Small Cap Catch Up: McBride, Centaur, AG Barr And More

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Small Cap Catch Up: McBride, Centaur, AG Barr And More

McBride (LON:MCB) – Broker Says Rating Is Too Low

This group, which is Europe’s biggest maker of retailers’ own-brand household goods, has benefited from improved trading, but according to one broker, the rating is still too low.

At Peel Hunt their analyst Charles Hall retained his ‘Buy’ on the stock with a Price Objective of 120p.

He stated that the rating is still very low in our view and the earnings growth potential underlines the opportunity.

McBride is aiming for a five-year revenue compound annual growth rate of 2%, with a 10% earnings margin in the last year.

Hall commented that private labels are ‘taking share’ as consumers look to offset the rising cost of living and retailers ‘look to reinforce their price proposition’, leaving McBride outperforming across all divisions.

The group is outperforming the market, while the company’s rating is low against historic levels and against its peers.

The shares closed last night at 99p, just 2p short of the five-year High achieved just over a fortnight ago.

There is more to go for in this stock.

(Profile 10.03.21 @ 79.5p set a target Price of 99.5p*)

(Profile 17.07.23 @ 31.15p set a Target Price of 38p*)

Centaur Media (LON:CAU) – Interesting New Buyer

I noted on Monday that Richard Griffiths has upped his holding in this business media group.

Increasing from 3.39% to 4.40%, 0.72% for himself and the balance 3.68% for his ORA Global group.

Richard Griffiths has had a long career founding, running, investing in and advising growth companies.

Previously, Richard was founder and executive chairman of the Evolution Group PLC, a diversified financial group, taking it from start up to FTSE 250 membership within 5 years.

Richard subsequently went on to become founder and chairman of ORA Capital Partners Plc in 2006 and later distributed the company’s profits and assets back to shareholders in 2013, before setting up ORA Limited in Jersey in 2014 and at which he remains chairman.

In addition, Richard has been a venture or strategic investor in many successful UK companies including IP Group Plc, Nanoco Group Plc, Tissue Regenix Group Plc, GVC Holdings Plc, Oxford Nanopore Technologies Limited and Plectrum Petroleum Limited (sold to Cairn Energy Plc).

Centaur is an international provider of business information, training and specialist consultancy within the marketing and legal professions that inspires and enables people to excel at what they do, to raise their aspirations and to enable our clients to deliver better performance.

The company is holding a Capital Markets Day at its South Bank offices on Tuesday 23rd April.

The shares are currently trading at around 40.5p.

(Profile 03.03.21 @ 33p set a Target Price of 41p*)

Journeo (LON:JNEO) – A Continuing Good Story

The 2023 annual results from this transport information systems group were very much as expected – which is good news.

Revenues up 118% to £46.1m, adjusted pre-tax profits up 325% to £4.0m, with earnings leaping from 9.80p to 17.96p per share.

CEO Russ Singleton stated that:

 I am very pleased with the progress we have made towards reaching our goal of becoming a market leader in our field.

Our strengthening intellectual property and increased barriers to entry into our markets are helping us establish defendable market positions.

Each year, we are growing our recurring revenue base as well as our sales order book, providing us with greater forward earnings visibility.

Together with healthy cash balances, we are able to invest further in our technologies and business.

The acquisitions of Infotec and MultiQ have performed well since joining the Group, extending our capabilities and geographic reach.

We continue to seek out complementary acquisitions that can provide Journeo with access to adjacent markets or increase the services we deliver into our current markets.

As we entered 2024, we did so with momentum in our strategy, which is enabling us to deliver valuable products, software, and services for our customers.

Our strong order book, growing sales pipeline, and increasing leadership positions give us confidence in our ability to further grow the business.”

Analyst Andrew Renton at Cavendish Capital Markets considers that Net Zero policies will continue to be a large driver of change in the transport market for years and decades to come.

He reckons that Journeo looks compelling on an FY24E Adj P/E of 12.8x vs peers on 19.4x, with further upside being seen if cash balances are deployed on additional organic or acquisition opportunities leading to earnings accretion.

After hitting 295p yesterday, the shares ended the day at 282p broadly unchanged but still well worth holding.

(Profile 07.04.21 @ 95.5p set a Target Price of 120p*)

(Profile 24.03.23 @ 147.5p set a Target Price of 175p*)

Michelmersh Brick Holdings (LON:MBH) – Better Than Expectations

The specialist brick manufacturer and brick-fabricator has reported that its revenues for the year to end December 2023 were 13% higher at £77.3m (£68.4m), while its adjusted pre-tax profits were 10.4% better at £13.8m (£12.5m), lifting earnings up 12.3% to 11.91p (10.61p), helping to boost its dividend 5.9% to 4.50p (4.25p) per share.

Outgoing Chairman Martin Warner stated that:

“I am very pleased to report on another positive year for the Group, with strong growth across our key financial metrics despite the decline in the broader construction industry.

We enter 2024 watchful of the interest rate environment and inflation trends and how these affect the timing of the anticipated increase in construction activity levels.

Whilst we continue to closely monitor the impact from these macro cycles, we believe in our business model, maintaining a broad customer base across multiple end markets, and continue to see robust levels of order intake as a result.”

‘Britain’s Brick Specialist’ has grown through acquisition and organic growth into a profitable and asset rich business, producing over 122m clay bricks and pavers per annum.

Michelmersh currently owns most of the UK’s premium manufacturing brick brands and is a leading specification brick and clay paving manufacturer.

Analysts Aynsley Lammin and Lewis Roxburgh at Investec Equities rate the shares as a Buy, looking for 116p as their Price Objective.

They note that the group has been delivering well in a difficult market, with the results coming in ahead of expectations.

The shares closed the day at 104.5p, 3p better on the back of the results – a very good hold.

(Profile 27.03.23 @ 91p set a Target Price of 115p)

CML Microsystems (LON:CML) – Rippling Not Waving

This RF communication products group yesterday issued a Trading Update for its year ending on this coming Sunday.

The company, which had a goodish first half year, experienced various hassles in the final period, especially with customer reductions in inventory levels coupled with a weaker China market.

It was also coping with integrating its Microwave Technology Inc acquisition.

Disappointingly that means that profits will be around the £3m level on the back of £3m of revenues.

The debt-free group, which is cash-generative, has in place the required resources and market focus to drive progress and remains confident of capturing share of the significant growth opportunities ahead.

Analyst Martin O’Sullivan at Shore Capital Markets stated that the lacklustre trading conditions have meant a re-rating of his estimates for the end March year to £23.0m revenues, £3.7m adjusted pre-tax profits, with 18.7p earnings and an 11.9p dividend per share.

He will be reviewing his comments come the 2nd July report on the results.

Over at Progressive Research their analyst Ian Robertson has estimates for £22.9m sales, £4.0m profits and 18.0p of earnings per share.

He notes that the trading update confirms revenues in line with his expectations, adding that excess inventory flow through and market softness in China have impacted CML’s core business, but Microwave Technologies Inc is performing ahead of expectations.

His view is that these are just ripples and not waves and that the group is still on a growth course.

The shares closed 43p down at 330p – be patient.

(Profile 27.02.2023 @ 560p set a Target Price of 650p)

Cohort (LON:CHRT) – Now Really Being Given Their Orders

Well, the market appreciated the latest bit of news from this defence technology and related products group.

Following on from its subsidiary Chess Dynamics picking up an award a week ago for £15.7m from BAE Systems Maritime Australia for its Sea Eagle surveillance systems, yesterday another big group contract was secured.

Its Systems Engineering and Assessment subsidiary gained a £135m contract from the MOD for Royal Navy Electronic Warfare Countermeasures.

I really like this group of companies and the markets in which they specialise, it has tremendous scope to keep on upping its Order Book, which is now above the £513m level.

Analysts Mike Jeremy and Andy Edmond at Equity Development have estimates for the current year to end April 2024 for £188.1m (£182.7m) sales, lifting adjusted pre-tax profits to £18.7m (£17.7m), with earnings of 36.2p (36.4p) and paying a dividend of 14.7p (13.4p) per share.

For the coming year they foresee £199.9m sales, £21.6m profits, 40.3p earnings and 15.4p of dividend.

Their ‘Fair Value’ on the shares is now 725p, which compares with the 640p price in the market, up 46p on the day in reaction to the new orders.

Hold very tightly.

(Profile 06.08.19 @ 446p set a Target Price of 607p*)

AG Barr (LON:BAG) – Soft Drinks Are Fizzing

On 7th February I suggested that holders should perhaps look to top slice a few, when the price was 552p.

They fell back to 514p by early this week.

However, the results for the year to 28th January this year reported revenues up 25.9% at £400.0m (£317.6m), with adjusted pre-tax profits just 16.1% better at £50.5m (£43.5m), lifting earnings up 13.5% to 34.59p (30.47p) covering a 14.9% rise in the dividend to 15.05p (13.10p) per share.

The IRN-BRU and other soft drinks maker gave an Outlook note stating that having seen continued positive brand momentum in the early weeks of the new financial year, the group remains confident in its strategy and the continued delivery of revenue and profit growth in the year ahead. 

CEO Roger White stated that:

With our business in a strong financial position, and our portfolio of differentiated brands poised for further growth, I have every confidence that our proven strategy, our results-driven teams and our well-invested asset base will continue to support long-term growth and value creation.”

Estimates have now risen for the current year, to see £57.0m profits and 38.1p in earnings, sufficient to cover a 17.1p dividend per share.

The group’s shares bounced strongly in reaction, rising 8.5% on the day to close at 558p.

Hold on tightly to your remaining positions.

(Profile 31.07.20 @ 444.5p set a Target Price of 525p*)

(Asterisks * denote that Target Prices have been achieved since Profile publication)

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