Brammer (LON:BRAM) (BRAM, 210.0p, £223.21m) The IMS statement for the period from 1 July 2010 to date is positive. The leading pan European added value technical distributor reports trading is ahead of market expectations. Sales per working day grew by 18.2% in the period driven by a recovery in the market. The business has won significant new contracts. Gross margins have been retained in line with the previous year and the management team continue to costs tight. The outlook statement is positive. We expect the market to upgrade 2010 EPS from 12.78p. The stock trades in a 2011 prospective PER of 12.7x with a yield of 2.9%. We believe further contract wins will continue to act as a share price catalyst. We reiterate our BUY recommendation and increase our target price to 248p.
Intercede Group (LON:IGP) (IGP, 55p, £26.50m) has opened a new US support office and consolidated its operations into a site in the Dulles Technology Corridor in Virginia, ideally placed to support Federal Government customers as well as its commercial ones. We went to a Hold at 63p and at 55p the group is trading on some 13.4x PER to March 2011. We see upside back to at least 15x PER – so move the shares back to a BUY with at least a 61.5p price target.
K3 Business Technology Group (LON:KBT) (KBT, 147.5p, £37.28m) has announced the acquisition of Panacea, a managed service provider, for a total £2.2m including the repayment of a £0.5m overdraft. Servicing distribution, retail and hospitality customers the group generated £9.58m revenues to December 2008 with an underlying op profit of £0.57m – with 47% of the 2008 revenues arising from recurring revenues. Just why no more recent numbers are given is not explained….No matter the acquisition usefully expands KBT’s presence in managed service (some 50% or Panacea’s revs) with the rest of the revenues arising primarily from Applications Solutions and CRM which are built around Microsoft Dynamics and Sage. We see this as neutral to good news (hard to be too enthusiastic given the lack of recent financial information) but we repeat our BUY recommendation with a maintained 158p price target.
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