Small cap investors may not expect profitability in the near future but would think of it as a handy bonus.

As annual reporting season looms, Stockhead has tracked down profitable micro-cap stocks (under $100m) that announced after tax profits last annual reporting season.

Code Name Price (22-Jul 3pm) Profit After Tax 1 Year % Return 6 Month % Return Market Cap
ACF ACROW FORMWORK AND CONSTRUCTION 0.32 $9.0M 2 -27 $57.7M
ADA ADACEL TECHNOLOGIES LTD 0.445 $8.4M -73 -31 $33.9M
AIS AERIS RESOURCES LTD 0.079 $61.5M -46 -67 $33.3M
ASH ASHLEY SERVICES GROUP LTD 0.3 $4.8M 65 15 $43.2M
ATL APOLLO TOURISM & LEISURE LTD 0.445 $19.2M -70 -62 $81.4M
BTK BOTAI TECHNOLOGY LTD 0.015 $6.0M -52 -25 $2.3M
CGR CML GROUP LTD 0.465 $6.5M -17 5 $93.6M
CLT CELLNET GROUP LTD 0.175 $3.1M -49 -57 $11.0M
CUE CUE ENERGY RESOURCES LTD 0.09 $7.7M 64 42 $66.3M
EBG EUMUNDI GROUP LTD 1.00 $3.9M 21 8 $39.5M
EPD EMPIRED LTD 0.315 $4.9M -41 -33 $52.0M
GAP GALE PACIFIC LTD 0.34 $9.8M -1 3 $95.5M
GLB GLOBE INTERNATIONAL LTD 1.6 $8.4M 28 -30 $66.4M
JYC JOYCE CORP LTD 1.51 $6.7M 19 7 $43.1M
KPG KELLY PARTNERS GROUP 1.03 $10.2M -12 -6 $46.9M
LGD LEGEND CORP LTD 0.37 $6.0M 69 23 $80.2M
MTO MOTORCYCLE HOLDINGS LTD 1.25 $9.1M -59 -38 $77.1M
MXI MAXITRANS INDUSTRIES LTD 0.32 $10.0M -38 -35 $61.1M
NTD NATIONAL TYRE & WHEEL LTD 0.395 $10.7M -65 -10 $40.6M
PBP PROBIOTEC LTD 1.57 $4.7M 23 9 $97.6M
QTM QUANTUM HEALTH GROUP LTD 0.025 $3.1M 56 0 $27.5M
RXP RXP SERVICES LTD 0.44 $7.8M -5 -11 $70.9M
SIO SIMONDS GROUP LTD 0.4 $4.8M 7 29 $57.5M
SSG SHAVER SHOP GROUP LTD 0.455 $7.2M 5 40 $58.4M
TAM TANAMI GOLD NL 0.05 $12.4M 44 4 $58.6M
TRS REJECT SHOP LTD/THE 2.1 $16.6M -62 -22 $60.1M
TTI TRAFFIC TECHNOLOGIES LTD 0.021 $6.1M -46 -39 $9.6M
VOL VICTORY OFFICES LTD 2.01 $3.9M N/A 0.5 $81.1M
VP7 VELOCITY PROPERTY GROUP LTD 0.028 $97.7M -44 -43 $10.1M
ZEN ZENITH ENERGY LTD/AU 0.6 $8.5M -42 -10 $84.1M

The biggest on the list was Velocity Property Group (ASX:VP7) which last year recorded a profit of nearly $98m.

How can a stock with a profit $98m have a market cap of just $10m?

Because its market cap is just the total value of its shares. Stocks in capital intensive industries such as property developments and aviation can be valued higher on different valuation metrics such as enterprise value.

Following Velocity was base metals explorer Aeris Resources (ASX:AIS), which made a $61.5m profit in FY18.

Aeris is in production and in FY19 has exceeded production targets at anticipated cost levels.

But profitability doesn’t make you immune from falls

While some stocks have gained, on average these are down 12 per cent in 12 months. One of the highest profitable firms, The Reject Shop (ASX:TRS) anticipates a loss of $3.1-$4.1m.

Increased competition and falling consumer spending is believed to be the largest cause of this.

Not even the Christmas and Easter shopping periods could save it. Chairman Bill Stevens said in May, upon announcing the profit downgrade, that he was still confident the company had good long-term prospects.

Next was Apollo Tourism and Leisure (ASX:ATL), which recorded a $19.2m profit after tax. This year it still expects a profit but it will be slightly lower – between $14 and $15.5m due to a softening travel market.

When will we know?

Companies still have to release results for the June quarter and these are due by Wednesday July 31.

Preliminary final reports are due by the end of August and the deadline for paying annual listing fees is around this time as well. Any stock that does not pay up will be suspended and on a ‘name and shame list’.

Concise financial reports are due at the end of September and final annual reports are due on October 31. The latter is the same date as the next quarterly deadline.

However, companies using its home jurisdiction’s financial year (such as New Zealand) are permitted to use adjusted deadlines (2, 3 and 4 months after the end) for these purposes.

Nevertheless, companies using the calendar year will have to release half-yearly reports and they will be just as insightful as their full-year reports.