I Read The News Today Oh Boy! 18-Jun-2019

18th Jun '19 by matylda

14 comments 1966 reads

Morning all!

Castleton Technology ( Castleton Technology (LON:CTP) ) – 106p – £86m – PER 15.7

Results For The 12 Months To End March 2019 – Revenue up 13% (to £26.4m), EBITDA up 24%, Net Debt down from £6.3m to £5.1m, EPS down from 5.23p to 5.08p.

I don't see value here at present.

( K3 Business Technology (LON:KBT) ) – 182p – £77m – PER 13.1

Trading Update For The 6 Months To End May 2019 – On track to meet FY expectations with results more H2 weighted than usual.

Will be waiting to see the actuals here aswell as revised forecasts for 2020E!

Marlowe ( Marlowe (LON:MRL) ) – 418p – £162m – PER 18.6

Results For The 12 Months To End March 2019 – Revenue up 59% (to £128.5m), PBT up 53% (to £8.9m), EPS up 34% (to 18.8p) with Net Debt up from £2.9m to £20.1m. Current year has started in-line with expectations.

Looks about fairly priced but will keep an eye out for revised forecasts as these are quite impressive results.

Team17 ( £TM17 ) – 247p – £319m – PER 25.9

H1 Trading Update – Strong start, expects FY Adjusted Revenue and EBITDA to be ahead of market expectations.

I still reckon this is overvalued but will now keep an eye out for updated forecasts.

As always, all comment most welcome!

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MrContrarian

18th Jun '19

My morning smallcap tweet: Westminster chimes hopefully.

Pelatro (LON:PTRO), Westminster (LON:WSG), £TM17, Local Shopping REIT (LON:LSR)

Pelatro (PTRO) wins contract from Asian telco. Also continues to contract for significant Change Requests. Together worth $1.5m.
Westminster Group (WSG) AGM: rabbit embryo pulled preaturely from hat - Letter of Intent for container screening services in Ghana. Still negotiating rates though. Hyperbolic outlook: "We have an opportunity to achieve unprecedented growth from the prospects we are pursuing".
Team17 (TM17) guides FY adj EBITDA and revenue ahead of market expectations.
Local Shopping REIT (LSR) Thalassa gives up harassing LSR and will support return of capital via tender offer at NAV. Thalassa will not participate in the tender so it may end up in control of LSR.

mojomogoz

Hello - you mean K3 Business Technology (LON:KBT) and not £K3C - don't want K3 Capital enthusiasts going bezerk with £77m rev expectation and doing themselves an injury ;)

matylda

LOL - That's now been corrected, thanks for pointing out.

andrea34

There are strong, in-line results from what I consider to be about the only FTSE-100 growth company Ashtead (LON:AHT) which are slightly ahead at a basic level and slightly below on a diluted basis. Revenue is up 19%, pre-tax profit £1110+19.7%, eps 174.2p+33% putting it on a current eps of 12 The outlook is positive. The UK is down a bit, but this is a tiny part of the business, with the main US division doing well and Canada, in it's early growth phase, mushrooming. The price is steady after an initial jump to £20. They have recently cropped up as Golden Cross charting signal.

Access Intelligence (LON:ACC) suggests interim revenue will be in-line at £6.2m+42%, with growth accelerating in H2. I don't know much about them (they're ANOTHER Saas company) but the Stocko picture is terrible.

Water Intelligence (LON:WATR) announces a link up with a US Fortune 500 company to set up a new home leak solutions project; no financials given.

Safestore Holdings (LON:SAFE) announces a "solid" interim performance with revenue +5.6% and EBITDA +5.9%. I don't do solid... zzzzzzzzzzzzzzzz

Hurricane Energy (LON:HUR) announces it's first revenue, with first cargo sold, marketed by BP Oil; this is a bit too early-stage for me I think.

Pelatro (LON:PTRO) announces a £1.5m contract... which should be just about significant enough to replace the directors company cars :-/

Pelatro (LON:PTRO) - LOL

GrahamF

“Safestore Holdings (LON:SAFE) announces a "solid" interim performance with revenue +5.6% and EBITDA +5.9%. I don't do solid... zzzzzzzzzzzzzzzz”

Hear what you are saying, but take a look at the share price over 3 years. This solidly performing company has been a great stock to hold. (So, I continue to do so). They are in a sweet spot - modern houses have insufficient storage or space as families grow and so the market for self storage continues to grow too. It is a relatively simple business but has some barriers to entry as finding good sites in the major conurbations is not so easy. It may be boring but it’s a lucrative type of boring.

jonesj

The rate of contract announcements from Pelatro (LON:PTRO) does seem to have slowed since the end of March. Would think the directors may have to run the current cars for a while yet....

Well, I do agree that "a lucrative type of boring" can be good, that is why I hold things like Renewables Infrastructure (LON:TRIG) which will never mushroom overnight but I feel the long term potential is good; I'm glad you've done well out of Safestore Holdings (LON:SAFE) though the price is currently down a bit on these results.

I look thro Access Intelligence (LON:ACC) stuff and it looks to me like they need a real pick up in growth in H2 or they will need to refinance again. The growth they present in results is driven by acquisition.

Investor base is VCT/EIS heavy and its one of those strange stocks that stays up in price without seeming to produce the results hoped for....a function of this sort of investor base always being willing to fund a bit more to keep the stock marked up in their portfolios?

Not clear that they have a technological edge either and their old-ish platform may need a lot of sprucing up. I have suspicion that they need quite a large headcount (100) as there's a lot manual stuff to do to feed the machine.

Anyway, Dec TU should be an interesting moment....unless they warn before then and/or make funding call.

fwyburd

Hi Matylda,

Re: Marlowe (LON:MRL)
One correction to your post this morning - the share count is now 45.9m so market cap at £4.18 is £191.9m (not 162 - Stocko data is incorrect).

And I now have the Cenkos and Berenberg broker reports which came out today. Highlights as follows:

2020E: Revenues: 168.9m/172m; EBITDA: 15m/15.2m; PBT: 12.4m

2021E: Revenues: 178m/180m; EBITDA: 17.4m/18m; PBT: 14.4m/14.7m

Berenberg target price is £6.2

I hold
Cheers
Francis

jwebster

Ashtead (LON:AHT)

Ashtead is a well run company, good growth, nice results. New guy running the US operation with great endeavour. Clear on their plan to grow via acquisitions and organically.

But I passed because it's both very cyclical and capital intensive. As a result they have huge debt although at 1.8x EBITDA its affordable. However, in a cyclical construction downturn, as they eventually come along, the debt cover could be tested.

The chart looks ok, price could easily drift back up to £24 where is was last year. If you think the US economy has a few good years left, well ok.

This will be a brilliant share to buy bombed out in the next downturn, I have AHT on my list for when it does comes (whenever that is!)

19th Jun '19

Thanks for pointing that out Francis - Seen those Cenkos forecasts, looks like reasonable value here, I see 550p or so as fair value, perhaps!

20th Jun '19

I have just been circling back to Marlowe (LON:MRL) today - considering in the annual results they state that the current 12-month revenue run-rate is 175m then surely they are easily going to beat those forecasts...? Also, the chart to me looks like it is coming good with the 50day MVA about to smash through the 200day MVA... although the 15day MVA is a bit flat.

HI Andrea
You are right about the forecasts differing from the run rate but then you will note they qualify for the Stocko "earning surprise" screen. And the brokers indicate EBITDA margin increases for 2020 at 9.1% (2019 was 8.6%) rising to 9.9% in 2021 which I suspect they will also beat.

But even if they don't, £172m rev @ 9.1% EBITDA margin X 15.3 (the PTSG takeout price on 2019e earnings) = £5.20 sp for 2020 and £185 @ 9.9% EBITDA margin X 15.3 = £6.10 for 2021.

So IMO, today's sp significantly undervalues them. I would say that given my large holding but hopefully my logic above supports my thesis.
cheers
Francis

I Read The News Today Oh Boy! 18-Jun-2019

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Matylda

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