Small-cap round-up featuring K3 Capital, Audioboom, Xpediator and more…

7 mins. to read
Small-cap round-up featuring K3 Capital, Audioboom, Xpediator 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…

K3 Capital (LON:K3C) – the good times are rolling

Last Wednesday morning this mergers and acquisitions group, which also handles insolvency and restructuring, declared a trading update for the year to end-May 2021.

We already knew that times were good for the company following its early March update. However, the trend appears to have strengthened considerably.

The group is looking to beat current market expectations, when its finals are released in September.

House broker finnCap have accordingly upped their estimates and their price objective.

Now looking for £45m of current year revenues and £12.9m of pre-tax adjusted profits, with earnings rising to 15.3p per share covering a 9.1p dividend, they increased their price target from 357p to 397p.

If you refer back to my profile of late last October, you will see just how positive I was about the group – and I am even more so now. 

The shares are a strong hold, now 334p.

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

Audioboom Group (LON:BOOM) – this boom is banging on

The first-quarter update from this global podcast group was extremely bullish.

The three months to end-March have showed revenue up a handsome 49% at $9.5m, with the group showing an EBITDA maiden profit in the period.

Now beginning to expand at quite a pace, the success is being driven by new content partnerships.

The current quarter has seen a continuation of that trend, which has led corporate brokers Allenby Capital to estimate full-year revenues of $37.52m ($26.78m) and a small loss of just $49,000 (loss $1.93m).

Going forward into next year, the brokers estimate $45.14m of revenues could produce almost $1m in pre-tax profits, worth 6.34p per share in earnings.

Allenby considers the group’s shares to have a fair value of 850p (500p previously).

The shares close the week at around 700p.

(Profile 09.07.19 @ 210p with no set Target Price)

Elixirr International (LON:ELIX) – just the tonic we all need

Well, it seems that the market liked the results statement and acquisition news from this challenger consultancy group, which only came to the market in July last year.

For the year to end-December 2020 it raised revenues by 24% to £30.3m and more than tripled its profits before tax from £1.7m to £5.8m.

Last Monday the company also announced the £7m acquisition of the Retearn Group, a UK-based procurement, transformation and insights consultancy.

This earnings-enhancing deal was well received, with the market pushing the group’s shares up over 130p to around the current 545p.

House broker finnCap has upped its price objective from 387p to 507p.

A very good profile performer in just over six months, up over 140%, the shares are a strong hold.

(Profile 21.09.20 @ 227p set a Target Price of 285p*)

Xpediator (LON:XPD) – driving ahead now

Last Monday, this freight management group announced its finals to end-December last year. They pleased the market, which upped its shares in response.

The sales increased 3.7% to £221.2m, with an admirable 38.5% leap in adjusted pre-tax profits to £7.2m, generating 3.84p in earnings per share. Even the dividend was up 12.8% at 1.5p per share.

It helped the group that it managed to cut a lot of its costs in March last year and it benefited from a strong fourth-quarter performance.

Already the new senior management team is delighted at its Q1 trading, coming in far better than expectations.

Taking advantage of a better share price and a tricky trading background generally, the group has a number of acquisitions in mind, especially as its ambition is to become a leading international freight management and logistics provider.

Analyst Robin Byde at Zeus Capital is going for £237.6m sales this year, generating £7.7m profits and 4p of earnings.

Peter Renton at Cenkos Securities rates the shares as a ‘buy’, looking for much the same estimates.

From 56p on Monday, the shares end the week at around the 65p level.

My view is that the new management structure now in place should be given their time and space and allowed to push the group further ahead as it progresses its growth strategy.

The shares are now a good hold and I hope they will get up to my price objective. Just give it time.

(Profile 28.05.19 @ 50p set a Target Price of 90p)

Belvoir Group (LON:BLV) – broker ups price target to 285p

As one of the UK’s largest property franchise groups, this company is doing well currently.

The finals announced earlier this week for the 2020 year showed sales up 13% at £21.7m and a 20% increase in pre-tax profits to £6.7m, with earnings of 16.7p (13.6p) per share.

Analyst Guy Hewett at house brokers finnCap has increased his price objective from 233p to 285p, as he anticipates almost £23m in current year sales revenue, £7.8m profits, 17.3p in earnings and a 7.4p dividend.

He rates the group’s low risk and capital light nature of its franchise model and likes its strong cash flow.

At 207.5p currently, the shares offer some very attractive upside potential in a bullish property sector.

(Profile 09.01.20 @ 141p set a Target Price of 175p*)

Palace Capital (LON:PCA) – a cheap property deal

This is one of the lucky property groups, insomuch as its basic business model is building up a portfolio of well sited non-London properties, which after a certain amount of remedial work helps to increase values.

It has certainly helped the company to achieve a hefty 94% of rents due in the year to end-March.

That is not a bad performance during a period, described by Neil Sinclair, the company’s CEO, as “the most testing of the company’s history.”

Analyst Alison Watson at Arden Capital estimates that in the last year the group saw pre-tax profits fall only £1m to £7m, with earnings of 15.2p (17.5p) per share, looking for a 2p fall in its dividend for the year to 10p per share. She estimates the net asset value at 344p per share. 

Arden is anticipating a bounce this year and next as times recover and now has a 280p price objective against the current 234p.

This has not been a goodie to date, but new investors should see an uplift in the near-term.

(Profile 26.12.19 @ 324p set a Target Price of 365p)

Quick notes…

Journeo (LON:JNEO) – The group will be holding its AGM on Wednesday 21 April, when hopefully a positive statement will reignite investor interest in the shares, now 107p. (07.04.21 @ 94.25p TP 120p*)

Iofina (LON:IOF) – I wonder what is really going on at this company. Yesterday’s Q1 report showed market recovery against weaker production (due to hassles beyond its control). The company’s broker is still expecting tripled PBT this year to $3.9m. Finals due next month, shares now 12p. (29.07.20 @ 13.5p TP 18p)

Epwin Group (LON:EPWN) – Yesterday’s 2020 finals were better than expected, but shares fell back 3% to 94p, which puts them on 13.7 times current year p/e ratio. If they fall very much further, they will become a buy all over again. (22.08.19 @ 73.5p TP 100p)

REACT Group (LON:REAT) – The interim trading update to end-March declared strong progress. The company is certainly confident enough to hold a live Investor Meet presentation next Monday 19. Shares were up 5% on the announcement at 2.475p. (28.01.21 @ 1.5p TP 2.5p*)

The Mission Group (LON:TMG) – At long last some daylight! Yesterday’s 2020 finals were not as bad as feared, but they were still awful. However, house brokers Shore Capital are bullish for this year’s recovery, looking for £7.1m (£1.2m) profits and 6p earnings (1.2p). Shares were up 6% at 88p, almost back to where we started. (04.02.20 @ 88.5p TP 125p)

(*Asterisk denotes that Target Prices have been achieved since profile publication)

Company results, meetings and updates expected within the next two weeks:

Tue 20Audioboom Grp (BOOM)AGM
 Card Factory (CARD)Fins
 DiscoverIE Grp (DSCV)T/U
 Porvair (PRV)AGM+T/U
 RBG Holdings (RBGP)Fins
Wed 21Carr’s Grp (CARR)Ints
 Hunting (HTG)AGM+T/U
 Journeo (JNEO)AGM
Thu 22Trifast (TRI)T/U
Tue 27Anexo Grp (ANX)Fins
 Aquis Exchange (AQX)AGM
Wed 28Capital Ltd (CAPD)AGM
 Fintel (FNTL)AGM
Thu 29Devro (DVO)AGM
 Int’l Personal Fin (IPF)Ints
Fri 30Elixirr Int’l (ELIX)GM
 Tremor Int’l (TRMR)EGM

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