Small-cap round-up: featuring Volution, Braemar Shipping, PCI-PAL and more…

5 mins. to read
Small-cap round-up: featuring Volution, Braemar Shipping, PCI-PAL 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…

Volution Group (LON:FAN) – excellent first half gets price running

Thursday’s announcement of the interim results to end-January was very well received.

They showed sales up almost 11% at £131.7m, adjusted pre-tax profits were 27% better at £26.1m, with earnings at the halfway up 23% at 10.1p per share.

This international designer and manufacturer of energy efficient indoor air quality solutions now expects its full-year figures to be even better than the market’s previous expectations.

The group’s brokers Liberum Capital upgraded their ‘buy’ views on the group on these excellent results. 

For the year to end-July they go for £253m (£217m) of sales and £49.2m (£31.3m) of profits, worth 19p (12.1p) per share in earnings. And what is more they predict a 5.7p per share dividend being declared for the year against nil last time.

Understandably the brokers also increased their price objective from 335p to 377p – which undoubtedly helped to spur the shares some 45p better to close last night at 359p.

This group is now looking very useful, with both organic and acquired growth lifting its sights over the next couple of years. 

Stay with them.

(Profile 23.05.19 @ 174p set a Target Price of 250p*)

(Profile 25.02.21 @ 301.5p set a Target Price of 350p*)

Braemar Shipping Services (LON:BMS) – time now to pick up some cheap stock

Well now we know – the group’s management is now going to focus more upon its shipbroking division. Understandably so, because it is doing a lot better than had been expected on its Dry Cargo and its Sale and Purchase side.

The group is also concentrating on reducing its debt, the proceeds from the sale of half of its holding in Aqualis/Braemar, a net £6m, have helped to lower it to just £10m at the end of last month.

Analysts Guy Hewett and Michael Clifton, at the company’s brokers finnCap, are suitably impressed with current progress and have raised significantly their price objective for the shares from 205p to 281p.

The shares have been up to 258p a week or so ago, but have reacted to some profit-taking, clipping them back to close the week at around the 215p level. 

Considering that the brokers are estimating that the year to end-February will have seen revenues of £109.9m produce some £9.4m of adjusted pre-tax profits, worth 21p per share in earnings, that price level makes the shares look incredibly good value.

(Profile 05.12.19 @ 185p set a Target Price of 250p*)

(Profile 20.05.20 @ 99p set a Target Price of 150p*)

PCI-PAL (LON:PCIP) – paying up big time

Well, this little group’s shares have performed extremely well in just one month, advancing from 76p through the 95p target price and up to 100p before easing back to close the week around the 97p level.

Now valued at some £57m, this Cloud-based PCI compliant payments solutions for call centres is still loss-making for this year to end-June (-£4.2m est.) and brokers finnCap estimate another £1m loss next year.

However, it has massive upside to secure profits over the next two to three years or so.

I spoke to the CEO and the CFO earlier this week and was impressed by their determination – although I just wish that they would use their ‘paper’ at these higher levels to just acquire one or two extra building blocks for their growth strategy.

(Profile 11.02.21 @ 76p set a Target Price of 95p*)

RBG Holdings (LON:RBGP) – full marks Foulston

There are times when it is not just the figures that back up a liking for the shares of any particular company, but also the ‘feeling in your water’.

It is just how I saw the potential for CEO Nicola Foulston’s legal services group when I profiled it just over a month ago.

Well earlier this week the shares burst through my price objective, hitting almost 103p before some profit clipping took them back to close the week at around 93p.

I sense a bigger game plan at hand with this group, one which could well see it expand impressively over the next few years.

There is no rush except for getting into the stock on any dips.

(Profile 05.02.21@ 80p set a Target Price of 100p*)

Kape Technologies (LON:KAPE) – crusading performance

On Monday of this week this cybersecurity group announced an immediately earnings enhancing acquisition.

Paying $149m net cash the group is taking over Webselenese, which is a digital global platform offering consumer privacy and security to millions of users.

The deal will give Kape one of the broadest audiences and is yet another step in its strategy to become a world leader in its marketplace.

Estimates for the current year to end-December are now for $200m of sales and pre-tax profits of $64.6m, worth 25.4c per share in earnings.

This week the group’s shares have responded well, moving up from 191.5p to 254p by the close last night.

These shares could easily double in value over the next two years, if not before.

(Profile 21.12.20 @ 172p set a Target Price of 215p*)

DWF Group (LON:DWF) – a lot more to go for yet

This legal services group has made a bold and clear decision to rationalise its Australian advisory services operations, casting off 85 employees and 14 lawyers in the process. 

At the same time its latest Trading Update for the year to end-April 2021 looked positive, with brokers Zeus Capital now going for £339m revenues and £27.3m pre-tax profits, worth 6.7p in earnings and covering a 4.7p dividend per share.

The group’s shares, which have been floating between 77p and 86p in the last month, closed last night at around the 84p level.

Offering such a good yield they offer some real upside, I remain very confident about my price objective.

(Profile 01.06.20 @ 67p set a Target Price of 100p)

(Asterisk* denotes that Target Prices have been attained since profile publication)

What to watch out for next week

Next week will be very busy with corporate announcements.

Below I list out companies worth looking out for in the plethora of statements.

16.03  Costain Group (LON:COST) finals

16.03  Haworth Group (LON:HWG) finals

16.03  STV Group (LON:STVG) finals

16.03 The Simply Biz Group (LON:SBIZ) finals

17.03  Centaur Media (LON:CAU) finals

17.03  Kape Technologies (LON:KAPE) finals

17.03  Tribal Group (LON:TRB) finals

18.03  Amino Technologies (LON:AMO) AGM

18.03  Capital Ltd (LON:CAPD) finals

18.03  Idox (LON:IDOX) AGM

18.03  Restore (LON:RST) finals

18.03  Sureserve Group (LON:SUR) AGM

18.03  The Gym Group (LON:GYM) finals

Comments (1)

  • tolle says:

    Very interesting review of small caps (as always). My concern with rosenblatt is that I do not believe the high dividend is covered, so why pay it, when they seem to have much better expansion options. So I feel that for this stock , the waters are “muddied” .

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