Jam delivered and currently stuck in a jam!

There were very few RNS announcements in October from companies that I'm interested in, but November has started with a terrific trading update from Biome Technologies:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/BIOM/13850420.html

This was a Q3 update to 30 September. It reads very well indeed.

Firstly, overall revenues are £7m for the first 9 months of 2018 which is a 56% improvement on last year. Significantly, this 9 month revenue figure is already well ahead of the full year figure from 2017 which came in at £6.2m.

As mentioned in my previous blog post, it's the RF division that's outperforming at the moment with £5.5m of the £7m revenues generated coming from the exceptional demand for fibre optic furnaces in 2018. The remainder of 2018 also looks strong for this division, and the outlook for 2019 sounds optimistic with orders "reasonably strong" at this stage.

The Bioplastics division is the laggard at this juncture, but I believe that this division has huge potential given the publicity regarding the environmental damage being caused by conventional plastics. 

Whilst the revenues generated in 2018 by the bioplastics division are marginally down on last year at £1.5m (1.7m in 2017), 2019 could see a significant uplift in revenues. Most of the revenues from this division are currently "for the commercialised outer packaging and non-woven filter mesh for the US coffee pod market." It's worth noting that "a contract for the supply of material for the rigid ring material in this coffee market sector has been signed recently and commercial revenues are expected to commence in Q1 2019 following the completion of final validations."

Even more significantly, there are two projects underway, one in the US and one in Europe, that could lead to substantial revenues in 2019 and 2020 with "further new customer relationships (are)underway within this division which should lead to exciting projects emerging in 2019."

I'm still very excited by the prospects here, and it's a long term hold for me. The shares rose sharply this morning, but they are extremely illiquid and have since fallen back a little from profit taking (the shares are up around 4% as I write). 

At the opposite end of the scale, 7digital's share price has been falling sharply in recent weeks. There is or has been a relatively large seller in the market recently which explains some of the decline:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/7DIG/13826986.html

A major issue is that many investors are probably sitting on their hands waiting for some positive news from the company. Whilst they work towards cashflow and profitability, they have burnt through cash very quickly and recently needed an additional £1.5m loan from three shareholders for working capital as the company completes it's restructuring.

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/7DIG/13843278.html

Promises of cashflow positivity and profitability accompanied by one or two large client contracts is needed from 7digital. So far it's been too many promises without the delivery, and we need under-promising and over delivering from now on.

I remain hopeful that 7digital can achieve their goals, and of course if they do then the share price will recover and move sharply higher. Ever hopeful, but it's never comfortable until you see the evidence of success rather than just jam tomorrow.

One thing that's worth noting is that Biome Technologies was very much a "jam tomorrow" company and many investors will have left the party never to return. That's a pity because it looks like the party may well be just starting? Biome's jam is being delivered now, let's hope 7digital does exactly the same. At the moment 7digital appears stuck in a jam.

Finally and very briefly, PCF have today announced the completion of an earnings enhancing acquisition following an encouraging trading update in late October. I hold.

As ever DYOR, no advice offered or given.

Fond memories - not really!

A brief blog post from me today. It's a company whose shares I don't hold, but have in the dim and distant past. Talking of dim, I remember taking a loss of 27% back in 2004. More positively and looking at the current share price that could have been a lucky escape? We'll see in the fullness of time.

The company in question is Coral products. If memory serves me correctly, I vaguely remember them producing CD casings? Do you remember CD's? Yep, that's why the share price went into freefall I think? Like most investors my memory becomes a little hazy when recalling the duff investments. Anyway, that was then and this is now. Perhaps Coral products is about to rise from the ashes? If they don't go under it's surprising how many companies rebuild and prosper. They can be the most lucrative purchases if you catch them near to their recovery path.

Anyway CRU released an encouraging trading update today and the shares are up 5% as I type.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/CRU/13838153.html

Firstly, I should point out that they're still  a specialist in the design, manufacture and supply of injection moulded plastic products. So what are the all important figures?

The market cap is just over £8m, and the results to the end of April 2018 showed a loss of £370,000 on revenues around £23.5m, although the underlying operating profit was £879,000 with earnings per share of 0.84p. Net assets came in at £13.2m, but just over £7m of that is goodwill and intangibles.

The company does generate cash, but had just £471,000 in cash on the balance sheet against approximately £6m debt back in April. Gross margins are ok at around 35%.

In summary, it's not one that interests me too much at the present since I always compare the financial metrics, market cap and prospects against company shares I already hold, and at the moment I'd tend to add more to some existing holdings rather than add CRU.

However, others may beg to differ or wish to do far more research than I have.

Incidentally, on the subject of plastics, if you haven't read my post on Biome Technologies then you may wish to do so by clicking the link below:-

http://michae1mouse.blogspot.com/2018/09/buy-one-get-one-free-bogof.html

I hold.

twitter: @michae1mouse

One I hold and one I don't!

First of all, a very quick mention of a company I hold.

PCF group released a trading statement this morning which has been well received since trading is in-line with market expectations. The growth metrics are looking very good, and as I write the shares are up almost 6%.  Here's their statement:-

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/PCF/13836455.html

A recent earnings enhancing acquisition should also aid growth prospects going forward:-

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/PCF/13819226.html

A very neat summary of where they are at the moment and what they hope to achieve can be found in the Midas article below:-

https://www.thisismoney.co.uk/money/investing/article-6146579/MIDAS-SHARE-TIPS-invest-PCF-Group-bank-thats-horsebox-expert.html

I'll be holding for the long term because I like the growth prospects, particularly as they continue to improve operational gearing and I'm always happy with a progressive dividend policy. Although the dividend is modest at the moment, for long term holders this income source can become quite substantial over time.

One I don't hold is Croma Security Solutions (CSSG) who released their final results this morning.

I've managed to contrive to miss out on buying into this company on two separate occasions now, in the mid teens and then early twenties. That's the share price I'm referring to btw and not my age. The share price is over £1 now. Never mind! :-(

They released a great set of figures this morning with a 59% increase in revenues to £35.1m (2017: £22.1m), a  significant rise in EBITDA to £2.5m (2017: £0.80m), a massive increase in pre-tax profits to £1.98m and earnings per share to 9.89p (2017: 0.36m and 2.13p respectively) and paid and proposed dividends up to 1.6p (2017: 0.5p). 

An outstanding performance all round. 

The share price has risen a very modest 1% as I write, chiefly I suspect due to the fact that this stellar performance won't be repeated next year:-

https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B5MJV178GBGBXASX1.html

"In the current financial year, we can expect to replicate some but not all of the project income we received in FY 2018 due to some large exceptional projects that are unlikely to be repeated.  However, there has been a substantial increase in contracted income and this together with the expectation of some further project work make the Board confident of achieving a good result for the year, consistent with the underlying growth in the business. "

It's a great little business which is supported by a very solid balance sheet which boasts £2.2m in cash (up from £770,000 the previous year) and has next to zero debt. The current market cap. is a very modest £15m or thereabouts. In summary, many of the qualities that attract me to micro-caps.

CSSG is back on my watchlist, although even in my most optimistic mood I can't see the share price slipping back to the teens or twenties. Sadly, I can't envisage me revisiting my teens or twenties either except by way of a mid-life crisis?

I will be monitoring any opportunities very carefully though. 

As ever, this is just a personal blog and isn't an attempt to provide buy, sell or hold advice.

twitter: @michae1mouse