Small Cap Value Report (11 Aug 2014) - DGB, CFHL, WSG, PSL, SIV

Good morning from the island of Paxos! My internet connection here is at best very weak, so am hoping this report will find its way to you at all, let alone promptly! I've hired a small motor boat, so once this report is filed, I'll be wandering down to Loggos, to spend the rest of the day whizzing around, bay hopping, slapping on the factor 50 and trying not to get eaten alive by mosquitos.

Digital Barriers (LON:DGB)

This is the first small cap I've observed to blame the Ebola outbreak for a profit warning. It says that contract negotiations are being delayed due to restrictions on staff travel. Some positive noises are made about other potential contracts. An excerpt from this morning's announcement says;

We have invested significant time and effort in developing a strategic sales pipeline in the fast growing economies of West Africa and our hope and expectation is that although we will see inevitable delays, we can work with our local partners to ensure these delays are kept to a minimum. In the interim we are already seeing very significant sales traction with customers across other target regions and expect positive contract news throughout the year.

The company certainly has a mountain to climb just to reach breakeven, after several years of heavy losses. So the £60m market cap rests entirely on hope for considerably improved results this year & next. Too speculative for me at anything near the current price I suspect these shares might lurch a long way lower as one disappointment follows another.

CityFibre Infrastructure Holdings (LON:CFHL)

This is an interesting company, which is building fibre optic networks in British cities. An announcement this morning is for a new network to be built in Kirklees.

These shares are on my watch list, but at the moment financial details are too skant to consider it anything other than blue sky. I need a much more concrete idea about what shareholder return there is likely to be, before considering buying any shares here.

Westminster (LON:WSG)

News is published today of a contract win with an African Govt to operate a ferry service in Africa, with potential revenue of $300m over 25 years. Sounds interesting, although this company has always seemed a bit peculiar to me. Might be worth another look possibly? The company says;

We expect this service to share many of the strong financial dynamics which are already being delivered by our existing managed services business.

Photonstar Led (LON:PSL)

Interim results to 30 Jun 2014 are published this morning, and as expected are not very good. It's an innovative lighting company. The weather is blamed for poor H1 results - it would be interesting to collate comments about the weather from all companies in the market - if you did that, I suspect that the conclusion would point towards a new Ice Age starting - i.e. weather is so often blamed for poor trading.

You very rarely hear companies blame good weather for good results. Instead good results are down to brilliant management, and only bad results are due to the weather!

As always, ther only weather that matters is whether you have the right products at the right price.

This micro cap recently raised £2.2m in a Placing, and talks about new lighting product launches for H2, so let's see what they deliver for the rest of this year. Hopefully the weather we are currently having is conducive to good sales of lighting, From what I can gather, it seems to go dark at approximately the same time & for the same duration each day as it did last year.

ST Ives (LON:SIV)

There's an in line with expectations trading update from this marketing & printing company today;

The board is pleased to report that the results for the financial year ended 1 August 2014 are expected to be in line with current market expectations.

This company looks potentially interesting - it has a StockRank of 99, and looks reasonably priced on a forward PER of 10.8. Also I like the progressive dividend, currently yielding about 3.6%, with a good track record of consistently paying & increasing the dividends in recent year.

Right, got to dash, the family are chomping at the bit here, wanting to get out on the water, so skipper Scott signing off!

Regards, Paul.

(of the companies mentioned today, Paul has a long position in PSL, and no short positions)