One of today's big risers is a company called Biome Technologies following a positive trading update. I didn't recognise the name at first, but when I glanced at the news I noticed that part of the company is Stanelco. I do remember Stanelco, I seem to remember that they were developing some packaging technology some years ago, but were continually making losses. A real jam tomorrow company. I did follow their fortunes for a while, but lost interest. Is Biome Stanelco in disguise or was it acquired? Perhaps someone can help out here?
Anyway, Biome have released a positive trading update today, and the share price has risen accordingly. In fact by 12% whilst I am writing this article.
The company appears to comprise of two divisions:- A 'Bioplastics Division' and 'Stanelco RF Technologies Division'. In today's first quarter update both divisions are trading well ahead of the same period last year with Bioplastics recording revenues of £0.5m (Q1 2013: £0.2m) and Stanelco revenues of £0.6m (Q1 2013: £0.2m). The cash burn during the period is just £0.1m, 'reflecting increased activity, receipt of deposits for the RF Technologies division and working capital movements.' A confident outlook has been expressed for the year as a whole based upon increasing volumes of Biome's materials being procured in the period for use in the US single-serve coffee market amongst other applications, and Stanelco's order book growing in an encouraging manner with 2014 orders now in excess of the revenues achieved in 2013. Activity has now commenced on the recently announced GBP1.5m contract to supply advanced analytical equipment to a customer in a regulated industry.
Looking at last year's results and today's trading statement, revenues are increasing from a very low base and profitability looks some way off. Cash burn in 2013 was significant. However, if they can continue to control the cash burn whilst accelerating sales then this could be an interesting punt.
Tangible assets come in at £4.4m with no debt, against a market cap. of approx. £4m after today's share price rise. Not one where I'll be chasing up the share price, and I'd definitely need to do more research, but interesting nevertheless.
Wednesday 23 April 2014
Monday 21 April 2014
The low p/e, small cap., high yielders vs. FTSE all-share
In January I started a study to see how a small portfolio of low p/e, small cap., high yielders would perform against the FTSE all-share index. The nine selected shares are listed in the link below:-
http://michae1mouse.blogspot.co.uk/search?updated-max=2014-01-06T12:56:00-08:00&max-results=3&start=12&by-date=false
Whilst I don't own shares in any of the nine companies, I did make some initial observations after some cursory research which can be seen in subsequent blogs:-
http://michae1mouse.blogspot.co.uk/2014/01/21st-century-technology-plc.html
http://michae1mouse.blogspot.co.uk/2014/01/fairpoint-and-h-group.html
http://michae1mouse.blogspot.co.uk/2014/01/ms-international-and-hydro-international.html
http://michae1mouse.blogspot.co.uk/2014/02/quarto-group-tandem-and-walker-crips.html
So how is this portfolio performing so far? Well whilst the FTSE-all share has fallen from 3605 to 3554, a 2.3% decline, the value portfolio has got off to a flying start, and is up 10.1% for the year to date. In fact just three of the selections are showing a loss whilst the other six have made impressive gains.
The star performer is Tandem with a gain of 40%. This has been driven by the release of better than anticipated end of year results and a positive outlook. Whilst revenues and EPS were down on last year, as expected, the dividend payment has been hiked by 4.5% and they state that revenue for the first quarter is well ahead of the corresponding period in the prior year.
The next best performer is MS International with a 16.1% gain. I can't see any specific company news to have driven the share price forward, but there have been some confidence boosting Director purchases.
Fairpoint has currently recorded a gain of 15%. Fairpoint recently released a good set of prelims. where, although revenues were slightly down, adjusted EPS had improved, they reported strong cash flow and improved the dividend pay-out by 9%.
An encouraging trading statement from Walker Crips has driven the share price 13.4% higher and Director purchases appear to have added to the growing confidence.
H&T has gained a respectable 9%. This was even better until recently when an expected bargain basement purchase of certain assets from Albermarle and Bond fell through. H&T also released their final results where they reported on a challenging year with EPS falling 63% and a reduced dividend (60%) to 4.8p. More positively, net debt had been reduced by 25% to £20.7m.
Quarto Group recorded a more modest gain of 4.6%. Following a challenging year, the group appears more confident about the outlook, they remain focussed on debt reduction, maintained a generous dividend and have recently entered into a joint venture with a Brazilian distributor.
Bisichi Mining is little changed with no notable news flow.
Hydro International is down 4% following final results where EPS halved to 5.15p. They predict a difficult year in 2014, although the dividend was maintained and longer term the management appear confident about the growth prospects.
Finally, the worst performer to date is 21st Century Technology which has lost 12%. Whilst there has been no new news, it appears that the value investor Peter Gyllenhammar has been unwinding his significant percentage holding in the company. The share price has risen a little in the past week or so following his disposal.
It's early days yet, and I'll try to revisit the performance of the portfolio on a fairly regular basis, but certainly it's got off to a flying start in 2014.
http://michae1mouse.blogspot.co.uk/search?updated-max=2014-01-06T12:56:00-08:00&max-results=3&start=12&by-date=false
Whilst I don't own shares in any of the nine companies, I did make some initial observations after some cursory research which can be seen in subsequent blogs:-
http://michae1mouse.blogspot.co.uk/2014/01/21st-century-technology-plc.html
http://michae1mouse.blogspot.co.uk/2014/01/fairpoint-and-h-group.html
http://michae1mouse.blogspot.co.uk/2014/01/ms-international-and-hydro-international.html
http://michae1mouse.blogspot.co.uk/2014/02/quarto-group-tandem-and-walker-crips.html
So how is this portfolio performing so far? Well whilst the FTSE-all share has fallen from 3605 to 3554, a 2.3% decline, the value portfolio has got off to a flying start, and is up 10.1% for the year to date. In fact just three of the selections are showing a loss whilst the other six have made impressive gains.
The star performer is Tandem with a gain of 40%. This has been driven by the release of better than anticipated end of year results and a positive outlook. Whilst revenues and EPS were down on last year, as expected, the dividend payment has been hiked by 4.5% and they state that revenue for the first quarter is well ahead of the corresponding period in the prior year.
The next best performer is MS International with a 16.1% gain. I can't see any specific company news to have driven the share price forward, but there have been some confidence boosting Director purchases.
Fairpoint has currently recorded a gain of 15%. Fairpoint recently released a good set of prelims. where, although revenues were slightly down, adjusted EPS had improved, they reported strong cash flow and improved the dividend pay-out by 9%.
An encouraging trading statement from Walker Crips has driven the share price 13.4% higher and Director purchases appear to have added to the growing confidence.
H&T has gained a respectable 9%. This was even better until recently when an expected bargain basement purchase of certain assets from Albermarle and Bond fell through. H&T also released their final results where they reported on a challenging year with EPS falling 63% and a reduced dividend (60%) to 4.8p. More positively, net debt had been reduced by 25% to £20.7m.
Quarto Group recorded a more modest gain of 4.6%. Following a challenging year, the group appears more confident about the outlook, they remain focussed on debt reduction, maintained a generous dividend and have recently entered into a joint venture with a Brazilian distributor.
Bisichi Mining is little changed with no notable news flow.
Hydro International is down 4% following final results where EPS halved to 5.15p. They predict a difficult year in 2014, although the dividend was maintained and longer term the management appear confident about the growth prospects.
Finally, the worst performer to date is 21st Century Technology which has lost 12%. Whilst there has been no new news, it appears that the value investor Peter Gyllenhammar has been unwinding his significant percentage holding in the company. The share price has risen a little in the past week or so following his disposal.
It's early days yet, and I'll try to revisit the performance of the portfolio on a fairly regular basis, but certainly it's got off to a flying start in 2014.
Sunday 13 April 2014
Access Intelligence - Final results
The last time I reported on my holding in Access Intelligence was back in October following a mild profits warning from the company:-
http://michae1mouse.blogspot.co.uk/2013/10/access-intelligence.html
At the end of the post I stated that I might add to my holding on further weakness, and that's exactly what I did at prices around and below 3p.
At the beginning of the month, the company reported their annual results with turnover up 4% at £8.4m, contracted not yet invoiced revenue up 21% to £6.6m, recurring revenue up 9% to £6m at 72% of sales, adjusted EBITDA up 57% to £576,000 and a cash balance of £1.5m.
The company reported a loss, but this is substantially due to the impairment of intangibles, otherwise the operating profit was a modest £77,000.
Over the last couple of years, Access Intelligence has invested heavily in product development to deliver long term shareholder value, and there are signs that the company is beginning to see the benefits of this investment with the number of new contracts that it has signed and the increase in contracted revenue not yet invoiced.
As with Trakm8, future visibility is good since recurring revenues are a significant percentage of sales and the company has strong cash generation. This is a small company which is making steady progress, but is well under the radar of many investors at the moment.
Another attractive feature is it's hugely impressive and wide client base:- BG Group, Debenhams, NHS, Metropolitan Police, AstraZeneca, Investec, Ladbrokes, Met. Office, Centrica, Easyjet, etc. to name just a few.
Following the results Michael Jackson took advantage of the low share price and grabbed £48,000 worth at 3.75p per share. Incidentally, Michael Jackson is former Chairman of PartyGaming plc, Computer Software Group, Planit Holdings and until August 2006 was chairman of FTSE100 company, The Sage Group plc, where he was a Board Director for 23 years and saw the company rise from a market cap of less than £5m to its current valuation of over £3bn.
Maybe he can do for Access Intelligence what he did for Sage Group?
A swish new website went up this week and it's well worth having a good browse:-
http://www.accessintelligence.com/
http://michae1mouse.blogspot.co.uk/2013/10/access-intelligence.html
At the end of the post I stated that I might add to my holding on further weakness, and that's exactly what I did at prices around and below 3p.
At the beginning of the month, the company reported their annual results with turnover up 4% at £8.4m, contracted not yet invoiced revenue up 21% to £6.6m, recurring revenue up 9% to £6m at 72% of sales, adjusted EBITDA up 57% to £576,000 and a cash balance of £1.5m.
The company reported a loss, but this is substantially due to the impairment of intangibles, otherwise the operating profit was a modest £77,000.
Over the last couple of years, Access Intelligence has invested heavily in product development to deliver long term shareholder value, and there are signs that the company is beginning to see the benefits of this investment with the number of new contracts that it has signed and the increase in contracted revenue not yet invoiced.
As with Trakm8, future visibility is good since recurring revenues are a significant percentage of sales and the company has strong cash generation. This is a small company which is making steady progress, but is well under the radar of many investors at the moment.
Another attractive feature is it's hugely impressive and wide client base:- BG Group, Debenhams, NHS, Metropolitan Police, AstraZeneca, Investec, Ladbrokes, Met. Office, Centrica, Easyjet, etc. to name just a few.
Following the results Michael Jackson took advantage of the low share price and grabbed £48,000 worth at 3.75p per share. Incidentally, Michael Jackson is former Chairman of PartyGaming plc, Computer Software Group, Planit Holdings and until August 2006 was chairman of FTSE100 company, The Sage Group plc, where he was a Board Director for 23 years and saw the company rise from a market cap of less than £5m to its current valuation of over £3bn.
Maybe he can do for Access Intelligence what he did for Sage Group?
A swish new website went up this week and it's well worth having a good browse:-
http://www.accessintelligence.com/
Trading statement - Trakm8
Trakm8 released a very encouraging trading update this week indicating that profit for the year ended 31 March was ahead of management expectations. Reassuringly the acquisition, and subsequent integration of BOX telematics into the group, appears to have gone well, and net cash at the end of the year at £0.6m was higher than anticipated.
Most encouragingly, on a like for like basis, Trakm8 orders are up 46% year on year, and the outlook statement indicates that they are now in a strong position to grow faster, and consider further value enhancing acquisitions.
A further caveat to the statement explains that exceeding management expectations this year was "primarily due to elevated levels of increased margin Engineering Services revenues in the final quarter of the financial year. These were very much associated with new projects that although beneficial for the results to 31 March 2014, will be predominantly delivered in the current financial year."
The trading statement also says that "the outlook for the current financial year is more positive than at any time in recent years."
Trakm8 is still a small company, and of course there are inherent risks and potential banana skins as it strives for rapid growth. However, I am very encouraged by their progress to date, and so far the management team have put in an impressive performance. Growth is being achieved through a measured approach without stretching the balance sheet. Comfortingly this is a high margin business with a high percentage of recurring revenues and strong cash flow. Interestingly, although the new financial year has just begun, I noted that future visibility means that management already expects the Group to achieve an improved trading performance in the new financial year, in line with their existing expectations.
On Friday the share price reached a new 52-week high.
The Director's hold sizeable stakes, and I noticed that at the end of the week an employee bought £21,000 worth out of treasury at a price of 60.25p per share.
Current broker forecasts are for 4.3p to end March 2015 putting the shares on a forward P/E of around 14. Given their impressive growth, and the potential for further value enhancing acquisitions, the share price looks good value to me.
I remain highly optimistic about Trakm8's future and shall continue to hold for the foreseeable future.
Most encouragingly, on a like for like basis, Trakm8 orders are up 46% year on year, and the outlook statement indicates that they are now in a strong position to grow faster, and consider further value enhancing acquisitions.
A further caveat to the statement explains that exceeding management expectations this year was "primarily due to elevated levels of increased margin Engineering Services revenues in the final quarter of the financial year. These were very much associated with new projects that although beneficial for the results to 31 March 2014, will be predominantly delivered in the current financial year."
The trading statement also says that "the outlook for the current financial year is more positive than at any time in recent years."
Trakm8 is still a small company, and of course there are inherent risks and potential banana skins as it strives for rapid growth. However, I am very encouraged by their progress to date, and so far the management team have put in an impressive performance. Growth is being achieved through a measured approach without stretching the balance sheet. Comfortingly this is a high margin business with a high percentage of recurring revenues and strong cash flow. Interestingly, although the new financial year has just begun, I noted that future visibility means that management already expects the Group to achieve an improved trading performance in the new financial year, in line with their existing expectations.
On Friday the share price reached a new 52-week high.
The Director's hold sizeable stakes, and I noticed that at the end of the week an employee bought £21,000 worth out of treasury at a price of 60.25p per share.
Current broker forecasts are for 4.3p to end March 2015 putting the shares on a forward P/E of around 14. Given their impressive growth, and the potential for further value enhancing acquisitions, the share price looks good value to me.
I remain highly optimistic about Trakm8's future and shall continue to hold for the foreseeable future.
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