Good morning from le gai Paris! Apologies for missing yesterday morning's report, but I was swishing under the English Channel on a Eurostar. What a convenient & pleasant service, and so nice to be able to walk to your hotel on arrival, with no hanging around waiting for bags, passport control (done efficiently at St Pancras).
There were several important announcements yesterday for shares in my personal, and SmallCapValue.co.uk portfolios (which heavily overlap), so I will cover those first.
May Gurney Integrated Services (LON:MAYG)is an out-sourcing company for the public & regulated sectors, providing largely recession-proof services such as road maintenance, refuse collection, etc. Specific problems with several contracts have trashed the shares, but gave me the opportunity to buy in cheaply at 138p, as detailed here in my article a few months ago.
That proved a shrewd purchase, as they are now around 174p to buy. The interim results yesterday provide no surprises, with underlying EPS and full year outlook all in line with expectations. They should generate around 25p adj EPS this year, so clearly the PER is still attractively low at 7 times.
The interim divi has been maintained at 2.79p, so 8.4p for the full year looks sustainable, giving a yield of around 5%, very nice! Cash generation & order book both look fine, as does the balance sheet, where all bar £3m of the net debt is underwritten by customer contracts (£74m in finance leases for vehicles & plant). So a nice situation where I'm happy to hold. In time I believe the PER should rise to at least 10, which implies a share price of 250p+.
Vianet (LON:VNET) also reported interims yesterday, which were solid. Turnover was slightly down, as expected since they exited some low margin cellar audit business last year. My preferred measure of performance is adjusted (i.e. pre-exceptional & amortisation) EPS, which rose strongly to 5.3p. However it should be noted that the utilisation of tax losses resulted in no tax charge for this 6 month period, hence that figure is correspondingly flattered. Underlying profits are pretty much flat against last year.
There is an extremely informative video results presentation here, which if you have time is well worth a listen. I…
About the Author
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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »
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