Small Cap Round Up: featuring Xpediator, StatPro, Genel Energy and more…

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Small Cap Round Up: featuring Xpediator, StatPro, Genel Energy 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…

Well, the news this week from freight management services group Xpediator (LON:XPD) was quite a shock.

The company announced that, although the current year revenues will be totally up to expectations, unfortunately its profits will be hit.

Customer demand is still very good for the group’s services, but it has been impacted by a number of major factors.

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Firstly, following a significant client giving notice on its contract, the group has decided to switch over its warehousing facilities in Braintree from lower margin storage activities to handling the higher value fulfilment business. That entails a loss of business whilst the new infrastructure investment is being made over the next few months.

Secondly, the company has been unable to pass on an increase in labour rates in part of its UK logistics side.

Thirdly, the group’s e-commerce business, EshopWeDrop, has generated lower volumes than expected; however, remedies to improve that have now been put in place.

Fourthly, the concentration by its management at Regional Express on winning two valuable and strategic contracts, has seen turnover tracking below expectations. The two contracts, if won, could generate substantial profit growth for next year and beyond.

However, on the plus side it reported that cashflow is satisfactory, that the Benfleet turnaround is continuing, whilst the Affinity, Romanian Pallex and Affinity businesses are all trading well.

The infrastructure investments across the group’s interests are necessary and should help to push growth in both revenues and profits for next year and into the future.

The shares fell on the shock news from 51p to a low of 30p. Currently they are trading at 33p at which level they look like an interesting, but cautious, averaging purchase. I still like the group and its potential, as the reasons for its profits fall-off appear totally reasonable, although unexpected.

Read the original write-up HERE

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More positive news was given by StatPro Group (LON:SOG) earlier this week, when its first-half results were published.

It has now partnered Revolution Delta with JP Morgan to develop its analytics solution. That has strengthened StatPro’s position in the fund administration and asset management market, and boosted its distribution capacity.

However, what I really like is the increase in its annualised recurring revenue (ARR). That is powering ahead and now accounts for a very impressive 98% of group revenue.


On first-half turnover of £28.25m to the end of June, its underlying profitability increased to £5.68m. Adjusted earnings came out at 3.8p, 15% higher, whilst its interim dividend was held at 0.85p per share.

The switch of its clients from its legacy software over to its Revolution platform cloud service is growing apace, as too is the ARR.

Market expectations remain the same. Even so, the shares, at 147p, up 5p on the news, have increased by a healthy 15% since my May profile on the company. I maintain my 185p target price.

Read the original write-up HERE

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My long-time favourite property group Helical (LON:HLCL) has just announced a very useful increase in its multi-bank revolving credit facility, now up to £400m.

That has helped to refinance the ongoing development of its largest asset, The Bower in London’s EC1 district, which is 88% let with just another four floors to be leased. It also takes in the group’s portfolio of offices in Manchester and London.

This company, which is on bid alert, sees its shares holding steady at 358p. I still think 450p/480p is a possible bid range.

Read the original write-up HERE

***

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In a positive update Genel Energy (LON:GENL) noted that its 25%-owned Tawke field, with production averaging 71,700 barrels of oil per day (bopd) in the first half of 2019, remains the largest independent oil firm-operated field in Kurdistan.

It was boosted by the addition of three new wells being added to the field in the first half. Another has been added already in this half, taking it up to 13.

At Genel’s Peshkabir field, two new wells have gone onstream, and it is now running at an average of 55,000 bopd. More production wells are due in this half. This is the second-largest independent operated Kurdistan field.

The company is also making progress on Kurdistan’s first ever enhanced oil recovery project, the Peshkabir-to-Tawke gas play.

Although its shares, now 183p, are below my 204p feature price, I still have a 350p target price by end 2020.

Read the original write-up HERE

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Watch out for the Rank Group (LON:RNK) final results, which are due to be announced on Thursday 22ndAugust. My target price range for the shares, now 153p, is 200p to 220p.

Read the original write-up HERE

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I see that Trackwise Designs (LON:TWD) has just announced a very interesting collaboration with GKN Aerospace. Described as ‘a significant milestone in the Company’s engagement with GKN’ it involves TWD aiding the aerospace supplier with development work utilising its improved harness technology.

Success with this project could boost the TWD revenue going forward. Its shares, now 145p, are well up on my early April profile price of 92.5p. That almost hits my primary 150p target price. Further out, 200p a share now looks very achievable.

Read the original write-up HERE

***

The Crystal Amber Fund has reduced its holding in STV Group (LON:STVG) by almost 1% to 7.77%. That really does make it an ongoing seller of the broadcaster’s shares since March, when it held 19.03% of the group’s equity.


Perhaps that has been helping to put a brake on the share price, which has held steady since I profiled the company in late April at around the 370p level.

The half-timers to end June will be announced in about a month’s time. I wonder whether Crystal Amber will continue to reduce their holding. I would imagine that they are maintaining a selling price at around this level, proving to be an efficient ‘tap’ for the market, without busting the price.

Three brokers currently have ‘strong buy’ ratings on the shares, with one putting out a 490p target price.

Read the original write-up HERE

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This week’s results from iconic Fletton brick maker Forterra (LON:FORT) saw its shares fall from 272p down to 260p in reaction.

I have already set a 350p target price and that is maintained after the first-half performance to end June. Brokers Peel Hunt have a 325p target.

The results showed a 7.6% increase in revenue to £193.6m and pre-tax profits up just 1.2% at £32.7m. Earnings came out at 13.6p up from 13p, whilst the interim dividend was increased a healthy 21.2% to 4p per share.

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Although it is acquisitively minded, the company remains 100% UK focussed. It has maintained a very flexible production capacity. Furthermore, it is strategically aimed at growth in its marketplace, whilst also looking to improve its overall operating efficiency.

I am encouraged to see that, despite Brexit hassles as well as current political and economic uncertainties, Forterra is seeing a robust demand for its products. Based on its current order book, there is a continued strength in its core markets.

Read the original write-up HERE

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I note that brokers Peel Hunt have just initiated coverage of Codemasters Group (LON:CDM). They have set a 310p target price, which is midway between my own 278p initial and 350p target price.

The shares are now 223p.

Read the original write-up HERE

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Tuesday 13thAugust sees ventilation products supplier Volution Group (LON:FAN) announce its trading update for the year that ended three days ago.

It should have been a good year, hopefully, seeing revenue well up at around the £238m to £240m range, with pre-tax profits up some 140% at around £40m.

Estimated 2018/2019 earnings of approximately 16p per share, will cover 4.8p of dividend by more than three times.

This global supplier in the ventilation market has the ability to balance out demand across the various parts of the world in which it operates.

I look for forward order books for this current year to be as positive as the group’s outlook.

The shares, which were featured at 174p in my end of May piece, are now 177p leaving lots of upside towards my target price of 250p.

The trading update could sharpen the vision of new investors.

Read the original write-up HERE

***

Following the recent interim results from Arbuthnot Banking Group (LON:ARBB), research analysts at Hardman & Co have put out a valuation figure of £17.93 a share on Sir Henry Angest’s finance outfit.


They describe Arbuthnot as being a well-funded and capitalised private bank, with its commercial banking growing very strongly.

In the current year they are going for operating income rising from £67.91m last year to £77.57m for this calendar year, then up to £90.34m next year.

During this year reported profits could rise, they suggest, to £7.30m from £6.78m last year. Then next year they foresee a mega leap in profits to £12.00m.

The researchers are going for 40.3p in current year earnings and then up to 65.9p per share next year.

The shares were trading at £13.00 when I profiled the company way back at the end of March this year. My target price then was in the £16.40 to £17.17 range.

Considering Hardman’s report, I now feel that my targets are easily achievable. The shares are currently £14.10.

Read the original write-up HERE

***

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The fast-expanding globally operating fast broadband services provider BigBlu Broadband (LON:BBB) reported improving revenues and margins boosting its underlying earnings in the six months ended 31 May.

A 21.5% increase in its revenue to £30.5m and much better margins helped to push up its underlying profits by 54% to £4.3m. Net debt, however, was up to £16.9m (£11.9m), reflecting expected capital expenditure increases.

It is still pushing hard at achieving 150,000 customers by the end of next year.

The shares, now trading at 114p, are below my mid-April 122p mention price. My speculative target price at 175p is held solid.

Read the original write-up HERE

***

And finally…

Hotel Chocolat (LON:HOTC) is offering free chocolates for five years and a visit to the company’s ‘inventing room’ if you can provide them with information to help recover their bespoke retail van that was stolen by three enterprising robbers – you can even see them in the act on https://www.cambridge-news.co.uk/news/local-news/hotel-chocolat-van-stolen-royston-16684518.

Read the original write-up HERE

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