Good morning!


KBC Advanced Technologies (LON:KBC)

This is a consultancy and software group, that specialises in optimising efficiency and hence profits at oil refineries. It's a share I've followed, and sometimes owned, for almost all my investing career, since the mid to late 1990s, when it was recommended to me by the widow of a former employee, who said that it was an up & coming company, staffed by extremely clever people. It also looked attractive as an investment, paying a nice dividend yield, but seemed to serve up repeated disappointments every couple of years, with something always going wrong.

The last year has been a lot more encouraging, with more positive trading updates, and in this roaring bull market for smaller caps that we've had in the last couple of years, KBC shares have also risen strongly. Today's trading update is for the full year of calendar 2013, and sounds positive, with the key bit saying;


Following a strong first half, good operational and financial progress was maintained in the second half.  Investment in key growth markets continued with new hires and contract awards in the FSU, Middle East, China and SE Asia. As a consequence, the Board anticipates that results for the year to 31 December 2013 will be slightly ahead of management's expectations.


Broker consensus is for 7.3p EPS for 2013, and 7.8p for 2014, so if they are "slightly ahead" (and assuming that management's expectations are the same as broker consensus forecast), then I guess they are probably talking about c.7.5p EPS. Therefore at the current share price of 116p, these shares look fully priced, on a PER of 15.5.

For a business with a rather erratic track record, and no obvious signs of strong & sustainable growth, I would probably only be interested if the price was a PER of about 10. So it's not for me. Also, the dividend yield is poor, at about 1.4% forecast.

There was an issue here about excessive tax charges too, if I recall correctly, because their profits are generated in a high tax jurisdiction, and their losses cannot be offset, something like that anyway. Action was being taken to deal with this, so it would be worth following up on that. If the tax charge is going to drop, then that…

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