Small-cap round-up: featuring D4T4, MP Evans, Hotel Chocolat and more…

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…

Time Finance (LON:TIME) – not waiting for anyone

In the next fortnight we shall see interim results from this re-branded and reorganised group of companies within the alternative finance sector.

It is not so much the first-half statement that will get the shares rapidly up to my price objective, instead I am hoping for a positive outlook from the group, to be followed up by some investor roadshows.

The shares, now 25.5p, have performed well in just a few days. More in store, hold tight.

(Profile 23.12.20 @ 21.5p set a Target Price of 30p)

K3 Capital (LON:K3C) – certainly not for selling

In January 2020 the shares of this £175m business sales specialist group were as high as 296p. Two months later they collapsed, with the rest of the market, to just 116p. But since then they have staged a recovery.

The mid-December trading update for the six months to end-November was very positive in tone, with CEO John Rigby stating that he was confident of the group making further progress in the current financial year.

Estimates are for the year to end-May 2021 to see revenues up from £15m to £36m, with pre-tax profits leaping from £6.4m to £10m, worth 12p per share in earnings.

The profit estimates for 2022 and then 2023, are £13.5m then £17.6m, worth 16p then 21p in earnings per share.

I continue to rate very highly this group’s potential. I am delighted with the price performance of the shares, closing the year at 255.5p.

Stay solid to the stock, in my view it is going higher.

(Profile 21.10.20 @ 147.5p set a Target Price of 200p*)

Robinson Group (LON:RBN) – property sales wrapped up yet?

It must be about time to see just how well this packaging group did in its second half  to end-December.

Although the finals are not due until March, I expect to see a trading update for H2 shortly.

And it would be a nice surprise if we also had comment from the company on just how well negotiations are progressing on any of its property disposals.

Since I profiled this plastic packaging, and luxury rigid boxes maker in April its shares, now 155p, have been up to 173p, more than trebling in price.

(Profile 02.04.20 @ 55.5p set a Target Price of 80p*)

D4T4 Solutions (LON:D4T4) – up 45% in under a month

Since the interims to end-September were declared in late November this data solutions provider’s shares have been moving ahead at quite a pace.

Last Thursday morning they peaked at 298p, up from 205p on the announcement day.

Being impressed by the very strong ARR the company enjoys, its brokers, finnCap, rated the shares highly enough to put out a 310p price objective.

Stay with them.

(Profile 09.04.20 @ 170p set a Target Price of 215p*)

DWF Group (LON:DWF) – a sudden bye-bye by Vin

Last Wednesday I was interested to note the sudden stepping down of one of the non-executive directors from DWF’s Board – one Vinodka Murria.

Vin is a very astute lady and I respect her parting statement suggesting that ‘DWF continues to be an excellent investment proposition.’

The next day it was announced that she had taken up the Chair of Marwyn Acquisition, which is now focussing upon opportunities in the software sector, in which Vin is an expert. 

Her only other directorships are Softcat and Bunzl. Remember that she is also a very big investor in M&C Saatchi (LON:SAA), whose shares closed at 82.4p last Thursday.

(Profile 01.06.20 @ 67p set a Target Price of 100p)

Capital Ltd (LON:CAPD) – directors buying more shares

Ahead of this mining services group’s trading update, due soon, I was pleased to see that boss Jamie Boyton, and fellow directors, showed faith in the group by taking up a total of 1.6m new shares at 58p in the recent £30m placing.

The group’s shares, which were 63p before the early December issue, rested at around 60p while the funds were collected in, then jumped up to 68p last Thursday.

Hold firm, I stick to my price objective.

(Profile 22.10.19 @ 61p set a Target Price of 100p)

(Profile 77.5p @ set a Target Price of 100p)

Accrol Group Holdings (LON:ACRL) – holders are cleaning up

After hitting 64.9p on Thursday morning, the shares of this loo rolls and kitchen towels maker closed the day at a firm 63.5p, valuing it at £198m.

The interim results to end-October will be announced on Tuesday 12 January.

The recent earnings enhancing acquisition by the group of Leicester Tissue, is considered an excellent fit by both Liberum Capital and fellow broker Zeus Capital and they both believe the shares are a ‘buy’.

(Profile 12.03.19 @ 22p a Target Price was not set)

MP Evans Group (LON:MPE) – low valuation spurs price

Analysts Raymond Greaves and Michael Clifton at finnCap are obviously keen on the shares of this £360m Indonesia-based sustainable palm oil producer.

They have a price objective of 1,000p a share, rating the group’s valuation as being ‘too low’.

Closing at 660p last Thursday the shares are just a few pence short of my own price aim.

The year to end-December should have seen pre-tax profits almost double to £20m, with £30m possible for the year just started. Then £45m is estimated for 2022.

Now that is profit growth that needs to be enjoyed.

(Profile 07.04.20 @ 540p set a Target Price of 700p)

Dekel Agri-Vision (LON:DKL) – up 115% in three months and going higher

Another company in the palm oil sector is this £20m tiddler.

After the company declared its November production figures in mid-December, brokers Arden maintained their ‘buy’ recommendation on the shares, looking for 8p a share in due course.

Subsequently they rose to 4.7p. Closing at 4.3p on New Year’s Eve they have been an excellent performer since I profiled the company in late September, now up 115% and through my aim point.

Clearly, they have a good feel about them.

(Profile 23.09.20 @ 2p set a Target Price of 3.5p*)

Audioboom Group (LON:BOOM) – what is going on?

This £41m company is a global leader in podcasting – producing, distributing and monetising premium audio content to millions of listeners around the world. 

Internationally it has operations and global partnerships across North America, Europe, Asia and Australia.

Following a strategic review, the group raised £3.15m @ 225p a share.

That was mid-October, since when the shares were steady at around 210p. 

But just after Christmas they suddenly burst into life, closing the year at 267p.

It will be interesting to see what kicked them into action.

(Profile 09.07.19 @ 210p a Target Price was not set)

DX (Group) (LON:DX.) – delivering share price strength

Another company that has seen its shares end the year well was this £203m freight, courier and logistics group.

In fact, 2020 saw its shareholders enjoying a mega-rise in price. A year ago they were 13p, fell to 6.3p at the worst, and then rose 463% over the following nine months to 35.5p last Thursday.

Brokers finnCap are expecting the current year to end-June to show pre-tax profits of £6.7m, up from £0.3m last year.

An excellent performance to date but do not chase the shares at these levels until more becomes visible, no matter how positive analyst estimates may become.

(Profile 20.02.20 @ 12.5p set a Target Price of 15p*)

Hotel Chocolat Group (LON:HOTC) – melt or bubble over Christmas?

This premium British chocolatier certainly has a strong and distinctive brand. 

How well did it do up to and over Christmas?

Within a couple of weeks or so we should get an interim trading update from the group, which sells its products both online and through a network of 130 locations in the UK and abroad. 

Brokers Liberum Capital estimate the group, which also has one restaurant in the UK and a cocoa estate and hotel in Saint Lucia, could see pre-tax profits for the year to end-June rise 50% to £3.5m. 

£9.9m is estimated for next year, then £15.4m for 2023. But even those profits would only generate 10.2p per share in earnings.

Isn’t that far too high a rating, with the shares currently 422.5p? Perhaps only a bid for the group would justify such a premium.

(Profile 21.03.19 @ 340p set a Target Price of 402p*)

Maintel Holdings (LON:MAI) – holder please hold

This leading provider of cloud and managed communications services could well be just days away from announcing its trading update for its finals to end-December.

The year is expected to have seen sales down from £123m to £105m, with pre-tax profits having eased back from £7.4m to around £5.8m. That should see earnings down from 52.1p in 2019 to 35.5p per share.

For the year ahead I would expect the group to benefit from a reorganisation of its business – new management, costs being cut and a boost to its sales function.

Perhaps with the imminent update we may also get some profit guidance from this telecoms and data services group.

That could help to shift the share price, now 316p, a great deal higher on recovery hopes.

(Profile 03.06.20 @ 173p set a Target Price of 250p*)