Small-Cap Round-Up: featuring Stobart, Vitec, Codemasters and more…

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Small-Cap Round-Up: featuring Stobart, Vitec, Codemasters 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…

Although the Stobart Group (LON:STOB) continues to suffer from the occasional bout of poor financial press about pay and bonus schemes, I am not at all dissuaded from my view that the shares have a long way to go yet.

However, there was one piece of comment that could not be distorted – which is heartening for investors.

In the travel section of the latest edition of the Which? Magazine, it notes comments and views upon the comparison of Stansted Airport against the Stobart-owned Southend Airport.

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“Stansted Airport has long been the budget flights capital of the UK thanks to Ryanair flying more routes from there than anywhere else.” The Travel Guide goes on to state that “the budget carrier has now landed just down the road in Southend Airport, with flights to Ireland, Italy and Portugal launching.”

It goes on to ask, “Should you swap Stansted for Southend on your next budget holiday?”

When comparing the two airports, London Southend comes out ahead on all points – security queues, bag-drop queues, seating, toilets and the range of shops and food outlets – rating the customer score of 84% against Stansted at just 44%.

The London travel market is the largest in the world, making it difficult for the main airports around the city to cope with the millions of passengers they attract each year.

However, for passengers, Southend is one of the best airports near London for avoiding crowds and for ease of travel, with six trains every hour at peak from London Liverpool Street station.

Gradually the number of passengers flowing through the airport is growing – it handled 1.5m last year. I believe that its target of 5m a year will be easily achieved by 2023.The company has been investing in the expansion of the airport to accommodate more than 10m passengers.

The shares at 117p are undervalued and my target price is 170p.

***

I was interested to note that the Madrid-based Alantra EQMC Asset Management have recently added to their client funds’ stake in Vitec Group (LON:VTC), increasing their holding from 15.09% up to 16.55% of its equity.

Employing over 1,700 people in 10 different countries, the Richmond-based Vitec, which enables the capture and sharing of exceptional content, specialises in imaging, production and creative solutions for its clients.


The company’s Interims are due to be announced on Thursday 8th August.

Its shares, at just £10.80, are looking undervalued and capable of moving a lot higher, hopefully the figures and statement will help such a move.

***

Renold (LON:RNO), suppliers of industrial chains and related power transmission products to its customers across the world, is having some problems.

It adjourned its AGM from the 17th July to an as yet to be announced date, which should be no later than the end of September.

Shareholder advisory company Glass Lewis recommended shareholders vote against the Renold remuneration report, following financial errors having been discovered in the last three year’s company accounts.

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It is suggested that profits could well have been overstated by some £1.8m. I gather that PwC have been called in to carry out an internal audit investigation.

The company’s shares could well languish around the current 25p until the results are known and the company comes clean on what happened.

***

The news that Equals Group (LON:EQLS) (which is the new name for FairFX) has done a tie-up with Citi Commercial Bank, seems to have been missed.

The benefits of the partnership should be seen through faster settlement and reduced transaction costsfor its customers. Citi, through its WorldLink service, offers local settlement and clearance capabilities in over 90 countries, significantly increasing the number of currencies it offers clients.

Equals shares were up to 129p and still well up on my mid-February feature at 89p.

***

Award-winning video game developer Codemasters Group (LON:CDM) has decided to change its previously announced release date for GRID, its racing game, from mid-September to 11th October.

The new date will be closer to the release of Stadia, which is Google’s cloud gaming service. GRID will be featured as a Stadia launch title.

Those that know a thing or two about the games sector suggest that this sensible move could prove to be very beneficial to Codemasters.

Its shares, now at 221p, are expected to react well from such a peak release season launch.

***

On the day that I profiled the investment attractions of the property group Harworth Holdings (LON:HAR) it was disappointing to note that Peel Holdings, through its Cayman Islands company Goodweather Investments, had reduced its stake from 25.99% to just 21.48% of the company’s equity.


On the same day, however, one of its larger holders, Nicholas Roditi, announced that he had increased his stake from 7.58% to 10.16%.

Whoever is playing in the stock, it does not alter my opinion about the shares, now 133.5p, I retain my 170p target price.

***

Liontrust Investment Partners have been adding to their holdings in The Simply Biz Group (LON:SBIZ), increasing their stake in the fintech and support services business from 9.71% to 10.49% of the equity.

For the first half to end-June the trading update from the company on Thursday reported continuing growth with a 20% increase in revenue and 30% up in EBITDA.

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The interim results are due on Tuesday 10th September.

Now trading at around 203.5p the shares, which peaked at 245p since my early April article featuring the company at 208.5p, are looking cheap again and obviously others are agreeing with that view.

***

The half-year results from private bankers Arbuthnot (LON:ARBB) were good, with pre-tax profits rising from £1.2m to £2.9m.

Chairman and chief executive Sir Henry Angest noted that it was a good start to the year. The company has raised £39.5m of new capital and grown its existing businesses, whilst also continuing to deliver on its plans to diversify.

In a move to improve the group’s returns it expects to complete the purchase of a £266m residential mortgage portfolio on 8th August.

This report impacted the shares positively, and now at £13.15 they should start to edge gently ahead. My £17 a share target price remains intact.

***

The recent trading update from Carrs Group (LON:CARR) confirmed that its August year end should see the company meeting its expectations and that is despite the Brexit uncertainty in its agricultural division, whilst the engineering interests are doing much better.

The shares, now 149p, and trading on just 10 times current year earnings, may well edge higher ahead of its finals being announced in early November. My target price of 200p is maintained.

***

This week’s finals from the award-winning clothing retailer and lifestyle brand Joules (LON:JOUL) reported that sales were up 17.2% at £218m, whilst its statutory profits before tax were 14.9% at £12.9m. Earnings for the 52 weeks ended 26th May were 17.3% up at 11.6p.


In a very challenging environment for UK retailing Joules has performed impressively and already this current year is giving management a pleasing showing.

The company is looking forward to more success both in the UK and internationally. Its active customers increased by 8% to a substantial 1.5m. It now has a very good online business, operates 125 stores and its wholesale business has over 2,000 stockists worldwide.

Brokers Peel Hunt have a 400p target price and rate the shares, now 246p as a ‘buy’.

***

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Driver Group (LON:DRV), the global professional services consultancy company to the engineering and construction sector, currently has a major share buy-back programme underway.

It has approval to spend up to £500,000 on purchasing no more than 1.25m shares, or up to 2.32% of the group’s equity.

It acquired around 100,000 shares this week at around 57.5p each and obviously still has more to buy. For a while, whilst the programme is ongoing, I see a slight brake on the share price. However, I still rate the shares, now 60.5p, as a very attractive investment, with my target price at 85p.

***

Specialist bank PCF Group (LON:PCF) has announced a very useful board appointment this week.

Accountant Marian Martin, the new non-executive, is an experienced risk manager and was an executive director of Virgin Money during its high growth and development stages.

PCF is at a high growth stage itself and this lady’s ability will come in very handy as the ‘challenger’ banking outfit forges ahead.

Its shares at 28.5p offer significant upside potential, in my view.

 

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