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 shares…
Foxtons (LON:FOXT) – interims due this Wednesday, mortgage arm disposal and record rental demand in June and a 129p valuation on its shares, now just 50p each
You would have to be blind to not have seen that property sales have been going through the roof.
We now know that the June house sales figures hit a 30-year high as the market was driven by the lower-level stamp duty suspension coupled with the very low mortgage rates now on offer.
What is more it is now assumed that as the lockdown restrictions lift and as employers get their staff back into the offices again, there may well now also be rising rental demand.
In fact, I understand that Foxton’s estate agents registered a record number of new tenants in June.
And something worth noting is the fact that 75% of the lettings revenue of Foxtons is considered to be recurring – oh yes I love it more now and it is growing.
At the same time as the leading estate agency group in London announces its interim figures on Wednesday of this week, I wonder whether we might also get an update on just how well it is getting on with selling off its Alexander Hall mortgage broking and conveyancing business.
I understand that it has been on the market for a couple of months now, but as yet, we have no update on how those disposal negotiations are proceeding.
Unfortunately, the group has not yet announced a possible date for its interim figures. However, last year they were published on 28 July – on double checking I have not been able to see any declaration by the company of the date that I have mentioned. But I must have got the date from somewhere, so please treat it as ‘possible’.
Whether Foxtons join the band of agents now looking to charge prospective homebuyers around £30 for a viewing – in an effort to reduce nosy neighbours and time wasters – I really do not know but that question could well be asked by analysts this Wednesday.
Estimates are in place for the current year to end-December to see revenues increase from £93.6m to £130.1m and for the previous loss of £0.1m to be replaced by a massive £9.5m pre-tax profit, worth 2.5p per share in earnings, with a 0.5p per share return to the dividend list.
For next year, estimates suggest nearly £138m of sales and £12.5m of profits, worth 3.3p in earnings and a 0.8p dividend per share.
Analyst Andy Murphy at Edison Investment Research currently has a 129p per share valuation on the group’s shares, now just 50p each.
It could be worth taking advantage of the pre-announcement bargain price to either buy in or top up holdings.
(Profile 07.07.21 @ 60p set a Target Price of 76p)
DWF Group (LON:DWF) – strongest organic growth rate in the sector
Analysts Mike Allen and Rachel Birkett, at brokers Zeus Capital, were impressed by the global legal services group’s management of streamlining its divisions and controlling costs.
They strongly endorse the strategic progress made to date, which leaves the group well placed to deliver profitable and cash generative growth.
Meanwhile, over at Liberum Capital, their analyst James Allen switched his view on the group’s shares from ‘hold’ to ‘buy’ and at the same time increased his price objective to 135p from 105p previously.
They closed the week at 106p and are obviously capable of making another attempt on their 2020 peak of 142.5p in due course.
(Profile 01.06.20 @ 67p set a Target Price of 100p*)
Premier Foods (LON:PFD) – Trading update for the thirteen weeks ended 3 July
The branded foods group takes in Oxo, Mr Kipling, Paxo, Cadburys Cakes, Ambrosia, Bisto and Sharwoods amongst many others.
It has made a very encouraging start to the year with two-year sales growth at the top of its targeted range for Q1. Online sales are running at double that of two years ago.
Selling such heavyweight brand names, together with a material reduction in interest costs following its bond issue, gives its management confidence that its adjusted pre-tax profits for the current year will now be at the top end of its expectations.
After the company advised the market of its confidence broker Shore Capital suggested that the full year to end March 2022 pre-tax profit was estimated at £119.6m.
The group’s shares, at 110p, could be ready for another early upward movement.
(Profile 29.06.20 @ 67.5p set a Target Price of 101p*)
Medica Group (LON:MGP) – Capital Markets Day could be a big booster
The UK and Ireland facing teleradiology services and US clinical trials imaging services group last Thursday announced a trading and business update for the six months to end June.
“Overall, the Group had a positive first half performance with the UK and Ireland performing strongly against a backdrop of a sustained recovery in activity in diagnostic services.”
The group’s broker, Liberum Capital, rates the shares as a ‘buy’ looking for 235p a share, compared to the current 163.5p, at which level the group is valued at close to £200m.
Analysts Graham Doyle and Alistair Campbell forecast revenues to increase this year to £61.4m (£36.8m), while pre-tax profits could more than double to £10.5m (£4.7m). That should see earnings at 7.3p per share and almost three times covering its 2.5p per share dividend.
The group expects to hold a Capital Markets Day on Tuesday 7 September, then plans to declare its interim figures on Monday 27 September.
It has taken a long time for this group’s shares to get back on track towards my price objective. However, I think that it is now gathering some good upwards momentum, certainly sufficient enough to see my aim being achieved.
(Profile 07.01.20 @ 155p set a Target Price of 215p)
GetBusy (LON:GETB) – figures due this Wednesday
This group is a leading developer of document management and productivity software products. It has confirmed that its results for the six months ended 30 June will be announced on this coming Wednesday.
On a truly global basis, GetBusy’s document and task management software enables over 67,000 professional paying users to digitise operations and be productive whether working in the office or remotely.
We have already been told, in the company’s early May AGM update, that trading in the first four months of the current year was better than management expectations, buoyed up by the increased recurring revenues.
While still loss-making, its brokers Liberum Capital have set their caps at the shares hitting 130p each, which compares very favourably with the current 84.5p.
They look good value ahead of the interims being announced and thereafter.
(Profile 05.05.20 @ 60p set a Target Price of 75p*)
Anexo Group LON:ANX) – get out now and put your money into something else
The big question remains whether shareholders in the Liverpool-based group, which provides motorists involved in accidents with credit and legal services, will get a decent price for their shares.
The Isle of Man-based DBay Advisers are still considering their possible 150p a share bid for the group.
They are continuing in talks with the group’s directors, three of whom control 38% of the equity, while DBay holds 29% – so I would imagine the discussions are more about ongoing contracts than the take-out price.
The shares, which climbed from 130p in late May to the current 143.5p, could still have further to go. However, my thinking is that this has proved to be a bit of a bloomer of a profile endorsement.
Take your turn now and get your money into another investment as soon as possible.
(Profile 23.04.20 @134p set a Target Price of 175p)
Audioboom Group (LON:BOOM) – take the money and run
Well, will the British Virgin Islands-based All Active Asset Capital win through with their share and cash offer for this Jersey-based emerging global podcast media group?
Already over 25% of its shareholders have irrevocably accepted the AAA offer – but it is made up in an equity and 200p a share cash bid mix.
To the way I see it, neither company has any real value worth anything like the current market capitalisations.
If you still hold BOOM shares, then I suggest that you sell out at around the current 960p market price and take very quick advantage of some of the recently fallen-back ‘value stocks’ and buy them using your sale proceeds.
(Profile 09.07.19 @ 210p with no set Target Price)
Frontier Developments (LON:FDEV) – sell half and hold the balance
The strong market buzz around the shares of this Cambridge-based games developer is that Tencent, which already owns 9% of the group, could well be interested in either adding significantly to its holdings or, in fact, actually looking to take it out entirely.
Tencent has agreed a £1bn bid for Sumo Group, which is another games development group.
We have had a wonderful run with the FDEV shares to date, having more than doubled in less than two years.
However, it is being suggested that on its trading values alone the games developer is worth more than the current 2,512.5p a share in the market.
Even so, I would be very tempted to suggest that holders could do well in selling half of their shares and hold firmly onto the balance.
(Profile 01.10.19 @ 1,000p set a Target Price of 1,500p*)
Bloomsbury Publishing (LON:BMY) – always been a very good read
I have never been disappointed with this publishing group’s performance.
At last Wednesday’s AGM, boss Nigel Newton declared that the first four months of the current financial year to the end of February 2022 showed year-on-year sales growth of 28%.
Both the Lynne Truss’ ‘Psycho By The Sea’ and Tom Kerridge’s ‘Outdoor Cooking’ books have seen big sales recently.
The end-August interims are due to be announced on 27 October.
The market consensus for the full year is for £193.4m of sales and pre-tax profits of £19.3m.
The shares ended the week on Friday at 378.5p, up 4% on the day, and well up from the 350p level that they were trading at before the AGM update.
Could the shares have a 450p price tag within the next year? There are several market whispers suggesting it could well become a ‘takeover target’ for some international groups.
(Profile 28.02.19 @ 231p set a Target Price of 251p*)
(Profile 27.03.19 @ 238p set a Target Price of 270p*)
(Asterisk* denotes that Target Prices have been achieved since profile publication)
Profile company results, meetings and updates expected within the next two weeks:
| Mon 26 | Gresham House Strategic (GHS) | AGM |
| Tue 27 | Cohort (CHRT) | Fins |
| FRP Advisory Group (FRP) | Fins | |
| OnTheMarket (OTMP) | AGM | |
| Record (REC) | AGM | |
| Restore (RST) | Ints | |
| Wed 28 | Card Factory (CARD) | AGM |
| Hargreaves Services (HSP) | Fins | |
| International Personal Finance (IPF) | Ints | |
| Smiths News (SNWS) | T/U | |
| Staffline Group (STAF) | AGM | |
| Ted Baker (TED) | AGM | |
| Trifast (TRI) | AGM | |
| Thu 29 | CMC Markets (CMCX) | AGM+T/U |
| Devro (DVO) | Ints | |
| discoverIE Group (DSCV) | AGM | |
| Forterra (FORT) | Ints | |
| Palace Capital (PCA) | AGM | |
| Mon 2 | SigmaRoc (SRC) | AGM |
| Tue 3 | Barr (A.G.) (BAG) | T/U |
| Joules Group (JOUL) | Fins | |
| Lamprell (LAM) | T/U | |
| SThree (STEM) | T/U | |
| Wed 4 | Morgan Sindall Group (MGNS) | Ints |
| Thu 5 | Dekel Agri-Vision (DKL) | AGM |
| Secure Trust Bank (STB) | Ints | |
| Fri 6 | Cake Box Holdings (CBOX) | AGM |
| Lamprell (LAM) | AGM |