AIM Prospector morning thoughts: (MTEC, ROL)

Thursday, Aug 07 2014 by
14

Some user feedback yesterday suggested that I put my thoughts on their own thread. I had been wary of doing this as it could lead to discussion of the same stocks and news in different places but here goes.

First, notice that there is a vast number of resources stocks making announcements this morning. I tend to avoid this sector. It has not been a happy hunting ground for many private investors and the companies here are extremely difficult to value. Which just leaves two companies posting anything that caught my eye:

1) Matchtech (LON:MTEC)
2) Rotala (LON:ROL)

Matchtech (LON:MTEC) have a trading statement out:
http://www.investegate.co.uk/matchtech-group-plc--mtec-/rns/pre-close-trading-update/201408070700114714O/
"results now expected to be slightly ahead of current market expectations"

the statement is a great example of how well things can go for a company addressing a cyclical market when things pick up.

" Strong cash conversion, with Net Debt of £3.0m (2013: £10.6m)"

then you get the virtuous circle, where lower debts can lead to reduced financing charges:

"new agreement is for a three year, £60m Invoice Financing Facility, at a lower rate of 1.1% over HSBC bank base rate"

While I have called Matchtech (LON:MTEC) an operator in a cyclical industry, it is clearly well run, evinced by the fact that it remained profit making throughout the recession and did not cut its dividend. Stockopedia data has the shares on a forward P/E of 16.2 with an expected dividend yield of 3.3%.

Now Rotala (LON:ROL), which is a company that I confess I knew nothing about before this morning, a bit embarrassing as it has been listed on AIM for nine years.

The company "provides a range of transport solutions, from local bus services under contract to local authorities, to commercial bus routes"

and there is a history of such firms doing well on AIM. The company has issued its half-year numbers this morning:
http://www.investegate.co.uk/rotala-plc--rol-/rns/half-yearly-report/201408070700074435O/


Profit before taxation up 12% to £1.055 million (2013: £0.946 million) on marginally lower revenues Interim dividend increased by 18% to 0.65p per share (2013: 0.55p) Strong balance sheet with net assets per share up 8% at 69p per share (2013: 64p)

which is obviously very pleasing. Stockopedia has the shares on a forward P/E of 10.3…

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Disclaimer:  

Blackthorn Focus, publishers of AIM Prospector, may have enjoyed past, or seek future, commercial relationships with companies featured.

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Gattaca plc, formerly Matchtech Group plc, is a human capital resources business dealing with contract and permanent recruitment in the private and public sectors. The Company operates through two segments: Engineering and Technology. The Engineering segment comprises Barclay Meade and Alderwood recruitment consultancy brands. The Technology segment includes the Connectus recruitment consultancy brand. The Company is a provider of specialist recruitment services to the engineering and technology industries, both in the United Kingdom and internationally. The Company offers three core solutions: Contingent Workforce Solutions, Permanent Recruitment Process Outsourcing (RPO) and Total Workforce Solutions. more »

LSE Price
161.5p
Change
 
Mkt Cap (£m)
51.9
P/E (fwd)
6.5
Yield (fwd)
n/a

Rotala Plc operates commercial and subsidized bus routes for businesses, local authorities, the public and private individuals. The Company is engaged in the provision of bus services. The Company offers contracted, commercial and charter services. Its contracted operations service two types of customers, including individual organizations and local authorities. The Company offers commercial services in the West Midlands, the South West and the North West. The Company also provides a transport management service to a range of customers. Typically this covers business or service disruption, and event management. The Company operates approximately 600 vehicles. The Company's registered bus services carry over 29,000,000 passengers every year. In addition, it operates a range of corporate transport contracts and private bus networks. The Company's operations are across areas in the United Kingdom, including West Midlands, Worcestershire, South West, North West and London. more »

LSE Price
54.5p
Change
 
Mkt Cap (£m)
26.2
P/E (fwd)
7.5
Yield (fwd)
5.2



  Is LON:GATC fundamentally strong or weak? Find out More »


4 Comments on this Article show/hide all

beatingmrindex 7th Aug '14 1 of 4
4

David, Definitely better than positing on Paul's thread with stocks he never mentioned as that to me is spam by not adding to the current conversation.... creating your own thread will encourage debate about the shares you have covered, there may be overlap but its nice to get more than one opinion on a prospective share to investigate further.

Cheers,

Pete

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JakNife 7th Aug '14 2 of 4

Rotala looks interesting. Below NAV, reasonable PE and yield. The notes mention a convertible but don't give any details of teh strike though.

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garbetklb 7th Aug '14 3 of 4
1

Agree with Beatingmrindex - great to see another view.

1 quick comment - your piece doesn't say what Matchtech do, which would be v helpful at the beginning to set the scene.

Carry on the good work!

Andy

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GavinT 7th Aug '14 4 of 4
1

David, you deserve your own thread and as investors we do value the diversity of opinion you offer.

Best of luck!

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AIM Prospector is a monthly online magazine focused on bringing readers free analysis and research into a selection of AIM-quoted companies. It is published by Blackthorn Focus.

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