21st Century Technology Plc

21st Century Technology (C21) is the second of the value plays on my list, and it is a company that I'm reasonably familiar with. It has been on and off my monitor a number of times. My impression to date is that it has been somewhat of a serial disappointer. Just when you think it's turned a corner a profit warning suddenly emerges out of the blue. In fact I wrote a few lines about C21 in my August blog with particular reference to Jan Holstrom, the outgoing Non-Executive Chairman:-

http://michae1mouse.blogspot.co.uk/2013/08/updates-ubc-media-densitron-ddd-group.html

However, it's a company that's always looked like it had promise, and with the recent Directorate changes, it is a company that is firmly back on my monitor.

C21 describes itself as "a leading supplier of public transport CCTV and other monitoring systems, including their award winning EcoManager".  Looking at the figures from last year's results the company looks very much like a value share with (in theory) potential for significant growth. Buying growth companies when temporary circumstances render them attractive as a value play can turn out to be very rewarding for medium to long term investors. What investors will need to weigh up here though is whether C21 is a genuine bargain or simply a value trap.

Based on last year's earnings, the historic p/e ratio is less than 6, the dividend yield is around 9% covered twice by earnings and the market cap. is £7m. The tangible asset value is around 4p or 8.5p including intangibles.

However, I mentioned that this could turn out to be a value trap because at the half year, Jan Holstrom had this to say about trading in the second half:-

".... We are now experiencing a significantly lower than expected order pipeline for H2 2013. We have received indications that revenue receivable from one of our largest customers is likely to be 70% lower in H2 2013 than H1 and below our previous expectations, whilst a four-year contract with the GoAhead Group is due to expire very shortly.
"In view of the above, the Board has sought to reassess the Group's order book and pipeline opportunities and anticipate that its financial performance for the year ending 31 December 2013 is likely to be significantly below its previous expectations and of the previous financial year, should the pipeline remain at its current levels."

So I suppose the question is can the new faces that have joined the Board put C21 back on track and re-establish a growth trajectory, and if they can, just how long will it take?

In October of this year, Russ Singleton, the Chief Executive Officer and Glenn Robinson the Group Finance Director, purchased over £160,000 worth of shares between them at 6.5p, and so it would appear that they are confident of steering C21 back in the right direction.

Only time will tell of course, and as ever please DYOR, and no advice is intended or given.