OMG! Tuesday 30 November: 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 IG Design Group and Vianet Group. Read about these Opportunities 4 Material Gains!

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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

  1. – 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.

 

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