Small-cap round up featuring Fonix Mobile, Winkworth, National World

Fonix Mobile (LON:FNX) – masses of potential for this year and beyond

On Thursday of next week, this group will be declaring its full year results to the end of June. We already know that that they will show a good advance on the previous year’s figures.

However, what I am looking for is a good Trading Update with the finals, pointing to a continuation of the first half performance and prompting, I hope, an upgrading in broker’s estimates for this current year.

Fonix, which was set up in 2006, provides mobile payments and messaging services for its multitude of clients across the entertainment, telecoms, media, enterprise and commerce sectors.

Based in London, it is a fast growth business which is driven by blue chip clients such as BT, Global Radio, ITV, Bauer Media, Comic Relief and Children in Need to name just a few.

When consumers make payments, they are charged to their mobile phone bill. This service can be used for donations, cash deposits, content and ticketing.

The company’s service works by charging digital payments to the mobile phone bill, either via Carrier Billing or SMS Billing. The group also offers messaging solutions.

Revenues last year will have risen from £40.1m to around £45.1m, while adjusted pre-tax profits are estimated to have increased from £7.3m to £8.4m, with earnings up to 6.9p (6.1p), and a 5.2p dividend per share.

The end July Trading Update reported strong earnings growth and expansion into international markets.

It also noted that “With high levels of repeating revenue, a strong exit run-rate for FY21, new supplier connections in international markets and a growing pipeline of client prospects across all sectors, the Board continues to be confident in the growth potential for Fonix going into FY22 and beyond.”

In late April this year the group’s shares hit 190p at one stage, before falling back to 123p on the day that the Trading Update was announced. Since then, they have been up to 170p, before easing back to 161.5p last Friday night.

At that level I rate the shares as offering a very good upside, with that 190p mark being an early price objective.

By the way, I note that the company’s brokers, finnCap, have a 200p price earmark.

Let us hope that next week’s results statement will provide the fillip to get the shares running back up again.

(Profile 01.02.21 @ 136p set a Target Price of 170p*)

M Winkworth (LON:WINK) – property market still strong

I really like this little asset-light company which is only capitalised at £26.5m.

Set up in Mayfair in 1835, this group is a leading franchisor of residential real estate agencies. It enjoys a pre-eminent position in the mid to upper segments of the sales and lettings markets.

Winkworth’s franchise model allows entrepreneurial real estate professionals to provide the highest standards of service under the banner of a well-respected brand name and to benefit from the support and promotion that the group can offer.

In the middle of last week, it declared its interim results to end June. They showed its network revenues up 92% at £36.4m, while the group’s pre-tax profits were 330% better at £1.98m, with diluted earnings rising from 2.86p to 11.57p per share.

CEO Dominic Agace commented: “While the first half of this year was marked by an exceptional level of sales activity, it also vindicated our strategic expansion in recent years into the country, enabling us to service clients not only in the buoyant London market, but also Londoners and country dwellers seeking more space or a change in environment.”

He went on to state that “Our rental business remained strong, albeit on this occasion it was outshone by sales, and we are again encouraged by the number of applications from talented operators looking to work within our successful and well-balanced franchise model.”

Analyst Alastair Stewart at Shore Capital, the company’s broker, is estimating revenue income of £8.5m (£6.4m), profits of £2.8m (£1.5m), earnings of 13.3p (9.1p) and a dividend of 8.8p (6.7p) per share for the full year.

The group is cash-rich boasting £4.57m cash in the bank.

On looking at the current market strength I would suggest that his estimates could well be on the light side.

The group’s shares, which touched 213p on the figures, closed the week at 207p.

Still early days but they are getting ever closer to my price aim.

(Profile 19.07.21 @ 190p set a Target Price of 240p)

Severfield (LON:SFR) – gradually firming up

Following the early September AGM Update, analyst Toby Thorrington at Edison Investment Research considers that this structural steelwork group has made a positive start to the current year to end March 2022.

He is looking for its revenues to rise from £363.3m to £373.9m, while pre-tax profits could increase from £24.8m to £28.3m, lifting earnings from 6.6p to 7.5p and easily covering a 3.1p (2.9p) per share dividend.

Thorrington considers the group’s shares to be on a conservative rating and offering a useful 3.9% yield.

They closed at 80.8p on Friday night, at which level I still see more upward price action.

(Profile 12.09.19 @ 62p set a Target Price of 88p*)

(Profile 04.06.21 @ 79p set a Target Price of 100p)

National World (LON:NWOR) – share price busting new Highs

What a year this new media group has been enjoying. Over the Christmas/New Year period boss David Montgomery and colleagues concluded the acquisition of JPI Media Publishing, the rump of the old Johnston Press grouping

He and his management have since then made significant progress in their efforts to localise, energise, digitise and monetise relevant and unique content for its various titles to create a modern operating model for news publishing across its multiple brands and platforms.

In the six months to 3 July, the company saw its revenues come in at £42.1m, its pre-tax profits were £3.5m and its interim earnings were 2.4p per share.

Analysts Paul Richards and Brendan D’Souza at Dowgate Capital now have a price objective on the shares at 50p each.

They are expecting the group to use its cash facilities to add more interests into the company fold, while also pushing its growth going forward.

Since I profiled the company in mid-May this year the group’s shares have been a wonderful performer, peaking at 42.28p at one stage in the last few days.

They closed at 40p on Friday night, getting near to Dowgate’s aspiration for the shares.

Despite having risen 216% since my feature four months ago, there is still a lot more to go for so hold very tight.

(Profile 17.05.21 @ 18.5p set a Target Price of 25p*)

Augean (LON:AUG) – roll up, roll up, any more bids to come

Some takeover bids can be quick and not attract third parties to join the bidding.

However, the tussle going on at my well-favoured waste management group has been quite exciting.

Bidder after bidder have been approved by the group’s management, as new bids were made.

The latest is worth 340p a share from the original bidder Morgan Stanley Infrastructure. Its first bid was at 280p a share before Eleia countered higher.

Now trading at around the 350p level, holders should sit very tight – who knows what might happen.

(Profile 31.10.19 @ 158.5p set a Target Price of 200p*)

(Profile 10.06.20 @ 185p set a Target Price of 235p*)

(Asterisks* denote that Target Prices have been achieved subsequent to profile publication)