Small cap round up featuring NWOR, SRC and SCE

National World (LON:NWOR) – a timely ‘fancy’ and still cheap

A week ago, I noted that I fancied this group’s shares for a quick pick-up – they were then trading at just 24p. In fact, they went even cheaper, down to 22p earlier this week.

Yesterday morning’s Pre-close Trading Update was very bullish, declaring that business has remained robust, with the group expecting to beat market forecasts for the year to 1 January 2022.

Analysts Paul Richards and Brendan D’Souza at Dowgate Capital have estimated the current year to see revenues of £85m (£85m) and adjusted pre-tax profits of £8.1m (£7.6m), worth 2.4p per share in earnings and covering a dividend of 0.5p (nil).

For next year they see £86.2m of sales and £8.9m of profits, generating 2.6p in earnings and a 0.7p dividend per share.
With the group now looking to get back on the acquisition trail the brokers are enthusiastically putting out a price objective of 55p.

The shares touched 32.90p yesterday in busy trading before profit-taking clipped them back to close at 29p with some 1.3m shares traded against the average daily volume of 149,435.

Hold tight.

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

SigmaRoc (LON:SRC) – a classic example of a buy to build

Over the last three months or so the shares of this ‘buy and build’ construction materials group have eased back from their 115p peak to 79p by Wednesday night.

The group yesterday published an Update on Trading showing that group revenues in the 11 months to end November were up 107% at £236.5m.

Analyst Charlie Campbell at the expansive group’s brokers Liberum Capital is looking for it to have see sales for the year to the end of this month of some £255m (£124m), while pre-tax profits will have more than doubled to £26.9m (£12.2m), with earnings up at 4.9p (4.1p) per share.

Going forward he sees £421m of sales, £54.1m of profits and 6.3p per share of earnings for 2022.

Liberum rate the shares as a ‘buy’ with a price objective of 125p.

As far as I am concerned, I really feel very confident in this growing group’s management and its ability to handle further expansion both organically and by acquisition.

The finals for this current year will be declared in March next year, however I anticipate further corporate news in the meantime and rate the shares, now 82.5p, as a very firm hold.

(Profile 04.09.20 @ 49p set a Target Price of 65p)

Surface Transforms (LON:SCE) – letting the price brakes off

Carbon ceramic brake discs may sound very boring to a lot of private investors.

However, this near £100m company is making solid in-roads into the supply of its specialised products.

The end of this month could see it losing some £4.2m, compared to its near miniscule revenue of just £2.7m.

But next year will mark a significant change in the company’s fortunes.

Analysts Raymond Greaves and Michael Clifton at brokers finnCap estimate sales in 2022 of £14.3m helping to turn it around into a healthy £2.4m pre-tax profit, worth 1.6p per share in earnings.

Yesterday morning the group announced that it had been selected as a tier one supplier for the launch of three cars from an existing customer, known as OEM 6.

The group’s discs will be fitted as standard to both axles on all three cars. That win could be worth over £45m to Surface Transforms, taking its current order book up to over £115m.

More contract wins are anticipated in the next year.

The group’s shares have been up to 81p each, peaking in March this year. Now at 54p they could well be able to reclaim that price level as more orders are revealed in 2022.

Hold tight.

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

(Profile 08.01.21 @ 50p set a Target Price of 65p)

Totally (LON:TLY) – we can see you now

I like the look of this healthcare services group’s latest acquisition – Energy Fitness Professionals, which is a corporate fitness provider.

The £1.3m acquisition is a very useful extension to Totally range of services, providing significant cross-company advantages for the expanding group’s public and private customers.

This will, no doubt, be just a foretaste of more of the group’s buy and build strategy.

Analyst Ian Jermin at Allenby Capital is looking for the company to score £122.9m (£113.7m) of revenue in the current year to end March 2022, helping to push the pre-tax profits up from £2.5m to £3.1m, worth 1.81p (1.49p) per share in earnings and jacking the dividend up 50% from 0.50p to 0.75p per share.

The build-up of this group has been sensible and steady to date, but now we could well be ready to see much more corporate activity as the company’s management progresses its strategy.

I am convinced that the shares, now at 34.25p, will be a good performer next year.

(Profile 12.03.20 @ 12p set a Target Price of 18p)

(Profile 25.06.21 @ 38.5p set a Target Price of 50p)

Worsley Investors (LON:WINV) – plodding gently along awaiting cinema check-out

Blake Nixon’s investment vehicle reported net assets per share of 42.84p (41.55p) for the first half to end September.

The cinema complex in Curno in Italy has maintained its value at €9.6m, unencumbered and producing €915,000 pa rental income. It is still up for sale and I think it should raise more than that valuation.

In its investment portfolio, the company has holdings of some 4% in Smiths News, stakes in Northamber, Shepherd Neame and ten other companies, as well as a chunk of Hurricane Energy July 2022 7.5% bonds.

The portfolio, which cost £4.09m and has a current value of £6.46m, is considered well positioned.

The company’s shares are a good hold at the current 29.60p.

(Profile 19.03.21 @ 25.5p set a Target Price of 32p)

And finally ……

Trackwise Designs (LON:TWD) – do not be tempted

I have always been pleased that my readers could well have made good profits on trading this printed circuit technology group’s shares. They have been as high as 394p.

However, from quite early on I started to realise that the group never performed to expectation and that its shares were overpriced.

In fact, I called them a distinct sale on several occasions over the last couple of years, finding it very difficult to justify the market’s valuation of the shares.

Yesterday, against the recent average daily dealing volume of 19,120 shares, I noticed that there were well over 650,000 shares traded.

They collapsed 36% to close at around 92.5p.

The news of a £6m Placing of 7.5m new shares at just 80p each, hit the market for six.

(Profile 10.04.19 @ 92.5p set a Target Price of 150p*)

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