Small Cap Value Report (1 Jul 2014) - IKA, MPOW, CSG, PURI, KOOV

Tuesday, Jul 01 2014 by

Good morning!

Ilika (LON:IKA)

There's a positive-sounding update on the technical progress being made by this blue sky innovative materials company. I visited them in Southampton a while back, and found their activities fascinating. The most commercially promising new material they have invented facilitates the production of solid state batteries, with dramatic advantages over conventional batteries.

So it's one of the "this could be HUGE!" type of shares that investors get terribly excited about in bull markets. Personally I'm sitting this one out for the moment, as the euphoric phase of the bull market has fizzled out in the last couple of months, with many valuations coming down to earth with a bump.

However, Ilika is still riding high, indeed has hit a new high this morning, currently up 8p to 70.5p. With 65.1m shares in issue, that values the company at £45.9m - quite a hefty valuation now, although that figure is either far too high, or far too low, we just don't know which yet!

Key points from today's update are that the battery size has been increased (which is a technical challenge), although still quite small by the sounds of it. Commercially, things are looking potentially promising, with this comment made today;

Initial commercial discussions have progressed and Ilika has entered into confidential disclosure agreements (CDAs) with commercial partners across the globe. In total, since January, Ilika has entered into ten CDAs to facilitate ongoing discussions with OEMs and suppliers of manufacturing equipment located in Europe, USA and Japan.

So they are talking to 10 companies about commercialising this technology basically. One of the Ilika's strengths has been its blue chip existing client base, although that has not translated into any commercial success to date. Although on that front, it looks as if licensing revenues could start to flow next year, so a reasonable timescale;

The progress we have made in terms of both technology and understanding of our unique processes since January is substantial and the interest from our potential commercialisation partners is increasing significantly. Both these factors encourage us that we are on track to commercialise our stacked thin-film battery technology in 2015.

Management here are (in my opinion) straightforward, and seem to have a good blend of technical expertise and commercial savviness. It will be interesting to see how this pans out, but for the time being it's one I'm happy to watch from…

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Ilika plc is the holding company. The Company is engaged in the production, design and development of high throughput methods of material synthesis, characterization and screening. It has developed solid-state battery technology to meet the demands of the Internet of Things (IoT). The Company has materials development programs addressing a range of applications, including the solid-state battery, aerospace alloys and electronic materials. It has developed a type of lithium-ion battery, which, instead of using the usual liquid or polymer electrolyte, uses a ceramic ion conductor. It offers Stereax M250 rechargeable, thin film battery. It has applications in autonomous sensor devices, smart homes (heating, ventilation and air conditioning (HVAC), security, light), automotive (infotainment, sensors), logistics (asset tracking), medical devices (biometric monitoring) and wearables. It is also developing superalloys, self-healing alloys and smart materials for electronic data storage. more »

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mporium Group plc is a holding company for mporium Limited and Fast Web Media Limited. The Company is a mobile first technology firm that monetizes the transformation that smartphones have had on consumer behavior. The Company provides Software-as-a-Service (SaaS) and supporting services. The Company is in the process of developing two products: impact and insights. The mporium impact is an advanced digital advertising platform. The mporium impact works for digital advertisers and their agencies. The mporium impact uses the stimuli that television content provides and generates the associated synchronized consumer digital activity. The mporium insights product provides enterprise level technology to the small and medium sized enterprise (SME) market. The mporium insights offers e-commerce analytics, customer segmentation, and real-time customer data, which include trend-based Web traffic reporting. more »

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

10 Comments on this Article show/hide all

purpleski 1st Jul '14 1 of 10

I don't like Quindell (LON:QPP) because of the business it is in (like I don't like big tobacco or wonga) but have you seen this?

Interesting to watch from the sidelines though.

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janebolacha 1st Jul '14 2 of 10

Paul, look at MoPowered's grants of options only a few weeks ago.
Surely they already knew the business was going nowhere fast?

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OsullivanB 1st Jul '14 3 of 10

With an EV of under £6m, isn't PURI a micro-cap at risk of delisting?

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Ramridge 1st Jul '14 4 of 10

Hi Paul - With respect to both Ilika and Koovs, I am sorely tempted to buy a shareholding, but resisting the temptation. I completely agree with your view that if a market downturn or correction occurs before the year end then these are precisely the kind of companies that will dive and dive fast and deep. A clear case that sitting on your hands can also be a big risk.

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Paul Scott 1st Jul '14 5 of 10

In reply to post #84446

Hi OsullivanB,

With an EV of under £6m, isn't PURI a micro-cap at risk of delisting?

I don't see that as a risk with PuriCore. De-listing usually only happens if a company has run out of money (with PURI it's the opposite, they are now cashed up), and/or when there is a dominant shareholder who realises that there is no point in remaining listed. Invesco seem to be the biggest shareholder at PuriCore with 29%, so that looks OK. One presumes they will want it to remain Listed & will prevent mgt from de-listing.

Regards, Paul.

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Gostevie 1st Jul '14 6 of 10


At the start of your Volex (LON:VLX) report you write:

The Placing & Open Offer has completed, and is worth nothing as in my opinion this fundraising has been structured in the best way I've seen for a while, by Investec - so a hat tip to them.

Did you mean "noting" rather than nothing? If so, it changes the whole meaning of the sentence.



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Paul Scott 1st Jul '14 7 of 10

In reply to post #84451

Blimey, thanks for pointing that out Steve, that was a real clanger of a typo!!

I did indeed mean "worth noting", and have amended the article accordingly. Maybe I'm so used to writing "worth nothing" that my fingers just automatically typed that LOL!

Many thanks for pointing out my slip of the finger. Normally typos don't really matter (although are obviously best avoided), but in this case where it massively changes the meaning of the sentence, I'm very glad you pointed it out!

Regards, Paul.

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jraitt 1st Jul '14 8 of 10

IKA seems a little different to most similar blue sky shares. Most have a big spike on news - as IKA in January - and then have a big, prolonged fall until further news sparks more interest. IKA has not fallen in those 6 months of no news but held its price. There are very few, if any, companies of that size with so many blue chip customers worldwide. I'm happy to hold.

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OsullivanB 1st Jul '14 9 of 10

In reply to post #84448

Thanks, Paul

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boothbym 26th Sep '14 10 of 10

Well ILIKA has jumped to 110 today. Massive potential and that is what people are buying. So long as the news flow stays good then this will continue to rise but there are a lot of people sitting on large profits already. I guess were just waiting for the potential to materialise. Roll on 2015.

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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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