Small Cap Value Report (19 May 2015) - ZYT, ACSO, SOM, IDOX, TNG, BMY, SNX, PMP, WTM

Tuesday, May 19 2015 by

Good morning!

NB. There won't be a SCVR tomorrow I'm afraid, as I will be attending the London Value Investing Conference. I will however report back (at a later date) on the LVIC, with one or two articles here on the talks which I find most interesting.

I've been glued to my screen this morning again, watching all the excitement going on with Plus500 (LON:PLUS) following their regulatory problems (inadequate client identity checks, it seems). I seem to have confused some of the gentlefolk on bulletin boards, by writing a blog here yesterday afternoon saying that I didn't like PLUS, never had done, and wouldn't go near it, but then posting on Twitter about half an hour later that I'd gone long!

The explanation is very simple - this blog is me with my sensible hat on. So this is about value investing, and longer term views of companies. However, I also like to do a bit of short term punting on the markets too - partly for fun (it's exciting), but also overall I make money at it too. The two things are very distinct activities. A lot of people do the same thing - shorter term trading gives us something to do, whilst we wait for our long term positions to either succeed or go wrong.

As this is a value-orientated report, I don't tend to mention my short term trades here, as that's not what these reports are about, although I will always disclose whether I hold a particular share or not, when mentioning it.

There are loads of results I want to cover today, so will probably spend all afternoon writing this article. I have a call with CEO/FD of Zytronic shortly, then a Synety AGM to "attend" by webinar. So busy, busy!

Zytronic (LON:ZYT)

Share price: 287p
No. shares: 15.3m
Market Cap: £43.9m

(at the time of writing, I hold a long position in this share)

Interim results - this is one of my favourite companies. Zytronic manufactures bespoke touch-screen displays, with superior performance characteristics, in N.E. England, primarily for export.

Interim results to 31 Mar 2015 are out today, and look good in my view. The share price dipped early on, as I think some people failed to notice that a £0.4m forex cost is buried in admin costs, so the underlying result is better than it…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>

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Zytronic plc is involved in developing and manufacturing of touch sensor products. The Company is also engaged in the development and manufacture of customized optical filters. Its geographical segments include Americas (excluding USA), USA, EMEA (excluding UK and Hungary), Hungary, UK, APAC (excluding South Korea) and South Korea. Its products incorporate an embedded array of metallic micro-sensing electrodes. Its technologies include projected capacitive technology (PCT) and multi-touch mutual projected capacitive technology (MPCT). PCT touch sensors can be constructed from one, two or three layers of laminated, toughened glass. Its sensing products offer touchscreen solution for applications, such as leisure, digital signage, retail, surfaces, banking and industrial applications. Its touch sensors are used in video jukeboxes and slot machines. The PCT touch sensors are used in a range of workplace applications, from medical diagnostic equipment to oil field machinery controls. more »

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accesso Technology Group plc is a United Kingdom-based company engaged in the development and application of ticketing, mobile and e-commerce technologies, and virtual queuing solutions for the attractions and leisure industry. The Company's solutions include accesso LoQueue, accesso Passport, accesso Siriusware and accesso ShoWare. accesso LoQueue is a queuing solution that includes Qsmart, Qbot and Qband. The accesso Passport ticketing suite is built where its customers shop. accesso Siriusware provides clients with ticketing and admission solutions, and includes various modules, such as OnSite Ticketing, OnLine eCommerce, Point-of-Sale and Guest Management. accesso ShoWare offers a range of ticketing software solutions for theaters, fairs, arenas and tours. The Company's products and services support attractions in the world, including a range of paid admission operations ranging from theme parks, water parks and zoos to cultural attractions and sporting events. more »

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Somero Enterprises, Inc. is a manufacturer of laser-guided equipment. The Company's equipment automates the process of spreading and leveling volumes of concrete for commercial flooring and other horizontal surfaces, such as paved parking lots in North America. The Company's products include S-22E, S-15R, S-15M, STS-11M, S-840, S-485, CopperHead XD 3.0, Mini Screed C, PowerRake 3.0, 3-D Profiler and SiteShape. Its Somero Floor Levelness System monitors Laser Screed performance, operator performance and reports alert percentages of issues. The Somero SiteShape System allows for grade shaping automatically using users' motor grader, dozer or other grading machine. The Somero 3-D Profiler System allows automatic paving of contoured sites using a Somero Laser Screed equipment. The CopperHead XD machine encounters applications, such as chaired rebar, low slump and poor subgrades. The Somero eXtreme Platform (SXP) allows users use their Laser Screed equipment. more »

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

21 Comments on this Article show/hide all

Paul Scott 19th May '15 3 of 21

In reply to post #99001

I'm not going to dignify that comment with an answer.


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kenobi 19th May '15 4 of 21

Re assesso / LO Q, it's nice to see one of these future blue sky type opportunites turn out so well, often they get a momentum of their own price wise and then end up collapsing when the sky high expectations are not met, congrats to the management for capitalising on the high shareprice and congrats to holders for calling this one correctly,


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MGinvestor 19th May '15 5 of 21

Hi Paul / website developer

Just a suggestion:

It would be great to be able to click on the heading for individual shares so that you can go straight to the relevant post for that company. Especially useful when viewing your report on a smartphone. E.g.

Todays report: Small Cap Value Report (19 May 2015) - ZYT, ACSO, SOM - We should be able to click on SOM and go straight to the SOM section that Paul has written.

Thank you for your great report Paul.



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herbie47 19th May '15 6 of 21

Yes I saw Simon Thompson report but I don't follow him much now after his many poor tips, he also wrote a bullish Globo report recently.

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herbie47 19th May '15 7 of 21

Paul, Any thoughts on Bioquell valuation, I think you have covered this share recently.

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LittonOwl 19th May '15 8 of 21

As a fellow Zytronic investor, just want to thank you for your detailed update, Paul, especially for sharing your thoughts on your conversation with Management, very re-assuring.

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Monty9 19th May '15 9 of 21

In reply to post #99030

Are you suggesting anyone writing bullish comment on Globo is generally to be disregarded as incapable?

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herbie47 19th May '15 10 of 21

In reply to post #99039

No it was just an example of the difference between Simon and Paul's assessment of companies. I can list a whole load of companies he has tipped that have gone wrong if you want, like Polo. I prefer Paul's methods, he really looks into the balance sheets. Many companies that have got into trouble he has warned about like Quindell.

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Paul Scott 19th May '15 11 of 21

In reply to post #99030

Hi Herbie47,

I usually read Simon Thompson's articles, and think he writes some excellent stuff. It's just a pity that the IC format is that he has to "tip" or give recommendations. I think that's a fundamental flaw. Because then people follow him blindly, and get annoyed when he (inevitably) makes mistakes, as everyone does.

I think our approach here is much better, where we just present one person's opinion, backed up by facts, encourage debate, and hand over to the readers to make up their own minds, and take responsibility for their own investing decisions.

Also, I think whilst Thompson does some excellent analysis, he's not very street-wise. So he just assumes that all the figures he looks at are genuine. It doesn't seem to even enter his head to question whether the numbers are real or not, even when it's glaringly obvious that something is badly wrong, e.g. with the AIM Chinese fiascos like Naibu & Camkids (and others).

That may be partly a result of the IC's policy of not letting its writers trade in shares. How are they going to learn, if they don't make the painful mistakes that the rest of us make?

Anyway he wrote a nice bullish piece about Somero today, so he's in my good books lol!

Regards, Paul.

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herbie47 19th May '15 12 of 21

In reply to post #99045

Hi Paul,
You are no doubt correct, he does pick some good shares as well tyo be fair. I probably mistimed my entrance to the share buying and my subscription to IC all wrong at the end of 2013, everything was fine for about 4 months, then the market in small companies turned. Anyway I think Simon tips are generally fine, apart from a few very dodgy ones like Chinese cos and Polo which I avoided and he does well in a bear market. But he does not seem to look into the balance sheets that deeply, not that concerned about high debt, see Greenko. Pensions defiects never mentioned until more recently. The other problem with IC is when a share does go bad they often still keep tipping it as a buy, won't admit they are wrong? Until the price has gone right down then they say sell. Or they don't say anything like Mar City, no update since Sept 2014. There is nothing worse when a share is faliing and you don't know what is going on. I think ST now tips far more companies than he used to which I think is part of the problem.

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Paul Scott 20th May '15 13 of 21

In reply to post #99051

Hi Herbie47,

Yes, fair points.

My view is that all articles are just sources of ideas. So I read Shares, IC, and numerous other sources of information all the time, but their usefulness to me is simply to provide me with leads to then go off and investigate for myself. I never rely entirely on someone else's judgement or opinions, but will take them into account in the decision-making process.

All sources of info will get some ideas right, and some wrong, often in roughly the same proportion, over the long term.

I think the real skill, which we all aspire to, is to be able to generally select more winners than losers, and hang on to the winners long enough to make lots of money, sell them right at the top, and avoid all the big market falls. If only!!!

Everyone gets plenty of stock ideas wrong. People who make out they don't are liars, or just enjoying a lucky patch and/or a bull market, when we all look like geniuses. The best investors I know tend to load up heavily into the stocks they are really certain about, after doing lots of research. So when they do win, they win big. Their losses tend to be relatively small. So even if they only achieve 50:50 in terms of stock ideas working, they make lots of money overall.

It's all a fascinating, lifelong pursuit, where we strive to constantly learn & improve, long may it continue!

Regards, Paul.

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Glaws2 20th May '15 14 of 21

Paul - thanks for sharing the feedback from Zytronic management.

With respect to the comment on "Board's Expectations" versus "Market Expectations" (disclaimer : I am not a city person) when I questioned the FD of RNWH on this point he said that they used Board expectations to describe their Interim statement because there was no broker forecast for the interims - they used market expectations for the full year where there is a broker forecast.

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Monty9 20th May '15 15 of 21

In reply to post #99042

Good! I certainly agree about QPP despite loosing money shorting it.... Possibly price action in 2015 indicates a turnaround but its not for me as Paul would say.

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Funnymoney 20th May '15 16 of 21

Bloomsbury: " I don't want to invest in any book publisher, unless they are really dirt cheap (i.e. PER of 6 or below), due to the uncertainty over what will happen to the industry longer term."

You could have made ther same sort of argument about the Daily Mirror publisher. I wouldn't believe all the Amazon hype about books being dead. I think the Stock Rank rating alone would be cause to give it a very good once over.


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janebolacha 20th May '15 17 of 21

The CEO of Bloomsbury Publishing (LON:BMY) said on Sky yesterday evening that about half of their revenues now come from academic and professional access to their owned databases (largely built up from acquisitions). He gave one example of a university paying up to £50,000 to do this. It now seems to be "Harry Potter plus...." and an owner and publisher of professional and technical content, besides a book publisher.

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herbie47 20th May '15 18 of 21

In reply to post #99058

Thanks Paul,
Yes I quite agree its all information, more you know the better usually. I just use IC for companies that I don't know about and then do more research. Its good to have 2 or 3 opinions before making decisions to buy or sell shares. I quite agree also about buying heavily in certain companies. Yes its very fascinating, different methods which seem to work. Re Stockopedia rankings they are based on the figures as presented? That seems to be the only problem, some do slip through the net.

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cig 20th May '15 19 of 21

In reply to post #99076

Perhaps not particularly reassuring given the trend towards open access in academia...

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cig 20th May '15 20 of 21

In reply to post #99081

Beware of survival bias looking at "heavy buyers" types. You can fill a room with lottery winners, but you may not want to rush and buy tickets because of that...

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herbie47 20th May '15 21 of 21

Yes I agree I subscribe to a basket of plenty of different shares, I get worried when I read people say they have all their money invested in just 3 companies. I would probably not put more than 10% in a single company. At the moment Im probably spread too thinly but its early days.

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 Are LON:ZYT's fundamentals sound as an investment? Find out More »

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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