Small Cap Report - SRG, ZATT, SDM, BQE, ULT, HEAD

Friday, Nov 16 2012 by
7

We seem to be in profits warning season, as some companies begin to realise that they're not going to hit their forecasts. Given the softness in the Eurozone, and UK economies, then one imagines we're likely to see more profits warnings that usual this year. So might be a good time to review the portfolio and trim back a bit on things that look vulnerable to warn? Handy to have a bit of spare cash on the sidelines too, so one can move fast to grab opportunities that arise. 

One such opportunity that I spotted yesterday was a special situation called Security Research (LON:SRG) , a very interesting small cap that won an enormous & highly profitable contract from the MoD to provide detection equipment for bombs for use in Afghanistan. The earnings are not sustainable, which they freely admit, but it has brought in a one-off cash boost, which they are returning to shareholders via a tender offer at 225p. The shares can be bought for about 125p, so I picked up a few, with the intention of tendering 1 in 5, but getting almost double the money for each share tendered. I also wonder if there is the possibility of repeat orders? You never know. DYOR as usual on this one, it does need careful thought, as it's such an unusual situation. But a tender offer at almost double the share price seems a pretty bullish signal to me.

Computer games company Zattikka (ZATT) is one of today's casualties, saying that proforma 2012 revenues will be $10-11m. Stockopedia shows that broker forecast is for $12.8m turnover in 2012. So that looks like a 10-20% share price fall on the cards for today.

Things are not going well at Stadium Group (SDM), a £15m mkt cap electronics company. I see that broker forecasts have already been lowered considerably throughout 2012, but they've warned today that H2 profits will be below H1, and therefore the full year will be "significantly below current market expectations". Not good that, so a sharp drop likely here too. Although they do say that a Hong Kong property disposal will realise a £3m one-off cash inflow, and £2.2m exceptional profit, and that they are confident of an improved 2013. So I might put this on 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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Security Research Group plc is a diverse group of companies. The Company offers electronics design and manufacture, and legal services. It has three divisions, Specialist Electronics, Property Information Services and Packaging Solutions. The Specialist Electronics Division manufactures and sells specialist electronic equipment used in the surveillance and counter‐surveillance market. Sales are achieved either directly through its sales team or through its network of distributors. The Property Information Services Division provides property information searches. The division runs a national franchising network together with its own franchise and also has an energy reports business and a regulated business sourcing financial products. The Packaging Solutions Division provides flexible packaging solutions to a variety of industry sectors, including the food and pharmaceutical markets. more »

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Zattikka plc is an entertainment company. The Company is engaged in developing and publishing games entertainment products for mobile and tablet devices, personal computers (PC)/Macs across open browsers and other Internet connected devices, and providing art and design services for third party game developers. The company operates in two segments: Online Games and Publishing Services. The Online Games group is responsible for developing and publishing intellectual property (IP) owned by the Company, including subscription, advertising and virtual goods revenues within its published games. The Publishing Services group generates revenues through work for hire art and design consultancy services for third party game developers. The Company’s subsidiaries include Concept Art House Inc, Yi Yi Ju (Shanghai) Software, Hattrick Europe Limited, Hattrick Holdings Limited, Spelkultur I Malmo AB and Spelkultur I Sverige AB. more »

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Stadium Group plc is a provider of integrated electronic technologies. The Company operates through two divisions, including Technology Products, which incorporates wireless, interface and displays, power and stontronics, and integrated Electronic Manufacturing Services (iEMS) provided through design and manufacturing operations in the United Kingdom and Asia. It offers various services, such as design (electronic, mechanical and software), prototype, new product introduction (NPI), global procurement, in house tooling and molding, printed circuit board (PCB) assembly, box build and test, packaging and global logistics. It provides wireless machine-to-machine (M2M) connectivity solutions for original equipment manufacturer (OEM) devices in vehicle tracking, telematics, fleet management, smart metering, asset tracking, wearable technology, handheld devices, infotainment and security systems. It serves various manufacturers in the marine, aviation, medical and broadcast industries. more »

LSE Price
76.5p
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Mkt Cap (£m)
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P/E (fwd)
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Yield (fwd)
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  Is Security Research fundamentally strong or weak? Find out 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 Stockopedia.com 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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