Small Cap Value Report (Mon 19 Mar 2018) - ACRL, MCRO
Hi, it's Paul here. Graham's busy, so I'll be writing Monday's report, at a leisurely pace, throughout the afternoon.
Today's biggest faller is;
Accrol Group (LON:ACRL)
Share price: 12p (down 57% today)
No. shares: 129.0m
Market cap: £15.5m
Trading update (profit warning) - I'm sorry to be the harbinger of doom, but this share is unravelling in much the same way that a faulty batch of its products (toilet rolls) might unravel, if a corner of the inner ply gets stuck, and you mistakenly rotate it many times, with the paper dividing into two different widths of single ply, neither of which is well suited to its original purpose, and have to be discarded. I've resisted the urge to write a more vulgar metaphor.
There was some Director selling recently, which looked like rats deserting a sinking ship.
This sounds absolutely horrendous to me;
As previously reported, the Group's trading performance in the current financial year has been significantly impacted by three major issues -
- an escalation in internal costs,
- input costs and
- adverse foreign exchange hedging.
The magnitude of the escalation in costs (circa 50% higher than in year ended 30 April 2017 ("FY17") has only, very recently, become fully apparent to the Board.
Also, the pace of progress in pricing actions to mitigate margin pressure has been slower than forecast but is now picking up pace.
The increased impact of these issues is expected to affect the performance of the Group materially in the year to 30 April 2018.
Some of the corrective, business critical remedial activities (outlined below) have been hampered while the Board transitioned to its new supportive composition.
The new management team believes firmly that the challenges facing the Group are resolvable, given time and experienced handling.
The successful resolution of these issues, however, will be a demanding task and one not without execution risk.
I don't know what to say. Other than, if you still hold this share, then you haven't read the above properly.
This has to be one of the worst outlook statements I've ever seen;
The magnitude of internal cost increases in 2017, combined with ongoing margin pressures, has impacted the Group's financial results and cash flow in the short term. As a consequence, the Group's profit outlook for the current financial year is now expected to be materially below market expectations with an expected adjusted EBITDA loss of circa £5 million.
Net debt, currently at £31 million, is also expected to be higher at the year-end than previously expected, despite a gross £18 million having been raised from shareholders in early December 2017.
The scale of the creditor stretch which had taken place prior to the fundraise was not apparent before new financial disciplines and processes were put in place by the new management team in Q4.
Of the net £17 million raise, over £10 million was paid out to creditors to reduce overdue balances and to reflect new terms of supply. In addition, further funds were absorbed by a recovery in inventory levels, cash costs incurred to break FX contracts, a reduced capacity for invoice discounting and further EBITDA losses.
Net debt at 30 April 2018 is expected to be circa £34 million, which is slightly higher than current levels due principally to working capital fluctuations. Given the new EBITDA and debt expectations for FY18, the Group is likely to breach one of its banking covenants. Constructive discussions about debt headroom and resetting covenants have already been initiated with the Group's bank.
My opinion - I don't think there's any point in looking into more of the detail provided in today's announcement. It seems crystal clear to me that the equity here is worth nothing, and that the bank has got the bigger problem.
I reviewed the Admission Document here in Nov 2016, which helpfully spelled out all the things that were wrong with the company's business model - e.g. heavy concentration of sales with a small number of clients, advantageously-priced raw materials, vulnerability to depreciating sterling. It now also appears that management were totally incompetent.
Zeus Capital floated this crock. Most of the money raised was to pay off existing shareholders, who sold down a lot of their equity, and got their shareholder loans paid off. I really hope that shareholders take legal action against that lot, and recover some of their losses. If companies are allowed to cynically float on AIM, based on hitting a purple patch of unsustainable profits, and shareholders+promoters walk away with a ton of loot, with no redress when things go wrong, then the golden goose is going to keel over in the not-too-distant-future. Every bad flotation undermines investor appetite for subsequent flotations.
I don't believe for one minute that Accrol was hit by unforeseen bad luck. The basis for my view, is that the Admission Document specifically sets out the deep flaws in this company's business model. Did any of the fund managers that threw away their client funds on this share actually read the Admission Document? I do wonder.
Anyway, the company looks bust to me, so this share seems likely to go to zero.
Micro Focus International (LON:MCRO)
It's not often that you see an £8bn market cap company more than halve in price in one day, but that's happened today. I've never researched this software company, but it's dropped from around £20 per share, to £8.82 per share, at the time of writing (13:03).
Guidance has been sharply lowered. I'm not sure if the reasons given for the CEO's resignation today were intended to be comical? You decide;
Chris Hsu has submitted his resignation in order to spend more time with his family and pursue another opportunity. He will step down immediately as the CEO of the company.
Reasons given for poor performance are;
1. Issues relating to our new IT system implementation, which have impacted the efficiency of our sales teams, our ability to transact with partners and our cash collection;
2. Higher attrition of sales personnel due to both integration and system related issues;
3. Disruption of ex Hewlett Packard Enterprise global customer accounts as a result of the demerger of Hewlett Packard Enterprise; and
4. Continued sales execution issues particularly in North America.
An IT group that can't implement a new IT system for itself ... doesn't sound great, does it?
Is it me, or do there seem to be more & more profit warnings, and general incompetence at the moment? It does make you wonder why parts of the market are so expensive, when there seems to be a lot of risk about?
Rather flimsy, but there we go.
Good night all!
Regards, Paul.
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51 comments
RE Accrol
Couldn't agree with you more Paul. I bought in here on a Simon Thompson tip, but sold on the first profit warning so not horrendous. Any time I here Zeus capital are involved I now steer clear. The Wajid family made a nice few quid by ripping us off in my opinion. GYG is another float (July 2017) by Zeus and 6 months later provides a profit warning.
Absolute joke.....
I'm not sure GYG (LON:GYG) is quite the same - repairing super yachts is inherently a lumpy business but has the attraction of being immune to cyclical pressures, billionaires not usually seeing the need to economise in recessionary times. I didn't think the relatively mild profit warning was anything other than business as usual in the timeframe since the IPO.
Accrol Group (LON:ACRL) though is just a complete disaster - I'm still picking over why I bought the thing in the first place. I also can't understand why anyone would still be holding it, I was incredibly grateful for the opportunity to sell as soon as it came back from suspension.
Also Zeus' record is not uniformly bad - they were behind Boohoo.Com (LON:BOO), Purplebricks (LON:PURP), Watkin Jones (LON:WJG) and a bunch of other successful fund raises. I get the impression that their success has, at least temporarily, outrun their ability to conduct full due diligence, but I wouldn't immediately consign any Zeus sponsored stock to the scrapheap.
timarr
http://www.the-buyer.net/insight/conviviality-faces-going-bust-if-recovery-funding-plan-does-not-work/
a bit of chat from some insiders
As I recollect, wasn't it us investment bankers who were the "pond life" :-)?
I think that I posted my question before the Evening Standard article but I've seen the comment since then that they're looking to raise at 10p. It's an incredible story, you worked in a finance dept before and must know that the idea that someone might miss a £30m tax payment (I assume VAT) that's due at the end of the month implies incompetence way beyond any level that I've ever encountered before.
You have to assume a certain basic level of competence when making an equity investment and it's quite incredible to see that assumption smashed at CVR.
Most frequently thought to be a duty payment to Customs, but seen nothing authoritative.
Yes, duty payable on taking product out of bonded warehousing seems the best fit but that’s speculation. It’s still almost incredible incompetence. From reading their interim results they were finishing putting the acquired businesses on their JD Edwards ERP system so perhaps that’s part of the story.
Also they said they were managing the business segments by adjusted EBITDA so there’s another reason to mistrust businesses that do that and risk forgetting about real profits that flow through to cash.
Their auditors were KPMG.
I think that's quite a kind interpretation. It could, maybe, explain the very different errors. However, I can't see how extending payment times can be done by accident and without awareness. Ditto probably for their revolving credit facility, depending on precisely why they chose to negotiate it originally. Feels to me as if they'd introduced all the little tricks they could think of and had reached the point where it was no longer possible to keep all the plates spinning and it was just chance what set off the general collapse.
I'm not convinced that they'll be able to get the placing away, given the numbers mentioned. Suppliers are probably too much on the hook already to be anything other than supportive.
Paul,
I was wondering if you are going to do any more on monday's report since if says it's "to be continued".
I was particularly interested in your take on Spectra Systems (LON:SPSY), whose result in line with guidance have not exactly wowed the market
Many thanks for your continued guidance
Steve
Some well-informed buying in Bloomsbury (LON:BMY) from 1500 this afternoon. RNS giving "earnings above expectations" did not come out till 1637. Sniffy!
Bloomsbury Publishing (LON:BMY)
Obviously leaked - they haven't done a trading update in the past as far as I can see.
Having said that, going from the US markets, it looks like there will be blood all over the horizon tomorrow, so this might ease the pain.
Phil
EDIT: £25m in cash sounds exceptional.
RE Miton (LON:MGR) - here are my forecast calculations for FY18 EPS:
AUM opening 4,057
Inflows - assume spread evenly 200
Performance (500)
AUM average 3,657
Revenue (assume constant bps margin) 23.7
Admin expenses (assume FY17 + 10%) (15.9)
Share-based payments - say (0.7)
Amortisation (assume constant) (0.3)
Exceptional expenses - say (0.3)
Operating profit 6.5
Finance revenue (assume constant) 0.0
PBT 6.5
Tax @ 20% (1.3)
PAT 5.2
Diluted shares in issue @ 31/12/17 163,362
Share buybacks - say 10m in 2 tranches (5,000)
EPS - pence 3.3
P/E multiple - say 12
Implied price - pence 39.6
Obviously, this calculation is highly sensitive to inflows/outflows and performance. Assuming a less pessimistic performance of flat and leaving inflows at a cautious £200m gives the following calculated EPS and potential price:
AUM opening 4,057
Inflows - assume spread evenly 200
Performance -
AUM average 4,157
Revenue (assume constant bps margin) 27.0
Admin expenses (assume FY17 + 10%) (15.9)
Share-based payments - say (0.7)
Amortisation (assume constant) (0.3)
Exceptional expenses - say (0.3)
Operating profit 9.8
Finance revenue (assume constant) 0.0
PBT 9.8
Tax @ 20% (2.0)
PAT 7.8
Diluted shares in issue @ 31/12/17 163,362
Share buybacks - say 10m in 2 tranches (5,000)
EPS - pence 4.9
P/E multiple - say 12
Implied price - pence 59.3
You can see how sensitive the price is to the performance - a 12.3% variation in the performance causes a 50% variance in the sp.
I am long. I think the risk/reward is fair. Although I think there will be another 10%-15% correction within the next three months, unless there is the start of a bear market, I expect UK small caps to out-perform.
I think this is undervalued as it is a bit old-school and key-man dependent but its low multiple and track record give it some downside protection.
Re: profit warnings, this is the latest quarter: "UK quoted companies issues 81 profit warnings in Q4 – the highest quarterly total since Q4 2015"
The first quarter will be out in about 2 weeks time. Yes there do seem to a lot this year already. But some companies are doing well hence the high values for instance Fevertree Drinks (LON:FEVR), Burford Capital (LON:BUR), Focusrite (LON:TUNE) etc. But quite a few have fallen back this year so they are not so highly rated. Some sectors due to consumer spending or lack of are struggling at the moment, this could get worse in the next year or 2. But other economies seem to be doing well, so I'm not sure what will happen, the markets fell in January but many shares have bounced back.
I understand from twitter that Paul is suggesting a 30p placing for CVR whilst Graham is at 10p. Any comments as to the veracity of such prices bearing in mind that it can't be insider info whilst the stock is suspended!
"I understand from twitter that Paul is suggesting a 30p placing for CVR whilst Graham is at 10p. Any comments as to the veracity of such prices bearing in mind that it can't be insider info whilst the stock is suspended!"
Neither of us was suggesting anything. Just repeating comments from City types (in my case) and the Evening Standard (in the other case). As you say - when a share is suspended, it doesn't really matter what people speculate about. Very different to price manipulation that we often see from others, when a share is freely trading. Sadly, then it's only the City insiders who get to clean up, not pond life like me & Graham. As you know!
P.
Conviviality (LON:CVR) is one of the biggest corporate disasters of all time ..ranks with Marconi for all round incompetence.
With regard to Accrol Group (LON:ACRL) Paul makes the point that: There was some Director selling recently, which looked like rats deserting a sinking ship.
Even more telling when you look at the detail - there was actually a buy (215,168 @ 36.00p) by the Executive Chairman. The selling was by Purchasing Director Colin Platt and Sales Director Gary Earle. They were not board directors but kept the title 'Director' having been on the board before the IPO.
To me this points to those being nearer the coal face being more aware of reality than those in the boardroom as was the case with Conviviality (LON:CVR) - as Paul wrote last Wednesday: Director buys - the Directors genuinely didn't seem to know that trouble was brewing. This is evidenced by 5 Directors collectively spending about £583k buying shares at around 300p on 5 Feb 2018.
I note that the Conviviality (LON:CVR) ceo has been made to walk the plank-hardly a great surprise.
Micro Focus International (LON:MCRO) - further evidence that the markets are increasingly twitchy. Anything that's taken on excessive debt on a rich multiple that warns about either accounting issues or operational mistakes is getting savaged. Capita (LON:CPI), Conviviality (LON:CVR), now Micro Focus International (LON:MCRO). Those that have taken on debt to return to shareholders either through unsustainable dividends or buy-backs are going to raise fears of covenant breaches when their EBITDA looks like dropping.
My portfolio is about 5% off its peak and, with very few exceptions, the sp charts seem to be forming descending triangles with lower highs which looks bearish. The risk/reward continues to favour being out of the market.
Looking at the two year ftse100 chart, I can see a sharp break to below 6700 levels. Plenty of these warnings around, interest rates headed up this week, uncertainty everywhere. Debt, debt and more debt. Property prices in some categories are crashing imo although a bit hidden away. Buy to let; if you have cash you can be very aggressive.
Micro Focus International (LON:MCRO) - "An IT group that can't implement a new IT system for itself ... doesn't sound great, does it?" - No surprise to me. Large IT groups don't make money on quick, efficient implementations, they make money by insinuating themselves inextricably in expensive overrunning projects where the clients haven't a clue, or where someone has deliberately brought in an outside agency in order to have someone else to blame. I've seen enough of them.
Re your comments on IT implementation in relation to Micro Focus International (LON:MCRO) woes - that was my experience too in about 15 years of being on the receiving end of IT support by EDS/ HP to the FTSE 100 employer I worked for. Unfortunately they were much better at writing contracts than was my employer. They really held us over a barrel with that bloody contract, which gave them licence to be utterly crap and then charge the Earth for the privilege of being treated terribly - much like BT treated retail customers in their monopoly days.
LTG:
Amortisation of intangible assets
8,404 (3,605)
apad
Learning Technologies (LON:LTG)
Useful pointer APAD and this significant increase in amortisation of intangibles relates to the acquisition of NetDimensions.They paid £53m for ND effectively representing.
Net Tangible Assets : MINUS £3m
Intangibles : £34m (mostly £32m Customer contacts & relationships)
Goodwill : £22m
And it is the amortisation of the £34m intangibles that drives the change. Key to understand though that this "formulaic" amortisation, not an explicit value judgement as to the worth of those "assets".
I presume therefore that the £4.8m delta in the amortisation figure reflects the 9 months of ownership as the full year figure should be over £6m (ie amort will increase again in the current year even without more acquisitions).Purely on a balance sheet basis then, you could argue they spent £56m on "hot air", however the business case for buying NetDimensions had little to do with Tangible Assets!
Micro Focus International (LON:MCRO)
"Chris Hsu has submitted his resignation in order to spend more time with his family and pursue another opportunity. He will step down immediately as the CEO of the company."
Reporting has sunk to new depths.
Phil
Re excuse for the Micro Focus International (LON:MCRO) CEO quitting - is that code for "...to do something he is less sh*t at"?
Micro Focus International (LON:MCRO) (a large cap FTSE 100 member) has halved in SP today on a profit warning (when was the last time a FTSE100 member fell by 50%?).
That might affect small cap IT companies - which is why I mention it here.
Micro Focus International (LON:MCRO) has very high debt which is one reason why I avoided it.
Micro Focus International (LON:MCRO) were always at the risk of acquisition indigestion - I did hold for some time, but following the HPE deal I felt it was time to take a step back
PCI- PAL (LON:PCIP) may be worth a look. They sold their call centre business to focus on their online payment processing which seems to be paying off. They then raised net £4.6m through a placing at 45p to finance increased marketing and expansion overseas. The have cash (but are still loss making and burning the cash quite fast). Current SP 44-47p
It's an agressive strategy that seems to have institutional backing. I don't hold.
I rather like the look of PCI- PAL (LON:PCIP) as a high-growth, high-risk play. The numbers don't tell you very much without the extended narrative, which is worth a read. 100% client retention, large addressable client base, and growing sales pipeline is the story.
https://uk.advfn.com/stock-market/london/pci-pal-PCIP/share-news/PCI-PAL-PLC-Half-year-Report/76973110
My previous thoughts from December 5th here:
PCI- PAL (LON:PCIP) aroused my interest enough to revisit it this weekend and delve through the RNS's to find out whether the directors seemed trustworthy. I am fairly allergic to companies chasing a big growth strategy but planning to capture most of the gain for themselves, while shareholders bear the risk.
Having found a grant of options in June this year to management representing 9% of the equity, my initial negative response was removed by the footnote that the CEO (a significant shareholder) had waived his rights. My take is the scheme looks like sensible golden handcuffs to keep the management team on board. 3 years continuous employment is a requirement for vesting, and there are different thresholds to be met in the share price. The options previously granted never passed the threshold for vesting and lapsed, so I can see merit in giving staff an incentive to stay on board for a more risky strategy. Board salaries don't look excessive.
My initial reading was that the leadership of this company had spotted a winner in their ranks and decided to sell off the rest of the business in order to fund ambitious expansion plans. Although loss-making, they still have £3million to come in over the next three years in stage payments from the sale of the call centre operation. So my further research has encouraged me to think this may be an interesting investment proposition.
They provide secure payment outsourcing to a range of clients. Many of the clients are anonymous, but one that Stocko readers may have come across is Serco and Boris bikes, aka Santander cycles. The biggest missing piece in my (and therefore to date, our, collective) knowledge is user feedback.
Any input would be very welcome. No investment advice is suggested or implied.
Jon
PS, The company describe themselves as:
PCI-PAL PLC is a market leader in securing payments, protecting customer data and reducing compliance costs.
My question on PCI- PAL (LON:PCIP) is this - payment processing is, in my opinion, becoming more commoditised. What makes them stand out from the competition?
It's a fair question. The corporate answer is this:
Each major economy in the world has specific data protection legislation, such as the forthcoming GDPR regulations in the EU. As a result, it would be illegal for say, a payment card transaction in the US to be sent to the UK for processing unless a privacy shield agreement has been established. Without a privacy-shield arrangement personal data is not allowed to cross international borders. Therefore, if we are to provide a solution in the US we would have to have available an in-country instance of our service. The same issues apply in Canada, Australia, China, etc.
There are few international providers of PCI DSS compliant solutions to contact centres, and we believe that PCI Pal is the only one with capability within AWS to deliver services globally whilst adhering to local data sovereignty rules and regulations. Therefore, we believe we are well positioned to capitalise on the global demand for our services so long as our technology remains easy to access and easy to use.
. . .
We believe that most of our competitors still either provide a hardware solution that needs to be installed at each contact centre or supply a service using similar technology to our first-generation platform hosted in a third-party data centre. We believe that true-cloud delivery is the future.
With a market cap now of £477m Learning Technologies (LON:LTG) might now be considered on the large side for this column, but as it's being covered here before (most recently the January TU covered by Graham) I thought I'd through it out there.
I was kicking myself yesterday for the fact that my current time constraints had meant I hadn't had time to have a proper review of this. It was looking like one of those situations where despite having a strong price reaction to the positive trading statement, we would also see a strong reaction on the results themselves. However, with the share price opening "only" 5% above Friday's close this hasn't been the case and was able to get in for a small initial position.
The strength of the results was broadly reflected in the January Trading Update, although EPS of 2.064p looks like a decent beat of the revised expectations of 1.98p (assuming this is a like for like comparison).
They were sounding quite confident back in January and perhaps more-so now : " Current trading ahead of management expectations".
I still need to go back and kick the tyres properly on this one and for anyone else wanting to do so, some of the cautionary notes in Graham's last review (linked above) are a good starting point.
There is an analysts presentation currently going on - disappointingly with no dial-in or webinar option - I expected therefore we'll see revised forecasts shortly. Currently Stocko is only showing a 7% increase in EPS for 2018 and in fact (again assuming the figures are like for like) two-thirds of that increase was actually delivered by the 2017 earnings over-performance.
Grateful for views from any of you who have already looked into this more deeply.
Paul I would appreciate your views on Miton (LON:MGR). The results look very good. Basic EPS of 3.27 and dividend of 1.4p are one year ahead of Stockopedia forecasts. The outlook statement is positive and they also have £19.9m cash on the balance sheet. On a cash adjusted basis they appear to offer strikingly good value, even for an asset manager that is subject to the vagaries of investor sentiment.
Cheers
Jonno
I agree - these are super results. High performing funds, further AUM increases in to new year, good dividend, plenty of cash. Larger asset managers already command a cash adjusted PE of 13+*
Quick calc shows 3.3p next year earnings * 13 = 43p+ cash of circa gives me a rough 6-12 month target of 55p.
I note Peel Hunt increased TP from 55p-60p
Once AUM at a manager starts to increase momentum can be dramatic (up and down) so I see further potential for a re-rating. Seems to be happening at Miton - they coped very well with loss of star managers last year too which, gives me confidence.
am long - toying with buying more.
Hi Dave
I added a small amount to my holding this morning. Just think that Miton (LON:MGR) is great value at present, provided that Mr Trump and his protectionist policy doesn't tip the world economy on its head.
All the best
Jonno
Thank they are one of the presenters at PI World forum on 16th April - don't think I can make it but well worth going along.
Regards,
Dave S.
Miton (LON:MGR) please
I noticed incidentally that Miton have quite a large shareholding in Accrol (see above); not sure which entity.
Any chance you could have a look at Learning Technologies (LON:LTG) ? They released preliminary results from y/e 31/12/17 today
https://www.investegate.co.uk/learning-tech-gp-plc--ltg-/rns/final-results-2017/201803190700040588I/
On the face of it everything looks good and Learning Technologies (LON:LTG) make nice sounding noises. "Learning Technologies Group enjoyed a very strong year in 2017, as we create a market leader in the fast-growing digital learning industry."
Companies that develop new and enhanced ways to deliver old services have, if successful, been doing very well. My problem is in untangling real profits and profit potential from results affected by a big recent acquisition and a focus on reporting "adjusted EBIT" numbers. Having said that, the company is now profitable at a basic EPS level too and positive about this year.
Disclosure - I am long Learning Technologies (LON:LTG)
I'd also like to add my voice to the requests for Spectra Systems (LON:SPSY).
And please do write about the companies that interest you. Those write ups are usually the most interesting and informative
Staffline (LON:STAF) have announced the acquisition of Endeavour Group, but haven't disclosed what they've paid, only that it will be 'earnings neutral'. No comment about future synergies either. This leaves me wondering if the pursuit of top line growth is taking priority over earnings growth? Just a thought...
Staffline (LON:STAF) not so much a case of synergies as expanding territory it appears from the RNS
"The acquisition will significantly increase Staffline's scale and presence in the East of England, supplementing the Group's existing Food and Agriculture offerings in that area '
A truly horrid trading update from Accrol Group (LON:ACRL) this morning:
https://www.investegate.co.uk/...
£5m loss forecast, £34m debt. Costs up, covenant likely to be breached. Shares down 50% on the day at the time of writing.
Yet another example of IPOs offering high yields going pear-shaped. cf. Entu (UK) (LON:ENTU)
Gostevie
Accrol was always an accident waiting to happen. Came to market when trading conditions were at a rare level of perfection. I assume that the errors in the middle of last year (presumably the reason for CEO's departure soon after) came from a degree of hubris after the IPO & current trading.
No sign that they've ever been on top of things since, even if they did get away with a placing.
There may be a price for it but I struggle to see how you could calculate what it was without inside info.
Ocean Wilsons Holdings (LON:OCN)
Also a dividend increase of 11% to 70c a share - somewhat erased by sterling's appreciation against the dollar over the past 12 months.
I am happy to hold this, and increased my holding a few weeks back.
Michelmersh Brick Holdings (LON:MBH) final results this morning. First report after acquisition of Carlton last year. Seems to be going well with decent increase in turnover and profitability and reasonably optimistic outlook.
https://www.investegate.co.uk/michelmersh-brick--mbh-/rns/final-results/201803190700030171I/
Also wondered if any views here on Ocean Wilsons Holdings (LON:OCN) ? Pretty decent preliminary results for this investment company with some interesting logistics operations in and around South America, especially Brazil. I bought a few based on strong Stocko metrics and as a diversification play.
https://www.investegate.co.uk/ocean-wilsons-hldgs--ocn-/rns/preliminary-results/201803190700050649I/
Gus.
Ocean Wilsons Holdings (LON:OCN)
Operating profit growth of 13% on its port operations, 15% increase on it's investment portfolio to $275m and EPS up 74%.
After many years of recession, Brazil economy now forecast to grow by 2.5 - 3% this year.
Trading at a sizable discount to its NTBV, this looks like a very good EM play - considering adding to my position.
Phil
My morning smallcap tweet:
Accrol Group (LON:ACRL), Spectra Systems (LON:SPSY), Telit Communications (LON:TCM), Petards (LON:PEG), Staffline (LON:STAF)
Accrol Group (ACRL) warns FY materially below market expectations with posttax before any asset impairment charges -£13m. Blames costs, difficulty in increasing prices (no shit Sherlock). "Some of the corrective, business critical remedial activities have been hampered while the Board transitioned to its new supportive composition" What? Guides next FY in line. Whatever.
Spectra Systems (SPSY) FY EPS 7c (3c). FY div 6c (5c). Net cash 11.1m ($8.8m). "Excellent prospects for ongoing earnings growth in 2018."
Telit (TCM) appeal against tax penalty of €5m rejected, will appeal.
Petards Group (PEG) MOD Air Platform Systems Platform Protection team exercises option to extend contract, worth in excess of £1.6m over 2 yrs.
Staffline Group (STAF) buys Endeavour Group and its subsidiary Vital Recruitment having T/O £83m and pretax of a miserable £0.5m. Expected to be earnings neutral in the current year. How much have they paid? It's a secret. I hold.
Paul, You looked at Spectra Systems (LON:SPSY) last month and thought them to be intriguing – Well it intrigued me too so I added 50% to my position. YE sales (mainly Phosphor royalties for bank note authentication) up 9%, but EPS has doubled indicating significant operational gearing. Cash up significantly too. Margin and return metrics wise it looks like another Bioventix to me. Another happy holder. Ian
Spectra Systems (LON:SPSY) would be worth discussing today. Released 12 month results, with 9% increase in revenue and 100% increase in EPS. Reported EPS is therfore only 1% lower than current 2018 expectations (As per Stockopedia) so I expect to see the release of increased broker forecasts shortly. Forward looking statement sounds bullish, with lots of new projects in the pipeline and a clear strategy set. Looks very reasonably priced for a growth share, probably because people (myself included) can't quite work out exactly what they do.
I have been a happy holder thus far and will not be selling on these results.
Hi Paul, hope the RSI is getting better.
Spectra Systems (LON:SPSY) releases its preliminary results for Y/E 31/12/17. It's an interesting company which deals with bank note authentication that has previously stated it will beat market expectations but has undertaken cos reductions which has improved results. It says it's ready to deal with large orders now. There aren't any details about current year trading. However, it does announce a move into new markets to do with coffee cups.