Small Cap Report - INL, ARTA, BVM, SID, PHTM

Friday, Dec 07 2012 by

Good morning, am back from Paris now, and full of praise for the Eurostar service. I'll definitely be using it more often for short breaks. It's so quick & convenient, and my return fare only cost £69! Combined with a great quality hotel deal on Expedia, and eating out cheaply from sandwich shops, and with decent champagne only £9 a bottle from Carrefour (yes that was the reason there was no blog update yesterday!) you can't go wrong really. Plus of course any visit to Paris reminds you that customer service in the UK really is marvellous in comparison!

Long-suffering shareholders in brownfield regeneration company Inland Homes (LON:INL) finally have some good news today - as expeted, planning permission has been granted on the old Pilkington Tiles site in Hamworthy, Poole for a mainly residential development. Whilst house prices in the poshest parts of Poole can be astronomical (e.g. Sandbanks), Hamworthy is a dump. However, since the site is right next to Poole Harbour then Inland's development might begin the gentrification of the area?

I bought a few more Inland shares yesterday, on a small dip. Underlying NTAV is probably now at least 32p a share, so buying at 19.5p seems good value, especially as the Banks are now beginning to lend again in this sector, as reported at Inland's last eventful AGM, where many of us went along to protest at excessive Board Room pay, and unjustified bonuses.

Results from Artilium (ARTA), a telecoms software group, look pretty awful, and their financial situation precarious. So that's going on my bargepole list, as it looks moribund without another fund-raising.

Talking of which, someone told me something interesting the other day. I've often wondered why some fund managers continue supporting companies which are obviously rubbish, with repeated fund raisings (Earthport springs to mind). The answer I'm told is because it's to save their own careers - i.e. by supporting a rescue fund-raising, they can pretend that the company will deliver on its business model, so it kicks the can down the road for a year or two. Whereas if the fund manager admits it's been a rubbish investment, and writes it off, then his own job is on the line.

Makes sense now doesn't it?! I've always thought that people make much bettter decisions with their own money, than with other people's money.

Belgravium (BVM) puts out a profits warning, so expect a sharp drop there today. The maker of rugged portable computers says that orders have been delayed, impacting on sales & profits for y/e 31 Dec 2012. Although dividends are expected to be maintained at the same level as last year, so not all bad. That means at 0.1p the yield is 2%. If it's a fundamentally sound company, then warnings like this can provide a cheap entry point. Although share prices usually take quite a few months to recover from profits warnings. The mkt cap at Belgravium is too low for me, at £5m.

Several readers emailed me yesterday to point out that I'd got the ticker wrong for Silverdell, which is actually SID, so I have corrected Weds blog entry. If you ever do spot any mistakes here, then please let me know, it's very helpful. I try my best to be 100% accurate, but being human, the occasional error will slip through.

Also, someone pointed out that broker forecasts for SID are much more appealing than the historic figures, due to having a full year of their acquired business. So might be worth me revisiting the numbers there, and thank you to the reader who kindly emailed me the Edison research note on SID.
I like the mgt at Silverdell who we met at a FinnCap/Mello Central evening last year. They seem honest, straight-forward, hard working people, which is what you want.

A very quick glance at Photo-Me International (LON:PHTM) results looks impressive - profits up, and tons of cash. Might be worth a further look when time permits? However, bear in mind that it's a seasonal business, with H1 the much stronger half, so don't make the mistake of assuming that you can double interim profits to estimate the full year! (as that would generate a falsely optimistic result).

I note that Berkeley Group has put out very strong results, which gives hope that activity in the house building sector might increase, which we certainly need, given the scarcity of housing, especially in the South East, caused by factors such as an ageing population, increasing number of single person households, and of course unrestricted immigration for the last 15 years. 

Funnily enough, if you let in 10 million people, and don't build any new houses, then you end up with a housing crisis! An intelligent 10 year old could have predicted that, but sadly not our last Government!
On that scathing note, I shall sign off & bid you a good day, and a pleasant weekend.

Regards, Paul.


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Inland Homes plc is a United Kingdom-based house builder and brownfield developer company. The Company, along with its subsidiaries, is engaged in acquiring residential and mixed use sites and seeking planning consent for development. The Company is a developer of urban regeneration projects around southern England, with a particular emphasis on residentially led mixed-use schemes on brownfield sites. It is engaged in land regeneration business, focused on developing sites in southern England for residential and mixed use projects. The land portfolio consists of approximately 3,734 plots across the south of England, owned, controlled or managed by the Company. Its subsidiaries include Inland ZDP plc. more »

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Artilium plc (Artilium) operates in the business to business communications sector delivering software solutions. The Company’s ARTA Mobile Applications Platform enables network operators to open networks to third party developers and launch new services which feature elements from the telecoms and Web environments. The ARTA Mobile Applications Platform supports multiple configurations depending upon the requirements of the operator and managed services provider. Artilium has two trading businesses: The First division Artilium NV, where customers include Mobile Network Operators (MNOs), Mobile Virtual Network Operators (MVNOs), Mobile Virtual Network Enablers (MVNEs), Fixed and Alternative Operators, Hosting Providers, System Integrators and Managed Service Providers. The second division, United Telecom is a service provider and reseller of telecommunications services in Belgium. more »

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Belgravium Technologies Plc is engaged in enterprise mobile computing solutions. The Company designs, installs and maintains software applications and solutions for the airline, rail, retail and logistics industries. Its core applications include annually licensed software and support services, as well as the supply of hardware, software and systems integration, backed by a fully managed service in markets, such as point of sale, logistics and transport, vehicle telematics and access control systems. Its services include analysis of client's overall system requirement; system design and manufacture, including bespoke software and hardware development if required; system commissioning and installation, and full local post-sale system maintenance and service, including rapid response call-out for any customers that require it. Its three company brands include Feedback Data, TouchStar Technologies and Novo IVC. more »

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  Is Inland Homes fundamentally strong or weak? Find out More »

1 Comment on this Article show/hide all

PhilH 14th Apr '13 1 of 1

Hi Paul,

I know your time is precious but I've been looking at Photo-Me International (LON:PHTM). You highlighted their impressive results in December in this report and they issued an interim report in early March which was positive. Their share price has taken a tumble recently and I think it's due to director selling. The director selling appears to have been driven by a desire to free up some shares for institutional investors and to increase liquidity. Given this dip in the share price I'd be interested in your comments on their potential value.

I have no position, but what sparks my interest is the strong positive reaction to the price drop suggeting that there is a lot of bullish support that is likely to push things higher.

I understand that you're not a fan of charting however my Point & Figure analysis of the share gives a suggested price target of £1.06 if a close above 78p occurs.



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About Paul Scott

Paul Scott

Paul trained as an accountant, then spent 8 years as FD for a ladieswear retail chain.He became a professional small caps investor in 2002 to date.Paul writes a small caps report for on weekday mornings. He joined Fundamental Asset Management Ltd as a research associate in 2014, as part of their Small Cap Value Portfolio team. more »


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