From here on, AIM Prospector will picking one story from AIM a week. This won't be the biggest sensation of the week, instead something that I personally found particularly noteworthy, from the perspective of the investment case.
For this week, that award nearly went to iomart (LON:IOM), for the simple reason that the shares have sold off almost to a level approaching half of July's rejected bid.
However, the inaugural 'story of the week' goes to tube manufacturer Tricorn (LON:TCN), for their announcement of a 5-year, £10m (total) contract.
http://www.investegate.co.uk/tricorn-group--tcn-/rns/contract-win/201412170700129639Z/
The agreement is to supply rigid tube assemblies used in high pressure hydraulic applications. Maxpower Automotive UK will invest approximately GBP0.25m in additional manufacturing capability at its facility at West Bromwich to support the contract.
David Leakey, Sales Director of Tricorn, commented. "Having a core skills base close to the customer's business, as well as an expanding international presence, was key to us securing this significant contract win. On the back of this we can now build upon the high pressure, hydraulic tube capabilities that were first established at our USA operation."
Tricorn (LON:TCN) supplies tube parts to manufacturers such as exhausts for use in large vehicles (resources industry etc.). Management strategy is to have a global manufacturing capability (UK, China, USA) that can serve global blue-chip customers.
The point about Having a core skills base close to the customer's business is something that Tricorn (LON:TCN) have been emphasising for some time. The company has been doing so in the face of a declining share price and disappointing business performance (dividend cancelled, losses reported, sales down).
However, the company has been much more successful in the recent past. For example, 3.4p of EPS was reported for 2012, followed by 3.5p the year after. Profits were made for 2009, 2010 and 2011 - I don't recall the global economy being particularly strong in those years.
The fact that Tricorn (LON:TCN) has had to invest in additional manufacturing capability suggests that this might be new business. To a company that reported £24.5m in revenues for the year to June 2014, £10m over five years looks a significant win.
The market recognised this, with the shares ending the week sharply higher. The advertised spread…
