I Read The News Today Oh Boy! 1-Feb-2018

Thursday, Feb 01 2018 by
16

Morning All!

T Clarke ( T Clarke (LON:CTO) ) – 83.4p – £34.1m – PER 5.53

Trading Update For The 12 Months To End December 2017 And New FD – This is a very well presented update. in line with current market expectations expect Underlying PBT of circa £6.5m and Revenues in the region of £310m. Net cash improved by 27% to £11.7m, the strongest closing balance recorded since 2009 (31st December 2016: £9.2m). Order book as at 31st December 2017 has strengthened to £337m compared to £330m at 31st December 2016. There’s a new FD (no reason given but seems amicable).

Still 2 big factors holding me back here. There’s a Pension Deficit of about £20m (over 60% of Mkt Cap) and the Operating Margin is tiny (about 1.5%). Much as I am tempted, I still just can’t get off the fence here.

Avon Rubber ( Avon Rubber (LON:AVON) ) – 1255p – £392.4m – PER 17.7

AGM Statement – A positive start and the 4 months to end January 2018 are in-line with the Board’s expectations. Could be headwind from FX and a tailwind from the new US tax reform but still seems, the net effect will be, year end expectations will be achieved.

Still like this but still think, possibly wrongly again, that it’s fairly priced here.

Stride Gaming ( Stride Gaming (LON:STR) ) – 230.05p – £167.1m – PER 9.98

AGM Statement – “Positive trading momentum and continued strategic progress”, in-line with the Board’s expectations.

Not enough to get me interested at this stage, will wait for updates with figures.

Spectra Systems ( Spectra Systems (LON:SPSY) ) – 103.5p – £45.3m – PER 15.6

Trading Update – Licensee for covert materials supplied to 18 central banks, royalty will be higher than previously expected for 2017. Profits for the year ended 31 December 2017 will exceed market expectations.

A nice update which seems like confirmation of the previous note. Not sure how much of this is in the price already. I remain Neutral here for now (need to research more) as I am not sure what exactly they do.

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TClarke plc is a United Kingdom-based building services company, which delivers electrical, mechanical, and information and communications technology (ICT) services. The Company provides electrical and mechanical contracting and related services to the construction industry and end users. Its geographical segments include London and South East, Central and South West, the North and Scotland. The Company's businesses include Intelligent Buildings Green Technologies, Facilities Management, Transport, Mission Critical, Manufacturing Services, Residential & Hotels, M&E Contracting and Design & Build. The Company within its M&E contracting business has capabilities in sectors, including commercial offices, retail, education, healthcare, financial services and media. Its Manufacturing Services business includes in-house precision prefabrication and engineering services. Its projects include Beckley Court, Chiswick Park, Kettering Hospital, Project Nova, Mitie Care Home and Rathbone Square. more »

LSE Price
120.5p
Change
2.1%
Mkt Cap (£m)
50.8
P/E (fwd)
6.5
Yield (fwd)
3.9

Avon Rubber p.l.c. is a United Kingdom-based technology group. The Company specializes in respiratory protection systems and milking point solutions through its two businesses, Avon Protection and milkrite InterPuls. The Company designs, tests and manufactures specialist products and services. Avon protection is the advanced chemical, biological, radiological and nuclear (CBRN) respiratory protection systems for the military, law enforcement and fire markets. The milkrite InterPuls is providing complete milking point solutions to customers across the world. more »

LSE Price
1254p
Change
-1.6%
Mkt Cap (£m)
395.2
P/E (fwd)
16.2
Yield (fwd)
2.0

Stride Gaming plc is an online gaming operator in both the Bingo-led and social gaming market. The Company's segments include real money gaming and social gaming. The real money gaming segment focuses on bingo-led online operation, using its purchased software to provide online bingo and related gaming activities to players. The real money gaming segment operates in regulated markets, principally the United Kingdom. The social gaming segment provides players with entertaining applications and games internationally. The Company has over 143 brands. Its online bingo brands include Kitty Bingo, Lucky Pants Bingo, Bingo Extra, Jackpot Cafe, Jackpot Liner and King Jackpot. Its online casino and slots brands include Spin, Magical Vegas, Big Top Casino and Slots Bonanza. In addition, the Company is engaged in development of Panda Slots application, a multi-technology platform for the creation of mobile social slot games customized on a player level. more »

LSE Price
148.5p
Change
0.3%
Mkt Cap (£m)
112.2
P/E (fwd)
8.7
Yield (fwd)
6.4



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


7 Posts on this Thread show/hide all

MrContrarian 1st Feb '18 1 of 7
6

My morning smallcap tweet:

Imaginatik (LON:IMTK), T Clarke (LON:CTO), Palace Capital (LON:PCA), Image Scan Holdings (LON:IGE), Comptoir (LON:COM), Spectra Systems (LON:SPSY), Connect (LON:CNCT)

Imaginatik (IMTK) puts up For Sale sign. - "the Company's share price does not reflect either the value of the highly scalable platform itself, or the growth prospects available to the Company. Additionally, the Board is mindful that shareholder value may be maximised by a sale of the Company to a larger organisation that can accelerate growth..." Not to do with funding loss after loss. Cap £1.7m. Stockopedia "Sucker Stock".
Clarke T (CTO) trading in line. FD leaving "after a short handover period to a newly appointed Interim (1 year) FD who joined today. No kind words. Where was the RNS announcing the FD's resignation? Are nomads telling companies not to bother?
Palace Capital (PCA) sells 3 houses for £1.2m at 14% over book and has more to sell. Is that really worth an RNS?
Image Scan Holdings (IGE) warns it expects FY will be materially below current market expectations - a £1m expected order now not happening.
Comptoir Group (COM) guides FY trading above market expectations.
Spectra Systems (SPSY) FY17 will exceed market expectations due to royalties from banks being higher than previously expected. This two weeks after saying FY will significantly exceed market expectations.
Connect Group (CNCT) buyer of books div fails to pay by deadline. Prev RNS said buyer admitted it didn't have the wherewithal to pay.

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Ramridge 1st Feb '18 2 of 7
1

Keywords Studios (LON:KWS) Looks like they are going to beat broker forecasts. But a high PE will put some people off.

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andrea34l 1st Feb '18 3 of 7

In reply to post #307718

The Keywords Studios (LON:KWS) update looks good in principle... but with 11 acquisitions made during the year, how much of it is actually organic? In my mind this matters...

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Effortless Cool 1st Feb '18 4 of 7
3

In reply to post #307693

MrC,

"No kind words"? T Clarke (LON:CTO) does, in fact, have this to say about its departing CFO:

"The Board would like to thank Martin for his substantial contribution to the Group since he joined the business in 2007 and wish him well for the future".

Perhaps carrying the can for the fraud discovered in one of its subsidiaries in late-2016?

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Julianh 1st Feb '18 5 of 7
2

In reply to post #307718

Re Keywords Studios (LON:KWS)
Yes, I have held for two years but the very high p/e and frequent acquisitions had prompted me to keep top slicing / taking profits. Which is a shame because the share price has gone up by >100% per annum since I bought. There is a very impressive presentation on PI World (a great service) where they talk about the acquisition process, how they integrate new acquisitions and why acquisitions are part of their business plan.
And they really do seem to have a strong competitive advantage - almost the only player with scale in a fast growing and very fragmented market.
Having top-sliced a few times last year (and thrown away very good gains in the process) I am now topping up my holding when more good news comes along
So (just my opinion) there are a few companies whose competitive advantage justifies a very high p/e. Maybe Boohoo.Com (LON:BOO), accesso Technology (LON:ACSO) and a few more. Keywords Studios (LON:KWS) looks as if it is one of these
Good wishes to all fellow private investors in this slightly rocky market

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Ramridge 1st Feb '18 6 of 7
3

In reply to post #307773

Hi Julian Re Keywords Studios (LON:KWS)
I have been in and out of KWS since the IPO days, making good profits along the way. However nothing like the profits I would be sitting on if I had held the shares since the IPO.

KWS's strategy is clear. Their market is very fragmented and they want to become the global dominant player by buying up smaller companies. I suspect they are there or nearly there.

The key to this strategy is management's ability to control the growth and make sure that earnings from acquisitions are above the hurdle rate. Or to put it another way, how earning enhancing have their acquisitions been so far? It is difficult to tell (but I think not impossible) from the published accounts. When I have some spare time, I will try to analyse and answer this question.

Today, I went long again. The worry of course is the impact of any market correction. A very high PE is a major risk in this context.

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Julianh 1st Feb '18 7 of 7
2

In reply to post #307888

Hi Ramridge and andrea34l
re: Keywords Studios (LON:KWS)
Yes, definitely Keywords Studios (LON:KWS) is at risk when the next correction comes (if we are not already in one) and even more so when the next bear market hits.
In general I try to avoid highly acquisitive companies. Increased revenues and profits derived from acquisitions don't always improve eps and cash flow per share. And then there is the risk of a botched integration process. A particularly bad example would be Stanley Gibbons (LON:SGI) who bought up lots of collectible businesses, failed to integrate them effectively, made several other huge mistakes and are now at severe risk of going out of business
However there do seem to be a few companies with a good business model specifically built around acquisitions which generate competitive advantage. It was the PI World presentation
http://www.piworld.co.uk/2017/11/17/keywords-studios-kws-synergistic-growth-capital-markets-event-november-2017/
that convinced me that they really know what they are doing in building this business. I hope I am judging this one correctly.
After a couple of years of spreading my investments too thinly and diluting my returns as a result I am trying to follow the Warren Buffet dictum - when it's raining gold, you go out with a bucket and not a thimble. Let's see how it works

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