Snoozebox - trading statement

Snoozebox is a small company with interesting prospects over the longer term, and the company issued a positive trading statement this morning.

Essentially the company supplies portable hotel accommodation to the events sector. The model sounds interesting, and there is clear demand for their services.

I expect the share price to rise slightly on today's news.

However, it's not one that interests me. Firstly, at a market cap. (yesterday) of around £17m, but with adjusted EBITDA losses expected to come in at £1.6m in the first half of the year, the company still looks expensive.

They have recently raised £11m to fund the construction of their next generation of hotel room stock and hospitality units which is necessary for their growth, but I'd be very surprised if they didn't need further funding rounds in future. This company is capital intensive and needs to generate large amounts of cash to be self-funding. I don't see them being able to generate sufficient cash in the near future given today's statement regarding a negative adjusted EBITDA for the first six months of this year.

It's always good to read between the lines of a trading statement as well. Note the following from this morning:-

"the Company has made demonstrable progress in the development of its event programme and is creating a platform for growth and profitability."

In other words growth and profitability are someway off at the moment, and if in any doubt then:-

"I believe the progress made in the underlying operating model, combined with the launch of the Next Generation Portable Hotel in the autumn of this year, provides the platform on which to transform the performance of the business in 2015 and to scale it in 2016."

Longer term, and at a lower price, the company may become interesting, but at the current valuation, a loss making capital intensive company which is consuming cash and valued at over £17m is not for me.

This doesn't suggest I'm bearish either, but I always consider the number of companies out there that are valued similarly and are profitable, cash generative and arguably have better growth prospects.

Angle preliminary results

Angle is one of my more speculative holdings, and the company released their preliminary results this week alongside an evaluation of their Parsortix device by the CEP Group at the Cancer Research UK Manchester Institute.

In short Angle's success or failure hinges on the findings of Key Opinion Leaders finding a clear clinical utility for the Parsortix device. The advantages of the device compared with the competition in this field and the relative cost effectiveness are already well documented, so to my mind the key issue is summed up rather neatly in the following paragraph:-

"The pilot study now underway (by the CEP group) will evaluate the feasibility and potential clinical utility of routine use of the Parsortix system to provide CTC information for patients at presentation and throughout their treatment."

In other words if Key Opinion Leaders can identify clear positive benefits for cancer patients by using the harvesting capability of the Parsortix device then investors will have hit the jackpot and more importantly many more lives may be prolonged or saved from this pernicious disease (in all its forms) by the development of personalised medicine.

Currently, it does look promising. Ged Brady, Deputy and Genomics Leader within the Clinical & Experimental Pharmacology group at Cancer Research UK Manchester Institute commented:
"The evaluation phase of our work is now successfully complete and we see great promise in the application of the Parsortix technology for harvesting CTCs for molecular analysis to enable personalised cancer care. We are now undertaking pilot studies using the Parsortix system in both colorectal cancer and pancreatic cancer."

At year end Angle had £3.9m cash on its balance sheet, and therefore a fund raising looks unlikely in the immediate future.

FDA approval is pending, but the big price driver will be the continued success of this device with Key Opinion Leaders and a tie up with one of the majors in agreeing a corporate deal and/or distribution partner. Given rumours earlier this year about a possible approach for the company, and the fact that Angle is essentially a one trick pony (albeit a potentially extremely rewarding trick), I expect the company to be sold in due course at a significant premium to the current price.

Speculative yes, but the signs are promising and I remain cautiously optimistic.

Belgravium trading update

An excellent trading update from Belgravium this morning:-

http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html?code=BVM&rbDate=released&preDate=Last3Months

Key bit states:-

"It was reported at the AGM that trading in the period had started slowly. Pleasingly trading picked up significantly in Q2 and as a consequence the results for the six months ended 30 June 2014 will show an increase in revenue and a significant improvement in profits compared to the equivalent period last year."

Trading is in line with expectations and second half weighted.

"The directors are encouraged by the level of enquiries and are confident that a good proportion of these can be converted to sales in the second half."

Broker forecasts:-

"Year Ending	Revenue (£m)	Pre-tax (£m)	EPS	P/E	PEG	EPS Grth.	Div	Yield"
31-Dec-14	10.20	0.70	0.66p	7.6	0.1	+65%	0.20p	4.0%
31-Dec-15	11.00	0.90	0.80p	6.3	0.3	+21%	0.25p	5.0%

This makes the shares look very cheap, particularly given current growth.

Appears to confirm my educated guess as to why the deal with Trakm8 fell at the first hurdle.  Belgravium are understandably looking for a premium price for the business, and Trakm8 management like to seek out bargain basement prices. Bodes well for both companies in the future.