I Read The News Today Oh Boy! 27-Oct-2017

27th Oct '17 by matylda

13 comments 5522 reads

Morning All!

EL Captial ( £K3C ) – 27-Oct-2017 - 133p – £55.7m – PER 12.4

AGM Statement – A strong start to the year in-line with management expectations. Expecting substantial profit growth in FY18.

Apart from the 6% Spread I quite like the look of this.

Systems1 ( SysGroup (LON:SYS)1 ) – 27-Oct-2017 – 517.5p – £64.5m – PER 15.7

Results For The 6 Months To End September 2017 – Revenue down to £13.82m from £15.28m (-12% in CC), PBT down to £0.85m from £2.79m (-70%) and EPS down to 4.2p from 13.7p (-69%). This is also scary – “Trading in Q3 to date has not yet resulted in a pick-up in our order book. Were the gross profit decline seen in H1 to be repeated in H2, then our PBT for the full year would decline by 50% to 60% (2016/17: £6.3m)”.

If I was holding, I would be looking for the exit.

Symphony ( Symphony Environmental Technologies (LON:SYM) ) – 27-Oct-2017 – 12.75p - £19.3m – PER 127.5

Trading Update – The Board now expects revenues for the year to end December 2017 to be approximately £8m (£6.8m last time). PBT to be significantly higher than current market expectations (due to leverage) - Not less than £350,000 for the full year (£123,000 last time). Also has Cash in the bank of £317,000.

First time I have come across this company, just below my £20m usual Market Cap limit - And this update seems encouraging. Will keep an eye on it.

Attraqt ( ATTRAQT (LON:ATQT) ) – 27-Oct-2017 – 43.5p - £46.3m – PER 23.9

Trading Update – The new FD (1^st September) conducted a review and “due to inaccuracies in forecasting the timing of certain contracts and client "go-live" dates, it is necessary for the Company to revise its full year outlook”. Expects the full year to be about 10% below previous expectations but to still show YoY high single digit organic growth and for EBITDA to be positive in H2 as well as being broadly breakeven for the year as a whole. The lower revenue run rate at the end of 2017 is expected to carry forward into 2018.

…

Unlock with Email

Unlock with Google

Already have an account?
Login here

matylda

27th Oct '17

Obviously, just noticed and reported on this news this morning...

Had a few spare minutes here this morning and was wondering if others would perhaps have time to comment on this one - I ask because I was quite interested in this company about 6 months ago (didn't buy). Here is the 8-Apr-17 Stock Report - http://reports.stockopedia.co....

At the time I just though the PER was a little high. Anyone else have any "high level" just looking at the raw numbers comment?

Thanks, of course, in advance, for any feedback.

timarr

Hi matylda

I've followed SYS1 (the £ ticker doesn't work because of the number) for a few years and held for a while, although wasn't holding when the last problems occurred - purely by luck, I should add. To my eye there are three problems with the business.

Firstly, they have very little forward visibility of earnings - in fact the results to this allude to this frequently. That's not the profile of a business I like to hold as a surprise is always just around the corner.

Secondly, it's a business that's heavily dependent on its staff and in good times they tend to take a larger proportion of the value than I really like as a shareholder, especially when they don't share in the downturns.

Thirdly, some of their business is under threat from automated, low-cost competition. The use of machine learning is yet another way in which technology is rendering existing businesses vulnerable to change. Basically, it looks like at least some of their competitive advantage is being eroded.

So, in short, although this is an interesting business and in the good times one that looks like an attractive investment, it's not one I'll be revisiting.

timarr

MrContrarian

My morning smallcap tweet:

ATTRAQT (LON:ATQT), Symphony Environmental Technologies (LON:SYM), Hardide (LON:HDD), Driver (LON:DRV), SysGroup (LON:SYS)1, Harworth (LON:HWG), Science in Sport (LON:SIS)

ATTRAQT (ATQT) warns FY rev will be 10% beow prev guidance. EBITDA 'broadly breakeven'.
Symphony Environment (SYM) expects that pretax will be significantly higher than current market expectations, and not less than £350k.
Hardide (HDD) has conditionally raised £2.54m at 1.7p, a 4% discount.
Driver Group (DRV) CFO leaves in Dec. New one found. Sells Initiate Consulting for £0.2m making a £0.9m writedown.
System1 (SYS1) H1 pretax down 70% as guided but "trading in Q3 to date has not yet resulted in a pick-up in our order book. Were the gross profit decline seen in H1 to be repeated in H2, then our profit before tax for the full year would decline by 50% to 60%."
Harworth Group (HWG) wins planning for £50m retail, leisure and community centre at Waverley development.
Science in Sport PLC (SIS) 3 year deal with USA Triathlon to be the official supplier of energy gels and bars. No rev guidance. "USA Triathlon sanctions more than 4,300 races and connects with nearly 500,000 members each year, making it the largest multisport organization in the world."

Thanks timarr, as always.

It seems to you too, on the face of it, looking just at the Stock Report - All seems OK.

It's only by delving and having a knowledge of what's underneath - That the problems could have been spotted.

Anyone spot anything on the Stock Report worthy of a Red flag?

investimouse

I couldn't see anything in the Stock Report either for SysGroup (LON:SYS)1 but like all companies it's about knowing the industry / market they operate in and the factors influencing that.

Good recent article showing that market research spend by marketers is in decline:

https://www.marketingweek.com/...

This chart is telling:

Rusty2

I very nearly bought some System1 shares this was around the time of the name change but the price went up and the spread was quite wide so I left it.

Damian Cannon

I looked pretty seriously at SysGroup (LON:SYS)1 about six months ago and came very close to taking a position. At the time everything on the stock report screamed "buy" - great ROCE, great cash generation, not too expensive, growing earnings. I think that the only thing which put me off was the tripling of the share price in just a year without earnings quite keeping up and the very low yield.

So, in the end, my money found a different home but I could quite easily be nursing a heavy loss here. The only upside is that I would have sold at the first profit warning - thanks to the excellent research done on Stockopedia!

daveinthelakes

Hi Matylda,

I have just had a look at the Symphony Environmental Technologies (LON:SYM) website. Very exciting technology that the world needs but they have been quoted for over a decade with little growth/profits. The big question is the world going to demand recyclable plastics and is SYM's IP unique or at least the best there is?

They quote Edison as an advisor but there is no research available on Edison's site so I have mailed them to establish if they have anything they can release. I will contact you if I get a positive response.

Dave

Thanks Dave, much appreciated.

Edison have advised me they no longer act for Symphony Environmental Technologies (LON:SYM) . Their nomad is Cantor Fitzgerald so no chance of anything off them!

I think you are right that it is one to watch and I am certainly not investing until I see evidence of more substantial growth.

GrahamF

‘The big question is the world going to demand recyclable plastics and is SYM's IP unique or at least the best there is?’

Hi Dave. I think that the question may be a bit more nuanced. Should plastics be recycled or should they biodegrade. It looks like Symphony Environmental Technologies (LON:SYM) are involved in biodegradable plastic but not recyclable plastic.

The main thrust in my area appears to be recycling plastic with the recyclable household waste and reusing plastic in the form of multi use bags. So, biodegradability while important may not be where the action is right now whereas recyclability is. Not clear to me that they are involved in recyclability.

28th Oct '17

Thanks Graham. I don't think they are involved in recyclability although the biodegradable bags are fully recyclable. Some countries are now insisting that all plastic bags are biodegradable and if this takes off with concerns about plastic, including bags, in the oceans there may be a lift off for their products which are an additive to the mix in bag manufacture and as such a simple addition to the process.

Dave

Mike888

Having read the SYM RNS, and the spike in share price yesterday, I got quite excited by the potential of this stock. However, having done a quick google on Biodegradable Plastic additives it would seem that there are a fair few other companies offering similar products. So not as much of a USP than I had originally hoped for. Pretty obvious if you think about it, as this share should have rocketed some time ago. Oh well, it probably still has legs but its not Usain Bolt

I Read The News Today Oh Boy! 27-Oct-2017

Unlock the rest of this article with a 14 day trial

About the Author

Matylda

13 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...