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The OMG newsletter recommends at least 15 companies each month, using the writers’ experience of small caps to give you a winning edge. Last week they wrote about Ondo Insurance Tech, Appreciate Group, ReNeuron Group and Seeen. Read about these Opportunities 4 Material Gains!
Mid-week Tips
Two for the Price of One
Ondo Insurance Tech (ONDO) the Mkt cap has fallen to £4m at 5.75p having listed in March 2020 at 12p. Since the IPO three announcements have reported progress being made with Insurance company trials and an industry report upgrading the Leakbot’s value. We would expect further announcements as the commercialization develops. A factor upsetting the price could be that its major shareholder with 19% and lender Homeserve are being acquired. The Homeserve shares are however locked in for two years, but it could open the door for a strategic investor.
We estimate net cash is £2.2m which should be sufficient for the business to gain commercial traction so it’s worth buying.
Appreciate Group (App) 26.5p (26p-27p) Mkt Cap: £48.5m are unchanged ahead of finals this Tuesday 28th June. The Trading Update stated improved revenue to £205m from £186m and that profits would be ahead of market expectations. The recovery is from the closure of many non-essential stores during lock-down making it a struggled to redeem gift vouchers. Sales have recovered to 90% of pre-lockdown levels and vouchers could become a more popular as they act as an inflation hedge rising prices of the underlying gifts. The new team’s focus is on Digital and Corporate strategy, where the differentiated proposition is particularly strong.
We anticipate a return to profits of around £7m for a P/E of 9x and a 1.5p Dividend would make a yield of 5%. Harder times may help accelerate from recovery to growth. Buy.
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ReNeuron Group (LSE: RENE) 28.5p (28p/29p) Monday 4th July
ReNeuron has been on the cutting edge of Proprietary Stem Cell technologies for years but blunted by little success are focusing on Exosome Technologies. (Exosomes are nano‐sized and serve as mediators for cell‐to‐cell communication). Its primary objective is the development of novel stem cell-based technologies targeting areas of significant unmet or poorly met medical need. They provide some of the bio- spades that are needed for the drug discovery process. Finals for the year end March 2022 are reported a week on Monday. A drug discovery company can go a long way without discovering drugs, it seems –its near the year’s low and could make a speculative buy.
Seeen (LSE: SEEN) 13p (12p/14p) Mkt Cap £7m Thursday 30th June
The strategic focus is commercialisation of existing technologies with its B2B clients. SEEEN aim to accelerate the roll-out with new customer wins and are aiming for break-even for the next year-end.The last figures for the six months to June reported an increase in Revenue to $5.1m with a Loss before Tax of $1.5m with cash down to $3.9m. Theses finals to December 2021 are likely to show a decline in losses but given strict cost control and some new orders there could be sufficient funding, although further funding maybe helpful to accelerate sales. Sumitomo is a Fortune 500 company, who are a 4.6% shareholders and commercial partner. Other shareholders include Canaccord 9.5%, Rathbone 3.5%, Gresham House 13.3%, and Water Intelligence with 7.9%. Around 60% of the shares are held by institutional investors, directors, and former directors. New client wins could add excitement.
Reviews
SYS – 26.5p- Worth buying
BGO – 144p-A deal bounce
SEE – 6.9p – More contracts
VANL – 41.5p – Transpennine framework
AGL – 103p – Clinical labs business builds
TWD – 49.5p – Revenues lower but expected profit on track
LOAD – 195p – Northbridge becomes Crestchic
RLE – 35.5p – Raised quarterly dividend
Finally
This weeks red flag event are UK and US GDP. State of the economy speeches from US, UK and EU central bankers can be expected to try smooth over the larger pitfalls as we struggle along the path of this business cycle.
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