Small Cap Value Report (30 Jan 2014) - KBC, MYX, BILN, NWT, TRI, FBT, BLNX

Thursday, Jan 30 2014 by

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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MYCELX Technologies Corporation (MYCELX) is a clean water technology company. The Company offers solutions for the oil and gas industry's water treatment needs. It provides water treatment solutions to the oil and gas, power, marine and heavy manufacturing sectors. It provides clean water technology equipment and related services. Its MYCELX polymer uses molecular cohesion to remove oil from water to levels the customers require. The core of the MYCELX solution is the MYCELX compound, which consists of a chemical polymer that is infused in the consumable media. The Company sells consumable filtration media on a long-term, recurring basis. It also offers technical services on a recurring basis. It provides water services to manufacturing; power and utilities; facilities and ground water remediation; marine; air filtration, and still response. The MYCELX systems remove oil to low levels in a smaller physical footprint. MYCELX can achieve oil removal to less than one part per million. more »

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Billington Holdings Plc is a United-Kingdom based holding company providing management services to its subsidiaries. The Company operates as a designer, manufacturer and installer of structural steelwork, through its subsidiaries, Billington Structures Limited and Peter Marshall Steel Stairs Limited, and as a supplier of safety solutions and barrier systems to the construction industry, through its subsidiary, easi-edge Limited. Billington Structures Limited's projects include Next Distribution Centre, Doncaster; Brize Norton Aircraft Hangar; Aldi Distribution Centre, Cardiff; One New Bailey, Salford, and Wellington Place, Leeds. easi-edge Limited's projects include C Sovereign Square, Leeds; Central Square, Leeds; St. James Road, Glasgow, and City Campus, Glasgow. Peter Marshall Steel Stairs Limited's projects include London School of Economics, London; University Technical College, Peterborough; Cornwall Energy Recovery Centre, St. Austell, and Sanger Institute, Cambridge. more »

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

23 Comments on this Article show/hide all

cig 30th Jan '14 4 of 23

Spreads are not as bad as they look, e.g. Photonstar Led (LON:PSL) at the moment:

- LSE website: 4.0/5.0
- RSP quotes: 4.225/4.7

I think that's pretty typical, and sometimes it's biased your way, I've got mid or better several times.

Also for long term growth stories, both the actual spread and the liquidity discount are likely to disappear by the time you exit so it can be an advantage if you get the fundamentals right.

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purpleski 30th Jan '14 5 of 23

Hi Paul

Don't know whether you have the time or inclination to answer this question. Where do you go to in the morning to find the company announcements? Do you simply go to and scan for companies you know that you are interested in or do you have something more sophisticated to help you? I assume you are not paying £20k for Bloomberg!?

Thank you in advance.

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Fangorn 30th Jan '14 6 of 23

What's the story Leven?
Heard something about traffic numbers being "increased substantially"

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NS23 30th Jan '14 7 of 23

In reply to post #81016

There's an article here,

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Fangorn 30th Jan '14 8 of 23

Ah thanks for the link NS23. Will take a butchers.

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NS23 30th Jan '14 9 of 23

In reply to post #81018

No problem (I only found it on LSE)
sorry, i got a bit excited and posted before i finished typing.

I was going to say that i am not vouching for its accuracy or even that it is cause for the drop (it is dated 28th). A cascade of stop-losses being triggered played its part, i'm sure. The price has come back up over the last 45 minutes.


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Ramridge 30th Jan '14 10 of 23

Hi Paul -
Newark Security NWT. Interesting company. There is a Edison Report dated 9 Sept 2013 which gives it a clear thumbs up. They put a fair value of 3.6p/ share, near double today's price. The co. is looking to expand internationally with a new product called SATEON. So good growth potential in 2014. The one caution for me is that their intangibles (£8.7m) is too close to net assets ( £10.7m) for comfort.
Regards, Ram

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Fangorn 30th Jan '14 11 of 23

No biggie re authenticity. Gather it might be a rehash of old article. More concerning is the potential loss of AOL contract(unsubstantiated rumour so far)

What I've managed to glean so far likely impacting Blinx so negatively.How much of it is true, even down to the veracity of EK's comments, is debatable.

"Concern over contracts with AOL/ASK"
Aol video search says powered byYouTube.

Ramped traffic numbers comment a rehash of old article

Edited as apparently Cawkwell comments were Globo related,not blinx.

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MrContrarian 30th Jan '14 12 of 23

In reply to post #81021

That Cawkwell quote is on the advfn Globo thread.

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SevenPillars 30th Jan '14 13 of 23

According to Shares Magazine.

"Market speculation that a big share placing could be on the cards for video search engine Blinkx (BLNX:AIM) sparks a 46.6% collapse in the share price to 93.75p. Management is expected to rush out a response although there’s nothing yet to calm investor panic."

Big dip whatever the reason.

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NS23 30th Jan '14 14 of 23

In reply to post #81021

It's one where i am definitely happy to watch from the sidelines. The recovery continues - despite being 35% down from the opening price, its already 30% above the intra day low.

40M shares have traded today, that's 10% of the whole company.

Have to say that where ever 'EK' and affliates are publicly involved my preference is to deploy the bargepole.

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oldnotbold 30th Jan '14 15 of 23

Hi Paul, It may be that Governments know what to do in a crisis, but can they react as effectively. The UK debt to GDP was £500bn, 38.1% of GDP in 2006. Now it is £1,377bn, 88.7% of GDP. That hardly gives the Government firepower. Likewise in the US, the number has gone from 61.7% to 101.5% in the same period (or from US$8.6tn to $17tn). Meanwhile, in 2007-09 emerging markets were strong, helped by increasing internal demand, high savings rates, conservative government finances. The Emerging Markets have now had five years of property bubbles, and personal debt is out of control. Emerging Markets could therefore act as a catalyst for weakness, rather than a growth engine. This is not my central view, but we shouldn't be completely relaxed that the world is in a benign place at the moment.

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Fangorn 30th Jan '14 16 of 23

Agree NS23. Quite a roller coaster ride Blinx side so far.
Thankfully not involved either way, although was tempted to nibble sub 100p.

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cig 30th Jan '14 17 of 23

In reply to post #81024

It's difficult to say how much of the company it is, it may be the same £5000 worth of shares being frantically rotated between 2 buggy algorithms. Some of the trade history looks pretty algorithmic to me, but by now it's probably a big mix of algos, speculators, day traders and spread bet stop losses. Not sure you'd want to read fundamental news in that...

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Paul Scott 30th Jan '14 18 of 23

In reply to post #81025

Hi OnotB,

I take your central point, but the UK's position is nowhere near as bad as it seems, because something like a quarter to a third of National Debt is owned by the Bank of England, due to QE. So contra that out, and our debt to GDP is OK, much of it long-dated, and new debt is being issued at pretty low interest rates. So I don't see a crisis there at all, although obviously it would have been far better if our Govts had exercised considerably more spending restraint over the last 15 years.

Ultimately, as we very wisely kept the keys to the printing press, the UK can (within reason) print it's way out of short term issues, as we have done so far. It hasn't caused serious inflation at all, much to the confusion of the people who warned that QE was the road to ruin. The point they misunderstood is that QE just replaced money supply that had been removed by the Banks contracting their Balance Sheets. If we hadn't done that, we would have ended up like the worst parts of Europe.

It's just a balancing act, trying to avoid deflation, but also avoiding too much inflation.

What 2008 taught everyone is surely that inaction is the worse course of action, as it triggers contagion, that was my main point really. So any Bank that gets into trouble now, won't be left to fester for a year before decisive action was taken, as happened with N. Rock for example.

Cheers, Paul.

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NS23 30th Jan '14 19 of 23

In reply to post #81026

Fangorn - just for completeness, you may not have seen this article on the FT which includes quotes from Citigroup, the house broker, on the first article.

If nothing else, i like the title.

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Fangorn 30th Jan '14 20 of 23


Statement Regarding Share Price Movement and Market Speculation

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Fangorn 30th Jan '14 21 of 23

Well I took the plunge in the end at 108p on a purely punt basis.

Who knows how it will end ....

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Tamarix 30th Jan '14 22 of 23

Blinx - the paper called "the Darker Side of Blinkx" is on
Ben Edelman is at Harvard Business School and this is a quite long research paper.

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Funderstruck 30th Jan '14 23 of 23

Quote from a contact in their business:- 'the business that they are in (mainly RF design and manufacturing) has good growth potential particularly in the 4G wireless market in Europe. They do have a good technology base which enables them to adapt to new market requirements, though a lot of their work is bespoke design.'

One to watch until 4G starts to gather momentum.

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 Are LON:KBC'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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