Small cap round-up: featuring Bloomsbury, Codemasters, STV and more…

11 mins. to read
Small cap round-up: featuring Bloomsbury, Codemasters, STV and more…
Master Investor Magazine

Master Investor Magazine 54Never miss an issue of Master Investor Magazine – sign-up now for free!

Read the latest Master Investor Magazine

In this weekly summary, Mark Watson-Mitchell updates his readers on previous company profiles and other news of interest from the exciting world of small cap stocks…

Bloomsbury Publishing Group (LON:BMY)

Initial market reaction to the interim results from my favourite publishing group was to mark the shares down, with several holders chopping their positions.

However, they were wrong!

We already knew that the first half was going to be a little weaker in revenues and profits. We already knew that the second half is always the strongest section of their financial year. This year it should be a very good report for the final six months, with a good Christmas season and continuing top sellers in the Books Lists.

The unbroken dividend record, for some 20 years always on the up, will continue.

I profiled the company in late February and again in late March at 231p and 238p respectively. The shares are now 256p after dipping to 245p on the results. My 300p target price by the end of next year remains intact.

Codemasters Group (LON:CDM)

This video game developer and publisher has announced that it has extended its contract with Formula One Management for exclusive rights for its F1 games.

Their existing contract is up until 2021 but this week’s news sees that extended to 2025, while also having the option to take it further for the 2026 and 2027 seasons.

This really is very encouraging for the group, whose shares are now 225p, just 2p below my end June 227p profile price, but still some way off my 275p target price. I would hold very tight.

Brokers Shore Capital, Liberum Capital and Peel Hunt all rate the shares as a ‘buy’, looking for 310p.


Now we know why this broadcast media group has seen its shares edging higher over the last few weeks.

On Friday morning the company announced that as part of its five-year strategic partnership with Sky, giving the global group’s viewers even better access into the Scottish market, its STV Player will be launched on the Sky top set boxes giving access to STV content across all major TV platforms for the first time.

Master Investor Magazine

Master Investor Magazine 54Never miss an issue of Master Investor Magazine – sign-up now for free!

Read the latest Master Investor Magazine

A cracking deal if you ask me – the shares are now 399p, up from 365p a few weeks ago.

I profiled STV in late April at 370p, so I am very happy to see the shares at their firmer levels. I now put a 450p target price on the shares by the end of next year.

On the Beach Group (LON:OTB)

I was interested to see that the very powerful Mawer group has just revealed a 5.10% stake in the equity of this online beach holidays company, holding some 6,689,502 shares.

Founded in 1974, Mawer Investment Management is a privately owned, independent investment firm, managing over $60bn in assets for individual and institutional investors across all major investment strategies. It has over 200 employees across office locations in Calgary, Toronto, and Singapore.

If you ask me, those professional investors are getting in at just the right time and price.

The shares are now 447p, on a par with my end-March profile price, and well below my new 550p target price. So, I am glad to see the Canadians getting aboard.

Genel Energy (LON:GENL)

Friday’s trading update from this Kurdistan oil producer showed massive cash inflows by the end of the third quarter of the current year.

During the first nine months some $287m of cash proceeds flowed into its coffers, of which $120m came in in the third quarter of the year.

Capital expenditure in the year so far was $110m, against free cash flow of $121m.

The cash at the end of September was a massive $413m, which compares with $281m at the same time last year.

That was all achieved on net production that had increased by 12% year-on-year to an average of 36,530 of barrels of oil per day.

I would expect the group to assess and then pursue a number of potential acquisitions to add to its portfolio.

Genel’s shares were up 10p on the news to 203.5p, which is 3.5p below my end-May profile price. My 350p target price by the end of next year may be too optimistic, but I am maintaining it for the time being.

Costain Group (LON:COST)

The infrastructure solutions group has been awarded a bunch of very useful new highways contracts, worth £150m.

The company is said to be excited at its participation in helping its clients shape the UK transportation landscape.

Master Investor Magazine

Master Investor Magazine 54Never miss an issue of Master Investor Magazine – sign-up now for free!

Read the latest Master Investor Magazine

The shares are better on the news, trading at around the 171p level.

My early September profile featured the company’s shares at 151p, placing a 250p target price by the end of next year. They offer some appealing upside.

Chemring Group (LON:CHG)

On Friday this aerospace, defence and security markets products and services group declared an additional contract from the US Department of Defense for a further 75 units of its AVCAD aerosol and vapour chemical agent detector.

Those units will be delivered in the next trading year, for 2020.

The year to end-October this year ended ‘robustly’, certainly enough for the group to suggest that it may well come in with slightly higher operating profits for the last year.

Those results will be announced in the middle of next month, on Monday 16 December.

I profiled the company in June at 177p. They are now 207p, so my target price of 300p is edging ever closer.

I really rate this group and still consider that it is wide open to a potential bid from an American private equity group. 

Harworth Group (LON:HWG)

This property regeneration group has announced a 50/50 joint venture with Hallam Land Management, part of the Henry Boot building group.

The JV will look to promote and develop a mixed-use strategic land opportunity in the Midlands.

Brokers Liberum Capital and Peel Hunt both rate the shares as a ‘buy’, with the latter going for 146p and the former for 170p.

I profiled the company in late July, with its shares at 130p, with a 170p target price – they are now 125p and look appealing at that level.

Severfield (LON:SFR)

The shares of this structural steelwork group, which I featured in mid-September at 62p, are currently trading at 78p, edging ever closer to my 88p target price.

Master Investor Magazine

Master Investor Magazine 54Never miss an issue of Master Investor Magazine – sign-up now for free!

Read the latest Master Investor Magazine

I was pleased to see that brokers Jefferies International are getting more bullish about the company, recently raising their own target up from 98p to 103p.

Volution Group (LON:FAN)

It appears that there are plans to tighten building regulations in the UK by cutting emissions. That could give this global ventilation products group quite a lift in demand for its own products.

Brokers Liberum Capital have increased their ‘buy’ rating on this company’s shares, pushing their target up from 235p to 250p.

That brings them in line with my own target price by the end of next year. I profiled the group at the end of May with its shares then at 174p; they are now 205p.

The recently announced results for the year to end-July reported that revenue grew by 15% to £235.7m from £205.7m, with pre-tax profits surging 38% to £23.1m from £16.7m.

For this year, despite uncertainty in the UK economy due to the current state of Brexit negotiations, the company has said that it will look to improve its operational performance.

My target remains intact.

Inland Homes (LON:INL)

On Tuesday my favourite brownfield developer announced that it had completed the purchase of the other 50% interest in Cheshunt Lakeside Developments from the CPC Group.

However, as part of an off-balance-sheet deferred terms transaction, Inland then transferred that stake for £28.5m cash – thereby enabling the company to start the development of the old Tesco site in early 2020. Initially the company is going for 195 homes in the first part of this project. They have already started demolition of some of the buildings.

This deal enables Inland to make the majority of the development profits from the site.

Great dealing, in my view, which just shows the ability of the two largest individual shareholders – Stephen Wicks, the CEO, and Nish Malde, the CFO.

The shares, now at 78.75p, compare with my mid-August profile price of 68p, but are just 31.5p below my 110p target price by the end of next year. I remain totally confident in that being attained.

Avon Rubber (LON:AVON)

The year to end-September for this respiratory protections systems and milking point solutions group should have seen sales rise £10m to £176m, with profits up £1.6m to £23.2m. Earnings could come in at around 63.7p per share.

Those results will be announced on Wednesday 13 November. I am expecting the group to deliver a strong set of results, in what was a very transformational year.

Master Investor Magazine

Master Investor Magazine 54Never miss an issue of Master Investor Magazine – sign-up now for free!

Read the latest Master Investor Magazine

When you study those ratings, they may well seem very toppy, but I do expect them to start falling to more realistic market levels in this current year and thereafter.

The shares are currently around 1,786.5p, up 86.5p on my early October 1,700p profile price. My target price is 2,000p, and I see them up to 2,250p by the end of next year.

Polar Capital (LON:PLR)

It appears that a trust company based in Jersey has emerged as a 4.01% holder of Polar Capital equity. Apex Financial now holds 3,864,108 shares in the business.

A wise investment methinks.

The specialist active asset management group expects to announce its interim results for the six months ended 30 September on Monday 25 November.

The shares are currently trading at around the 495p level. My target price remains solid at 675p.

Ten Lifestyle (LON:TENG)

This online global lifestyle and travel service, catering for the world’s wealthier individuals, has announced that has won out in a competitive tender with one of its existing clients to really boost its services in the Americas.

For the company this is its largest single win and will really push the size of its large contract for next year to being ‘extra large’. That takes this client’s business up from the £2m to £5m per annum range to being well over the £5m level.

This bit of news saw the group’s shares leap to 134p at one stage, now just a fraction lower at 131p.

I profiled the company in mid-September at 120p, with a 155p target price. With more news like this contract expansion we could well see that being achieved well before the end of next year.

Helical (LON:HLCL)

I am looking forward to seeing the interim results from my very long-term favourite property development and investment group. They should be announced on Thursday 21 November.

I have been following this company and its progress since I had an 8% stake in the old ‘shell’ Helical Bar, which is a coupling rod for vehicles. Mike Slade took control of it in the early 1980s and the rest has been history.

Master Investor Magazine

Master Investor Magazine 54Never miss an issue of Master Investor Magazine – sign-up now for free!

Read the latest Master Investor Magazine

I am sad now that Mike has retired as chairman of the company. However, I am still anticipating a predator to show its hand – with a bid of 450p to 480p a share being my current guess.

Whether this ever comes to pass is anyone’s guess, but it doesn’t stop investors from taking a sensible growth view on the company, whose shares are now 389.5p.

Carr’s Group (LON:CARR)

This engineering and animal feeds group will be announcing its finals on Monday 11 November. I hope that they will be good and give us some confident pointers as to just how well the group has been trading in the current year to date.

For the year to end-August, estimates suggest that sales topped around £425m and pre-tax profits were up from £15.5m to £16.4m, worth 13p in earnings and amply covering a 4.7p dividend per share.

Estimates for this year are for £445m of sales and £18m pre-tax profits, worth 14.5p in earnings per share – that is 9.3 times prospective earnings.

I featured the company in early July at 153p, they have not been anywhere close that since then and are currently 145p – at which level the shares shout out to me as being very good value. I have a 200p target price standing for the end of next year.

Trackwise Designs (LON:TWD)

I see that finnCap has been appointed both Nomad and Broker to this printed circuits technology specialist products company.

That company replaces Arden Partners, the brokers that brought Trackwise to the market in July last year, having placed 7m shares at 105p.

That has proved to be a very disappointing investment for Arden’s clients, no doubt impacted by the ghastly set of results announced in September.

Now finnCap have the hard job of convincing their clients that Trackwise may well be a good investment at 62.5p. You already know my opinion!

And finally…

Both StatPro (LON:SOG) and Synnovia (LON:SYN) have now been acquired by US based companies and accordingly have lost their UK market listings this week.

Readers who followed my small cap profiles will, hopefully, have taken their profits and already reinvested their funds.

StatPro was featured at 130p in early May – taken out at 230p cash + 77% in five months.

Synnovia was featured in early March at 102p – taken out at 125p cash + 22.5% in seven months.

Comments (0)

Leave a Reply

Your email address will not be published. Required fields are marked *