Small Cap Report (28 May) - TET, C21, RNO, VLX

Tuesday, May 28 2013 by

Pre 8 a.m. comments

Good morning, and I hope you are all rested from the long weekend, and pleasant weather!

Things are starting to get busy again, with smaller companies beginning to report 31 March year-ends and interim period ends.

I last reported on 28 Mar on Treatt (LON:TET) saying that the shares didn't look particularly good value any more, although the 4% dividend yield is attractive. What do I know, as the shares have gone up from 420p to 490p since then! That price move looks justified now, given a very bullish trading update issued today. They are now talking about exceeding expectations for year ending 30 Sep 2013, but they don't say by how much.

So the consensus EPS forecasts of 34.7p for this year and 38.9p for next year are now too low, so at a guess we might be looking at nearer 40-50p then for the two years? That still doesn't make the shares look especially cheap at 490p, given that they are carrying a fair burden of net debt on top of the market cap.

Well done to any holders of this, but I think the big move has already been had, so I'm not going to chase it up for the last 10-20% that might be left in the tank.



21st Century Technology (LON:C21) has issued an AGM trading update which warns that sales for the current year ending 31 Dec 2013 will fall short of estimates (Stockopedia shows £17m forecast sales), and is expected to be similar to 2012 at around £14m. The reason given is that overseas customers have delayed purchases, due to difficulties and administrative delays in getting funding.

Contract delays always make me nervous, as they're usually the early sign of bigger problems, as bad news tends to be released in stages in my opinion (hence the old adage that profit warnings come in threes).

Given that they are having to fight harder for sales, C21 is "investing" £0.5m extra in "new projects, expanding out operations in the UK, and establishing specialist local sales teams in key overseas markets by approximately £0.5m in total. Excluding such investment costs, we expect the underlying profitability before tax of the Group for this year to be in line with that achieved in…

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Treatt PLC is a United Kingdom-based ingredients manufacturer and solutions provider to the flavor, fragrance and consumer goods markets. The Company's geographical segments include United Kingdom, Rest of Europe, The Americas and Rest of the World. The Company's products include Essential oils, Citrus, Treattarome, Functional ingredients, Chemicals, Organic essential oils, Vegetable oils and Treatt brew solutions. Its Essential oils include Amyris Oil, Angelica Oil and Aniseed Oil. Treattarome products include Pineapple Treattarome, Honey Treattarome and Cucumber Treattarome. Its Citrus products include citrus oils, CitrustT, TreattZest and Citrus add-back range. Its Functional ingredients include beverage specialties, fragrance ingredients and sugar reduction products. Its chemicals include aroma chemicals, natural chemicals and Treatt Flavour Wheel. Its Vegetable oils include Borage Oil and Baobab oil. Its organic essential oils include Organic Aniseed Oil and Organic Lime Oil. more »

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21st Century Technology plc is a specialist provider of tailored solutions to the transport community, solving operational requirements both on and off the vehicle. The Company operates through two segments: Fleet Systems and Passenger Systems. The Fleet Systems segment includes closed-circuit television (CCTV), passenger wireless fidelity (Wi-Fi), telematics and driver behavior, and passenger counting. The Passenger Systems segment includes information estate software and hardware for passenger displays, smart ticketing and way finding. Its fleet solutions include video surveillance for passenger's and driver's safety, vehicle's and driver's performance monitoring and automatic passenger counting. Its services and technologies include integrated solutions, consultative design, maintenance and support, installation, testing and commissioning, and telematics. It provides solutions to fleet operators, train operating companies, local authorities and public transport executives. more »

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Renold plc is engaged in delivering engineered and power transmission products and solutions across the world. The Company's Chain segment manufactures and sells power transmission and conveyor chain and includes sales of torque transmission product through Chain National Sales Companies (NSCs). It has manufacturing sites in the United States, Germany, India, China, Malaysia and Australia. It also offers leaf chain used in the forklift trucks. Its Torque Transmission segment manufactures and sells torque transmission products, such as gearboxes and couplings. It is a manufacturer and developer of coupling and gearbox solutions, from fluid couplings to rubber-in-compression and rubber-in-shear couplings, and a range of worm gears, helical and bevel helical worm drives. It also manufactures gear spindles. The applications of conveyor chain include theme park rides, water treatment plants, cement mills, agricultural machinery, mining and sugar production. more »

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  Is LON:TET fundamentally strong or weak? Find out More »

3 Comments on this Article show/hide all

Paul Scott 28th May '13 1 of 3

Just to keep everyone updated, I did buy a small number of Volex (LON:VLX) this afternoon, at around 100p.
It looks well placed to develop as a turnaround stock in the next year.


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LancashireLad 28th May '13 2 of 3

I've followed the fate of Renold (LON:RNO) for many years but never bought into them. I share your view re how the next few years are likely to go and also point out that they have to a great extent missed the boat internationally (the UK market is insignificant) as compared with the pace of action in the last 5 years from German and Korean competitors. I wish Mr Purcell well, but I'm not sure this depends on one man. The board failed to move with the times back in 2008-10 and there are more exciting opportunities in the manufacturing world elsewhere.

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cig 29th May '13 3 of 3

I like Volex too, got in last week. Have you noticed the price seems to have been hovering around £1 since January. It's a suspiciously round number and tight range, a large seller perhaps?

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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