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

7th May '19 by matylda

8 comments 2082 reads

Morning all!

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

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

Onto this morning...

4imprint ( 4imprint (LON:FOUR) ) – 2580p – £724m – PER 22.1

AGM Statement – In a strong position to hit £1bn in Revenue by 2022, first 4 months of 2019 strong with Revenue up 16%, early in the year but Board confident of delivering on FY expectations.

Looks fairly valued here to me.

Begbies Traynor ( Begbies Traynor (LON:BEG) ) – 60p – £69m – PER 11.5

Trading Update For The 12 Months To End April 2019 – FY To be comfortably ahead, entering the new year with a strong Order book and favourable market conditions.

Still think there's value here (perhaps a lot) but the poor ROCE and Op margin hold me back.

Costain ( Costain (LON:COST) ) – 325p – £350m – PER 8

AGM Statement – In-line.

Looks like there's value here – Low growth and low margin offset by Net Cash and a decent Yield.

Empresaria ( Empresaria (LON:EMR) ) – 74p – £36m – PER 6

AGM Statement – Om course to meet FY expectations (reliant on H2 weightings).

Even on a PER of 6 still doesn't tempt me - Net Debt is high, Operating margin is low, (EPS) growth is forecast <2% per year and now, H2 weighting too!

Kape Technologies ( Kape Technologies (LON:KAPE) ) – 90p – £130m – PER 14.9

AGM Statement – Strong start to the year, trading in-line, subscriber number growth exceeding expectations.

I am Long here and this seems good enough reason to remain so for now (based on the expectations (Broker forecasts) I have access to).

SDL ( SDL (LON:SDL) ) – 532p – £482m – PER 17.7

AGM Statement –…

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MrContrarian

7th May '19

My morning smallcap tweet: Brown trousers for PurpleBricks.

Bidstack (LON:BIDS), Begbies Traynor (LON:BEG), ImmuPharma (LON:IMM), Purplebricks (LON:PURP)

Bidstack Group (BIDS) £5m placing at 12.5p, a 19% discount. Placing "gives us the financial resources to capitalise on our strong current position."
Begbies Traynor (BEG) guides FY rev and profit comfortably ahead of market expectations thanks to a number of successful fee realisations combined with continuing strong performance from both operating divisions.
Immupharma (IMM) delays Managed Access Program for Lupuzor while talks continue with potential corporate partners as well as consulting with regulatory advisors on potential pathways to market.
Purplebricks Group (PURP) Founder & CEO resigns. Immediately reverse some of his plans. Exits Australia, blames execution errors and challenging mkt. Rows back on US - "materially cut investment in marketing and other overheads to reduce expenditure to sustainable levels and begun a strategic review." CEO is thanked.

andrea34

On the face of it, things sound rosy enough with the Kape Technologies (LON:KAPE) figures mentioned... but when I looked at the finals previously I was put off by low revenue growth and the low ROCE and margin figures on Stocko. Some of the positive results seem to be a conversion of their existing business model rather than new business, to provide a more secure revenue stream rather than, necessarily, additional revenue.

There is a Q4 update from Distil (LON:DIS) which looks a bit scary on the face of it.... "revenues and volumes were in line with our expectations, being 33% and 32% lower respectively, reflecting the additional stock build by our distributors during the third quarter", though management claim it is part of their strategy being "a result of the earlier phasing of our promotional activities, the sales benefits of which were seen in the third quarter, which is our major trading period".

There is an update from Kromek (LON:KMK) stating revenue growth for the full year 2018/19 and EBITDA profit will be in-line, and with a confident outlook; the share are reacting moderately positively. I hold.

There is a positive update from Victoria (LON:VCP) stating results will be in line, positive lfl of 3%, increased margin of 100bps with them forecasting a similar margin update in 2020 as well as a lot of cashflow to bring down debt.

There is a 500k buy of shares in Xpediator (LON:XPD) by the CEOs family, taking their interest up to 26.4%, plus 0.?% held by the CEO himself. I wonder if he'll eventually take it private....?

The market quite likes the acquisition of Ecopac by Macfarlane (LON:MACF) although I do wonder if they have overpaid a little, with a maximum cash consideration of £3.9 million (including an earn-out of £0.8m) when in 2017-18 Ecopac generated sales of £6.0 million and pre-tax profits of £0.5 million.

The thing I don't like with the announcement from Begbies Traynor (LON:BEG) is that there are no numbers in it!!! What does "strong" mean? (Presumably better than 'solid'). The fee realisations are adhoc rather than predictable income, so won't necessarily be repeated, at least in the same magnitude. I think I'd have to wait for the results.... but I agree that the ROCE and margin are poor, and in fact I wonder how on earth Stocko comes up with a Quality score of 71 for them!

William K

Costain (LON:COST) puzzles me. The metrics look good but it's currently trading 15% below its 200 day MA and heading down steadily. There's clearly something about this company that the market doesn't like. But it's hard to identify exactly what that negative factor is.

I had a quick look at Costain (LON:COST) and, in the last results, operating profit was up only 7% and revenue was down a thumping 14%! Operating margins are low, but this is the nature of the business... though unfortunately means that if one project goes wrong then profits can be severely affected. I couldn't invest in this until (1) I see a return to revenue growth and (2) the HORRENDOUS chart, which has been in decline for almost 12 months, turns positive.

Thanks Andrea..

matylda

Phew!

Great comment this morning guys, thanks.

Costain (LON:COST) - For me, if you take the Net Cash, the Yield (5% or so), the forecast EPS growth of 10% or so next year and the year after, looks like a decent income play (if you accept that any knock on that low margin will not hurt too much, I would not expect it to impact the ability to pay the Dividend (having so much Cash)) with the potential for 20% or so upside in the SP (bringing the Yield to 4% or so).

Distil (LON:DIS) - Too small a Market Cap for me but a quick skim of the RNS and fundamentals and it doesn't excite me much at all.

Kape Technologies (LON:KAPE) - Will, price action depending, probably look to hold here through to actuals - EPS forecasts still look to be on target (and they're 30%+ in 2019E and again in 2020E). True enough the low ROCE and Op Margin is a concern. However, I reckon the Op Margin is slightly out considering say £50m Revenue and £10m PBT.

Kromek (LON:KMK) - Need to see a profit (or at least firm confirmation of it) here first before considering.

Xpediator (LON:XPD) - Tempted to get back in here, it's one of 7 on my Watch List, perhaps concerned a little about import/export services but I suppose they would do well regardless of B***** whatever the outcome, especially companies that have already said so.

Macfarlane (LON:MACF) - Need to look at this, just noticed an updated Broker note, looks like EPS is lifted 2% (2019E) and 3% (2020E).

Begbies Traynor (LON:BEG) - Yes, Op margin and ROCE and "lumpy" or at least unpredictable.

Please can you provide the updated broker figures for Macfarlane (LON:MACF) Matylda?

You know Andrea, I apologise but I just don't feel comfortable doing ad-hoc requests - Research Tree is a service I pay for and though I feel comfortable including the information in updates, comments, reports, etc. unprompted - I would feel quite awful about responding to an ad-hoc request, at what point would I stop and potentially destroy an otherwise excellent service that Research Tree provides :(

Hope you understand.

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

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Matylda

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