Small Cap Value Report (12 Jan 2015) - SKP, LAM, NETD

12th Jan '15 by Paul Scott

17 comments 16392 reads

Good morning! Another interesting morning too, with lots going on. I'm increasingly looking for opportunities in the oil sector, and over the weekend I did an oil sector special audiocast, with an expert in the field, Paul Curtis. Click here to listen to me interviewing him yesterday. There's no angle on these audiocasts, they're free, with no advertising. I just enjoy doing them, and think they are interesting, and other people seem to like them.

Stop Press: Mello Beckenham, at Sea Salt restaurant, is next Monday, 19 Jan, and the company presenting is a micro cap HML Holdings (LON:HMLH) which is a property management company. Please see the usual webpage here for details on how to reserve a place.

SkyePharma (LON:SKP)

Share price: 284p (down 17% today)
No. shares: 104.8m
Market Cap: £297.6m

For more information, there is a link embedded in the picture of their website above. Just click on the nice lady looking wistful as she is about to take a pill.

Trading update - this sounded fine to me when I first read it, but the market seems to disagree, with the shares currently down 17% to 284p, so I've clearly missed something that the market doesn't like. It's encouraging to see that they are trading in line with expectations, and that the net cash position looks fine;

This bit sounds mildly negative;

R&D spending is set to rise, from around £4.5m in 2014 to around £10m in 2015. Is that negative? I wouldn't say so - a drug development company should be spending money on R&D, so it seems odd if this point has triggered the sell-off today.

The Directorspeak at the end sounds positive, so all in all, I'm not terribly sure why the market has marked down these shares so heavily today. I'm wondering if this might be a good opportunity to top up? Think I'll wait until I've seen some updated broker notes, as it's important to know you own limitations - pharmas are not an area that I know well enough to get heavily involved in. Although the figures do seem to show SKP as being a potential…

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imranawan

12th Jan '15

Hi Paul

In terms of updated broker forecasts, I assume these aren't available to private investors and released only to institutional investors? It therefore makes it difficult to evaluate whether SkyePharma (LON:SKP) is a buying opportunity this morning, as the projected PER and potential GARP is based upon the estimated EPS (which assumes a substantial uplift). On this point, how long does it take for revised broker forecasts to get filtered onto the Stock reports on Stockopedia.

Regards,
Imran.

janebolacha

Paul, not sure what you can do about it on audioboom but the sound quality is quite bad on several audiocasts.

Soundbuy

Shore Cap had these to open 'unchanged' this am. after this update - obviously they're as puzzled as you.........

FREng

A poster on ADVFN says "Singers appear to have downgraded their EPS numbers by a large amount" for £SKP

Beginner

Cracking audiocast with Paul Curtis. It put me well off Hunting (LON:HTG) , thank the Lord! These are time well spent, and you hard work is far more appreciated than you will ever know. (I have 60% hearing loss and manage the sound very easily: I just turn up the volume!)

I guess that's why the SP has taken a hit this morning. Would be interested to know what the revised EPS figure is for 2015, if anyone finds out.

Paul Scott

SkyePharma (LON:SKP) - please refresh the page, I commented on revised broker forecasts about half an hour ago, in an update to the main article.

P.

Thanks Paul, much appreciated.

Camtab

Paul,
I agree on Lamprell. The Oil price is too difficult to call. What is clear is that OPEC is prepared to keep the pumps open until Frackers are out of business. If that puts Oil at $20 or $30 a barrel they will do it. But I agree at some point there will be a big opportunity.
Guy

Jane, Yes I'm aware of the issue with sound quality, and have been trying to improve it. Once they are recorded, there's nothing that can be done. The latest one is fine though I think. One issue is that the sound seems to record much louder for me, than the guest. So you can improve this by adjusting the speaker balance on your computer, by (on Windows) going into Control Panel > Sound > Playback > double-click on speakers > Levels > Balance. Then adjust the RHS speaker up to maximum, and leave LHS speaker at about 50. That should give much better balanced sound.

Alternatively, move your RHS speaker next to your head lol!

Regards, Paul.

Delpher

Audiocast
Well done Paul in arranging a discussion with Paul Curtis who appears to have a handle on the the situation in the oil industry. His advice, particularly regarding suppliers, was most welcome. However before I invest in oil cos there's a lot of research to be done. Roger

iiimurray

Paul
Share your view of potential opportunities in oil sector as cannot believe we will remain for any length of time at <$50 - this might be a stand-ff between Saudi Arabia and shale producers but a more balanced supply demand and realistic crude price must be established again. My interest would be in producers rather than service providers as more immediate benefit from increasing oil price - although need to be selective amongst smaller companies and with this in mind, am impressed with Amerisur Resources in terms of growth, potential reserves and development strategy having strong balance sheet. Keen to know if you have looked at them recently and whether you or other on this blog share my optimistic view of prospects.

Regards
Peter

We give opinions, never advice! Let's try not to use the A word please!!

Daniel Neale

Dear Paul,

Would you consider having a look at Universe (LON:UNG)? A new contract signing with Morrison's looks promising. Would be interesting to hear your opinion on the subject.

Thanks

AlanJenkins2

Yes,oil will bounce,but it is contangoed on the futures markets,and it costs a bundle to store.So the falling price only reflects the supply/demand situation right now.Most oil shares are actually discounting some future price recovery.

13th Jan '15

Thanks, Paul, yes it is the quality and not the volume.
As you noted, you come across much louder than the other person.

SKP now 7% up on yesterday's low.
Mr Market, the gift that keeps giving.

Small Cap Value Report (12 Jan 2015) - SKP, LAM, NETD

SkyePharma (LON:SKP)

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Paul Scott

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