Hybridan Small Cap Wrap featuring Alkane, Ambrian, Landkom, Pulse Group

This week: An energy company that’s a gas, the charmed Life of Ambrian, and an outfit that knows its Ukrainian tractors.

Alkane Energy plc (ALK 19.5 p / £18.1m)

The owner and operator of "Gas to Power" plants in the UK yesterday announced that it is trading in line with management expectations and has made good progress in the installation of new capacity. Alkane has a strong pipeline of new projects which are progressing well and the new site at Bilsthorpe has commenced production ahead of plan. Alkane jumped up 1 p on the news.

Ambrian Capital plc (AMBR 26.5p/£28.62m)

Many small cap stockbrokers have been hit hard with falling secondary trading revenues and corporate finance fees. Ambrian however seems to have bucked the trend with its eclectic mix of equities, futures and physical commodities trading businesses. This week Ambrian released a trading update uttering those immortal words that trading was “materially ahead of market expectations” but surprisingly the share price remained flat. Nevertheless, the shares have had a good run this year, up 100per cent from their lows in March so a period of Ambrianing along is excusable.

Ark Therapeutics Group plc (AKT 44.5 p / £90.6m)

The specialist healthcare group announced the UK launch of Kerraglove, a mitten- shaped dressing device for hand injuries, particularly burns. Kerraglove will be sold initially to UK specialist burns units and accident and emergency centres by Ark's current wound care sales force. This is another product developed and patented by Ark, which has undergone clinical trials and which adds to the other products in its wound care division. These products continue to maintain the 2008 reported growth trends; perhaps this new device will give a hand to accelerating these trends!

Bglobal plc (BGBL 21.3 p / £15.8m)

Last week we reported that this market-leading provider of smart metering services to the UK energy market had secured a new source of meter asset funding from Barclays and launched its new Energy Counts campaign for business customers. £3m was added to its market cap in the last week, with its share price having risen more than 30 per cent. This week Bglobal announced that NPower now plans to aggressively increase the rate of roll out. Great news for Bglobal, who also announced preliminary results for the year ended 31 March 2009. Bglobal has installed 60,000 meters in the financial year to March 2009, with 120,000 meter orders queued for delivery. It reported an increase in turnover of 48 per cent to £6.6m. We believe that as the rate of the roll out increases there will be further improvements on operational efficiency and more reductions in the “cost per fit”. The group’s mission to reduce carbon emissions in the UK should continue to drive sales.

Boomerang Plus plc (BOOM 62.5p, £5.6m)

In a trading update for the year to end May 2009, Welsh-based television producer Boomerang says it has not been immune to the delays, cancellations and pricing pressure facing the industry as a whole. In particular, two projects have underperformed financially and profits for the year will be below expectations. Furthermore, trading conditions remain tough and are expected to hit the first half of 2010. Despite this, some advertising-funded commissions and recommissions have been secured; the group is cutting costs and has a net cash position, which provides a cushion against the economic downturn. And it should continue to benefit from the requirement for public sector broadcasters to take on more programmes produced in the regions. So Boomerang, like Lions’ star Shane Williams, is one that could well bounce back.

Burst Media plc (BRST 6.6p, £4.7m)

And talking of bouncing back, Burst Media had a stunning 23 per cent growth in revenues in the second quarter (April to June). But the group, which provides online advertising services in the US, expects first-half revenues to be down around $1.3m, at $12.1m, as the adConductor business (a software solution enabling third parties to set up and manage online ad networks) was hit by the loss of the TACODA account, following its acquisition by AOL. adConductor has, however, secured four significant new customers in the first half and Burst had a healthy $9.4m on the balance sheet at 30 June. Not bad for a group with a market cap of less than £5m.

Central China Goldfields plc (GGG 1.9 p / £3.4m)

How do you know when you have overstayed your welcome? A good clue would be when your partner throws a little cash at you and tells you they rather do the job themselves. Joint venture partner the Sichuan Bureau of metallurgy and Geological Exploration has offered to pay Rmb 71 million for Central China’s stake in its principal asset, the Nimu Project which is a porphyry copper deposit. The transaction has to be approved by Central China’s shareholders who have no other choice than to approve if they want to salvage    what    is    left    of    their    investment. After tax, the amount is roughly £4 million which will then be the company’s major asset along with a fairly inconsequential joint venture interest in the Dong Huo Gold Project. The board should pay close attention to other clues. For instance, maybe it’s time to pack up the whole company?

Landkom International plc (LKI 14.3p/£33.6m)

Landkom’s is a large scale producer of oilseed rape and wheat from its farms in the Western Ukraine. Following Landkom’s flotation on AIM in 2007, the share price has crashed from a high of 103 p in March 2008 to 12.7 p this week following the collapse in land prices and the lack of debt finance to fund planting and new land development. Things may be on the turn for Landkom as it has just announced a new venture into biodiesel using marginal quality crops not suitable for food production. Biodiesel has not necessarily been a winner for small cap investors and this week’s muted share price reaction reflects a degree of cynicism in the market.    There is still much work to be done to get to full scale production so clearly no rush to be a bio of the stock anytime soon.

NetDimensions plc (NETD 11.3p/£2.8m)

NetDimensions is another one of those stocks whose business has a negative value after the company’s cash position is stripped out. In NetDimension’s case the company announced a cash position of $6.8m being equivalent to 16.5p per share. This is against a share price of 11.25p. This is all the more surprising given that the software-for-training group is forecast to be cash generative. In our view, one to net at this price.

Pulse Group plc (PGRP.PL 5.3p / £4.8)

With its finger on the Pulse, this leading provider of research services within the Asia- Pacific region, unveiled another research solution, this time for mobile users. Pulse Group provides research predominantly to market research and media companies
wishing to conduct research within the Asia-Pacific region. The offering will be the first of its kind in Asia, and will supplement the online and traditional telephone market research models and is a more cost-effective solution. With this Pulse will gain additional access to the 1.5bn mobile subscribers throughout Asia, where mobiles dominate fixed line telephone systems. Pulse Group listed on PLUS in June 2008, although sadly is trading at half of its listing price. Perhaps one to watch were liquidity in the share improved.

Tenon plc (TNO 43.5p/£86.31m)

Tenon has proudly announced this week that underlying profits are in line with the expectations set prior to the global financial crisis and the onset of the UK recession. Tenon has its roots as a consolidator of small and mid-sized accountancy firms and now styles itself as an “adviser to entrepreneurs”. Of course the key to its trading resilience lies in its “recovery services”, the insolvency-related work for companies and individuals that find themselves crunched by credit. Indeed, there’s some irony that Tenon has had to announce itself a costs reduction program. Nevertheless, the shares are trading on a reasonable earnings multiple of 7.5 times do offer a counter-cyclical protection should growth not take off tenon to the dozen.