Small Cap Value Report (Thu 26 Apr 2018) - SNX, BWNG | Paul Scott

26th Apr '18 by Paul Scott

26 comments 12101 reads

Good morning!! It's Paul here, reporting from the Derby Conference Centre, at the Mello 2018 investor show!

Graham and I have been cajoled into doing a SCVR Live, on stage here at 9am, today and tomorrow. However, I thought we need to look after everyone else that isn't at Derby too. So here are some comments on this morning's RNS.

It's now 7:07, and guess what? The RNS feed is broken again. Great, just great! In that case, I'll nip downstairs and have a Full English, and hopefully the news feed will be working again soon.

Very nice that was too. OK, the news feed is working now. Some quick comments before I go on stage;

Synectics (LON:SNX)

Share price: 200p (up 5.3% at 08:24)
No. shares: 17.8m
Market cap: £35.6m

Trading update

Synectics plc (AIM: SNX), a leader in the design, integration, control and management of advanced surveillance technology and networked security systems, is holding its Annual General Meeting at 11.00am today, at which the Chairman, David Coghlan, will make the following statement.

The company has a 30 November financial year end.

The first paragraph sounds ominous - note the word I have bolded;

"In the first four months of this financial year, the trends we see in the various end market sectors Synectics serves have remained largely as set out in last year's Annual Report ...

This sounds like the company is warming us up for a profit warning.

More detail is given, of different sectors, some up, some down. The suspense is lifted with a reassuring final sentence;

"Based on Synectics' current order book and pipeline of anticipated new business, the Board expects that the Company will announce full year results in line with market expectations."

Stockopedia is showing consensus forecast of 14.6p EPS, so at the current share price of 200p, I make that a PER of 13.7, which sounds about right for this type of business. The business model here suffers from tending to have lumpy contracts, so it should really be on a below-average PER rating.

My opinion - this share doesn't interest me, as it's difficult to see much upside, unless the order book substantially increases. That could happen, as historically the company did well from the oil & gas sector, which is now showing signs of life…

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Carcosa

26th Apr '18

U and I (LON:UAI) is a specialist property developer and investor in regeneration projects. They reported their results today. Discount to NAV (303p v 203p closing price yesterday), Dividend yielding 9% EPS ahead of forecasts. Positive commentary from CEO... "we are well positioned for the future". Net debt is reasonable (32%), targeting 12% post tax total return per annum.

Why is share performance so dire? - It has an impressive development pipeline of projects...

gus 1065

The LSE feed seems to be working OK although Investegate seems to be having a lie in. Interesting announcement from Sucker Stock Satellite Solutions Worldwide (LON:SAT) concerning a couple of relatively big acquisitions and an equity placement to fund this/strengthen the balance sheet.

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/SAT/13619063.html

Deal itself looks pretty straightforward. Placement is being done at a slight premium of about 4% (quite unusual and should just about cover the fees). As part of the placement, top management are also selling some of their holdings (due to “exceptional demand”). Also, activist investor Chris Mills/Harwood Capital are taking a chunk of the placement and Mills is going onto the board (and they’re changing the company name to something a bit more catchy .....). Wheels within wheels, but as a small holder still wary Mills and co will try and run off with the upside with a cheap takeover offer if this thing takes off. As they used to say on the Sweeney, “he has previous...”.

Enjoy Mello for those there.

Gus.

MrContrarian

My morning smallcap tweet from Mello2018.

Park (LON:PKG), Braveheart Investment (LON:BRH), ULS Technology (LON:ULS), LSL Property Services (LON:LSL), Akers Biosciences Inc (LON:AKR)

Park Group (PKG) guides FY marginally below market expectations due to delayed roll out of a significant contract with a corp. client.
Braveheart Investment Group (BRH) FY trading: "expect a substantial increase in the value of its investment portfolio, primarily in its investments in Paraytec Limited and Kirkstall Limited. In addition, trading at Viking Fund Managers is expected to show a slight improvement on the last FY."
ULS Technology (ULS) guides FY ahead of market expectations, with revenue up 38% and adjusted pretax up approximately 25%. Only a slight beat on F/C though.
LSL Property Services (LSL) Q1 slightly below the Board's expectations but guides FY in line with the Board's expectations.
Akers Biosciences (AKR) terminated Dr. Raymond F. Akers as Executive Chairman and as Chief Scientific Director and Secretary of the Company. He continues as a NED! "For more information... Tel. +1 856 848 8698." More information? Like,er, why?

LeoInvestorUK

The Park (LON:PKG) profit warning looks like one of the "good" kind - delayed revenues now apparently secure. However there has been quite a lot of management change, there is always a risk of further delays, and looking at them again they are hardly cheap. I'm happy (so far) to have got out at 76.1p first thing.

The Seeing Machines (LON:SEE) update is pleasing, but I think it only confirms negotiations mentioned in their announcement here: https://investegate.co.uk/seeing-machines-ltd--see-/rns/statement-regarding-press-speculation/201803090752552368H/
For a contract they categorise as "large", the revenues (and I checked, they are lifetime revenues) seem quite small at £13.5m. They'll need a lot of these to justify the market cap of £110m, although of course investors are hoping (and all road users should be hoping) that this will become like ABS and be fitted as standard in all mainstream cars in the near future.

jjis

Dull looking results from N.Brown (BWNG) this morning too - not particularly small but I think Paul has commented on it in the past & it might be an interesting longer term turnaround / value play.

ridavies

Perhaps their results vary widely from year to year? Lots of investors - big and small - like consistent performance, period by period. Just a thought. I have been attracted by them since am a big supporter of Watkin Jones (LON:WJG) and U and I (LON:UAI) have been in similar developments recently.

Small Cap Value Report (Thu 26 Apr 2018) - SNX, BWNG

Synectics (LON:SNX)

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Paul Scott

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