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…
Last week’s resignation departure of Michael Slade, the creator of the Helical (LON:HLCL) property group, was the feature of a celebration party in the former chairman’s honour. It could well leave the company wide open to an opportunistic bidder.
We already know from the company that it has had and rejected several approaches. Whilst its shares are trading at such a wide 24% discount to net asset value (NAV) at the current 363p, I do feel that they could well be very appealing to a hostile predator.
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Brokers Numis Securities continue to rate the shares as a ‘buy’ with a 436p target price – if Helical does get bid for then I reckon that the successful bid will be a lot higher than that.
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News that it has opened up two new state-of-the-art recording and production studios in New York is very bullish indeed for Audioboom (LON:BOOM). It effectively more than doubles its capacity.
Thursday’s half-year results were impressive, showing a 171% increase in revenue to almost $10m and a significantly reduced loss at just $2.8m. The balance of this year and then next year’s smaller loss should then see the company break into good profits on the back of even greater sales.
All this is very good news for property developer Nick Candy, who owns 25% of its equity. The shares at 270p are still very speculative whilst it is making losses. Even so, they could be a very good punt.
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On the back of a 14% rise in sales for the year to end June Hotel Chocolat (LON:HOTC) should be showing full-year profits in line with market expectations.
However, I do understand that the current year is already seeing better than expected trading. It is still opening new stores – which is quite extraordinary in the face of a general decline in the retail sector. Bucking the trend is a good description.
But Hotel Chocolat is something different and generates its own following, especially with its special loyalty scheme.
Brokers Liberum rate the shares, now 365p, as a ‘buy’ with a target price of 410p.
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Miton Group (LON:MGR), the asset managers, has not enjoyed a good first-half, with net outflows in the second quarter. Admittedly, that has proved to be a pattern common to its sector.
Brokers Peel Hunt still rates the shares as an ‘add’ with a target price of 60p.
They hope that the company can see a change of sentiment helping to create a positive momentum in the second half, allowing Miton to make some progress for the year as a whole.
At just 47p there still remains an element of upside potential.
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I do not agree with German brokers Berenberg in downgrading the shares of Chemring (LON:CHG).They consider that the aerospace and defence sector supplier is fairly valued with its shares at 184p.
They say that the shares have performed well enough already this year and the inference is that they could even feel a ‘bit toppy’. Even so they upped their target price from 180p to 190p.
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As far as I am concerned, I see Chemring as now getting its act together after a number of mishaps that have befallen the group over the last year or so.
That gives medium-term investors an ideal buying opportunity.
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I am a positive person, so much so that I always find it very difficult to class any company as a ‘short sell’ (although Majestic Wine could well be just that).
So I was very pleased to see that brokers Mirabaud when initiating coverage of Block Energy (LON:BLOE) rate the shares, now 12p, as a ‘buy’.
The company has recently announced that it is ramping up its production in Georgia after it concluded an oil storage capacity deal.
Mirabaud are awaiting the company reporting an updated Competent Person’s Report shortly. With so much good news in the offing they really like Block Energy and they have set an impressive 35p a share target price.
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Last Wednesday’s trading update from publishers Bloomsbury Group (LON:BMY) was a reassuring one. The first four months to end-June give the company confidence of its management expectations for the full year to end February 2020.
They note that they have a lot of sales potential from various of both its existing and its new authors.
In fact, one of their books, ‘Three Women’ by Lisa Taddeo, will be the Number 1 Non-Fiction title in this weekend’s Sunday Times bestseller list.
The Interim Results to end-August will be announced in three months’ time.
The shares, now at only 236p, still look very undervalued.
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And finally…
It would appear that low-cost gyms really are gaining popularity.
GYM Group (LON:GYM) is looking to open up another 20 new gyms over the year, in reaction to its growing list of members subscribing to join the operator.
It now has some 800,000 members and increasing.
And it boasts a gym estate of 165 clubs.
For the first half year to end June revenue growth was up an impressive 27%.
Brokers Liberum are looking for the group to report revenue for the current 2019 year of some £155m, upon which it could make adjusted pre-tax profits of just under £19m.
We will get a much clearer picture of the full-year prospects when the company announces its interim results at the end of next month.
In the meantime, the group’s shares, now at 258p, have a lot further to climb.