AIM A-Z Part 31: Niche Businesses
Ticker 521 to 535 on London's Alternative Investment Market (AIM)
Happy New Year to everyone,
good start into the year: 5 watchlist companies. Mix of growth, cheap and more or less special situations.
Here you find the last part:
Here you find all other parts: https://increasingodds.substack.com/s/a-z-uk-aim
521) Sosandar (Ticker: SOS)
19£m womenswear brand with a focus on ‘affordable clothing with a premium, trend-led aesthetic’. Just awarded share options to the C-suite based on the following targets: 50% vest on at a share price of 20p, 25% at 25p, 25% at 30p. Current share price ~8p. If vested, shares outstanding will increase by 13%. H1 results showing 15% growth on usual seasonal unprofitability. Expects 43£m revenue and 0,4£m PBT. Bought back 2% of shares. 7% insider ownership. Two co-founders are joint-CEOs. Pass.
522) Sound Energy (Ticker: SOU)
21£m upstream gas company with assets in Morocco. In development phase, expects first gas sales in Q1 or Q2 2026. Share price just doubled, pass.
523) Southern Energy (Ticker: SOUC)
15£m O&G exploration and production with projects in the USA. 4$m sales in Q3 2025 with 10% profit margin, driven by higher gas prices. 20$m net debt, many share issues. Pass.
524) Sovereign Metals (Ticker: SVML)
189£m no-revenue mining company with a titanium and graphite mine in Malawi. Pass.
525) SpaceandPeople (Ticker: SAL)
4£m media agency and broker of advertising space in Europe, allowing brands to advertise on ‘free space’ in shopping centers or travel hubs, also organizing marketing events. Just announced a partnership with Berlin’s largest shopping center. Expects 8,8£m revenue and 0,75£m PBT for FY26, repaid its debt. Wants to further expand in Europe. 0,8£m net cash → about 4,3 EV/PBT. CEO is also the founder. Was heavily hit by covid, now appears to have recovered. Looks like an interesting niche. Growth seems straightforward by signing more contracts with venues. Paid a dividend in the past, cheap, watchlist.
526/527) Spectra Systems Corporation (Ticker: SPSC & SPSY)
75£m ‘leader in machine-readable high speed banknote authentication, tax stamps, brand protection technologies and gaming security software’. Just announced a 0,35£m buyback. H1 results looking very strong:
Results were mainly driven by a $40m contract to manufacture sensors for a central bank over 3 years, following a $15m development funding from that customer. Expects a cash pile to build up from that contract: ‘we continue to evaluate acquisitions of synergistic, strategic and profitable businesses’. 5,5% dividend. 5x fwd. P/E (Koyfin), but we are looking at inflated earnings. Revenue from that contract will be significantly lower after 2027. CEO and founder owns 10% of shares. Niche looks interesting, some work needed to calculate underlying earnings power. Watchlist. Write up by @InvestingWithWes Newsletter
528) Springfield Properties (Ticker: SPR)
156£m homebuilder in Scotland through six brands. Latest trading update shows flat 106£m revenue for H1, no profits mentioned, net debt of 40£m. Describes the housing market as ‘subdued’, but is confident about an upturn in consumer confidence. 20£m EBIT last year. 171£m NAV, 1% dividend, 17x fwd. P/E (Koyfin). CEO is with the company since 20 years, grandson of the founder is Chair. If I’d want to have exposure to the housing market, I’d rather pick companies on the transaction side, not the builders. Pass.
529) SRT Marine Systems (Ticker: SRT)
231£m ‘provider of maritime surveillance, monitoring and management systems’. Last FY results show 426% revenue growth to 78£m with PBT of 4,9£m, driven by contract wins. Revenue was generated from five customers. Highlights >300£m signed contracts and 1,8£b potential pipeline. Revenues were bumpy in the past, mostly operated unprofitable. I can’t tell whether there was a certain breakthrough or structural change in products or it’s simply coincidence that SRT had a good year, or probably will have good years ahead. Apparently their products are used by ports and coast guards, so there is no focus on military.
Marine robotics company Ocean Infinity owns 15%. Various private people who are not on the board own 26%, 7% insider ownership + the CEO of Ocean Infinity who is on the board. CEO is with SRT since 2008, CFO joined in 2009. Multiple share issues in the last years. Again, interesting niche and according to broker estimate profitability and revenue for the next 2 years is expected to grow 20%+. Watchlist, but not a high priority.
530) Staffline Group (Ticker: STAF)
56£m staffing group. 7,5£m buyback ongoing, repurchased ~30% in recent years. Cash stacked up on the balance sheet since the financial crises, so apparently there was a change in capital allocation policy. H1 2025 results looking good:
Driven by ‘new business momentum’ and more hours worked. Sold its skill training provider subsidiary for 12£m last year. 12x fwd. P/E (Koyfin), margins increasing year by year since Covid. An Asian recruitment group owns 20%, Chairman owns 28% through his own asset manager. I’d say this is only interesting assuming the buybacks continue over the next years, worth a watchlist spot. Write-up by @Rohan Soor:
531) Star Energy (Ticker: STAR)
12£m O&G and geothermal energy company. O&G segment is profitable with 5,5£m adj. EBITDA, geothermal lost 1£m last H1. Reduced costs in geothermal. Pass.
532) Steppe Cement (Ticker: STCM)
42£m Kazakh cement producer. Latest trading update shows increased sales volumes leading to 21% in KZT, just 10% in $ due to high inflation. Wants to increase production, H1 was unprofitable. Pass.
533) Strategic Minerals (Ticker: SML)
34£m mining company with projects in the US, UK and Australia. Share price 4x since October after good drilling results. 2$m revenue in H1, 0,6m PBT. Pass.
534) Strip Tinning Holdings (Ticker: STG)
4£m ‘supplier of specialist connection systems for battery modules and automotive glazing applications’. Expects 8,5£m and negative EBITDA. Suffers from tariffs and ‘supply restrictions’. Revenues flat and unprofitable since years. Pass.
535) Strix Group (Ticker: KETL)
116£m provider of kettle safety controls used in water heating, temperature control or steam management. Share price just jumped >30% on the news to sell its Australian subsidiary for 110£m, which KETL just acquired in 2022 for 38£m. This contributed about 47£m revenue and 10£m adj. EBITDA (~1/3 of the group). Overall reports lower demand for products and negative tariff impacts. Improving its working capital and restructuring its China operations. Cancelled dividend (~4,5%) to reduce debt position, cash from the sale will be used for that as well. CEO joined in 2006, COO in 2012, no material insider ownership. After the sale, KETL may trade at like 5x adj. EBITDA and ‘real’ earnings will be improved simply by not spending 9£m on finance costs like in FY24. Watchlist.
Wrap-up
535/669 companies covered so far.
Watchlist: 80/535.
Pass: 455/535.
No-Revenue counter: 112/535.
Feel free to provide opinions and sources on any of the stocks. Cheers.
Watchlist
Part 1: 4GBL (Delisted), ABDP, ASCO, AMS; Part 2: ALT, ALU, AMCO, ANG; Part 3: ANCR, AT, AVG, BPM; Part 4: BGO, BEG, BIG, BRCK; Part 5: CBOX; Part 6: CLBS, CEPS, CER, CKT, CHH Part 7: CFX; Part 8: CSSG, CRPR, CVSG; Part 9: DFCH, DOTD; Part 10: EAAS; Part 11: None; Part 12: FIN, FNTL, FKE; Part 13: FLO, TUNE, FRAN, GBG; Part 14: DATA; Part 15: HDD, HAYD, HERC; Part 16: IDOX, ING; Part 17: JNEO, JDG; Part 18: KITW; Part 19: LST, WINK; Part 20: MLVN, MBH; Part 21: MAB1, MWE; Part 22: WINE, NWT, NTBR; Part 23: OHGR, OGN; Part 24: OMG, PEB; Part 25: TPFG; Part 26: QTX, REAT, RLE; Part 27: RCN, RNWH, RGG; Part 28: ROSE, RTC, RWS, SDG; Part 29: SAG, SDI; Part 30: SRC, SFT; Part 31: SAL, SPSC/SPSY, SRT, STAF, KETL
Thanks for sharing my write-up and for the continued work on the AIM A-Z series! For what it’s worth on Staffline, buybacks are a big part of the capital allocation strategy under Chairman Tom Spain (as you mentioned, his asset management firm owns ~28% of the Company; I encourage anyone interested in the name to read his Chairman letters, which lay out his capital allocation philosophy clearly) - I estimate a further 3%+ of shares outstanding have been repurchased since H1 FY25 (i.e. in the last 6 months or so).
Execution continues to be strong here despite a weak macro, with the substantial new Culina contract expected to begin driving revenues in H2 FY25E and strong cost control driving operating leverage (EBIT grew 50%+ in H1 FY25). A full year FY25E trading update should be posted in the coming weeks.
Happy to share notes/discuss anytime in case of interest.