Small Cap Value Report (26 Aug 2014) - BQE, BOOM, CNC

Tuesday, Aug 26 2014 by
32

Good morning! I hope you enjoyed the Bank Holiday as best the weather permitted.

It's interesting to note that the US market (the S&P 500) hit a new all-time high yesterday. People keep saying that the market is overvalued, but it still wants to go up whenever there's a correction. From my point of view, small & mid caps overheated in the spring, but have now corrected considerably, and I'm starting to see some pockets of reasonable value emerge again. We've also seen strong recoveries in some small caps shares in the last fortnight, so that usually pulls in buyers to the stocks that haven't yet recovered.

As ever, I remain focussed on the fundamental value of the companies I'm invested in, and to a large extent the short term price movements are just background noise. I think most transactions in small cap shares are done by people who don't have a clue about how the company is performing - they're just buying & selling on short term market sentiment. So if they sell below fundamental value, then that creates a buying opportunity for me!

So overall, I'm feeling considerably more bullish than I was a few weeks ago, because the market has done what it should do - i.e. scrubbed off many excessive valuations, which should clear the way for renewed upward moves in sensibly-priced companies which report good earnings & outlook statements.

Bioquell (LON:BQE)

Share price: 88.5p
No. shares: 42.43m
Market Cap: £37.6m

I've been watching this company for a couple of years now, but held back buying any shares because it never quite reached an attractively cheap valuation, and the newsflow has been rather negative - so it seemed to be a company that had a lot of potential, but wasn't executing well.

Interim results to 30 Jun 2014 are out this morning, and look weak to me, although the company had previously flagged that H1 would be weak, therefore the share price has only moved down 2p this morning, on what looks like just a single trade of 5,000 shares.

Profitability - at the operating profit level, has dropped to a loss of £78k in H1 this year, versus a £1.0m profit in last year's H1. The company has two divisions, and as you can see from the extract from today's accounts below, its TRaC division is trading quite well (flat against last year at…

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Bioquell Plc is engaged in the design, manufacture and supply of bio-decontamination and containment equipment, related products and services to the pharmaceutical, healthcare, food and defense industries, and testing services to the aerospace, telecoms, defense and other industries. The Company's operating segment is Bio-decontamination (BIO). The Company offers various products, which include Healthcare products, such as Healthcare HP Vapor Services, Healthcare HP Vapor Generators, Healthcare Patient Rooms, Healthcare Pharmacy Workstation, Healthcare Consumables/Accessories and Healthcare Archived Products; Life Science products, such as Life Sciences Aseptic Workstation, Life Sciences HP Vapor Services, Life Sciences Materials Transfer, Life Sciences HP Vapor Generators, Life Sciences Consumables/Accessories and Archived Products, and Defense products, such as Defense CBRN Filtration, Controls, Defense Pre-filtration, and Defense Consumables and Spares. more »

LSE Price
587p
Change
 
Mkt Cap (£m)
n/a
P/E (fwd)
n/a
Yield (fwd)
n/a

Audioboom Group plc operates an audio platform for hosting, distributing and monetizing content. The Company works with approximately 2,400 active broadcasters, content creators and podcasters around the world, and hosts in over 7,400 content channels. The Company's hosting and distribution platform allows partners to embed, share through social channels and re-syndicate their content. The Company receives over 40 million listens per month. It also works with its partners to monetize their audio through live in-reads, the dynamic insertion of pre and post roll audio adverts and video advertisements. Its audio, cloud-based, software as a service (SaaS) platform enables the creation, broadcast and syndication of digital audio content across various devices, networks and geographies. Its subsidiaries include Audioboom Limited, Audioboom Inc, One Delta Limited and Audioboom Pty Limited. more »

LSE Price
260p
Change
-2.8%
Mkt Cap (£m)
37.5
P/E (fwd)
n/a
Yield (fwd)
n/a

Concurrent Technologies Plc is engaged in manufacture of embedded computer products for applications in the defense, aerospace, transportation, telecommunications, scientific and industrial markets. The Company designs, manufactures, sells and supplies high-end embedded computer products (boards) primarily on processors from Intel. Its products include processor boards, switch fabric boards, transition modules, carrier boards, graphics adapters, serial adapters, storage controllers and mass storage. Its products support various operating systems, such as Windows, Linux, Solaris, QNX and VxWorks. Its geographical areas of operation are the United Kingdom, Other Europe, North America and Rest of the World. The Company sells and markets its products in the United States, various European Economic Area (EEA) countries, Israel, China, India, Japan, South Korea, Australia and Singapore. It has design facilities in Bangalore, India, and sales and support in China. more »

LSE Price
73p
Change
 
Mkt Cap (£m)
53.1
P/E (fwd)
18.7
Yield (fwd)
3.4



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


19 Comments on this Article show/hide all

rmillaree 26th Aug '14 1 of 19

Awwwww - thought we had a company with ticker BOOM - every exchange needs a company with the ticker BOOM!

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Ramridge 26th Aug '14 2 of 19
1

BOOM in your headline? Does it mean that your feel today full of beans, or were you intending to comment on Audioboom's results? :)

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Mark Midmore 26th Aug '14 3 of 19
1

Paul, has your view of VLK changed. Share price looks attractive but movement is broadly sideways to down. I wondered whether it's something I missed or it's awaiting news? Mark

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GrindertraderUK 26th Aug '14 4 of 19

I am in BOOM as a speculative buy a couple weeks back. I look forward to any comment by our PS !  Good or bad ;>

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Paul Scott 26th Aug '14 5 of 19
3

In reply to post #85610

Hi Mark,

I don't alter my fundamental views on companies in reaction to share price fluctuations, but only on newsflow. So in the case of Vislink (LON:VLK) there hasn't been any news, so my view is unchanged. Results are imminent I believe, and Equity Development are doing a results webcast again, on 3 Sept, which gave useful background last time. So we don't know how the company is currently trading, but we'll find out shortly when the interims are published.

Regards, Paul.

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medlar 26th Aug '14 6 of 19
1

A small thought on Audioboom (LON:BOOM) (i hold) - much of the current share price anticipation is about the app due some time in September.
Past experience of app launches suggests that they are not quite shoot-the-lights-out products as investors hope, e.g. Facebook Paper, Google+. This is because it is not always immediately apparent how the new functionality will enhance usability, or necessarily add users. Only time takes care of that.

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buz 26th Aug '14 7 of 19

I thought Patisserie Valarie's ticker of CAKE was rather good as well.

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loudenr 26th Aug '14 8 of 19

In reply to post #85610

Think Vislink (LON:VLK) has been tipped somewhere or people expect good results as there is a good movement up today

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FREng 26th Aug '14 9 of 19

Paul

You seem to have overlooked this veiled profit warning by Concurrent Technologies (LON:CNC).

" Review of Operations

... As a consequence of these export controls, the Board has determined that a further write down in the value of certain designs may be required; the exact amount will be finalised at the year end and incorporated into the results for the full year ending 31 December 2014. "

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bsharman 26th Aug '14 10 of 19

In reply to post #85616

Vislink (LON:VLK) has been tipped by Simon Thompson in the IC

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FREng 26th Aug '14 11 of 19

In reply to post #85618

IC tips can provide a good selling opportunity.

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bsharman 26th Aug '14 12 of 19

In reply to post #85619

Only if you are trading. I am a holder of Vislink (LON:VLK) and have a target of about 80p + dividends, so there is no reason for me to sell just because ST has tipped it.

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Paul Scott 26th Aug '14 13 of 19

In reply to post #85617

Hi FREng,

I saw that bit in the Concurrent Technologies (LON:CNC) results, but I wouldn't describe it as a veiled profit warning. It's just writing down some capitalised intangibles by the looks of it, which I automatically write off in full anyway.

Regards, Paul.

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cig 26th Aug '14 14 of 19

Audioboom (LON:BOOM) seems like it could be a great speculative punt, but kicking the tires on fundamentals:

- "growth is viral": their main service seems to be to package audio content for big names for distribution, in which case they're possibly piggy-backing their clients' visibility. If users then stay on the site and come back, yes, we could say growth is viral, but if they're just consuming the media embedded in other websites... User numbers are not that informative here as they're so easy to pimp up (counting non-recurring users as your own is not even as such dishonest).

- "the world's YouTube, but for audio": from their website it seems their ambitions are actually narrower, just trying to cover the "spoken word". This is actually okay as the audio space (including music) is very crowded so perhaps they can find a smaller but viable niche.

- "maybe one of the heavyweights (e.g. Google, Facebook, Twitter, etc) might bid" yes, but they tend to buy <1% of the candidates... If they're a service provider rather than a destination, and their functionality is novel, it can easily be reproduced in-house by the big boys once it's been proven. Startup graveyards are full of ideas Facebook etc successfully cloned and adopted.

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Cisk 26th Aug '14 15 of 19

How is Audioboom different to Spotify? Can Spotify do the same thing?

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PhilH 26th Aug '14 16 of 19
1

Re Audioboom (LON:BOOM):

Why would I be interested in audio content when I can find video content?

Some reasons:

1) I'm blind so video gives me nothing extra

2) I'm engaged in activity where I cant focus on video, e.g. driving, running, sleeping? (subliminal absorption?)

3) I'm a content provider that currently produces audio only content so I might as well make it available

It seems to me that 3 is what is driving the business but do I as a consumer want to listen rather than watch and listen? It'd have to be a really strong piece of content for me to choice audio over video content. Perhaps that's just me. It's interesting that when advertising the content on the website an image is included, perhaps indicating that the content itself isn't quite a strong enough draw and visuals are needed to draw you in.

I too would also be wary of the ability of the big boys to reproduce this at the drop of the hat. As a former software developer it looks reasonably straightforward to reproduce from a technical perspective.

My feeling is there are some short term gains as word gets out about the organisation as seen by today's rise, but (and I might be forced to eat my hat) I see little chance of them becoming YouTube for audio.

Best of luck if you hold.
Phil

Professional Services: Sunflower Counselling
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TheMarinersWife 26th Aug '14 17 of 19

Sounds remarkably similar to these guys https://audioboo.fm/

Maybe it's the same outfit.

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Paul Scott 26th Aug '14 18 of 19

In reply to post #85628

Yes, that is the website of Audioboo, which is owned by £BOOM

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TheMarinersWife 26th Aug '14 19 of 19

In reply to post #85634

A few years back some of the smaller BBC radio shows were using Audioboo to host interviews and other content. The non-league show which at that time was made by Radio London certainly did.

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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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