Small-cap round-up: featuring Robinson, Chemring, Helical and more…

The Covid-19 Market Recovery Portfolio + 47.41%

Since its inception on 24 March, this portfolio of 10 share selections has shown a truly market-beating performance over just over ten weeks.

The FTSE 100 Index is up 17.85% in the same time frame.

Next week I will update my views on the portfolio constituents. 

Robinson (LON:RBN) – still more to go for despite 85% gain in two months

Have you noticed the sudden strength of the share price of this packaging group?

In the last week the shares have risen from 88p to the current 104p.

I have no reasons for such an upward move, other than its undervalued merits.

Could a property development group be interested in acquiring the group so as to take advantage of its property development potential?

A developer could make quite a decent turn by doing so, thereby leaving the business in for nothing.

However, the group is due to hold its AGM on Tuesday 30 June, so it could be helped by a good update on current year business.

It feels to me as though there is a lot more to wait for as far as the share price is concerned.

Profile 02.04.20 @ 55.5p set an end-2020 Target Price of 80p*.

Chemring Group (LON:CHG) – ready to break through my target price

The interims to end-April from this high technology products group were excellent. They showed a cracking 37% increase in revenues to £191m for the six months, while underlying pre-tax profits came in at £24.2m, a 144% advance over H1 2019.

Earnings were up 154% at 7.1p per share, conservatively the interim dividend was raised just 8% to 1.3p. Impressively net debt at the halfway stage was down 28% at £60.6m.

The group’s order books are looking good, with big US defence contracts won. Some 95% of the anticipated second-half revenue has been secured, with some already delivered.

Current full-year estimates to end-October are likely to be met. Brokers are looking for some £357m in revenues and £44m pre-tax profits, worth 12.5p per share in earnings.

The group’s shares at 278p have been a good performer of late, especially in the Covid-19 marketplace. They fell to around the 170p level in late March and are now edging slowly up to break through the year’s high of 287p and above.

My target price now looks very achievable.

Profile 20.06.19 @ 177p set an end-2020 Target Price of 300p.

Helical (LON:HLCL) – the quality is forever showing through

Thursday’s final results for the year to end-March 2020 from my long-time favourite

office building developer and investor showed its quality.

In that year it raised its group’s share of net rental income by 13% to £28.5m. Its development profits for the year were £9.9m, which compared with the previous year’s loss of £4.4m.

Its pre-tax profit was £43m, down £0.5m, while its earnings dropped from 35.8p to 32.3p per share.

The net asset value was improved 5.5% to £598.7m, lifting its net assets per share up 6% to 511p.

The group has some very robust finances, with £279m of cash and undrawn bank facilities available to fund the growth of its business.

As Chief Executive Gerald Kaye stated with the results “Helical is primarily a capital growth stock, albeit one with an increasingly important income stream as our redeveloped and refurbished investment assets become let.”

Helical was first featured by me at this time last year at 389p. At that time, I understood that a couple of private equity investment groups were interested in bidding for the company.

The group opened its books to them but may well have been thwarted by management not being prepared to undersell the company. My target was 500p a share, a price which was beaten at above 540p earlier this year. Then Covid-19 broke loose and the shares fell away to a low of 200p.

I have followed closely the growth of this company since 1986 and never been disappointed with its progress.

The group’s shares, which I profiled again just three weeks ago at 286p, with a short-term gain to 350p suggested, touched 400p yesterday morning. Later in the day they slipped back to close at around 379p, at which level they are closing the week.

If the private equity boys come back again or decide to take out some cheaper positions now in the stock, then the shares could well be ready for furthering their recent rise.

Brokers Peel Hunt have put out an ADD recommendation on the shares, raising their sights from 400p to 430p.

Profile 11.06.19 @ 389p set an end-2020 target price of 500p*.

MP Evans (LON:MPE) – a great AGM statement this morning

Wow – an absolutely cracking AGM statement out this morning from this Indonesian palm oil producer.

Analyst Michael Clifton at corporate brokers finnCap is very positive with his current and the next two years earnings estimates.

He goes for 28.1p in earnings for the year to end-December 2020, then 54.6p for next year and a whopping 74.6p for 2022.

The Covid-19 pandemic has had little effect on the company – crops for the first five months of this year are 16% higher than last year, production is 35% higher, while prices are up from $533 per tonne to an average $659.

Couple this with a really strong balance sheet and good cashflows and you can now see why the company has been buying back its own shares.

They closed last night at 575p but a further rise to trade the 700p level very soon is, in my opinion, inevitable. Now a little stronger on the day at 589p

Profile 07.04.20 @ 540p set an end-2020 Target Price of 700p.

Angling Direct (LON:ANG) – good online sales but now waiting for the stores to re-open

The year to end-January 2020 saw this fishing tackle and equipment retail group growing sales by 27% to £53.2m. Some 10 shops were added to its portfolio, then up to 34 and now at 36.

Online sales were up 14% at £25.3m. Since the year end, particularly in this virus period, online has shown an even greater advance, with April alone being up 24%. It has been upgrading its online service and its offer.

Obviously, the retail stores have been closed due to the lockdown, but the group is now preparing itself ready to re-open them as soon as safely possible.

The shares at 61.5p have been quite steady of late. Because of Covid19 I now stretch my target price to end-2021.

Profile 29.10.19 @ 58p set an end 2020 Target Price of 100p.

And finally…

Capital Drilling (LON:CAPD) – looking forward to next week’s AGM statement

After The Mail On Sunday journalist Joanne Hart wrote about the shares last Sunday, the market reaction was a mark-up to 70p.

That 11p gain was impressive and during the week it has succumbed to some profit-taking, cooling back to 63p before closing the week at around that level.

Next Friday 12 June will see this growing mining services group hold its 10am AGM out in Mauritius, where the group has its operational headquarters.

I would just love to be out there right now and then able to attend the meeting but cannot do so because of the lockdown (shame really).

Even so I am hoping that the shares will respond to a favourable AGM report – I am looking for some positive news please.

I believe that the price of gold is well below its potential value and that the record of $1917.90 an ounce achieved in late August 2011 will still be in investors sights.

A higher gold price creates more drilling demand for Capital Drilling.

My first profile target will soon be beaten, while the second may take a little longer but is still very possible within 2020.

Profile 23.07.19 @ 48p set an end-2020 Target Price of 76p.

Profile 22.10.19 @ 61p set and end-2020 Target Price of 100p.

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