Small Cap Report: VP., DAY, TRK, CRE, AVG

Wednesday, Nov 28 2012 by
4

Yesterday was certainly an interesting day at the Inland Homes (LON:INL) AGM. I posted some initial thoughts yesterday afternoon on the advfn.com bulletin board, and will write up a more detailed report on the blog later today, or tomorrow.

Interim results from specialist equipment hire company, VP (LON:VP.) look pretty solid. This seems to me a decent company, which is riding out depressed market conditions very well. EPS is up 18.8p to 21.7p for the 6 months to 30 Sep. There is a strong H1 bias to seasonality, as you would expect for this sector, but they seem on track to deliver broker forecasts of around 32p for the full year.So at 334p (£138m mkt cap) these look reasonable value, on a PER of about 10.5. There is a fair bit of debt, around £50m, but for an equipment hire group that is to be expected, and it's funding £114m of equipment (Balance Sheet net book value of fixed assets).

There's also a useful dividend of around 3.6% forecast, so quite a nice one, especially as I reckon there could be good upside on an economic recovery. It's too easy to get into the mindset of being in a permanent downturn, but at some point things will fire back up again, and that will drive big earnings increases at cyclical companies.

At £240m its mkt cap is a bit large for me, but Daisy (DAY) has rather bizarre accounts. They capitalise enormous amounts of costs as intangible assets (described as "customer lists", valued at £180.9m!), in order to show a large EBITDA figure on the P&L, but after amortisation is always loss-making. I don't like the look of that at all. I'm only mentioning it here so that I can search for the name again here using the search box above, and quickly remember why the shares should be avoided!

I've had a quick skim of the Torotrak (LON:TRK) results - a relic from the late 90's technology shares boom. Their infinitely variable transmission has never really taken off, but the company is still going, and managed to deliver a £1.6m profit for the half year to 30 Sep. Although in the past profit here has been one-offs due to licence receipts, and not recurring.

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Vp plc is engaged in equipment rental and associated services. The Company is engaged in providing products and services to a range of end markets, including infrastructure, construction, house building, and oil and gas, both in the United Kingdom and overseas. Its segments include UK Forks, Groundforce, Airpac Bukom, Hire Station, Torrent Trackside and TPA. The UK Forks segment is a hirer of telescopic handlers and tracked access platforms. Its Airpac Bukom segment offers oilfield services and is engaged in provision of specialist compressed air and steam generation services. Its TPA segment provides equipment rental and installation of portable roadways, walkways and stairways. Its Hire Station segment is a provider of small tools, climate, lifting, safety, survey and press fitting equipment. The Torrent Trackside segment supplies rail infrastructure portable plant and related trackside services. Groundforce is a rental provider of excavation support systems and specialist products. more »

LSE Price
705p
Change
 
Mkt Cap (£m)
283.1
P/E (fwd)
10.9
Yield (fwd)
2.9



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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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