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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 IG Design Group and Vianet Group. Read about these Opportunities 4 Material Gains!
Mid-week Tip
A gift of a warning
IG Design Group (LSE: IGR) 245p, Mkt Cap £226.5m Currently, the market is not quick to forgive companies that have disappointed. Supply chain problems and cost increases can have a significant effect on prospective profit, but the share price reaction can be even greater than that shortfall and forgets the longer-term potential for a business. Taking a broader view of giftware and craft products supplier IG Design Group (LSE: IGR) the outlook is good. The integration of the CSS acquisition, which was made in 2020-21, continues and there are more cost savings to be obtained. Margins, though have slumped and this is not a high margin business in the first place. The latest increase in net debt was particularly high, but it should unwind during the second half. Net cash could fall to £60m at the end of March. The interim dividend has been cut from 3p a share to 1.25p a share. The net tangible asset value is around 200p a share, so not far below the current share price after a small recovery. NAV including goodwill is higher than the share price. This provides some limit to the downside. The share price slump has provided a buying opportunity.
Results Preview
Almost Covid Safe
Vianet Group (AIM :Vnet) 80.5p Mkt Cap £23.3m The recent trading update from Vianet reported that sales momentum was strong due to the easing of Covid restrictions, Vnet provide real time actionable data and business insight through devices connected to its Internet of Things platform (IOT). All its Smart Zone clients are now fully operational, and this has resulted in a strong rebound in revenues. It is being hoped that the momentum will continue despite supply chain costs being marginally higher and the implications from the new Covid variant. . Before the Covid profits were regularly £2m plus and were highly rated. At the year-end borrowings had increased to £2.7m but growing revenue should support recovery and the Directors seemed confident enough to say that the dividend could be reinstated for the full year. A buying opportunity
Reviews
CLX – 114p – Right numbers wrong timing
MERC – 48p – Performance fee
CER – 815p – Record order book
- – 22.5p – ESG problem
GLAN – 90p – Software acquisition
ANX – 132p – Motorcycle contract
SEE – 10.74p – DMS order
APP – 23p – Reduced interim loss
NAR – 67.5p – Discounted
CNIC – 144p – Cash generation
CKT – 47p – Placing
CRU – 15.5p – Cash pile
XPD – 48p – Boss steps down
NFT – 2.45p – Afterpart stake
Finally: Assuming the news of Covid will take some weeks to harden there could be some market volatility but we are optimistic the fear factor will soon ease.
OMG! Opportunity for Massive Gains is a Premium Newsletter on ADVFN with two reports each week written by experienced small cap specialists. To get trips like this every week, sign up here.
