I Read The News Today Oh Boy! 21-Feb-2019

21st Feb '19 by matylda

7 comments 2407 reads

Morning all!

Avation ( Avation (LON:AVAP) ) – 287p – £185m – PER 10.7

Interim Results For The 6 Months To End December 2018 –Revenue up 11%, PBT up 95%, EPS up 97% and Asset value up 9%.

Still think this seems impressive, my only concern is that forecast EPS figures are quite poor (but this is not reflected in these H1 results). I will be keeping an eye out for Broker notes here, once again, on this ex-holding.

Idox ( Idox (LON:IDOX) ) – 30p – £124.6m – PER 8.8

Trading Update For The 12 Months To End October 2018 – Revenue down, and Profit/EPS flat/down depending on which figure you look at. The Dividend has been stopped.

Remains on my Avoid list for now.

Innovaderma ( Innovaderma (LON:IDP) ) – 84.5p – £12.2m – PER 8.1

Interim Results For The 6 Months To End December 2018 – Revenue down 7.48%, LBT up from -£0.03m to -£0.04m. Gross margin is up from 53.2% to 58.3% (driven by stronger retail sales weighting). Second half strong (6 weeks LFL up 37%).

Still cover this as I started when it was worth over £30m. At present I cannot see it getting back there any time soon.

Macfarlane ( Macfarlane (LON:MACF) ) – 93p – £146.5m – PER 12.2

Results For The 12 Months To End December 2018 – Revenue up 11% (£217.3m), PBT up 17% (£10.9m) (9th year of Profit growth and current YTD is ahead of this), FY Dividend up 10%. The Pension Deficit has been reduced from £11.8m to £9.8m.

Sold out at around 100p here believing that to be about fair value – I retain that view at present.

McBride ( McBride (LON:MCB) ) – 87p – £160m – PER 5.5

Interim Results For The 6 Months To End December 2018 – Looks OK but expects FY Adjusted PBT to be lower than last year (by 10% - 15%).

I am no more interested here today than I was yesterday.

Morgan Sindall ( Morgan Sindall (LON:MGNS)…

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MrContrarian

21st Feb '19

My morning smallcap tweet: Red faces at Purplebricks

Purplebricks (LON:PURP), Malvern International (LON:MLVN), McBride (LON:MCB)

Purplebricks (PURP) Once a £1bn co, soon to be a smallcap. Slashes FY rev guidance by 20%. UK and US CEOs to leave shortly. The incentives in the business model never made sense to me.
Malvern International (MLVN) small placing at 4p, an 11% discount.
McBride (MCB) H1 rev up 11%, adj EPS flat. Repeats yesterday's FY warning. Why did they RNS on two days?

andrea34

Keywords Studios (LON:KWS) - another acquisition, of GetSocial, a "cloud-based software platform that provides a comprehensive and robust suite of functions that enable games developers to manage all social interactions between their game, their players and their friends' networks". Oddly, no financial terms are disclosed.

I hold Vitec (LON:VTC) (though bought a little higher than current price) and will continue to hold after this, I'm very happy with the rises in profit and eps, though wish revenue growth was into double digits.

I hold Morgan Sindall (LON:MGNS) too, I don't understand why they are only considered fair value with a current (never mind future) PER of 7.8 when eps is +23%; the magic score is also A+.

I bought Macfarlane (LON:MACF) above 100p and feel that was a mistake - they look fair valued at best. The brokers forecasts on Stocko indicate eps of 7.0... so at only 5.72 this would appear to be a big miss.

Re. Mr C, Purplebricks (LON:PURP) are a prime example of a company replicating their model in overseas markets VERY badly and failing to take into account geographical differences in markets.

Carcosa

Re Avation (LON:AVAP)
Although aircraft trading is an everyday business for leasing companies, Avation is too small for an investor to 'rely' on aircraft sales. Therefore if you strip out the VietJet A320 sale which brought in 10% above book value then those forecast EPS numbers to which you refer are in the ballpark.

It is unrealistic for any broker to know what aircraft sales may or may not occur which is why I maintain valuation should be related to forward NAV; a figure somewhat easier to have an educated guess at. All IMO

Effortless Cool

I had fair value of Macfarlane (LON:MACF) at 115.7p before these results, and I anticipate it will increase once I rework my analysis.

On EPS, you are comparing actual reported EPS against an adjusted EPS calculated by the brokers. The adjusted figures add back amortised intangibles relating to acquisitions and exceptional costs. Your figure only adjusts for the latter.

The 2018 EPS outcome is actually a slight beat versus broker expectations.

matylda

Re: Morgan Sindall (LON:MGNS) - Latest EPS I have is 144p in 2019E and then just 145p in 2020E which is why I consider it fair value (at best), of course a 10% increase in the latter would make a huge difference to that view - I would like to see the 2019E actuals come in and then see how the 2020E looks.

Okay, thanks; I wonder why eps is forecast to only increase 1p in 2020 considering current progress...

jwebster

I own a few Avation (LON:AVAP) on the basis they are in a growth area, there are many budget airlines growing rapidly in Asia and air travel is in a long term uptrend in that region. Catch is they need to raise considerable amounts of debt to grow, it's a heavy balance sheet business, not a capital light growth model (like tech for example). So I expect steady growth over a few years. Good history of growing dividends, although I don't expect high payout ratios as they need the capital to grow.

The risk with a high capex base is write downs appearing in the situation assets are disposed of at a loss to book value, which is why they are taking pains to point out about the recent aircraft sale achieved at 10% premium to book.

I Read The News Today Oh Boy! 21-Feb-2019

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Matylda

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