Skip to main content
The Markets by Proactive
Go to Proactive UK

Financial Services

Hoodless Brennan Daily Small Cap News Flash including WCFA, Redhall Group, Stanelco and Newmark Security

WFCA (WFCA, 3.25p, £8.6m) will lose a major account at the end of February 2009, which will result in the group significantly missing current market PBT and EPS estimates of £0.82m and 0.25p respectively. The group may find it difficult to replace the revenue in 2011, which may lead to the market to downgrade 2011 PBT and EPS estimates of £1.12m and 0.34p respectively. The group trades at a premium to the media sector, which we believe is unwarranted. We downgrade our hold recommendation to a SELL.

Redhall Group (RHL, 138p, £40.8m) prelims to 30 September 2009 came in line with our expectations. Revenues up 49% to £129.0m (2008: £86.7m), adjusted PBT up 39% to £6.5m (2008: £4.6m) and adjusted EPS up 3.5% to 16p (2008: 15.4p). The group proposes a 10% increase in DPS to 4.4p, which demonstrates the group’s strong cash generation (net cash £6.3m) and confidence in the business (order book of £115m). The group is well positioned in the Energy, Defence and Process markets, which offer prospects of long-term growth. Redhall continue to seek acquisitions and broaden its services by entering new areas of expertise in waste to energy and carbon fibre, a growing market. The market forecasts 2010 PBT of £7.1m, EPS of 16.9p and DPS of 4.8p, which puts the group on 8.2x and a yield of 3.5%. We upgrade our recommendation from a Hold to a BUY.

Stanelco (SEO, 0.32p, £9.85m) The company has stated that it knows of no reason for the drop in share price from 0.42p or so 10 days ago. Our recommendation remains HOLD due to the £6.8m loan notes that are repayable on demand, there may be a modest technical bounce.

Newmark Security (NWT, 1.475p, £6.64m) has completed safety tests for its bullet proof glass which is lighter and cheaper than older alternatives. With forecasts around £1.6m PBT and 0.3p EPS the shares offer reasonable value and we return the shares to a BUY with a 1.625p price target.