Small Cap Report - UNG, DLC, IPEL, QPP

Tuesday, Dec 18 2012 by
6

Several interesting small cap RNSs today. Universe (LON:UNG) is a £7.5m (at 4p/share) payment and loyalty systems group. It's hovered on my radar for years, and management impressed at a FinnCap/Mello Central event earlier this year.

Their pre-close trading update today looks good - profits will be ahead of market expectations. They are also confident about the outlook for 2013. I have an indirect shareholding in Universe, through Vianet (VNET), which holds 13.2m shares (7%) in Universe. The hideous bid/offer spread puts me off, although a good telephone broker can usually solve that problem by ringing round the various market makers to find shares priced well within the spread.

Anyone interested in a broker recommendation is welcome to email me privately, as I have a special arrangement with a proper broker which is priced very competitively, but only available to investors who trade in reasonable size/frequency (say £10k+ deals, several per month).

CAD/CAM software group, Delcam (LON:DLC) continues its excellent performance, with a trading statement indicating profits will be ahead of current market expectations of £4.3m. Sales have reached a new high of £46m for the year.

Very good to see Delcam actually state what market expectations are, which few companies do. So often one is left scrabbling around trying to find out what figure a company thinks it is likely to beat! So let's hope more companies adopt this very helpful approach of specifying the market expectations figure which you are expecting to beat. It's surprising how often market expectations vary from one informational website to another.

On a PER of 17, and with a yield of just under 1%, Delcam doesn't exactly look a bargain, but high quality companies rarely do.

Specialist publisher of car repair manuals, Haynes Publishing (LON:HYNS) puts out a trading update with somewhat mixed messages, but seems to overall be saying that conditions remain tough. This is another company which is struggling to find a direction to take in the move to digital. Although one would imagine that car repair manuals are one area where sticking with a hard-backed paper product makes a lot more sense than trying to go digital - I rebuilt a MkI Vauxhall Cavalier in my…

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Universe Group plc is a United Kingdom-based company, which designs, develops and supports point of sale, payment and online loyalty solutions and systems for the United Kingdom petrol forecourt and convenience store markets. The Company's solutions are delivered through the cloud into real-time environments. The Company's trading segment is HTEC Solutions (Solutions). Solutions provide hardware, software and service solutions into the United Kingdom petrol and retail markets. The Company provides services, such as deployment, including site surveys, and communications infrastructure design and installation, and equipment refurbishment and disposal; field maintenance, including a range of on-site maintenance options; in-house services, including bench repair facility and help desk services, and outsourcing, such as project management, installation engineers and infrastructure consultants. The Company's subsidiaries include HTEC Group Ltd, HTEC Ltd and Indigo Retail Holdings Ltd. more »

LSE Price
5p
Change
 
Mkt Cap (£m)
12.8
P/E (fwd)
12.0
Yield (fwd)
n/a


Impellam Group plc is a holding company that provides strategic planning and management services to its portfolio of subsidiaries. It is engaged in the provision of staffing solutions, human capital management and outsourced people-related services in the United Kingdom, Ireland, North America, mainland Europe, Australasia, New Zealand, Singapore and the Middle East. It’s segments include Managed Services-UK, Europe and Australasia; Specialist Staffing-UK, Europe and Australasia; Managed Services-North America, and Specialist Staffing-North America. It operates various supply models within its Managed Service Programs (MSP), including Neutral vendor, Master vendor and Hybrid vendor. It also offers Recruitment Process Outsourcing, which refers to the outsourcing of permanent, temporary and contract recruitment. It offers staffing services for specialties, such as Healthcare, Legal, Engineering and technical, Construction, Catering, Driving, Office and Industrial. more »

LSE Price
398p
Change
 
Mkt Cap (£m)
191.4
P/E (fwd)
6.3
Yield (fwd)
6.1



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


2 Comments on this Article show/hide all

shipoffrogs 18th Dec '12 1 of 2
1

"Very good to see Delcam actually state what market expectations are, which few companies do. So often one is left scrabbling around trying to find out what figure a company thinks it is likely to beat!"

That struck a note with me today!

This is from Keller Group's RNS this morning -
"In our Interim Management Statement released on 15 November 2012 we reported that the Group's 2012 full-year revenue was expected to be around £1.3bn, with full-year profit before tax significantly above the then range of market expectations."

So, finding out current market expectations won't do - they're not commenting on those. I've got to find out what they were four weeks ago! And yet the footnotes are longer than the actual statement.

Makes you wonder how they can organise a company employing 7000 staff

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djpreston 19th Dec '12 2 of 2
2

QPP - I've been amazed how little comment there has been given its meteoric rise. The shares look to be discounting a lot of scepticism given the expected EPS next year is roughly 2.2p so the PE looks very low with the shares at 14p.

I think the comparison with ACE is somewhat unfair and Rob Terry founded Innovation - so he knows a thing or two about both IT and insurance). The group just seems to have hit the sweet spot but I guess I can understand some scepticism given the pace of acquisitions. One thing I do find very interesting is the legal work and scope to view this as the first investable version of "Tesco Law". It will be fascinating to see how slick IT can transform legal work and how the legal practices (dinosaurs mainly) respond.

Fund Management: European Wealth
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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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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