Small Cap Value Report (30 Mar 2015) - CNKS, BVXP, HAYT, OUT, CBUY, EMAN, LTG

Monday, Mar 30 2015 by

Good morning! I spent a couple of hours yesterday afternoon catching up on a report I'd missed last Monday. Didn't get as far as I liked, but it covers two companies results, YouGov (LON:YOU) and Spaceandpeople (LON:SAL). So the link to that report is here, for anyone interested.

Cenkos Securities (LON:CNKS)

Share price: 185p
No. shares: 58.0m
Market Cap: £107.3m

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

Final results - for calendar 2014. As expected, these numbers are excellent. Revenue was up 72% on prior year, at £88.5m, and profit before tax came in at £27.0m, up 152%. Basic EPS was up 148% to 35.2p, which is ahead of broker consensus estimate of 33.4p. Although diluted EPS is lower at 32.0p, so I'm not sure which measure the broker consensus is based on.

These are superb P&L numbers, which just goes to show how lucrative institutional broking is, in the good years when lots of fundraisings and IPOs are going on. Cenkos seem to be going from strength to strength, and raised 15% of all funds on AIM in 2014. It's also doing increasingly large deals too, such as the float of the AA in 2014, and a more recent big deal which I mentioned in last Friday's report, raising just over £1bn for Haversham.

Dividends - total divis for 2014 are 17p, for a remarkable yield of 9.2%. Important to remember that this is probably not sustainable, but at least it shows the company does pay out a decent amount in the good years.

The company also points out that 9% of its shares were bought back in Jan 2015, a material amount.

Outlook - sounds good;


Balance sheet - is very strong. The current ratio was 2.41 at 31 Dec 2014, including £32.9m of net cash (some of which will have since been used for the share buyback).

My opinion - I fully appreciate that profits at this level are probably not sustainable for the long term, as their business is so cyclical & unpredictable. But 2015 is likely to be another bumper year, due partly to the Haversham deal. So I suspect that broker forecast for 2015 earnings could be revised up considerably, as current estimates show EPS…

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Cenkos Securities plc (Cenkos) is a United Kingdom-based independent institutional securities company. The Company's principal activity is institutional stockbroking. Cenkos provides corporate finance, corporate broking, research and execution securities services to small and mid-cap growth companies, and other companies, across a range of industry sectors, as well as investment funds. The Company offers its clients access to equity finance at various stages of their development. The Company's activities also include institutional equities and market making. It provides technical advice on all forms of corporate transactions, including initial public offerings (IPOs), fundraisings, mergers and acquisitions, disposals, restructurings and tender offers. The Company's subsidiaries include Cenkos Nominee UK Limited, Cenkos Securities (Trustees) Limited and Cenkos Securities Asia Pte Limited. more »

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Bioventix PLC is a United Kingdom-based biotechnology company. The principal activity of the Company is the development and supply of antibodies. The Company specializes in the development of sheep monoclonal antibodies (SMAs) for use in immunodiagnostics focusing on the areas of clinical diagnostics and drugs of abuse testing. The Company's non-vitamin D business consists of antibodies, NT proBNP (heart failure), testosterone, Free Triiodothyronine (FT3) (thyroid hormone), estradiol, and various drugs, such as tetrahydrocannabinol (THC)/cannabis, and progesterone. The Company offers products for indications, such as thyroid, fertility, oncology, cardiac, vitamin D, drug of abuse, infectious disease and miscellaneous. Its sheep hybridoma technology produces cell lines that secrete SMAs. The Company offers a panel of SMAs to 25-OH D and has various 25-OH D2 and 25-OH D3 specific antibodies. It sells its products through direct sales and through distributors. more »

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Hayward Tyler Group PLC is engaged in the business of designs, manufactures, and services fluid-filled electric motors and pumps for high-pressure, high-temperature applications and environments across the energy sector. The Company's segments include Original Equipment (OE) and Aftermarket (AM). The Company's OE segment activities include the design and manufacture of motors, pumps and steam generators. The AM segment provides range of aftermarket services and spares. The Company caters to the markets, including power, oil and gas, renewables, nuclear, process and marine. The Company's products include Boiler Circulating Pumps, Canned Motor Pump, Varley Gear Pumps, Subsea motors and Submersible motors. The Company's products applications include Heat Transfer and Process Pumps, Primary and Secondary Nuclear Circulation pumps, Reactor Water Clean-up, Solar Power Tower Application and SynGas. The Company offers engineering services. more »

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

6 Comments on this Article show/hide all

martinthebrave 30th Mar '15 1 of 6

Midas touch today on SAL Paul +18%!!

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lightningtiger 30th Mar '15 2 of 6

Bioventix has still got a huge bid offer spread 860 p - 900 p with low volumes that puts me off. I have already got OXB, OXP, & VRP in the health sector, all of which have a healthy 50 day moving averages. Cenkos is a bit too volitile for me in spite of the 8.7% yield.

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Gostevie 30th Mar '15 3 of 6

Hello Paul,

Thank you as always for these reports.

I just have one query. You say that Bioventix (LON:BVXP) isn't for you as it's too small, but a market capitalisation of just over £40m makes it about four times the size of Spaceandpeople (LON:SAL) which you have said you hold. Do you mean it is too small because of staff numbers or another criteria that you use?


Disc: I hold both BVXP and SAL

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Paul Scott 30th Mar '15 4 of 6

In reply to post #95710

Hi Steve,

Bioventix (LON:BVXP) - the smallness I'm referring to is the actual business itself, rather than the market cap. So it's basically about a dozen people, and the key expertise seems to be concentrated on literally just one or two people. I think that introduces quite a big risk - if the key people walked, or fell under a bus, then the golden goose might not lay many more eggs.

Regards, Paul.

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Paul Scott 30th Mar '15 5 of 6

In reply to post #95698

It's just the lack of liquidity unfortunately - the price of Spaceandpeople (LON:SAL) moves very rapidly on small trades, as with a lot of micro caps.


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nevilleaustin 30th Mar '15 6 of 6

I was fortunate in being invited to the Bioventix lunch today at Finncap. CEO Peter Harrison gave a truly fascinating insight into his Company, I do believe that we are looking at a genuine "wonder stock" with this one.

With regard to the golden goose getting stuck under a bus scenario, the problem should not be immediate, because if Bioventix stopped doing their work altogether from today their revenues due to the royalties will still keep rolling in at a similar rate until 2020. The work that they are doing from today is to take the Company forward from 2020 until 2030 !

We learnt that Bioventix is investing in a program to scour the nations universities in pursuit of finding the best talent for its future.

The general mood amongst investors at the lunch meeting (all I believe to be shrewd) was very positive indeed.

cheers Neville

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 Are LON:CNKS'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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