Good morning. Oh dear, the alarm didn't go off this morning, I always struggle on Thursdays, my apologies. I'll try to catch up this evening and update this article properly, but have to dash now for another investor lunch, the third of the week. Trouble is, the networking and meeting companies is vital to out-perform, in my view - it's no good being insular, you have to soak up ideas & intelligent views from other people.
Fairpoint (LON:FRP) has issued interim figures. I bought back into this one a few weeks ago, as the valuation was beginning to look compelling again, and the shares were starting to edge up. It's since risen about 20%, so that was a good decision.
Adjusted EPS is up 12% to 5.87p for the six months, and they have moved into net cash of £2.8m. The dividend is up 10% to 2.15p, so those look good enough figures for me to sit tight on these shares. They don't comment on the outlook versus market expectations, which is annoying. I don't like waffle in outlook statements, I just want to know whether they think the full year will meet expectations or not. They do say that they are "confident of delivering a solid performance in the current year", which is reassuring, albeit too vague for my liking.
Very belatedly, I'll catch up on the rest of the day's news, as I've been out all day. It's a mid cap really, but I see that Dialight (LON:DIA) has warned on profits, with the shares down 16% to 1150p. They say that contract delays mean that profits are likely to be "broadly in line with the prior year". It did 41.3p EPS last year, so that means the shares are still far from cheap on a PER of 27.8. That's a seriously racy price for a company that is not showing any profit growth against last year - I'm surprised the shares haven't fallen considerably more, so are not of any interest to me.
Several friends hold shares in MyCelx Technologies (LON:MYXR) and it's a company I've looked at before, but the price raced away on a newspaper tip, and given the high valuation, I wasn't prepared to chase it up. Their shares have dropped 12.7% today to 480p on the publication of interim results. With 13.16m shares in issue, it is currently valued at £63.2m.
Their technology sounds interesting - it's specialist filtration equipment to remove oil from contaminated water, for use in oil wells, which apparently produce a lot of contaminated water as part of the oil extraction process. MyCelx are showing good growth, and the attraction is that it should develop recurring sales from supplying replacement filters for a growing installed base.
The growth certainly looks good in H1 of 2013, with turnover up 85% to $9.42m, of which over half is recurring. The company has broken into profit, of $0.3m for the six months. The fly in the ointment is the outlook statement, which indicates that "end user delays which will likely impact the full year results and increase our caution for 2014 guidance". Although they then go on to say, more encouragingly, that the order book underpins "substantial growth next year".
All in all then, it's really not something I can sensibly value at the moment, as more information is needed from updated broker forecasts. £63.2m seems a pretty stretched valuation to me, for a company that is currently only just above breakeven. It's all about future growth, but the price is too high for me. There also seems to be significant potential dilution, with 12.996m shares in issue, but 14.249m shown in the diluted EPS section, so it looks as if a lot of share options may have been issued this year?
Thalassa Hldg (LON:THAL) have issued a positive trading statement, saying that they expect to "significantly exceed market expectations", and increasingly optimistic about 2014. Sounds good. Their shares are up 32% to 256p today. Existing forecasts show $0.16 (so about 10p) for 2013, so we might perhaps be looking at 12-13p for this year, at a guess? So the price is now up to about 20 times earnings, which isn't cheap. I don't know anything about what they do, but think I've missed the boat here, so won't be following up on this one.
OK, that's it for today, apologies again for my hopeless time-keeping. Too many late nights & early starts unfortunately.
See you in the morning.
(of the companies mentioned today, Paul has a long position in FRP)