Good morning! Vianet (LON:VNET) has issued a trading update this morning, and it will be interesting to see how the market reacts to this. Technically, it's a mild profit warning, since they indicate that pre-exceptional operating profit will be c.£3m, about 10% down on last year, for the current year ending 31 Mar 2014. However, in the circumstances, with a major threat to their core business from the Government's proposed Statutory Code, that's actually not a bad result in my opinion. We already knew this was likely to be a poor year, with all the extra costs associated with defending the company against this legal threat, and disruption from management time being diverted from the business, plus the inevitable standstill on making new sales of the beer flow monitoring equipment until this issue was resolved. So anyone expecting a good year this year just hadn't done their research!

Pub closures has meant that the installed base has fallen to 17,000 Pubs, where it was expected to stay at 17,500, so that's disappointing, if not altogether unsurprising in the circumstances. The group's other divisions have improved, with the vending division now profitable, the USA making "positive progress", and fuel division is now close to breakeven.

The bit I like best is that the recurring revenues are emphasised (mostly on five year contracts), which has allowed continued strong cashflow, and the interim & final dividends are being maintained, which is excellent news. That means the 7.6% dividend yield is safe, for the time being. Now all they need is for the regulatory threat to fall away, as it's very likely to in due course, and in my view we'll be heading back to a quid a share, and maybe more once some decent vending contracts come through.

I am expecting the shares to open down modestly today, and if they continue dropping, I will be using that as a buying opportunity. The valuation here is pretty attractive if you think, as I do, that the regulatory threat is not likely to have any teeth. Anyway, let's see what happens!





There's a solid trading statement from Thorntons (LON:THT) this morning, for their Q1, being the 14 weeks to 5 Oct 2013. I'm not quite sure why they measure a quarter as…

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