Small Cap Value Report (7 Apr 2014) - API, HAT, SNTY, SEA

7th Apr '14 by Paul Scott

9 comments 18969 reads

Good morning!

API (LON:API)

There is a mild profits warning from API today. The key sentence says;

In line with the Board's guidance when interim results were announced in December 2013, the Group experienced a strong overall trading performance in the second half. However, the recovery has not been enough to fully offset the weak first half and full year results are now anticipated to be at the lower end of expectations.

Unfortunately I don't have the range of expectations, just a single figure, for consensus forecast, which is shown as 9.05p on Stockopedia for the year ending 31 Mar 2014. So guessing at say 8p EPS, that would put the shares on a PER of just over 8, at the current share price of 65p (down 12% on the day). Potentially interesting, in my view.

Furthermore, they say this about debt;

With working capital substantially unchanged, further progress has been made on debt reduction and the Group expects to report a positive cash position at the year end, for the first time in 15 years.

It's not clear whether they mean a positive NET cash position, or just positive cash, which might be offset by some debt? So overall a rather unsatisfactory announcement that leaves two distinct question marks.

A 2p dividend is forecast for the year just ended, which would give a useful yield of 3.0%.

The fly in the ointment here is that the company's major shareholders forced management to put the group up for sale some time ago, but after a protracted process there was no buying interest. That doesn't exactly fill me with confidence, as you wonder what potential buyers found that put them off? Also it means there's probably an enormous overhang of shareholders who don't really want to be shareholders.

For those reasons I can't bring myself to buy any of these, even though it could be cheap.

H & T (LON:HAT)

There's a potentially interesting announcement from pawnbroker H&T today, saying that they have submitted a bid for some of the Albemarle & Bond stores, by the sounds of it;

H&T Group plc ("H&T") has noted the…

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AlanJenkins2

7th Apr '14

I bought some H and T a few days ago.In a high street local to me,Albermarle and Bond were just a few shops down from H and T,competing directly with them.So I would imagine that H and T would close one or two Albermarle and Bond shops in situations like that if they were to buy them,enabling their own shops to trade more profitably.

Gostevie

Looking at the Seaenergy (LON:SEA) update I am reminded of this:

http://en.wikipedia.org/wiki/Voynich_manuscript

The Voynich manuscript has been studied by many professional and amateur cryptographers, including American and British codebreakers from both World War I and World War II. No one has yet succeeded in deciphering the text, and it has become a famous case in the history of cryptography... Many people have speculated that the writing might be nonsense.

Steve

ExpectingValue

Sector clearly had a lot of overcapacity after the peak came off the gold boom - both HAT and ABM were effectively subsidising loss-making stores with the exceptional gold profits.

HAT's in an interesting spot now, though - they should have some slack to cherry pick profitable locations and sort out their own estate. The risks are still the same as before, though - competition from alternative money lending services and regulatory reform.

The Seaenergy RNS is terrible. Marketing companies are pretty good at this sort of thing; I remember a chunk from Mission Marketing's Chairman's statement..:

"Our strategy is not driven by brobdingnagian principles... ... Perhaps this is due to peniaphobia but more likely it stems from a passion to establish the missiontm as the most respected and regarded Agency group in the UK."

man741

Regarding unhelpful statements, I remember the CEO of Brixton Estates putting out such statements. They went bust subsequently and were bought by Segro. Maybe a lesson here. Panther Securities also has a habit of issuing irrelevant 'stories'. Such companies best avoided.

chrigil

Seaenergy (LON:SEA) - "I've read it twice, and it might as well have been written in Mandarin, as I haven't got a clue what it's trying to say, nor what significance should be attributed to the news"

Well thank goodness it's not just me that didn't have a clue what it meant! I actually wondered if they weren't just taking the opportunity to name drop the likes of Facebook!

It's also worth noting that the 7% rise is on the back of last week's 15% drop!

loglorry

Regarding SEA looks like they are using a virtual reality (VR) headset made by a third party in their R2S (return to scene) software which allows users to do a virtual walk through of an offshore oil installation or similar. I guess the VR device gives users a better experience of actually being there. The reference to Facebook is because facebook also using same technology in gaming industry.

At least that is how I understood it.

Log

webloid

That's pretty close Log.... The VR headset is Oculus Rift and they have just been bought by Facebook for $2B.

stockandy

Hi Paul,
As usual you know your stuff.Missed SNTY at lower price .Bought FLYB around 100p.I have been top slicing as I think we are in for a correction.Surprised it has held up so well.A lot of cash on the side lines waiting for good entry point later in the year.Your ASOS short is well thought out.Interesting comments on your two bedroom flat.Slow but sure and HEALTH is far more important than wealth.

beatingmrindex

8th Apr '14

Paul,

Great stuff on Sat - very impressive performance. You mentioned waterlogic were posting results today, did you take a look? I noticed we have their product in the office I am currently working from and pretty sure we had the same contraption at my previous office. Not sure they are adequately integrating the acquisitions adequately but they certainly on the acquisition trail.....

Small Cap Value Report (7 Apr 2014) - API, HAT, SNTY, SEA

API (LON:API)

H & T (LON:HAT)

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Paul Scott

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