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…
Robinson (LON:RBN) – surplus property sales will add sparkle
Brokers finnCap have this week increased their price objective for this plastic and paperboard packaging group. Based upon ‘a sum of the parts view’ they are now looking for 196p.
The year to end-December saw sales up from £35.1m to £37.2m, with adjusted pre-tax profits up fractionally from £2.3m to £2.6m, and earnings of 13.5p against 12.3p previously. However, the dividend was increased from 2.5p to 8.5p per share, reflecting the addition of the held back final from 2019.
Readers may well remember, when I profiled this Chesterfield-based company last year, that I made specific mention of the group’s surplus property.
Well at last moves are afoot.
It appears that progress has been made towards selling some of the surplus property in Chesterfield.
Subject to contract, heads of agreement, with a gross value of £3.4m have been signed for two plots of land which have a book value just under £1m.
Furthermore, subject to receiving the necessary planning approvals, further sales are expected to be achieved in the next two years.
The brokers are estimating £48.7m sales this year and £51.1m next year, generating £2.7m then £2.9m in pre-tax profits, worth 14.2p then 15.2p per share in earnings. The long-term dividend payment of 5.5p per share should remain for the next two years.
We have had an excellent ride in these shares to date, more than trebling to a 179p peak.
Yesterday they eased back to 150p, at which level they still look very reasonable value.
(Profile 02.04.20 @ 55.5p set a Target Price of 80p*)
Tremor International (LON:TRMR) – teasing Biden’s boys in?
Despite it normally being the weakest quarter of the year for this programmatic advertising platform the company has indicated that Q1 will see net revenue of $55m-$60m, up between 71% to 87%.
Revenues are estimated to rise for this year from $211.9m to $251.1m, with pre-tax profits of $53.5m against the 2020 figure of $30.8m.
The year to end-December 2022 could see $279m of revenues, $72.2m of profits, with earnings rising from an estimated 30.5c this year to 40.4c.
The buzz is that the US quote is likely to be achieved within the next three months.
Analysts Michael Hill and Lorne Daniel at finnCap have now increased their price objective from 1,000p to 1,200p a share.
The shares touched 762p yesterday morning, before sliding back to 696p.
A speculative punt on further upwards price action ahead of the US listing.
(Profile 16.01.20 @ 156p set a Target Price of 235p*)
Luceco (LON:LUCE) – brokers going for 330p
The LED lighting, wiring, and portable power products group enjoyed a magnificent year in 2020.
On sales up just 2.4% at £176.2m, it reported pre-tax profits of £33.6m, up 96.5%. Earnings leapt 116.9% from 8.3p to 18p per share, while the dividend payment was 168.6% better at 6.2p per share.
The current year will not see such dramatic increases, due to added raw material and freights costs. Even so, the management is confident of further revenue and profit progression going forward.
The shares, currently around 273.5p, still have upside potential, with another 20% being possible, so hold tight.
(Profile 15.06.20 @ 96.1p set a Target Price of 125p*)
MP Evans Group (LON:MPE) – really oiling the wheels
This Indonesian sustainable palm oil producer is beginning to bring home the goodies.
The year to end-December 2020 saw sales of $174.5 ($119.3m) and pre-tax profits of $28.8m ($10.7m). Earnings showed a massive leap from 7.8c to 38.1c for the last year.
Estimates for sales this year’s and for next are $211m and $215m respectively. Profits of $39.6m then $44.8m are estimated, earnings of 52.5c and then 60c, covering 42c then 45.5c per share in dividends.
Now we can understand just why the group’s management decided that cash in their bank would be better used in a big share buyback programme.
The shares hit 670p on Wednesday lunchtime before ending the week at 645p.
I see them advancing through my price objective, yet again, before going even higher over the next few months.
(Profile 07.04.20 @ 540p set a Target Price of 700p*)
Strix Group (LON:KETL) – now steaming away
Despite slightly lower sales in 2020, £95.3m (£96.9m) the kettle control systems maker actually managed to increase its adjusted pre-tax profits by 2.4% at £30.9m. Earnings were 14.9p and the dividend was 7.85p per share.
There is now a strong five-year growth strategy underway, aiming to see sales double and profits jack up by at least 70% in that timeframe.
Zeus Capital is going for £122.1m of sales this year, with £34.6m of profits, 15.7p of earnings and a dividend of 8.7p per share.
For next year the broker sees £135.5m of sales, £36.5m profits, 16.5p earnings and 9.1p dividend.
Clearly these shares are looking good value. After peaking at 295p last Tuesday, they have since come back to 273.5p.
(Profile 31.12.19 @ 196p set a Target Price of 250p*)
(Asterisk* denotes that the Target Prices have been attained since profile publication)
What to watch out for next week
Next week will be relatively busy with corporate announcements.
Below I list out some of the companies worth looking out for in the mass of statements.
29.03 Aukett Swanke Group (LON:AUK) AGM
29.03 Ten Entertainment Group (LON:TENG) Finals
30.03 AG Barr (LON:BAG) Finals
30.03 MPAC Group (LON:MPAC) Finals
30.03 Pressure Technologies (LON:PRES) AGM
30.03 S&U (LON:SUS) Finals
31.03 Topps Tiles (LON:TPT) Trading Update
31.03 Tricorn Group (LON:TCN) AGM