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 shares…
Totally (LON:TLY) – Insourcing side can take off like a rocket
Last Tuesday’s results for the year to end-March showed a significant advance for the healthcare services group. Despite the Covid-19 hassles it showed a 7.4% increase in revenues to £113.7m and a substantial turn-around from a £3.4m loss to a pre-tax profit of £0.1m.
The Urgent Care side saw a big 9.2% leap in revenues to £105.4m, and with it margins improving to 17.8%. It has recently secured a good number of contract extensions.
The Planned Care revenues fell 37.6% to £5.2m. However, it increased its margins to 23.7%. It was hit badly by the pandemic, but it has now just got underway on its delayed community dermatology contract.
The recently (2019) established Insourcing side increased its revenues 202% to £3.1m – and in my view that is going to show even greater strength over the next few years. A number of its contracts were on hold, but they are now progressing in providing elective care for various hospitals.
The group ended the year with a strong increase in cash of £14.8m (£8.9m).
An acquisition or two must surely be on the cards now, which, hopefully, will be earnings accretive.
This is a well-run machine that now has some big upside.
Analyst Ian Jermin at Allenby Capital sees profits rising to £3.1m this year, then £4.1m in the 2022/23 year, and up to £6.1m for 2023/2024.
Jermin has put out a ‘fair value’ of 65p on the group’s shares, which are now 38p.
Might be a good time to add to holdings, otherwise just hold very tight.
(Profile 12.03.20 @ 12p set a Target Price of 18p*)
(Profile 25.06.21 @ 38.5p set a Target Price of 50p)
MPAC Group (LON:MPAC) – going well over the water
Fast moving consumer goods companies in the healthcare, pharmaceuticals, food and beverage sectors are the focused markets for this high-speed packaging and automation systems group.
Its list of top name customers, amongst so many others, includes, Nestle, GlaxoSmithKline, Procter & Gamble, Unilever, Philips, AstraZeneca, Bausch & Lomb, Diageo and Kellog’s.
Yesterday’s trading update declared a continued momentum and a strong order book for the first six months of this year.
The group has made big progress on integrating the US based Switchback business, which is so complementary to MPAC’s own UK operations.
Analysts Mike Jeremy and Hannah Crowe at Equity Development have estimated a sales advance for this calendar year from £83.7m to £95m, with pre-tax adjusted profits improving from £6.3m to £7.5m, taking earnings up to 32.3p per share.
For 2022 they see £100m sales and £8.5m profits, worth 36.3p in earnings. They put out a ‘fair value’ of 600p on the shares, which are now 480p.
The group’s interim results will be announced on Thursday 2 September.
Still more to go for.
(Profile 19.12.19 @ 182p set a Target Price of 235p*)
Avingtrans (LON:AVG) – broker raises price objective to 456p
Yesterday’s trading update from this industrial engineering mix of companies confirmed market expectations.
The finals to end-May this year are due to be announced on Wednesday 29 September.
David Buxton at finnCap is expecting revenues of £98.7m (£113.9m), while adjusted pre-tax profits should come out stronger at £7.4m (£5.9m), generating earnings of 20.9p (16.9p), easily covering a 4p dividend per share.
A moderate advance is looked for this year to £101m sales, £8m profits and 22.8p earnings with a 4.5p dividend.
The brokers raised their price aim from 416p to 456p a share, compared to the current 417p.
I am sure that further good news is possible soon from this enterprising group.
A firm hold.
(Profile 04.11.20 @ 260p set a Target Price of 325p*)
Ten Entertainment Group – Interim trading update led to upgrade
The re-opening response for this bowling alley and family entertainment centres group has been very encouraging.
Since re-opening on 17 May the total 46 centres have shown an overall 22.5% sales growth, when compared to 2019.
Back into profit and cash generation again, that certainly is good for the group.
Analyst Anna Barnfather at Liberum Capital has increased her price aim to 325p, against 248p currently.
For the full year to end-December it could see sales rise from £36.3m to £57.6m, with a substantial drop in losses from £19.1m in 2020 to just £4.5m this year.
She goes for a rebound next year to £95.4m sales, £14.8m profits, earnings of 17.5p and a dividend of 5.5p per share.
We will have to wait until September for the interims to 27 June being announced.
In the meantime, Liberum rates the shares as a ‘buy’ noting that the group was now back in the ‘fast lane’ – that makes the shares a good hold right now.
(Profile 02.10.20 @ 135p set a Target Price of 170p*)
K3 Capital (LON:K3C) – a natural fit
Raising £10m through a placing of new shares at 340p helps to fund the £12.6m acquisition of the Knight Corporate Finance and Research and Development businesses – a natural fit for this mergers and acquisitions, corporate recovery, forensics and tax advisory group.
Brokers finnCap now see the shares rising to 477p against their previous aspiration of 449p. Their analyst Nik Lysiuk likes the group’s acquisition strategy.
For the year to end-May his estimate is for revenues to rise from £15m to £46m, with profits of £13.9m (£6.5m), earnings of 16.4p (12.2p) and a 9.1p (7.5p) dividend per share.
The current year could end with £57m of sales, £17.7m profits, nearly 20p of earnings and a handsome 12p dividend per share.
I really like the way that this group is building up and it obviously has high aims, perhaps even to doubling up again in profits and earnings.
The shares at 357p still have strong upside potential.
(Profile 21.10.20 @ 147.5p set a Target Price of 200p*)
Some Quickies…
Polar Capital Holdings (LON:POLR) – yesterday this specialist active asset management group announced that it had increased the value of its assets under management (AUM) by 9% in the quarter to end-June. They now have £22.8bn (£20.9bn). Shares are steady at 884p. (P 10.09.19 @ 530p TP 675p*)
Circle Property (LON:CRC) – Cenkos Securities analyst Selwyn Jones is keen on the shares of this commercial property investment group. He rates the shares, now at 212p, as being very cheap, rating them as a ‘buy’. He estimates a net asset value of 274p a share. (P 19.11.19 @ 206p TP 235p*)
Enteq Upstream (LON:NTQ) – Oh what a flop this has been since I first profiled the downhole oil and gas tooling equipment group. The shares have just never performed as I had anticipated, and I can only apologise for my error in assessment. Brokers finnCap have now been taken on as the ‘shop’ and they have put out a price objective of 40p on the shares, now 17.75p. Could it be about to show punters a quick turn? (P 12.11.19 @ 28p TP 50p)
Sureserve Group (LON:SUR) – This leading provider of compliance and energy services has just secured a £36m PA Housing contract, starting next month and going on for the next eight years. The group’s shares touched 84p on the news, but closed the day at 82p, up 8.6% in reaction. (P 14.01.20 @ 36p TP 50p*)
(Asterisk* denotes that Target Prices have been achieved since profile publication)
Profile company results, meetings and updates expected within the next two weeks:
| Tue 13 | Belvoir Group (BLV) | Webinar |
| Solid State (SOLI) | Fins | |
| UP Global Sourcing Hldgs (UPGS) | AGM | |
| Wed 14 | Kromek Group (KMK) | Fins |
| Thu 15 | Helical (HLCL) | AGM |
| Redcentric (RCN) | Fins | |
| Renewi (RWI) | AGM | |
| Tue 20 | Begbies Traynor Group (BEG) | Fins |
| Centaur Media (CAU) | Ints | |
| Gateley (Holdings) (GTLY) | Fins | |
| One Media IP Group (OMIP) | Ints | |
| SDI Group (SDI) | Fins | |
| Wilmington Group (WIL) | T/U | |
| Wed 21 | Bloomsbury Publishing (BMY) | AGM |
| Norcros (NXR) | AGM | |
| Thu 22 | Petards Group (PEG) | AGM |
| Fri 23 | Premier Foods (PFD) | AGM |