I Read The News Today Oh Boy! 25-Oct-2017
Morning All!
10.75p - £43.1m
Interim Results For The 6 Months To End September 2017 – Revenue down (16.4%) and a whopping Loss Before Tax of £5.9m versus -£0.1m last time. I think I’d be running for the door if I held this!
158.75p - £487.8m
Trading Update For The Period 1 July to 24 October 2017 – The positive start to the year has continued - LFL Revenue is up as are Profits (no indication of how much). Decent growth here with a huge 7% or so dividend – Although it’s not particularly well covered (<1). With no Cash in the bank this just seems weird enough for me to, rightly or wrongly, steer clear.
171.25p - £636.7m (covered because I hold from pre £500m)
Trading Update For The First 5 Months Of The Year – LFL Revenue up 11.2% (CC) consistent with full year expectation and “cash generation remains strong. This continues to support our progressive dividend policy”. As a holder here, would have liked a more upbeat statement. I have a concern that growth seems to be slowing slightly for the PER of 16.8. However, the ROCE (30%+) is great as is the yield (4%+ plus special dividends). It’s also got a decent amount of cash (5% of Market Cap) which, when it gets too big, is usually paid out to fund those special dividends. I remain a holder here but don’t see this pushing through the elusive 180p ceiling off the back of this update.
191.5p - £73m
Trading Update For The 12 Months To End September 2017 – An in-line update with an order book of £202.7m, up 25% on the same time last year. First time I have come across this company, that’s the beauty of reading the news – For me it’s the best way to find investment ideas. Anyway, quite like this. It’s not the most consistent or strongest growth story out there but I think there’s potential. The order book is up 25% LFL, the ROCE is fantastic, the Operating Margin is above average for the sector, Net Debt is £9.67m (over 10% of Mkt Cap) and it looks forecast to start paying a 3% Dividend. On a PER of 8.82 I reckon this is worth a further look.
Quite liking that new find NEXS today…
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8 comments
I normally wait for things to settle after a really bad trading update in a share that I hold, but today's update from Defenx (LON:DFX) would seem likely to lead to a cash raise and other exciting unknowns. Small high tech companies come with opportunities and risk and when the risk overwhelms the opportunity I believe you have to jettison them fast.
Defenx (LON:DFX) is on my watchlist, I would like to invest in that area, cyber security, but looks like it won't be with Defenx (LON:DFX). Falanx (LON:FLX) looks better but is still loss making.
I wanted to have a stake in the cyber/Id area as I believe somewhere there are potentially some breakout stocks, it is a small part of my portfolio and clearly risky. Both Beazley (LON:BEZ) and Hiscox (LON:HSX) are also interesting as the insurance industry looks set to gain from increased premiums in this area.
I bought Falanx (LON:FLX) at the same time as Defenx and also have Intercede (LON:IGP), Kromek (LON:KMK), GB (LON:GBG). There are plenty more to choose from but I recognise them as high risk and have an appropriately modest percentage invested
Yes I agree its a good time to buy insurance companies after large losses. Beazley (LON:BEZ) and Hiscox (LON:HSX) are both Lloyds syndicates, not many public listed ones left, most have been taken over so reasonable chance of that, I don't hold any at the moment, but will take look.
NCC (LON:NCC) is active in the cyber area and the new CEO seems to haveachieved a recovery from its earlier problems.
FREng, thanks for NCC (LON:NCC). Had a quick look, loss this year, EPS forecasts are falling, debt is quite high but directors have been buying heavily around 180p. Will have to investigate further.
Herbie
Another is Tern (LON:TERN) (which I hold), it focusses on IoT cybersecurity, and Ian Richie, the recently appointed (1 June) Chairman, is an extremely shrewd and successful entrepreneur.
My morning smallcap tweet:
Defenx (LON:DFX), Seeing Machines (LON:SEE), Lombard Risk Management (LON:LRM)
Defenx (DFX) is late with product product updates, new product dev. FY will be materially below market forecasts, making a loss. Looking to employ a Group COO and a Group CTO.
Seeing Machines (SEE) will present research conducted with Emirates airline on how pilots interact and monitor instruments during procedures that could pose potential safety risks. I don't know if there's any sales potential from this.
Lombard Risk Managment (LRM) Has poor H1. Pretax -£5.9m (-£0.1m). "A number of opportunities we had hoped to secure in the period remain in the pipeline as market distractions such as MiFID II caused companies to delay on committing to new projects...This leaves us much to do in the second half, and converting our strong visible pipeline will be crucial to us meeting market forecasts...we are confident this can be achieved...We expect delivery of a strong second half will enable the Company to meet its stated objectives of being cash generative."