I Read The News Today Oh Boy! 7-Jun-2019 & June Updates

7th Jun '19 by matylda

8 comments 1640 reads

Morning all!

First off all, I have posted my Monthly Recap for June here - Covering all my purchases and sales in the month of May.

Secondly, I have posted my Parity PEG Price Reports for June here (free sign up required to access) - Covering 20 stocks updated in the month of May.

Onto this morning...

Somero ( Somero Enterprises Inc (LON:SOM) ) – 355p – £200m – PER 11.1

Trading Update For The 5 Months To End May 2019 – Trading below management expectations (adverse weather conditions) – Expects Revenue of about $87m, EBITDA of about $28m with Net Cash at 31 December 2019 of about $18m.

Not sure how much of a miss this is but it looks like about 15% or so on the Revenue side. Quality company but I considered it overvalued previously so looks like I will be sitting on the side-lines for a bit longer now. Or this may present a buying opportunity – Perhaps!

As always, all comment most welcome!

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MrContrarian

7th Jun '19

My morning smallcap tweet: SUN dims.

Surgical Innovations (LON:SUN), Somero Enterprises Inc (LON:SOM), PHSC (LON:PHSC), £R4E

Surgical Innovations (SUN) weak Q2, blames Brexit. Guides rev still up but adj pretax down YoY.
Somero Enterprises (SOM) record rainfall in US hits construction starts. Guides rev $87m, EBITDA $28m. F/C rev 98.3m. "The positive US market conditions described in the Company's 14 March 2019 trading update have not changed and whilst we anticipate it will take some time for momentum to rebuild."
PHSC (PHSC) FY trading: rev £5.2m (£7m). EBITDA £320k (£92k). "The reduction in revenue is largely attributed to a significant decline in the sale of security solutions to retail clients as highlighted in our interim results." Accounts may have impairmanets and stock write-down.
Reach4Entertainment (R4E) closing loss making Dewynters Germany, will service Germany from UK. "Dewynters Germany was launched under r4e's previous management team."

William K

Thanks Matylda. Almost tempted by Somero Enterprises Inc (LON:SOM) but the current spread of 270-290 is off-putting. It's certainly a quality company but it's worth waiting for the dust to settle.

andrea34

I have avoided Somero Enterprises Inc (LON:SOM) in more recent times (after selling last year) as their regional performance continues to be very mixed with a forever ongoing failure to crack China. The latest update provides another reason not to get involved.

There is the following update from Ferrexpo (LON:FXPO) today - "Group EBITDA in 1H 2019 is expected to increase materially compared with 1H 2018. Year to date, the improvement in profitability has been driven by higher pricing, production and sales volumes compared to 1H 2018. While the average C1 cost of production is likely to increase in 1H 2019 compared with 1H 2018, cost inflation has been lower than expected due to a fall in the Brent oil price and the European gas price partially offset by an appreciation of the Ukrainian Hryvnia versus the US Dollar". I know this isn't a small cap, but a forward PER of about 4 seems a bit ludicrous. I will do further research - for example, the performance will be geared to iron ore prices, and I don't know how cyclical these are. But I am encourage that they say EBITDA increases are due to production as well as prices. The recent resignation f auditors over past (now ceased) charity donations is a minus.

Thanks for the latest month;y/parity reports, I'll have a look.

Have a nice weekend Matylda... and all.

I am logged into your Briefed Up site, but it is either not recognising that I am already logged in, or there is no download link for the June report.

I don't understand what is tempting about Somero Enterprises Inc (LON:SOM) at the moment - apart from the US weather-related issues, they also say "Europe and China, as well as in the Rest of World territories, trading in 2019 is at comparable levels to 2018... growth in India has been steady.... Middle East and Latin America are trading below 2018 levels, however the Company expects improvement in H2 2019, notwithstanding the political uncertainly and economic challenges seen in these regions." Apart from India, which is only 'steady' (I think we can translate this as single-digit), ALL other geographic areas are either showing no growth or are down! This is much worse than in previous years, where some areas have been up and others not. They always say that they see many opportunities... but these just do not translate into a good amount of sales. I'd be expecting another profit warning......

You're right Andrea, it's not very tempting as things are. (I did say almost tempted.) I owned some of these and sold last year at around 400 so the current price seems a bit like a bargain., bearing in mind Somero Enterprises Inc (LON:SOM) pays a decent, well covered dividend around 5% and has spare cash. But you've pointed out a few negatives and the spread is prohibitive. I'm no longer tempted although I will be keeping an eye on the share price. Maybe one for a long dry spell being in mind its sensitivity to rain.

lemonjar

Yeah I got the same actually, shame coz I'm interested in your writeups on a couple! :)

matylda

8th Jun '19

Something strange is happening with the "cache" - It is being looked into - However, when on the page itself - If you do a refresh of your browser then you should be fine - The document should load and the download link should also be visible - Apologies for the inconvenience.

I Read The News Today Oh Boy! 7-Jun-2019 & June Updates

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Matylda

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