Good morning!

Thanks for the early comments.

I'm planning to cover Cerillion (LON:CER), Ramsdens Holdings (LON:RFX), Zoo Digital (LON:ZOO) and Patisserie Holdings (LON:CAKE), and will then see what I have time for after that.

Regards,

Graham



Cerillion (LON:CER)

  • Share price: 124.5p (+4%)
  • No. of shares: 29.5 million
  • Market cap: £37 million

Final Results

I've just finished an interview with the CEO & CFO of this company, which I hope to publish in the next day or so.

It provides charging, billing and customer relationship management software, historically to the telco space but now to a range of other industries as well.

These are nice results, which are in line with expectations: revenues are up 8% to £16 million, although the large majority of revenue comes from abroad so I expect there were some currency tailwinds. Recurring revenue and the back order book both increased materially and without any acquisitions having taken place.

The company has net cash and is run by a heavily-invested management team who have been with Cerillion for many years. It was spun out from Logica in 1999.

According to Stockopedia metrics, it qualifies for the Neglected Firms screen. Digging into that screen, it means the company doesn't have much broker coverage,  and hasn't seen much EPS growth (at least not until today), but does also satisfy a wide range of attractive criteria.

For example, to qualify for the "Neglected Firms" screen, you need a PE ratio less than the industry median, and net margin greater than the  industry median.  Cerillion's PE ratio is c. 14x - 15x, depending on when you measure it, while the operating profit margin in 2017 was c. 16%. Both pretty reasonable!

The shares are up about 50% since the March 2016 IPO, though they have been drifting lower this year.

Outlook for the future remains "very positive" as the company pursues a "strong pipeline" of prospective international customers.

My opinion

Overall, I think this deserves a bit more attention from investors than it has received so far. As is always the case with contract-driven, B2B work, there is that element of risk from the…

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