Small Cap Value Report (8 Aug) - PURI, C21, CAP, HNT, SGI

Thursday, Aug 08 2013 by

Good morning! Firstly today I shall look at interim results from PuriCore (LON:PURI 38.5p). This is a company which makes products to "protect people from the spread of infectious pathogens", in particular products for supermarkets to sterilise fresh produce, and decontamination machines for hospitals, also woundcare. The company has had a chequered history, but refinanced in Jan 2013, so seems more stable now.

Checking back our archive here, I've mentioned it twice before, on 30 Apr 2013, when it announced a move into positive EBITDA for 2012, and on 20 Jun 2013 when it announced a contract win.

The market cap is £19.3m at 38.5p per share. There were convertible bonds in issue, but 95% of these were converted into ordinary shares at 40p, as part of a refinancing in Jan 2013. There are now only £375k in loan notes outstanding, with a conversion price about double the current share price, so they are likely to be repaid on expiry in Dec 2013.

H1 revenue fell 4.9% to $24.1m, although they say new contract wins will kick in for the H2 figures. A sharp fall in supermarket revenues, has masked strong growth in (admittedly small) wound care products (up 148% to $1.7m). Note their accounts are in US dollars, so will need converting into sterling for valuation purposes (today's rate is £1 = $1.55).

The Chairman's comments contain this encouraging-sounding couple of sentences:


Encouragingly the second quarter was strong with significantly increased revenue from a major US contract, recurring revenue growth, and two new marketing partnerships in Wound Care. With these partnerships in place, new product launches, and a strong US order book for the remainder of the year, the Directors remain confident in the future prospects for the Company.


So thye've neatly side-stepped commenting on performance against market expectations, but it sounds fairly upbeat.

Puricore's Balance Sheet really has been fixed by the refinancing in Jan 2013. So it now has net cash of $3.3m, which is transformed from its previous significant net debt position. They generated a $847k loss before interest and tax for the half year, which is only slightly improved from the comparable prior year period. So not a very impressive performance, in that the growth I was hoping for here has not shown itself in the H1 figures. There is a…

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Realm Therapeutics plc, formerly PuriCore plc, is a biopharmaceutical company. The Company is focused on leveraging its immunomodulatory technology to protect and improve the health of adults and children. The Company has initiated drug development programs based on its hypochlorous acid technology. The Company is engaged in the development of small molecule therapies with potential application for the treatment of diseases in a number of therapeutic areas, and an initial focus in dermatology and ophthalmology. The Company has developed proprietary formulations of its technology, with anti-inflammatory and immunomodulatory benefits. Its pipeline of products include PR013 and PR022, which are in Phase I. PR013 is indicated for allergic conjunctivitis and PR022 is indicated for atopic dermatitis. Realm Therapeutics, Inc. is a subsidiary of the Company. more »

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21st Century Technology plc is a specialist provider of tailored solutions to the transport community, solving operational requirements both on and off the vehicle. The Company operates through two segments: Fleet Systems and Passenger Systems. The Fleet Systems segment includes closed-circuit television (CCTV), passenger wireless fidelity (Wi-Fi), telematics and driver behavior, and passenger counting. The Passenger Systems segment includes information estate software and hardware for passenger displays, smart ticketing and way finding. Its fleet solutions include video surveillance for passenger's and driver's safety, vehicle's and driver's performance monitoring and automatic passenger counting. Its services and technologies include integrated solutions, consultative design, maintenance and support, installation, testing and commissioning, and telematics. It provides solutions to fleet operators, train operating companies, local authorities and public transport executives. more »

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

5 Comments on this Article show/hide all

dangersimpson 8th Aug '13 1 of 5

Profit warning for 21st Century Technology (LON:C21):

Now likely to only break even for the year +-0.25m which is a significant miss from Stockopedia's £1.5m net profit forecast.

They say the miss is mainly due to delays winning or renewing large customers. I guess this is one of the risks of having a business that relies on just a few large customers. Given the lack of revenue visibility and that the major shareholder (Peter Gyllenhammar) has been selling stock into the market for 18 months now and still has a chunk left makes me think that it's too soon to buy even at today's reduced price (10p-6p). One to add to the watchlist for if those contacts actually come in?

EDIT: Crossed in the Post I see :-) But good to see we came to similar conclusions!

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it_trader 8th Aug '13 2 of 5

Nice write up on PuriCore Paul. Alot of pressure is now on those H2 results, you're right this does seem like a punt!

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it_trader 8th Aug '13 3 of 5

With regards to PuriCore the market seems to like it, up 6% on good volume. Although the recent figures have been downplayed the outlook has obviously hit a beat.

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MGinvestor 12th Aug '13 4 of 5

Hi Paul,

You are truly doing an excellent job with these very informative articles - thank you very much!

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jraitt 14th Aug '13 5 of 5

Paul, thought you might be interested in the comments from a leading player in the LPG industry

"Was talking to them at a conference week before last. Might be worth a short term punt but it must be considered a high risk investment. This technology has been on the cusp of greatness for at least ten years and has sunk several companies, particularly those with high people-cost overhead. On the other hand they operate in several markets around the world so their political risk is spread. Current Federal policy is making USA very much the place to be for clean-tech generally.

I am sure that Prins distributor in UK is making more money on these systems than on LPG/Petrol systems for cars"

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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 on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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