Good morning from Paul & Graham!
Agenda -
Paul's Section:
Marks Electrical (LON:MRK) - an impressive, if slightly vague trading update. Why can't they just say that they're trading in line with expectations, instead of hinting at it? MRK seems to be strongly out-performing a difficult market. Shares have drifted down to a more sensible valuation, providing it hits forecasts for FY 3/2023, which might be a stretch given the deteriorating macro picture, possibly? Long-term though, I think this is an impressive, entrepreneurial company, with a commonsense, lean operating model. Tons better than problem-strewn larger competitor AO World (LON:AO.)
Revolution Beauty (LON:REVB) - another bombshell announcement. As we warned here on 2 August, this makeup business looked seriously over-stocked, and with a CFO resignation & audit delays, I feared more bad news to come. It's come this morning - "material" audit issues re over-stocking, bad debts, and revenue recognition. Just for gamblers at this stage, I remain of the view that it's uninvestable until we have proper information & figures. More detail below.
Graham's Section:
Videndum (LON:VID) (£653m) - Full-year results at this hardware and software provider are heading to be at the top end of expectations. The content creation market is booming and I would expect that to continue for the foreseeable future. Videndum has been deal-making and it has both the debt load and the earnings adjustments to prove that. But shareholders have not been diluted and the company has good organic revenue growth in addition to acquisition-related growth. There are some attractive features which make this stock worth investigating in more detail.
Checkit (LON:CKT) (£27m) (-12.7%) [no section below] - this software platform helps companies to “understand the hidden activity of your deskless workforce and their interactions with critical equipment and buildings”. According to this update, H1 revenues were down by 31%. Non-recurring revenues were allowed to evaporate, as planned. Annualised recurring revenues, however, are up by 48%, in line with expectations, and are now at £10.2m. The cash balance reduces to £19.5m (down by nearly £5m in six months). The Board is “accelerating its plan to achieve profitability”.
Paid researchers at Edison haven’t changed any of their forecasts. Judging by the share price reaction it appears that the company was expecting this H1 result, but its investors weren’t. Investors…
