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Here's the latest update from Mark Watson-Williams at Master Investor (cheers Qd22, I did indeed!):

Https://masterinvestor.co.uk/equities/sysgroup-centralnic-and-nine-other-interesting-small-cap-stocks/?mc_cid=f4d0495386&mc_eid=db9f9bbaf2

"SysGroup (LON:SYS) – 58p ‘fair value’ for shares now at just 25p

Last Wednesday this multi award-winning managed IT services, cyber security and cloud hosting provider, provide a trading update for the six-month period ended 30 September.

SysGroup focuses on a customer’s strategic and operational requirements – enabling clients to free up resources, grow their core business and avoid the distractions and complexity of managing IT services.

The Update reported a strong trading performance, despite the challenging macro-economic environment.

It expects to report first-half revenue of £11.32m (£7.58m) and adjusted EBITDA of £1.67m (£1.34m),

The company notes the need for managed IT services remains prevalent and as businesses increasingly seek to invest in technology to increase efficiencies and improve their margins, it is ideally placed to capitalise on that growing market opportunity.

Analysts Bob Liao and Carl Smith at Zeus Capital consider that this strong update demonstrates just how robust its business model is in the face of the general hassles.

They state that the group’s recent acquisitions are doing well, and that they are confident in their estimates for the current year.

The brokers are going for revenues to end March 2023 to rise to £20.5m (£14.7m) while adjusted pre-tax profits will rise to £2.4m (£2.0m), generating earnings of 3.7p (3.4p) per share.

Their valuation on the shares is 58.3p, which is significantly higher than Friday night’s closing price of just 25p.

The group’s interim results are due to be announced on Monday 21 November, by that time I would hope that the shares will be trading towards the 34p level at which they stood this time last year."

WH ireland's latest 20 page note is worth a read. Here's the summary page FYI - they have a 120p target and forecast 5.5p EPS this year, rising to 6.7p asnd then 8.4p EPS.

They also see a £2.4m cash pile at the end of 2022 - almost 40% of the £6.4m m/cap:

"Recurring revenue strategy delivering growth and margin expansion

Touchstar is an established supplier of mobile data computing solutions and managed
services to a variety of industrial sectors. The company boasts a number of high-quality clients and its relationships are longstanding given the embedded nature of its products and services. While the business, historically, has been hardware focused, Touchstar increasingly provides a range of end-to-end solutions, with major products in the proof-of-delivery, access control and security and logistics markets.

With the successful execution of its software-focused, recurring-revenue strategy and a major restructuring in 2019, the company returned to profitability in FY21. Now, software revenues make up a much larger proportion of the sales mix, with total recurring revenue accounting for in excess of 40% of group sales. Set against this progress, the shares still only trade on FY22E and FY23E EV/revenue multiples of 0.5x, FY22E EV/EBITDA of 3.2x, falling to just 2.4x in FY23E, and FY22E PER of 13.6x, falling to 11.2x in FY23E, a significant discount to wider peers. As such, we believe there is potential for a re-rating as the strategy is successfully executed. We see fair value for the shares at 120p.

? Interim results demonstrated continued momentum

Total revenue grew 7.2% to £3.1m and recurring revenue moved ahead by 17.6% to £1.3m, representing 42% of the total. With a 330bps increase in the gross margin, EBITDA grew by 23.1%, while EPS rose by 46.2% to 1.9p. Net cash at period-end stood at £1.6m. The order book as at 13 September stood at £1.0m, +22% against the prior year.

? A focus on recurring revenue to drive profitability and growth

Touchstar is successfully delivering on its strategy to realise value from its solutions and, in doing so, has driven progressive profits and cashflow and enhanced the quality of earnings. The group benefits from a high-quality product range in niche markets, with high barriers to entry given long-term contracts and the considerable complexity of its core markets. Customer relationships are reinforced by the cost of switching providers, which, for the embedded systems Touchstar provides, are considerable.

? Valuation At 11.2x 2023E earnings, Touchstar trades at a significant discount to its London-listed peer group, trading on a FY23E P/E of 14x-25x. Our fair value of 120p (60% premium to current share price) is based on an FY23E PER multiple of 17.6x, taken from a weighted average of UK-listed technology solutions providers and SAAS businesses. We also note that our £2.6m net cash forecast equates to over 40% of the current market cap, putting the shares on a FY2023 EV/EBITDA of ju

This link suggests cashew nut prices have been rising nicely?

https://www.tridge.com/news/cashew-nut-export-price-highest-since-december-202?utm_medium=email

"Phases 2 and 3 capacity expansion – Existing contracted models will absorb all of Factory 1’s capacity by 2024e. Final equipment fit-out of Factory 1 is currently taking place under Phase 2 and Phase 3.1 programmes. Management has reported some delay to delivery of furnaces but essentially this plan is on-track. Phase 3.2 is transformational, with the development between 2024e and 2026e of a new factory on a site next door. The property owner of Factory 1 owns the site for Factory 2, and lease terms and a construction plan for Factory 2 have been agreed. Building Factory 2 next door with the same equipment (but a better flow for high volume production) is a low-risk option and has strong support from the local authorities and grant funding bodies. Total floor space across the factories will eventually rise from 55k sq. ft. to 115k sq. ft. and as discussed, annual revenue capacity should reach £150m. In context, our current estimate is that the global market for carbon ceramic brake discs is probably £300m each year, but with the potential to rise to multiple billions over the next decade, particularly given the benefits of carbon ceramics for EVs. These include lower weight, a beneficial interaction with regenerative braking systems, and high brakingperformance at all temperatures to cope with the often-faster acceleration of EVs. Overall, we view the start of Factory 2 development as a good low risk option to add capacity, meet growing demand and enhance the benefits of the recently implemented high volume manufacturing strategy.

Zeus estimates adjusted for the fundraise; cash and balance sheet strengthened –

Our 2022e-2025e revenue and profit forecasts are (as expected) unchanged. Revenue is predicted to rise from £12.5m to nearly £40m by end-2025e, and net profit from break-even to around £9m, with a net margin exceeding 20%. We believe the sustainable net margin for Surface over the medium term is between 20% and 25%, applied to the £400m prospective pipeline. The cash position of the Group is significantly improved, with c.£17.1m of net proceeds added. We estimate gross capex of c.£45m between 2022e and 2026e to complete Factory 1 and start the build-out of Factory 2. Prior to the raise we assumed a gross cash balance of around £1m at the end of both 2022e and 2023e – not too comfortable (see: Interims and outlook: strong progress and upgrades). With new funds secured we assume a low-point gross cash of over £3m in 2024e, or net cash of £2.6m before lease obligations – much more comfortable. Our DCF valuation is increased to 150p from 140p, with the fundraising offset by changes to numbers of shares, capex and working capital."

Been away on family hols for nigh on three weeks, so glad to see the share price consolidating nicely in a mildly upwards trend during October.

Zeus's upgrade to 150p is part of an 11 page note - here's the summary:

"Preparing for the ramp-up

Surface Transforms has successfully completed an £18m equity fundraising to significantly expand factory capacity to meet growing demand for its carbon ceramic brake discs. Funds raised and free cash will complete the existing factory and start the fit-out of a new one next door. By the end of 2026e, Surface should have the manufacturing capacity to generate £150m of annual sales. The Group’s total orderbook and prospective pipeline is currently valued at £590m, with the prospect of more contracts to be announced. We adjust our estimates for the proceeds; finances are now in much better shape and able to support our predicted c.£45m of capex spend between 2022e and 2026e. Our DCF valuation is lifted to 150p from 140p with new funds applied. Surface is getting ready for the ramp-up.

Successful fundraising for capacity expansion – Surface has completed an £18m (gross, at 40p) fundraising to complete the build-out of the current factory (Factory 1) and start to develop a new one (Factory 2) next door. Funds will also be used to support working capital for the ramp-up in production to fulfil the secured £190m OEM orderbook. Combined with estimated free cash from trading, the Group is now nearly funded to build £150m of annual revenue capacity by the end of 2026e. This allows Surface to outpace demand and address the prospective pipeline of £400m on top of the existing orderbook. To recap, the Group is now profitable, in full production and shipping discs for OEMs 6, 7 and 8. Activity for OEMs 5, 9 and 10 will come online in the next 12-18 months."

Been away on family hols for nigh on three weeks - great to see new all-time highs here now (even with today's small pull-back).

Here's a new video from the CEO about how mobile interactivity is changing the radio landscape:

Https://www.fonix.com/blog/fonix-focal-point-how-mobile-interactivity-is-changing-the-radio-landscape/

Been away on family hols for nigh on three weeks, so happy to read the excellent Q3 results here.

CAPD merely need $72.6m revenues in this Q4 to meet expectations - that's less than they achieved in the much seasonally weaker Q3 just gone. So the likelihood is that the year end numbers should look pretty good compared to Tamesis's forecasts.

The core business EBIT (before investment portfolio gains/losses) is forecast to be up to $55.8m from $51.9m - this against a £163m m/cap, with $87.4m cash inflows from operations.

The share price is still very, very undervalued imho.

Been away on family hols for nigh on three weeks, and there's been just a little news flow :o))

- more director/Kestrel share buying
- yet another "materially exceeding" trading statement for Q3
- another earnings-enhancing acquisition
- a successful refinancing materially reducing costs

Zeus Capital now forecast 20.9c EPS this year, rising to 22c next year. So with around 18.2p EPS for 2022, CNIC will soon be on a historic P/E of just 7.1.

The share price has moved back up somewhat, but is still ridiculously undervalued imho.

Been away on family hols for nigh on three weeks, so it's encouraging to see the new contract wins:

https://www.investegate.co.uk/eneraqua-technolgs.--etp-/rns/contract-wins---order-book-update/202210240700087888D/

This year's revenues are fully covered, and next year's are already up to an extraordinary 85%! But ETP remain on a very low P/E considering the very high forward visibility.

Finncap have retained their 425p price target, and Singer's is 396p.

This announcement looks like the start of the B2C offering, with Control Flow being installed in homes:

Https://twitter.com/abrigroup/status/1584922994706628608?t=9vBR9dVTeFO-xdv6kwIgpg&s=19

ETP have a number of avenues for large scaling up open to them, and we should continue to get good news flow.

Good to see the further 5G contract win whilst I was away on three weeks' hols.

With 5G beginning to accelerate, defence spending on the rise globally, and water conservation and sustainability paramount everywhere, all of MWE's divisions are in the right place at the right time.

Yet MWE trade on an ex-cash P/E of only 10.7.

I've been away on family hols for nigh on three weeks, so pleasing to see the upbeat year end trading update here, especially the Q4 upturn which has continued into this year.

Singer have a 2.5p target price, and state the year just ended should show 0.1p EPS and a £0.8m adjusted PBT.

This year is now forecast to bring 0.15p EPS and £2.2m adjusted PBT (incluDing a full year of LaddersFree of course).

At 0.89p that's a P/E of only 5.9.

Master Investor have issued this update on REAT - note that their EPS figures are rounded up substantially so are not to be entirely trusted!

Https://masterinvestor.co.uk/equities/sysgroup-centralnic-and-nine-other-interesting-small-cap-stocks/

"React Group (LON:REAT) – ready to double in price

Last Wednesday this leading specialist cleaning, hygiene and decontamination company announced a trading update in respect of the year ended 30 September.

Trading in the last three months of the year ended 30 September 2022, and into the current financial year, has been especially strong across the group, with all divisions continuing to win a broad spread of business providing the positive margin contribution and cash generation we are seeking. This positive start underpins the company’s optimistic outlook for the current financial year.

Shaun Doak, CEO stated that:

“Q4 performance has shown good growth which has continued so far in the current financial year.

The nature of these contracts provides us with both recurring income and potential to provide ancillary services. Despite the volatile macro-economic domestic and international background, the markets we are addressing are large and fragmented, providing significant opportunities for growth.

We remain confident that the high-quality services the Group provides will continue to be very much in demand and that we will meet our growth expectations for the current year.”

Analyst Greg Poulton at Singer Capital Markets rates the group’s shares as a Buy, with a price objective of 2.5p.

His estimates for the last year were for £13.6m revenues against £7.7m previously, with adjusted pre-tax profits of £0.8m (£0.5m) and earnings of 0.1p (0.1p) per share.

For the current year he sees £19.7m sales, £2.2m profits and 0.2p per share in earnings.

In June last year this group’s shares hit 3.65p each, since when they have been down to 0.72p.

Currently at only 0.80p I would suggest that these shares now have an upward path to travel, they could easily double again."

Hi Qd22, been on family hols for nigh on three weeks, so pleased to see the rather encouraging H1 trading update here.

The P/E here looks ridiculously low at 7.2, especially given the encouraging H1 update.

Zeus now forecast 3.7p EPS this year, with £3.3m adjusted EBITDA and £2.4m PBT.

Interestingly, H1's revenues represent 55% of total forecast revenues for the year, and the £1.67m EBITDA is 51% of the forecast. So SYS look well on course to meet and potentially beat forecasts.

Zeus have a 58.3p valuation for SYS, which gives good upside in itself. But they also state that they believe SYS could reach £50m revenues with 30% EBITDA margins, thus indicating an enterprise value of around £100m against the current £13m m/cap.

For the record, another 5k shares just bought back at 1,050p - that's now 112,000 shares bought back in total:

Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Transaction-in-Own-Shares/89283314

Good stuff from the news wires this morning:

JEFFERIES RAISES SERICA ENERGY PLC PRICE TARGET TO 480 (465) PENCE - 'BUY'

Https://www.investorschampion.com/channel/blog/great-results-but-the-market-couldnt-care-less

"Eneraqua: terrific results and an upgrade

Eneraqua Technologies (AIM:ETP), the provider of energy and water efficiency solutions, announced excellent interim results bringing a nice upgrade from its broker.

For the six months ending 31 July 2022 revenue nearly doubled to £24.2m while adjusted EBITDA was 23% higher at £3.98m, reflecting the continued investment in the team.

The forward purchasing of key items on a number of projects brought an operating cash outflow of £2.2m and free cash outflow of £2.7m. The Group closed the period with gross cash of £6.5m and net debt of £0.2m.

With seemingly huge potential in social housing and private sector clients in the UK to provide heat pump solutions, we are a little puzzled by the need to push into agritech, with a first contract secured to provide an irrigation solution to the State of Uttarakhand in India. Hopefully it’s relatively easy to deliver.

In response to the excellent numbers and positive outlook, the house broker upgraded forecasts for the January 2024 financial year to revenue of £80.1m (in line with management guidance), adjusted pre-tax profit of £12.2m (margin 15%) and earnings of 28.8p. For the current year to January 2023, forecasts are for revenue of £61.3m, adjusted profits of £10.6m and earnings of 25.7p, resulting in a modest 10x earnings multiple."

Here's the summary from Shore Capital's note today, forecasting 9.2p EPS and £32.3m net cash this year:

"Sureserve Group

FY22F outlook confirmed with stronger cash

Social Housing Energy Services Group

Sureserve confirmed in today's trading update that it expects results for FY22F to be in line with management's expectations, with slightly better net cash than we
were forecasting and a strong uplift in orders. This reflects "Sureserve's resilient business model and...solid operational performance despite inflationary pressures". We are not changing our estimates for FY22F and FY23F other than to nudge up our net cash from £21m to £23m, in line with guidance. The shares have marked time for a year but now look compelling at 8.7x FY23F PER. House stock.

Solid performance in face of inflation pressure: In the FY results to September, Sureserve continued to experience growth in revenue, earnings and cash flow. This reflects solid operational performance despite inflationary pressures, against which the company has taken action, and remains confident it can continue to mitigate going forwards . The order book for continuing businesses rose 16% YoY to £585m. Pre-IFRS16 net cash was in excess of £23m (FY21, £16.5m).

Estimates maintained: Other than FY22F net cash, we are not changing any of our estimates for the combined business, which includes the two non-core businesses, Sureserve Fire and Electrical and Precision Lift Services. They are classified as businesses held for sale. These are both performing well, thereby providing the opportunity to achieve the right price and the right buyer for each business A full breakdown of our estimates for the continuing business and those held for sale is given in last week's note, "Better together on the home energy front, 6 September.

Fighting on an united front: The note argues that the decision to move from two divisions Compliance and Energy Services to one more effectively addresses the growth opportunities for both by concentrating on the huge social housing market. The new structure aims to increase cross-selling opportunities for tackling fuel poverty while performing regulated gas safety audits.

An example was the £5m solar PV contract for the Ministry of Defence, announced last week which could, in our view, open further opportunities across its vast estate of military housing and other buildings. The outlook could be further boosted by a new £1.5bn spend on energy retrofits of social housing in the "mini-budget'. The note also discussed the potential for a return to paying dividends.

Valuation: After a year of flat price performance and modest uplift versus the FTSE All Share, we believe the potential for long-term market growth and the visibility of revenue from increasingly long contracts, of up to 15 years, make the shares attractive at 8.7x PER, 5.3x EV/EBITDA and 7.0% FCF yield for FY23F."

Singer Capital Markets have initiated coverage today with a Buy and a 396p target price.....

They summarise:

"Strong and highly visible earnings growth

Eneraqua is a specialist in designing solutions that maximise energy and water efficiency. We expect PBT growth of 79%/21% in FY23/FY24 driven by significant requirements to improve energy efficiency in the UK built environment against a backdrop of rising energy costs.

Growth is highly visible, with our FY23 revenue forecasts 100% covered by orders, FY24 already 72% covered (post a revenue guidance upgrade in today’s interims) and a strong pipeline beyond this. An attractive margin (16%-17% OM) is supported by its unique IP and technical expertise in terms of both design engineering and its ability to arrange funding for its social housing clients. The balance sheet is strong, with a net cash position expected across the forecast period, and there are ambitions to execute bolt-on M&A. On a Jan. ‘24 EV/EBITDA rating of only 4.5x, we believe the shares are attractively valued and initiate with a Buy rec and 396p TP."

"Significant upside to 396p target price

We value Eneraqua against a basket of ESG driven Support Services stocks and Engineering Consultants. These trade on an average EV/EBITDA rating of 9x. Applying this to Eneraqua’s Jan. ’24 earnings implies a target price of 396p and a P/E multiple of 15x. This represents 73% upside to the current share price."

A reminder that the ETP investor webinar is free to register for and takes place at 12.00 today:

Https://www.investegate.co.uk/eneraqua-technolgs.--etp-/rns/retail-investor-presentation/202210100700072594C/

Bizarre initial reaction to the encouraging trading statement and huge rise in the order books - it can only be short-term traders who were in for the trading statement.

Anyway, bouncing back now and will surely recover to opening levels and better given the ex-cash P/E of only around 7 and the excellent prospects.

Shore Capital have reiterated their forecasts of 8.1p historic EPS and 9.2p EPS for the current year.

They've also raised their forecasts for the cash pile to the current £23.2m - and this now rises to £32.3m at Sept'23, i.e almost 25% of the m/cap!

With the defensive charecteristics of SUR's revenues, and the large increase in the order books in the last few months, it can surely only be traders who were in for a short-term bump on the trading statement who are selling now, as the value and security here looks tremendous imho.