A couple of tiny firms with a market cap of less than £20m caught my attention today — Styles & Wood (LSE: STY) and Publishing Technology (LSE: PTO). The former fell 14% in early trade, while the latter had lost over 20% of value. They were still down 12% and 13%, respectively, around midday. Let’s take a closer look at them.
A Nice Growth Story
The shares of Styles currently trade at 241p, for a market cap of £14.4m. They hit their record high of 286.95p on 17 September — their 52-week trading range is 50p-286.95p.
It looks like investors are taking profit today in the wake of a trading update for the six months ended 30 June that showed a strong growth rate for revenues, narrowing losses and declining net debt, among other things.
The group — which defines itself as an integrated property services and project delivery specialist — announced on 16 September to have secured a prestigious renovation project; it will carry out “the £17.7m refurbishment of Westminster House, Portland Street, Manchester for Aviva Investors, designed by BDP, WSP and Chapman BDSP” over the next 69 weeks.
As Tony Lenehan, its chief executive, pointed out at the time, the company “now has in excess of 25,000m2 of office space under refurbishment for legal, financial and insurance blue chip customers“. That’s a number I like, and this is a nice growth story that has become more enticing following a refinancing round in June, in my view.
Volumes are thin, though, which heightens the investment risk.
Warning
The shares of Publishing Technology currently trade at 125p — the software provider is slightly bigger than Styles in terms of market value. Its 52-week trading range is 120p-208p.
In a trading statement released on Tuesday, the company said that its divisions, “other than (the) advance (unit), are either trading in line with or are ahead of expectations.“
“Over two thirds of the sales base is stable or growing, reflecting the global appeal among publishers of the group’s products and services,” it added, but the board has concluded that the “second half acceleration in sales will be substantially less than expected due to a number of key pipeline opportunities being delayed into 2016 and one pipeline opportunity has been lost“.
Although the board believes that the advance division — which has not fared very well this year — remains well placed for growth, the group “is now not expected to meet current market expectations and is expected to produce a loss for the year“.
A £9 million placing of new equity, which was completed earlier this year, “has ensured that the group is now debt free,” Publishing Technology says — but this doesn’t mean that more funds won’t be needed in future, particularly if it keeps burning cash at a fast pace. The group provides software and services to the publishing industry, which is a sector where competition is particularly fierce these days.