OMG! Tuesday 18 January: Summary of last week’s newsletter

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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 Town Centre Securities and Pressure Technologies. Read about these Opportunities 4 Material Gains!

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Mid-week Tip

Town centre value

Town Centre Securities (LSE: TOWN) is trading on an enormous discount to net assets and the dividend is growing strongly from its reduced level during the pandemic. The disposal of retail and leisure related assets and the limited exposure to London are further positives. The fully listed property developer and investor is focused on the Leeds and Manchester areas, which have good prospects. Leeds accounts for two-thirds of the portfolio and this includes the Merrion estate, an area that is favoured by students, which is worth £145m, and there are options for further development. Its net assets held up well at 292p a share at the end of June 2021 – net tangible assets were steady at 284p. Revaluation gains were offset by loss on disposals and there were also £1.86m of dividends paid during the year. The revaluation gains include a £500,000 uplift in the value of the YourParkingSpace investment. Peel Hunt forecasts NAV of 298.9p a share at the end of June 2022 and 310.6p a share one year later. Dividends are expected to rise from 3.5p a share to 5.5p a share with 6.5p a share pencilled in for the following year. Buy  at 159p  for a narrowing discount to NAV and growing income.

 

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Cost headwinds

Pressure Technologies (LSE: Pres)-74.5p  Mkt Cap £23.15m

Pressure Technologies has been quoted since June 2007 and the original business is more than 100 years old. Its core business is the supply of high-specification seamless steel gas cylinders historically for the oil and gas sector and submarine market. It has moved into new hopefully growth areas such as alternative energy as well as diversifying geographically.  It has not made an unadjusted year-end profit since before 2016. It raised £7.5m at 60p in 2020 which paid off its accumulated debt. There are long lead times so substantial banking faculties are in place but at the interims there was just about net cash at £0.2m. Recently a  £7m bank loan was renegotiated.
It’s likely to win further contracts but there are too many cost headwinds reducing profitability. Wait.

 

Reviews

HAYD – 5.6p – Material progress

RDT – 3.85p – Mixed statement

IUG – 14.25p – AI revenues to come

PMP – 710p – Better than expected

VCAP – 47p – 5% yield

QXT – 177.5p – Gaming recovery

NBI – 171p – Disposal talks continue

MMX – 10.4p tender offer

IQG – 132p – ARR growth

JSG – 147.4p – Recovery continuing

BEG – 131p – Southern purchase

AGL – 121p – Ovarian study delays

 

Finally: 

On Thursday Retail Sales (YOY) are set to decline to 4.2% from 4.7%. While on Wednesday the BOE Chairman, Andrew Bailey hopefully adds some soothing context to these conflicting ‘story-lines’.

 

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