Small-Cap Round-Up featuring Iofina, Augean, Rosslyn Data, Billington, Tremor, Superdry and others

9 mins. to read
Small-Cap Round-Up featuring Iofina, Augean, Rosslyn Data, Billington, Tremor, Superdry and others

Iofina (LON:IOF) – refinancing ups both profit and price hopes

As I predicted last week this group which produces iodine from oil and gas well produced water, has concluded its refinancing and at a lower ongoing interest cost.

This has now emboldened its broker finnCap to make some current and future year estimates. $33m of sales to end December 2020 and $3.9m profits, with 2c of earnings per share. Then 2021 could return $37m in revenues, $6.3m in profits and 3.3c in earnings.

The brokers have now upped their price forecast to 33p, which offers an upside of 130% with the shares now at 14.5p.

However, for the short-term I am confident with my easy objective.

(Profile 29.07.20 @ 13.5p set a Target Price of 18p)

Augean (LON:AUG) – great cash generation and higher profits envisaged

The interims to end June were much as anticipated, showing an 11% decrease to £8.5m pre-tax on a sales fall of just 6% to £41.4m. Net debt fell from £13.2m in December to just £3.3m, reflecting some admirable cash generation.

For the full year brokers N+1 Singer are going for £96.2m in revenue and an adjusted pre-tax profit of £20.4m, which would be up on last year’s £19.2m. That would kick in 15.7p in earnings per share.

For 2021 the house brokers go for £103.6m sales, £24.1m profits, 18.5p in earnings.

Going further ahead 2022 might see £121.4m sales, £28.2m profits and 21.7p in earnings.

The group’s core strategic markets are ‘Energy from Waste’, construction soils, treatment, nuclear decommissioning and North Sea decommissioning.

Market reaction to Monday’s results was to mark the shares down to 155p from 190p, but sense soon saw them recover to the current 175p level, at which they trade way below the rating of their peers.

I am even more confident of my price objective, with 200p being an early hurdle.

(Profile 31.10.19 @ 158.5p set a Target Price of 200p*)
(Profile 10.06.20 @ 185p set a Target Price of 235p)

Rosslyn Data Technologies (LON:RDT) – 84% annual recurring revenue

Cenkos Securities, brokers to this Cloud-based data analytics software group, rate its shares as a ‘buy’, stating that its 60% discount to its sector is unwarranted.

I remain totally convinced that they are destined to go a great deal higher, remember I am particularly impressed by its 84% annual recurring revenue.

Research house Equity Development have a 10p valuation against the current 5.65p share price. They point out that it has an estimate for the group to end its year in April 2021 with £6.1m cash in the bank, against its £19.2m market valuation.

I was pleased to see that one of the group’s founding directors added to his holding after the results, paying 5.89p a share and taking his stake up to 11.54m shares, representing 3.38% of the group’s equity.

I am very happy with my price aim for the shares.

(Profile 12.08.20 @ 5.75p set a Target Price of 7.5p)

Billington Holdings (LON:BILN) – sales fall and profits devastated

Another company reporting Covid19 disruption in its first half year.

This leading structural steel and construction safety solutions specialist saw sales fall from £47.2m to £32.8m to end June, with pre-tax profits collapsing from £2.7m to just £0.6m, earnings fell from 17.8p to only 4.1p at the interim stage.

However, net cash almost doubled from £8.4m to £16.1m in the period, compared to its market capitalisation of £40m.

With its shares at 306p, it perhaps indicates that a full year figure will obviously be much lower than 2019’s results.

Going forward the group’s market position will help it to win more orders, like the £21m worth of contracts announced on Monday. It is strong enough to compete and possibly even snap up failing competitors in due course.

(Profile 02.04.19 @ 266p set a Target Price of 314.5p*)

Tremor International (LON:TRMR) – back to strong profitability

Predictions are now that this global leader in video advertising technologies has performed even better than suggested in its AM Trading Update in mid-June.

As opposed to expected losses for the year to end December estimates now suggest that a $2.8m profit is possible on sales of $330m.

But 2021 could well report a mega-recovery to $33.4m pre-tax, worth 18.7c per share in earnings, derived from $419.9m revenues.

The group’s broker has a price objective of more than twice my own, but at 170.5p they do have a certain longer-term recovery appeal.

(Profile 16.01.20 @ 156p set a Target Price of 235p)

Superdry (LON:SDRY) – recovery still on the cards?

Well this fashion brand, which operates in some 61 countries globally, continues to disappoint. This week’s £167m loss announcement is not encouraging. However, they were not unexpected, with the dreaded virus causing a severe collapse in shopper footfall.

But I have not given up hope yet. I believe that gradually reborn boss Julian Dunkerton will get to grips with the group’s problems and cope with its recovery.

The shares at the current 144p could reward the patient investor.

(Profile 21.11.19 @ 454p set a Target Price of 600p)

Wilmington (LON:WIL) – undemanding rating

This provider of data, information, education and networking services in the specialist Risk & Compliance, Healthcare and Professional knowledge areas, recently announced its finals to end June 2020.

They came in better than many had forecast, especially considering that it had suffered major impact of the virus and the lockdown, with face to face meetings proving impossible. However, a digital transformation helped.

Sales were down from £122.5m to £113.1m, while profits were sliced from £19.3m to £11.9m, with earnings down from 17.2p to just 10.6p per share.

Research group Radnor Capital suggest that the recovery will be a medium-term climb, until 2023 to see 2019 figures again. Even so, they say that the current valuation, with its shares at 120.5p, is undemanding and lagging behind the group’s peers.

(Profile 22.06.20 @ 143p set a Target Price of 175p)

Crimson Tide (LON:TIDE) – not to be chased – yet

It seems as though this little company is beginning to benefit from new business offering longer-term contracts.

This software and computer services business could see an annual compound growth rate of 17% over the next three years.

The shares at 3.55p are currently up to events and do not need to be chased until more growth evidence becomes apparent.

(Profile 08.10.19 @ 2.8p set a Target Price of 5p)

Surface Transforms (LON:SCE) – now playing in the big boy’s game

Almost with one bound this carbon ceramics brake discs designer and maker has seen its shares catapult itself to almost doubled levels.

On Friday 11 September they were trading at 25p, the next trading day (Monday 14) saw them peak at 48.5p.

That was on some very positive news, a major award from a global vehicle manufacturer to be the standard fit, sole supplier of the carbon ceramic brake disc on both axles of its high-performance car.

Kevin Johnson, CEO commented that “This, truly game changing, award builds upon the recent trend of significant contract wins with mainstream automotive manufacturers. The award, which on its own, doubles previous revenue projections for FY22 and accelerates Surface Transforms’ transition into profitability and operational cash generation”.

This contract would be with OEM8, they have seven other OEM’s with whom work is under negotiation or planned for the next few years.

Gradually this company is proving its ability to play in the big boy’s game, and that they want SCE to be playing with them.

The shares are now trading at around 42.5p. Further news will be needed to maintain them in the current price range.

(Profile 19.09.19 @ 17p set a Target Price of 30p*)

Barr (AG) (LON:BAG) – getting more bizzy with the fizzy

This well-known maker of the IRN-BRU carbonated soft drink, amongst many others in its production portfolio, reported its interim to 25 July on Wednesday.

They reported sales off just 7.6% at £113.2m, while pre-tax profits were 19.4% better at £16.6m, before exceptionals of £11.5m.

Some £10m of those charges were from the impairment cost at its Strathmore brand, which was really hit by hassles to the hospitality sector during the lockdown.

Anyway, the group has a strong balance sheet and boasted £30.4m net cash at bank at the halfway. I believe that it can cope with its current pressures.

Roger White, the group’s Chief Executive stated that “We remain on course to deliver a full year performance in line with the revised expectations we communicated in the July 2020 trading update. We have continued to invest in our core brand equity for the long term, maintained our quality and service standards and remain a profitable and cash generative business in a robust drinks sector. We are confident that our business will continue to prove its resilience for the balance of this year and beyond”.

The group’s shares were down to 370p a few days ago but close the week at around the 444p level, showing a healthy price reaction to the interim news and the full year prospects.

Brokers Liberum still rates the shares as a ‘buy’, considering that the company has shown its resilience and is now looking for £30.7m pre-tax this year, and setting a 625p price on the shares.

(Profile 31.07.20 @ 444.5p set a Target Price of 525p)

The MISSION Group (LON:TMG) – needing a ‘moonshot’ of its own

This marketing services group has had a rough time during the lockdown, as shown by its interims to end June.

They showed a revenue fall from £39.2m to £29.1m and a severe swing from £2.4m adjusted pre-tax profits to a loss of £2.3m, with earnings easing back from 3.2p to a loss of 1.92p per share.

But not all is lost – it seems that the second half year has started well, with chairman David Morgan stating that measures have been put in place to ensure that the group can emerge from the pandemic as an even stronger business.

Research house Edison is effectively writing off this trading year, but it is estimating £76.1m of revenues next year, £9m of profits and 7.7p of earnings together with a 1.8p per share dividend.

The shares close the week at just 59.5p – disappointing 2020 but hopeful for 2021?

(Profile 04.02.20 @ 88.5p set a Target Price of 125p)

DWF Group (LON:DWF) – the Yanks are coming

Ahead of its AGM on 21 October this global legal business yesterday proudly announced that Cartesian Capital had taken a useful little stake in the group.

Cartesian is a New York-based equity player, and having taken a 4.46% stake in DWF, which could be a pre-cursor to further holdings being taken.

Sir Nigel Knowles, CEO of DWF Group, added: “We have a longstanding relationship with Cartesian and we are delighted to welcome them to our group of major shareholders. It is pleasing to see the progress we have made – and the future potential in our business – being recognised with a significant new shareholder coming on-board”.

I wonder who the sellers were?

The shares are currently stronger at 70.5p.

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

And Finally …

Strix Group (LON:KETL) – put the kettle on and let’s celebrate

Last Wednesday this Isle of Man-based kettle safety controls maker announced its interims to end June.

They could well have been a pretty awful set of results due to the Covid19 lockdown hassles.

However, they showed a fairly strong performance, with sales down 21% at £34.7m and pre-tax profits only off 12.5% at £10.1m, earnings came out at 4.9p against 5.4p previously, while the interim dividend was held at 2.6p per share.

With a strong order book and new products being launched before the end of the year the group is sounding quietly confident of its second half potential.

The shares at the current 233.5p, which have been a good market of late touching 260p at one stage, have responded well to the confidence shown in these results.

(Profile 31.12.19 @ 196p set a Target Price of 250p*)

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