Avanti Communications Group Plc (LON:AVN) (AVN, 701p, £561.94m) Avanti’s share price has performed almost as well as its first satellite’s launch vehicle. However the reality of technology is beginning to catch up with AVN with trials in the Welsh mountains using the frequencies previously used for analogue TV to deliver broadband connectivity. That combined with mesh style wireless networks and point to pint transmission systems AVN will certainly come under pressure from competing technologies as frequencies are released. After all the vast majority of houses are capable of receiving analogue television using simple and cheap consumer equipment. Take profits and SELL.
Endace (LON:EDA) (EDA, 312.5p, £46.85m) has received a Technology Development Government grant of up to NZ$6.702m (£3.17m), or some 20% of eligible R&D expenditure, over a 3 year period. Forecasts put the group on prospective PER’s of 69x to March 2011, falling to 57 in the next year. We recognise there is probably further upside given the valuations in America on leading network products businesses, and recognise the group’s significant technical lead, but the rating is high enough. HOLD
Norcon (LON:NCON) (NCON, 64.5p, £30.99m) Trading update for the year ending December 2010 has reduce expectations for the second half. While at the time of the interims the group anticipated an improving trend of client work the second half has instead turned out to be similar in revenue terms to the first half. The group has also incurred higher costs and lower gross margins – which will lead to results “considerably lower than previous expectations”. Cash remains healthy though and the group expects to pay at least 50% of net income as dividends for the year. Forecasts will fall – after $4.098m PBT at H1 we suggest some $6.5m for the year which would equate to $0.095 EPS or 6p per share, putting the group on a prospective PER of 10.75x. With the promise of 50% as DPS our forecast would imply a 3p+ DPS full year – or a yield of 4.7% for the year. With some short term weakness inevitable we rate the shares a Hold with yield attractions. HOLD
S&U (SUS, 595.0p, £69.84m), the provider of niche consumer credit and car finance in the UK, reports an IMS for the…
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