Small Cap Report - MAYG, SLG, IND, TNI, SWP, ARI

Monday, Nov 05 2012 by

Good morning! A bit earlier than usual today, as a busy day planned. Firstly, some comments on existing positions.

May Gurney Integrated Services (LON:MAYG) is performing very well indeed, delighted with that one. It was flagged here less than a month ago at 138p, and has already risen to 173p Bid/180p Offer, so a rather ridiculous spread there, but a mid-price of about 176p, so that's a pretty impressive 27% gain already!

I double-checked the figures again, and in my opinion it still looks good value. EPS is forecast for about 25p, so I cannot see any justification for a PER of less than 10, or 250p a share. That relies on no more significant bad news coming out, of course. There could be more bumps in the road, although management did recently say that their 3 problem areas are ring-fenced, implying that the bad news is out.

With a dividend yield still over 5%, and not looking under any threat, I'm very happy to hold until the price gets to my 250p target. But as usual, this is just my personal opinion, not advice, and you should DYOR*

The trading statement from Sarantel (LON:SLG) intrigues me, as I've followed this company for years, and remember speaking to the CEO a long time ago. It's a micro cap (c.£2m) that makes specialist, high performance aerials for mobile devices. It's consistently loss-making, and its finances look precarious (need for another fund-raising soon I'm guessing). So extremely high risk. However, sales  do seem to be in the early stages of taking off - full year sales 35% up at £3m. Doesn't say what the loss is, although they only have £0.8m headroom left on a loan facility. But military customers in particular, are making repeat orders. Intriguing, might be worth a further look, with fun money only, given the very high risk.

I have high hopes for the Indigovision (LON:IND) AGM statement this Thursday, 8 Nov. Since they are in the process of giving away virtually all their cash pile through a Special Dividend, it seems inconceivable that their current trading statement this week will be anything but excellent. The shares are now ex-divi, and in my opinion this could be a favourable entry point at around 410p a share, which is only around £31m mkt cap - not much for a company which could be heading for £3-5m profit this year, and is in a market now growing at 20% p.a. compound.

I suspect 50p EPS is more likely than the broker forecast of 32p, based on the details given in the last trading statement (targeting sales growth of at least 20%). On 60% gross margins the operational gearing is remarkable. Time will tell whether my theory is right or wrong.

There is also an IMS from Trinity Mirror (LON:TNI) on the same day, 8 November, so that will be a busy & exciting morning, although I no longer hold shares in TNI.

Have had a quick look at results from £13m mkt cap SWP (LON:SWP), but can't see anything to get excited about.

Similar with Active Risk (LON:ARI) - interims to 30 Sept look pretty poor - turnover is up a bit to £3.8m, but a £0.8m operating loss. Difficult to see how that is a viable business.

That's it for this morning.

Regards, Paul.

* For anyone not already aware, DYOR means "do your own research!"

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Kier Mgis Limited, formerly May Gurney Integrated Services Plc, provides infrastructure support services. It operates in three segments: Public Sector Services (highways services, environmental services, facility services and fleet and passenger services), Regulated Sector Services (utility services, rail services and waterways services) and Property. The Company is a highways maintenance services provider for local authorities. It is the provider of municipal waste collection services in the United Kingdom. It provides end-to-end fleet management and passenger services to local authorities. It delivers utility maintenance and asset enhancement services in water, gas, power and telecommunications across the United Kingdom. It works in long-term partnership with its client, Network Rail, to deliver maintenance and refurbishment works on rail structures, rail property and in signalling. more »

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UK Oil & Gas Investments Plc (UKOG) is an investment holding company. The Company is seeking to hold interests in exploration, development and production oil and gas assets in United Kingdom. It holds five licenses, including four onshore and one offshore license located in the South of England. The assets include the Horndean and Avington onshore producing oil fields, an offshore Isle of Wight exploration license and the Baxters Copse and Markwells Wood onshore oil discoveries. UKOG holds 28% interest in Horse Hill Developments Limited that owns 65% of the Horse Hill license. UKOG also owns 6% share of Angus Energy Limited which operates and produces oil from both the Lidsey and Brockham oil fields in the UK Weald Basin, south of London. Its subsidiaries include UKOG (GB) Limited, UKOG Weald Limited and UKOG Solent Limited. In addition UKOG holds a 1.32% indirect interest in Horse Hill through its 6% interest in Angus Energy Limited. more »

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IndigoVision is a United Kingdom-based manufacturer of IP video security solutions. The Company’s products include IP Video Wall, Integration, Alarm Panel, Encoders/Decoders, IP Cameras, Network Video Recorders, Video Aanalytics, Control Center, Internet Streaming Server, Software Development Kit, and Software Upgrade Plan. more »

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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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