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

Thursday, Feb 21 2019 by

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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Avation PLC is a United Kingdom-based company engaged in leasing of aircraft. The Company is a commercial passenger aircraft leasing group managing a fleet of 47 aircraft, which are leased to airlines globally. The Company's fleet includes Airbus A220, A220-300 A320 and A321 narrow-body jets, Boeing 777-300ER and Airbus A330-300 twin-aisle jets, Boeing 737-800 NG, ATR 72 twin engine turboprop aircraft and five older Fokker 100 jets. It supplies regional, narrow-body and twin-aisle aircraft to the airline industry. It serves the commercial airlines. It owns, through its subsidiaries, a range of commercial passenger jet aircraft, which are leased to various airlines in Europe, Asia and Australia. The Company's subsidiaries include Avation Capital S.A., which is engaged in financing, and Capital Lease Aviation Limited and MSN429 Leaseco Limited, which are engaged in aircraft leasing. more »

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Idox plc is a supplier of specialist information management solutions and services to the public sector and to regulated asset intensive industries around the world. The Company operates through five business segments: Public Sector Software (PSS), Engineering Information Management (EIM), Grants (GRS) and Compliance (COMP). PSS segment is an application provider to the United Kingdom local government for core functions relating to land, people and property, such as its planning systems and election management software. The EIM segment delivers engineering document management and control solutions to asset intensive industry sector. The GRS segment delivers funding solutions to private and third sector customers. The COMP segment provides compliance solutions to corporate, public and commercial customers. more »

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InnovaDerma PLC is a holding company. The Company develops a range of male and female at-home and clinically proven treatments for hair loss, hair care, self-tanning and skin rejuvenation. It operates through hair and beauty division. Its products include Leimov Personal Hair Laser Starter Kit, Leimov Hair Treatment Pack, Leimov Bio Cleansing Shampoo, Leimov Thickening Conditioner, Leimov Scalp Therapy Day Treatment, Leimov Scalp Serum Night Treatment, Leimov Deep Cleansing Scalp and Body, Leimov Hair Treatment Pack for Her, Leimov Personal Hair Laser Starter Kit for Her, Leimov Vitality Shampoo, Leimov Follicle Boost Therapy, Leimov BioPlex Scalp Serum, Leimov Scalp and Body Exfoliating Spa, Leimo Instant Hair Introductory Pack, Leimo Instant Hair Regular Pack, Leimo Instant Hair Building Fiber, Skinny Tan-Ab Shader, Skinny Tan-Dermabrasion Pre-tan Primer, and Tan and Glow. It operates in the United Kingdom, the United States, Australia, New Zealand, the Philippines and South Africa. more »

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

7 Posts on this Thread show/hide all

MrContrarian 21st Feb 1 of 7

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?

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andrea34l 21st Feb 2 of 7

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.

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Carcosa 21st Feb 3 of 7

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

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Effortless Cool 21st Feb 4 of 7

In reply to post #450768

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.

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matylda 21st Feb 5 of 7

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.

Blog: Briefed Up
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andrea34l 21st Feb 6 of 7

In reply to post #450818

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

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jwebster 21st Feb 7 of 7

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.

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