Small Cap Value Report (22 Jul) - VLX, RENE, CSG, MCGN, TSTL, BRY, VNET

Monday, Jul 22 2013 by
15

Good morning! Electrical cable manufacturer, Volex (LON:VLX 99p) issues an in line trading statement, despite market conditions that "remain challenging across all sectors". The turnaround plan, to focus on cost cutting and margin improvement appears to be working though.

They have reduced their annualised operational costs by $20m, so it makes you wonder how inefficiently the business was run in the past? At £62m this is a lot of business for the price, with turnover of $478m expected this year, and in the turnaround year, profits of $9m, giving normalised EPS of $0.17, or about 11p. So that puts them on a PER of only 9.

Brokers forecast a 35% rise in EPS next year (ending 31 Mar 2015), with the PER dropping to 7, and I wonder whether there is scope to beat that, given the significant cost-cutting going on?

Yes, it's fairly low margin business, but if things are run efficiently, there are profits to be made. Volex has maintained it's dividend, and the forecast yield this year is a healthy 3.7%. Also, it is good to see net debt has reduced significantly, coming down from $19.5m at the last year end (31 Mar 2013) to $10.8m at end Jun 2013.

Bizarrely, the shares have flat-lined at around 100p all this year, so it seems to me that pressure must now be building for a break upwards, based on today's reassuring trading update.

Volex also announces that it has appointed Nick Parker as CFO, formerly of WANdisco, so he knows a thing or two about getting investors excited about a share! Let's hope some of that excitement can rub off on Volex. Note how Volex has significantly under-performed the small caps sector (the beige line on the price chart below), so if things continue to do well, then I think this one could be a winner. Obviously that's just my personal opinion, so please be sure to do your own research.

 

 

It looks as if the open should be fairly quiet, with the futures indicating the FTSE 100 likely to open up about 6 points at 6,639. I note also that Gold has broken through $1,300 overnight, now priced at $1,315, which should mean the recovery in gold mining stocks continues. I hold a couple of these in the…

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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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Volex plc is a supplier of power cords and cable assembly solutions servicing a range of markets, including consumer electronics, telecommunications, data centers, medical equipment and the automotive industry. The Company's segments include Power Cords, Cable Assemblies and Central. The Power Cords segment is engaged in the sale and manufacture of electrical power products to manufacturers of electrical/electronic devices and appliances. These include laptop/desktop computers, printers, televisions, power tools and floor cleaning equipment. The Cable Assemblies segment is engaged in the sale and manufacture of cables permitting the transfer of electronic, radio frequency and optical data. These cables range from universal serial bus (USB) cables to high-speed cable assemblies, and are used in a range of devices, including medical equipment, data centers, telecoms networks and the automotive industry. It is also engaged in contract manufacturing service and product development. more »

LSE Price
99.5p
Change
1.0%
Mkt Cap (£m)
145.3
P/E (fwd)
9.4
Yield (fwd)
3.3

ReNeuron Group plc is a clinical-stage company. The Company, through its subsidiaries, is engaged in researching and developing cell-based therapies. The Company's products are allogeneic. Its CTX stem cell therapy is used for the treatment of patients left disabled by the effects of a stroke. Its human retinal progenitor cells (hRPC) stem cell candidate is used for the treatment of retinitis pigmentosa (RP). Its second CTX stem cell candidate is for the treatment of critical limb ischaemia. The Company's exosomes nanomedicine platform focuses on generating early pre-clinical data in cancer. Its ReNcell Products include ReNcellVM and ReNcellCX cell lines. It is engaged in Phase II clinical trial of CTX cells for stroke disability. It is engaged in Phase I clinical trial of CTX cells for Critical Limb Ischaemia. It is engaged in Phase I clinical trial of hRPC stem cell candidate. The Company has completed pre-clinical trials CTX-derived exosomes. more »

LSE Price
220p
Change
-7.4%
Mkt Cap (£m)
70.0
P/E (fwd)
n/a
Yield (fwd)
n/a




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7 Comments on this Article show/hide all

DJLJ23 22nd Jul '13 1 of 7
1

Hi paul,
have to admit I took a more negative view and got out. The reference to product closures leading to reduced revenues and that these revenue reductions would continue. Led me to think that the easy wins in terms of operating costs, may have been achieved, and that further cost reductions may lead to restructuring costs.
I shall watch closely

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Funnymoney 22nd Jul '13 2 of 7
1

Paul,

What about a comment on Filtronic results today? It's an old friend which appears to be coming back.

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bobdouglas 22nd Jul '13 3 of 7
1

Ref. Microgen - since results announcement in february when share price was 120ish it's been quite an eventful ride with 160p almost achieved and dividends paid of 7.4p and now share price around 140. Bulls and Bears seem fairly evenly split on today's interims.

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kevanp 22nd Jul '13 4 of 7

In reply to post #75395

A plea from a blog reader: which particular stock are you talking about?

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kevanp 22nd Jul '13 5 of 7
3

Paul

I don't wish to gloat like an English cricket fan, but I did take note of your Sweett (LON:CSG 29p) comment on 2 Jul, and though I didn't manage to buy at 20p I nabbed them for 23p. So many thanks for that – and for your coverage of Xaar (LON:XAR 848p), Spaceandpeople (LON:SAL 106p), WH Smith (LON:SMWH 764p), J Sainsbury (LON:SBRY 399p), and Newriver Retail (LON:NRR 234p), all of which are performing royally. Waiting patiently for Fairpoint (LON:FRP 99p) and Sprue Aegis (OFEX:SPRP 94p) to start moving up too.

Thanks again for implementing the current share price in your commentary. It really is useful.

Kevan

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DJLJ23 22nd Jul '13 6 of 7

In reply to post #75407

My apologises, its volex

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stpalm 23rd Jul '13 7 of 7

Hi Paul,
i bought CSG at 16p shld have bought more as it turns out! However at 32p i'm hovering over the sell button do you have any advice/input for an amateur? dont worry i know anything would be personal opinion only. I never know where to get help with this stuff tho. In this situation I usually sell 50% cos hate selling and then watching it fly. Bought AHT at 55P 2002 i think. I sold the last 500 when it reached £3ish still watching it rise Not as painful as watching it go to 5p in between though!!
Happy days
S

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 Are LON:VLX'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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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