Small-cap round-up: featuring Marlowe, Codemasters, Manolete and more…

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Small-cap round-up: featuring Marlowe, Codemasters, Manolete 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…

The Covid19 Market Recovery Portfolio +40.31%

This portfolio of ten selections made on 24 March 2020 is now up 40.31% in just three months.

In the same timeframe the FTSE100 is up 14.44%.

Marlowe (LON:MRL) – acquisition and cash raising plus good results

This group, which is a UK leader in specialist services which assure safety and regulatory compliance, has this morning announced a £35m placing @ 478p a share.

It has also reported the £14.05m acquisition of Elogbooks, a provider of contractor management software and services, which looks to be a very good fit into the group’s own integrated technology and services.

Marlowe made strong progress for the year to end-March 2020, declaring significant revenue and profit growth, growing 44% to £185.4m, and 52% to £13.6m respectively.

The full results should be issued early next month.

In the meantime, the group’s shares seem to be gaining some strength again.

At the end of March, they dipped to a low of 315p; two months later they tipped up at 505p, but this morning are steady at 485p after the acquisition and placing news.

Considering its recent performance and the corporate news, I consider that my price objective remains intact and offers upside potential.

Profile 30.01.20 @ 468p set a Target Price of 550p.

Codemasters (LON:CDM) – despite a 52% rise over the last year there is still much more to go for

Over the last year the shares of this video gaming developer have been a very good market, except for the end of March fall back to 205p.

They have certainly kept up to date with the group’s trading news.

Sales were up 6.8% at £76m, while pre-tax profits were up from £2.9m to £12.2m. Tax charges were a minimal £0.77m because years of development costs built up the group’s tax losses to a massive £120m at the start of the year to end-March 2020.

At that date the company was long of a sizeable £24.8m net cash position.

Going forward the group has a wide portfolio of games, with a strong schedule of planned releases for the trading year to end-March 2021.

The shares at the current 341.5p still offer good upside potential, despite both of my objectives having already been achieved.

Brokers Liberum Capital have increased their target price from 370p to 390p, while both Shore Capital and Peel Hunt rate the shares as a ‘buy’.

Profile 25.06.19 @ 225p set an early Target Price of 275p and also a later 350p TP*

(* denotes that Target Prices have been subsequently achieved.)

Trifast (LON:TRI) – directors take placing stock

It was good to see that a couple of Trifast’s executives took some stock in last week’s £15m Placing – admittedly not many but even so it shows certain confidence.

Mark Belton, the CEO, took 10,000 @ 120.5p taking his holding up to 376,822 shares, while Noel Chin, the group’s Asian COO, took a similar amount building up his holding to 49,370 shares.

Because of Covid19 the finals to end March 2020 are delayed until August, however brokers finnCap are estimating £200m (£209m) of revenue and pre-tax profits of £17.2m (£23.5m), with earnings dropping to 10.7p (14.5p) per share.

For the current year they see £206.9m of sales and £18.2m profits and earnings of 10.5p per share, which allows for the equity dilution of the placing.

Given the stronger balance sheet, the group could well be getting out there and tucking another small acquisition or two into its grasp.

We must now await until those finals are released to get back up to speed with this company. Even so I still rate its shares as a good price recovery bet at the current 119p.

Profile 26.05.20 @ 113.5p set a Target Price of 175p.

Manolete Partners (LON:MANO) – good news delayed until next week?

The UK’s leading insolvency litigation financing company surprised the market and its investors and followers on Monday morning with the announcement that it is delaying announcing its end-March results.

Normally such a statement is the precursor of bearish news.

However, it appears to possibly be quite the contrary.

The figures are delayed due to a significant update due concerning one of its larger cases.

So now those results, updated, will be given out sometime next week.

The shares at 530p are holding steady in advance of such news.

Profile 12.02.19 @ 230p set and end-2020 Target Price of 300p * while a follow-up on 26.02.19 @ 330p set no TP.

Polar Capital Holdings (LON:POLR) – funds under management on the rise again

The year to end-March 2020 saw this fund management group report assets under management having fallen 13% from £13.8bn to £12.2bn, which was disappointing.

However, by the end of May AUM was way back higher again and boasting a healthy £14.4bn.

Pre-tax profits fell from £64.1m for the year to just £50.8m – but that is still a very good figure in my opinion. Earnings were 43.5p against 57.8p previously, while the dividend was held at 33p per share – which is both healthy and confidence inspiring.

The group’s strategy of growth with diversification continues.

The shares are currently trading at around the 499p level, but I do feel that they are capable of a good rise before the year is out.

Peel Hunt have upped their ‘buy’ rating from 580p to 620p.

Profile 10.09.19 @ 530p set an end-2020 Target Price of 675p.

And finally…

Wilmington (LON:WIL) – hold tight and wait to buy

Well yesterday’s pre-close trading update has informed us that revenues for the year just ending next Tuesday could be higher than earlier estimates.

The market was given the indication that it could have been between £108m to £113m, while the adjusted pre-tax profits could be between £8.5m and £12m.

It now appears that both sets of figures could be at the higher end of those ranges.

However, that good news needs to be tempered somewhat by the knowledge that there will be a reduction in profitability for the year to end-June 2021, due primarily to less conferences and events being planned for the first half of the year.

Also, there will be purely virtual training courses until face-to-face lessons can resume.

We should be getting a much clearer update on trading come 17 September when the group reveals its finals for the year to end-June 2020.

The shares, which dipped to 124p on Wednesday, close the week at around 137.5p.

But I still see them drifting lower before or when the current year results are assessed.

Profile 22.06.20 set a longer-term Target Price of 175p.

(*denotes Target Prices have been previously attained.)

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