Small cap round up: featuring StatPro, Cohort, Helical and more…

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Small cap round up: featuring StatPro, Cohort, Helical 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…

Stat-Pro (LON:SPRO)

Well, Friday morning’s news was very pleasing. This data and support services group for the fund and asset management sector has just received and agreed a very attractive 230p a share cash bid from Confluence, a private US based company in a very similar business.

That bid was 55% higher than StatPro’s closing price on Thursday.

I profiled the company way back in early May at 130p, with a target price of 185p.

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Since the profile the shares have been as low as 122p and as high as 149p before the bid.

I am absolutely delighted at this price and the US company’s generosity should be taken advantage of so that StatPro’s investors can reinvest their cash elsewhere in the market.

Cohort (LON:CHRT)

The defence market supplier announced a very bullish AGM statement last Tuesday.

The company indicated that the current year had progressed well to date. With some 76% of the current year’s externally projected revenue already booked into the order book, that compares very well with just 60% at the same time last year.

That order book is now standing at around £210.9m and there is even more in the prospect negotiation pipeline.

The group is rated at well below the P/Es of its peers, by perhaps around a third. What is more, the sector is alive with bid rumours and activity – a la Cobham and the US bidders Advent International.

The shares, now trading at around the 530p level, are looking to be very good value. My early August profile was at 446p, stating a 607p target price – I am confident that they will get there.

Eddie Stobart Logistics (LON:ESL)

Oh my goodness, it just seems to go from bad to worse with this company.

First of all, there are ‘accounting’ errors, then executives get sacked, and a suspension of dealings is called for until new accounts can be drawn up giving a true picture of affairs.

To cap all of that, then one of the company’s biggest shareholders declares an interest in bidding for the company – whether that is out of embarrassment from being involved in the company’s quoted rebirth or not I cannot yet discern.

Still more to come, when the company announced earlier on this week that it is taking some time to sort out the figures and their potential impact in the first half of the year.

Suddenly out of the woodwork comes the former Stobart boss Andrew Tinkler, who says that he is preparing a bid for the transport company.

Is a cut-price bid war about to ensue?

If so, will that be good or bad news for fund manager Neil Woodford and his group, who are holders of some 23% of the suspended shares.

Is this turning into a cliff hanger?

We can do nothing other than just await further events.

Helical (LON:HLCL)

I was impressed to see that the Prudential group of companies now owns 6,036,551 shares in my very long-time favourite office and warehouse property developer and investor.

That is a declared 5.03% stake in the company, which I still reckon is high up on a potential bidder’s list. We understand that a couple of large private equity players eyed the group very seriously earlier this year.

In early June the company reacted to press speculation with a statement that it had received more than one unsolicited approach from different parties, with proposals being made at prices below the company’s value.

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In the best interests of its shareholders it has been ‘open to engage’ with potential offerors, including allowing due diligence to be conducted.

The news that the Pru is now a sizeable holder was paralleled by a 12p rise in the shares to 371p.

I almost napped the shares for a takeover when I profiled the company way back in early June, when the shares were 389p – setting a 489p to 500p target price on a bid. My view has not changed.

Petards Group (LON:PEG) 

Well, the first half to end June has not fared so well for this surveillance systems company.

The order book, at £15m, is down £4m on the same time last year. Good rail and traffic product revenues were set against lower defence activity.

Revenue was down 8% to £8.9m while pre-tax profits collapsed from £514,000 to just £216,000.

Even net debt of £0.7m compares to net cash of £1m six months earlier.

The way the shares have performed recently should perhaps have been a pointer. However, on those results they closed down 2p at 17p.

Despite this poor interim performance, I do consider that the shares have recovery potential. Its products are much required in its various markets and, if the company’s valuation gets too cheap, I reckon that it will attract an outside bid, that is if the company does not get taken private.

Morgan Sindall (LON:MGNS)

Brokers Peel Hunt have reiterated their ‘buy’ recommendation on this leading UK civil engineering, construction and regeneration group.

The brokers suggest that worries over the company’s fit-out side are overdone. They state that the company’s own corporate actions will help to cushion any impact.

With estimates of a full-year pre-tax profit of £86m they have increased their target price from 1,600p to 1,700p.

The shares are currently trading at around the 1,230p level against my mid-May profile price of 1,300p.

I am happy to keep my target price at 1,600p.

Trackwise Designs (LON:TWD)

The printed circuit technology specialist pushed out some very disappointing interim results earlier this week.

In the six months to end June its revenues fell from £1.85m to £1.55m, producing a pre-tax loss of £87,000 compared to a £71,000 profit previously.

It seems that it is still experiencing tough market conditions, so the full-year figures will not be good.

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I am very sorry to say that these results and statement on its current year have been awful.

I profiled the company way back in mid-April at 92.5p, since when the shares have been up to 150p in early August. Now they are just 77p and I would cut and run very quickly.

Forterra (LON:FORT)

I was interested to note that recently AXA Investment Managers have almost doubled their share stake in this leading UK brick and masonry products manufacturer.

Now the managers have a whopping 10,069,891 shares, representing 5.02% of Forterra’s equity.

The company showed its half-timers earlier this month. Despite ongoing Brexit hassles in the economy, it managed to increase its revenue by 7.6% and producing a 1.2% improvement in pre-tax profits.

My end May profile featured the company when its shares were standing at 286p. They have since been up to 306p and down to 251p, now they are trading at 284.5p.

This is a cheap stock and my target price is maintained at 350p. 

Manolete Partners (LON:MANO)

At the AGM on Friday the specialist insolvency litigation financing company reported a strong development in the pipeline of new cases in which it is investing.

In the year to end-March it had invested in 60 new cases, and in the financial year to date it has completed 18 cases, which compares with just 12 completions in the first half of last year.

The shares, at 514p, are looking much stronger of late, especially after the Burford debacle. That must be pleasing for the Soros funds group who recently took advantage of cheaper stock and added to their holdings.

Having profiled the company twice in February this year, at 230p then again at 330p, I am still sitting back on my laurels. They touched 620p in late May and could well get back up there again.

Springfield Properties (LON:SPR)

Last Tuesday this £106m Scottish housebuilding group announced a cracking set of annual results for the year to end-May.

They showed that revenue was up 36% at £190.8m, upon which the company revealed a stonking 69% improvement to £16.5m, with earnings leaping 29% to 13.92p per share and an increase in dividend of 18.9% to 4.4p per share.

This group, which has an average selling price of £227,000, has expanded its land bank to 15,938 plots, which compares with 12,476 at the same time last year.

Total completions in the year were 23.6% higher at 952 homes. Gross margins have improved in both the private housing and the affordable housing divisions, while its village developments are progressing apace.

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Net debt reflected the costs of the acquisition of the Walker Group, almost doubling from £15.3m to £29.6m.

The group is continuing to see good growth in its business, especially with the village developments creating big appeal as they get more established.

It is well worth noting that the day after the results a non-executive director made a maiden purchase 20,000 shares at 110p each.

The shares have been a reluctant performer since my mid-March profile on the company featuring them at 114p, since when they drifted to a low of 97p in late August, before rising ahead of the results to around the current 111p level.

They touched 138p in May 2018 and I consider that they will be back up there again within the next year or so – my new target price is 140p. 


On Tuesday of next weekthis finance groupwill be announcing its half-year results.

At the beginning of August Chairman Anthony Coombs commented on the group’s trading and outlook. He stated that trading in the first half had seen the continued and consistent growth that has been shown by the group over the last ten years:

“Transaction volumes and quality improvement, particularly in our motor finance business, are expected to be reflected in the pace of profits growth over the full year.”

I hope that the current tricky trading environment for others in its sector will not become evident with S&U, but the interims statement will no doubt update us.

Having profiled the company less than a month ago at 2,010p I am pleased with the current share price performance – they are now at 2103p.

My 2,500p target price is maintained.

And finally…

Surface Transforms (LON:SCE) – are the brakes at last coming off?

It would appear that something is going on in the background at this ceramic brakes manufacturer.

As I outlined in Thursday’s profile on the company, there is a real possibility that its orderbooks will be growing big time over the next couple of years. Sufficiently enough to switch it from development losses into production profits.

An indicator that the company is feeling confident of its prospects was reflected in Thursday’s announcement that it will be holding a Capital Markets Day for investors, media, analysts and other interested parties at the company’s Liverpool offices on Wednesday 30 October 2019.

The day will cover a tour of the site, including the new OEM production cell one with the new furnaces and other equipment recently installed. Management will also provide a presentation and guests will have the opportunity to meet with Surface Transforms directors, staff and senior management.

It is still incredibly early in its development and its shares, now at 24.5p, are extremely speculative.

I really get a very good feeling about this company.

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