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…
Iofina (LON:IOF) – refinancing proceeding well
Is good news on its way from this iodine exploration and production speciality chemical group?
When I profiled the company at the end of July, I noted that it was taking some time to refinance its US debt.
Last Wednesday we were informed of the company having taken a few steps forward with regard to the debt.
Commenting, President and CEO of Iofina Dr. Tom Becker, stated: “We are pleased that we are now in the final documentation phase of debt refinancing and we look forward to updating the market as to its conclusion in due course.”
In response to that announcement the group’s shares touched 17.5p briefly before some profit-taking set in to pull them back to the current 15p.
I see them hitting 20p, possibly higher, after the refinancing is completed. They were up to 31p this time last year, so there is upward scope for the shares in due course.
(Profile 29.07.20 @ 13.5p set a Target Price of 18p)
MPAC Group (LON:MPAC) – viewers will see why I like this stock
If they have the time, I would recommend that investors tune into my favourite packaging and automation solutions group’s live presentation at 11am on Thursday 3 September.
It is being handled by Equity Development and it is free to register. The link is:
It is on that day that the group will be releasing its interim results for the six months to end-June.
Obviously, it will have been impacted by Covid-19 restrictions, but I do understand that the group’s order book is well up on this time last year at £45.4m against £39.9m previously. Impressively, no orders were cancelled due to the virus.
The shares, which were whacked down to 180p at the end of March, have since recovered to the current 292.5p level.
They touched 377p earlier this year and could well return to those heights again.
(Profile 19.12.19 @ 155p set a Target Price of 235p*)
Capital (LON:CAPD) – going from strength to strength
This Africa-focussed mining services group enjoyed a cracking first half year to end-June.
Its revenues were up 18.8% from $54.8m to $65.1m, while its net after tax profits were a stonking 168% higher at $13.6m ($5.1m), boosting basic earnings 170.5% from 3.7c to 10c. Its dividend was only raised from 0.7c to 0.9c per share.
This was a strong performance from the group, with drilling rig utilisation increasing. But then so too has the price of gold in the first half year, which is a driver for some 90% of its business.
Tamesis Partners are looking for current-year revenues of $138.3m, giving a pre-tax profit almost doubled from $14.6m to $28.3m. They have put out an increased price objective of 102p for the group’s shares.
Even brokers Peel Hunt have increased their price objective to 86p.
Executive Chairman Jamie Boyton stated that, “the mining business is seeing increased tendering activity, providing further optimism of higher activity levels in the second half and into 2021.”
I continue to have high regard for this company’s prospects, its value and its share price and retain my latest target price of 100p. The shares closed last night at 76.5p.
(Profile 23.07.19 @ 48p set a Target Price of 76p*)
(Profile 22.10.19 @ 61p set a Target Price of 100p)
(Profile 03.08.20 @ 77.5p set a Target Price of 100p)
M&C Saatchi (LON:SAA) – is Vin waiting for the 2019 results before she moves?
A delayed results announcement is not always a good sign. But it is just what this advertising group has been doing over the last few months. The excuses also sound weak.
“We had targeted to publish our results by the end of August, but as a result of the continued disruptions to working practices caused by the COVID-19 pandemic, the group will now announce full year results for the year ended 31 December 2019 in September.”
And that was after having already taken advantage of a three-month extension for the filing. Is it because there is a real mess under the Saatchi carpet?
Actually, it does not really matter because I profiled the company following Vin Murria having become the group’s largest shareholder. She is shrewd, but not flash like so many in the advertising sector. I have followed her for the last couple of decades and liked what I saw in the way she does her business. The big question is what is she planning to do with that >15% holding in the company?
What we do know is that the company has been trading well in the second half year and is winning new business. It has a strong balance sheet, with net cash of £20m and an undrawn £5m overdraft facility.
I would guess that Vin is waiting for those accounts, no matter how appalling they are, to be signed off before she makes any move to create real value with her holding.
The shares closed last night at 61.4p – so just watch this space.
(Profile 11.05.20 @ 64p did not set a Target Price)
Macfarlane Group (LON:MACF) – a very neat little package
The Glasgow-based packaging distribution, design and manufacturing group’s interims for the six months to end-June were actually quite impressive.
They came in with revenue covering the Covid-19 lockdown period off just 1.8% at £105.6m while pre-tax profits were 5.5% lower at £3.62m. Earnings were 8% easier at 1.83p per share but still covering the 1.4% increased interim dividend of 0.7p per share.
Sales will be much more heavily weighted to the second half year, with an emphasis upon the increased business from its internet retail customers.
“Macfarlane Group’s businesses all have strong market positions with differentiated product and service offerings. We have a flexible business model and a clear strategic plan, being effectively implemented, which is reflected in consistent, profit and cash generation over a sustainable period.”
The group reflects upon its outlook for the second half year: “We expect to deliver a solid sales and profit performance in 2020 and are well positioned to benefit as the economy recovers.”
Well, that is good enough for me, the shares now at 92.4p are going higher and are a strong hold.
Brokers Arden Partners rates the shares as a ‘buy’, looking for 105p.
(Profile 08.07.20 @ 77p set a Target Price of 100p)
Pebble Beach Systems Group (LON:PEB) – proving to be a waiting game
Despite its revenue easing in its first half to end-June from £5.6m to just £4.5m, this playout automation and content management solutions software specialist actually managed to report pre-tax profits unchanged at £0.7m.
Cash generation of £1.4m, compared to £0.8m previously, helped net debt to reduce £0.6m to £7.8m.
John Varney, Non-Executive Chairman of Pebble Beach Systems Group plc, stated that “Despite the very challenging global environment, the Company continues to operate at full capacity, and we remain confident on the long-term growth opportunities for the Company. We continue to trade profitably and maintain our budgeted investment into new technology as we continue to innovate our suite of products.”
There is still no profit guidance, but the company appears confident of its full-year outlook.
The group’s shares, which peaked at 14.5p in mid-June, are currently at around the 11p level.
(Profile 07.05.20 @ 11.25p set a Target Price of 15p)
Trifast (LON:TRI) – I maintain my hopes of better times to come
The declared purpose of this group is to see that its fastenings enable innovation today to help build a better tomorrow. Just think about the use of fastenings in every walk of life – the mind boggles.
This group has some 1,300 employees, operating across its 33 global locations in 18 countries, eight locations of which are manufacturing sites.
Currently in an ongoing transformational multi-year system, the company has massive potential, which has yet to show through to the bottom line and see its share price responding upwards – but give it time.
Having been up to 133.5p in mid-June its shares have since eased back to 96p. However, they closed last night at 103.25p – hold tight.
(Profile 26.05.20 @ 113.5p set a Target Price of 175p)
Frontier Developments (LON:FDEV) – very much more than ‘game on’
This Cambridge-based leading developer and publisher of videogames has a very busy programme of releases from now up to the end of its trading year to 31 May 2021.
After a strong close to the end of its last trading year, sales across all of its games have so far been up to expectations.
The group has declared that it is on track to deliver revenue within the top half of the range of analyst projections of £83 million to £95 million for this current year.
On Friday of last week the £850m market capitalised group saw its shares respond well to its latest trading update, closing last night at 2,302.5p – more than double my profile price when I featured the company eleven months ago.
In reaction, brokers Peel Hunt increased their price objective from 2,076p to 2,466p.
(Profile 01.10.19 @ 1,000p set a Target Price of 1,500p*)
(*denotes that my Target Prices have been already attained since my profiles.)
And finally… On the move…
After touching 64p a couple of weeks ago, the shares of N Brown Group (LON:BRWG) fell back to 49p last Wednesday before reaching back up to 59.5p on Friday morning before closing the week at 55p. Last night they closed at 53p. The online retail group’s AGM is on Thursday 10 September – good news coming?
Alumasc Group (LON:ALU) closed last night at 80p, looking a lot firmer. The building products group is announcing its final results on Tuesday of next week (8 September).
Almost three times the average daily volume in the shares of Sureserve Group (LON:SUR) on Friday helped them close strongly at 52.5p. Last night they closed at just 51p, Remember, I have a 70p target price on this company.
After hitting 700p subsequent to my profile piece, shares of the Keller Group (LON:KLR) fell back to 613p mid-week before closing the week at 617.5p. An excellent opportunity to jump aboard a ‘class company’.
The shares of my 74.8p mid-July profile subject UP Global Sourcing (LON:UPGS) broke through my 100p Target Price on Friday, closing up another 5p to 105p, on the back of more than doubled daily dealing volume. Looking so much stronger, Tuesday’s dealing volume was almost four times the daily average – something going on?