Allianz manager Knight drills down into Capital prospects9 Oct 2023 06:06
Capital Ltd (CAPD), previously known as Capital Drilling, is an example of a small-cap stock being hit disproportionately hard by negative news, says Allianz Global Investors’ Richard Knight.
The Citywire Elite Companies A-rated mining services company has a focus on the gold mining industry in Africa and is a top 10 holding in Knight’s Allianz UK Listed Opportunities fund where it makes up 2.4% of the £197m portfolio.
‘The shares have performed poorly following a trading update in July, though the update was only slightly soft on revenues and led to very minor downgrades in profit expectations for the year, though management guidance was maintained,’ Knight said.
He added that the ‘more salient news’ was the ongoing longer-term contract wins in mining services in new metals and in new geographies that ‘significantly de-risk the business operations’. This, along with growth in materials testing means it ‘warrants a much higher valuation than the group average’.
Shares in Capital added 1.8% to 79.8p on Friday, but have tumbled 17% this year.
———
*Capital are the main contractor handling the waste clearing at Sukari