Small Cap Report (2 May) - SSP, JSG, SNX, ZZZ, CCT

Thursday, May 02 2013 by
6

Pre 8 a.m. comments

 

Good morning! Fairly quiet for results today, although my eye has been drawn to a trading update from Solid State (LON:SSP). They say that sales and pre-tax profits are in line with expectations for the year ended 31 Mar 2013.

As you can see from the Stockopedia "Growth & Value" table on the left, there are some good strong green bars (indicating top quintile in both absolute & sector relative terms) in the key areas of PER, dividend yield, and ROCE/ROE.

For me, that is always my instant glance as to whether the shares are worth looking into further, which in this case they are.

Also, a positive or at least "in line with expectations" trading statement is always a good starting point for researching whether to buy some shares, as you have at least got certainty over current trading, which reduces the risk of a profits warning, at least in the near future.

They have also done what appears to be a good value acquisition, paying £900k cash for Q-par Angus Ltd. It had turnover of £2.25m and post-tax profits of £214k for the year ended 31 May 2012, so the acquisition price of just £900k looks to have been a good deal. It is said to be earnings enhancing, which of course any profitable acquisition will be, if paid for in cash!

They conclude the trading statement by saying that order intake "remains strong". Looks to be an interesting potential investment, I might do some more work on this over the weekend.

 

Johnson Service (LON:JSG) issues a positive-sounding AGM trading update. Key points are that trading has been in line for the first four months of the year. They remain confident for the full year. It's got too much debt for my liking, so for that reason doesn't meet my investing criteria.

 

Post 8 a.m. comments

One thing that's generally struck me, is that whilst we've had a fairly indiscriminate move up in many shares in the past year, in order for those price rises to stick, then companies have to deliver solid trading results. So we're seeing some quite sharp pullbacks in share prices where results do not live up to expectations.

All the…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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Solid State PLC is engaged in manufacturing of electronic equipment and distribution of electronic components and materials. The Company is a manufacturer and specialist design-in distributor to the electronics industry. Its segments are Distribution division and Manufacturing division. The distribution division comprises Solid State Supplies Limited and Ginsbury Electronics Limited. The manufacturing division includes Steatite Limited and Q-Par Angus Limited. Its geographical segments include UK and Non UK. The Company is a supplier of computing technologies, electronic components, antennas, microwave systems, secure communications systems and battery power solutions. It markets its products through brands, including ndura RUGGED and RZ Pressure. It acts as both a distributor to original equipment manufacturers (OEMs) and manufacturer of specialist units to clients with complex requirements. It serves aerospace, environmental, government, oil and gas, and transportation markets. more »

LSE Price
515p
Change
 
Mkt Cap (£m)
43.5
P/E (fwd)
14.2
Yield (fwd)
2.5

Johnson Service Group PLC is a United Kingdom-based company that provides textile related services to both businesses and consumers. The Company's segments include Textile Rental and Drycleaning. The Textile Rental segment is engaged in the provision and laundering of workwear, roller towels, corporate apparel, dust mats, premium linen for the hotel, catering and hospitality markets, linen for the high volume hotel market and the direct sale of associated products. It operates Textile Rental business under the brands, including Apparelmaster, Stalbridge, Bourne and London Linen. The Drycleaning segment is engaged in the provision of drycleaning, laundry and ironing services, carpet cleaning, upholstery cleaning, wedding dress cleaning, and suede and leather cleaning. It operates Drycleaning business under the brands, including Johnson Cleaners and Jeeves. Its subsidiaries include Jeeves of Belgravia Limited, Johnson Investment Limited and Johnson Group Properties PLC, among others. more »

LSE Price
112.5p
Change
-1.3%
Mkt Cap (£m)
416.3
P/E (fwd)
14.7
Yield (fwd)
2.3

Synectics plc is a United Kingdom-based company that designs, delivers and manages integrated security and surveillance systems for security environments. The Company operates through two divisions: Systems, and Integration and Managed Services (IMS). The Systems division provides specialist electronic surveillance systems based on its technology to customers in oil and gas operations, gaming, infrastructure protection, high security and public spaces. The IMS division supplies products and technology from its Systems division. The IMS focuses on delivering end-to-end, security and surveillance solutions, specialist mobile systems for transport operators, as well as service-led solutions for the management of facilities and security services. The Company primarily works across oil and gas, gaming, transport and infrastructure, and high security and public space sectors. It offers Synergy 3, which a command and control software platform for security. more »

LSE Price
235p
Change
-2.1%
Mkt Cap (£m)
42.7
P/E (fwd)
15.9
Yield (fwd)
1.9



  Is Solid State fundamentally strong or weak? Find out More »


5 Comments on this Article show/hide all

Chrisfarrell21 2nd May '13 1 of 5
1

Hi Paul,

The concept of Snoozebox really interests me, and think it has more of a market at events like F1 and Moto GP where people would pay good money to be at the track for the whole 3-4 days. Festivals are more of a mixed crowd so agree that it might not fair as well there.

It will be interesting to see the next couple of updates now that Robert Breare has stepped aside as CEO to concentrate on sales, and the FD has gone. There were always questions about Robert Breare's past company history, and the FD should be responsible for the shortfall news issued on 22 April.

Also, Goldplat (LON:GDP) updated as well yesterday morning, the market seemed to take it well. It looks currently like one of the best value shares on the entire London market.

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Paul Scott 2nd May '13 2 of 5
1

In reply to Chrisfarrell21, post #1

Hi Chris,
I also like Goldplat (LON:GDP). I had a very small number of shares in it until recently, but got rid of them when I needed the funds for something else. Does look very good value though - PER less than 5 on broker forecasts, and it has net cash! 5% forecast yield too.

Downside is obviously risks inherent from African operations.

Regards, Paul.

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campbellsmith 2nd May '13 3 of 5
1

Hi Paul,

I totally agree with your comment about moving part into cash after a very strong run. We really don't have to be fully invested all the time. I too keep finding interesting companies to invest in!

So far this year, the SmallCap companies in my portfolio have significantly out-performed the 'traditionally dependable' larger-company element.

Keep up the excellent work!

Campbell

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Chrisfarrell21 2nd May '13 4 of 5
1

In reply to Paul Scott, post #2

Indeed.

With a slightly longer term view, the potential development of a third recovery operation in Burkina Faso is interesting and would reduce the forward PER further, albeit a year or two down the line.

Also, the recent announcement on 24 April effectively values £GDP's share (after the transaction) in the South African recovery operation at £14.5m, which compares pretty well against the market cap of £17.3m, the net cash and the value of the other profitable operations.

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Nopunting 4th May '13 5 of 5
2

Paul

When you look at Solid State, look closely at the cashflow statement; it requires quite material working capital to grow. Director remuneration is also quite high. I expect that they will need further equity to fund acquisitions of any material size

Edward

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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