Small Cap Value Report (Weds 19 May 2021) - DIA, SAG, CREO, KGH
Good morning, it's Paul and Roland here. A big welcome to Roland Head, who has kindly agreed to step in and help out here at the SCVR, to give Jack some study leave. Roland is a highly experienced investment analyst and writer, and can be found on Twitter: @rolandhead
StockSlam - a reminder that this popular free webinar starts tonight at 18:00. Anyone can do a 3 minute pitch for any stock, so why not get involved?! It's good fun. Register here.
Timing - we should be finished by 1pm.
Agenda -
Paul's Section:
Dialight (LON:DIA) - in line with expectations trading update, but orders above expectations. Does this mean the turnaround could be gathering pace? Who knows, not enough information is provided.
Science (LON:SAG) - A strong trading update, with H1 profit guidance 30% up on last year's excellent H1. Mentions potential supply chain problems (as many companies are saying). Valuation still looks attractive to me. A thumbs up from me - holders should be pleased with the group's progress.
Roland's Section:
Creo Medical (LON:CREO) - a promising update from this medical device firm, but it remains a speculative situation.
Knights Group (LON:KGH) - This acquisitive legal services business says that revenue for the year to 30 April should be ahead of consensus. Knights Group has delivered strong growth since flotation, but the firm doesn’t yet have a very long track record as a listed business.
Paul’s section
Dialight (LON:DIA)
320p (pre market open) - £104m market cap
Dialight plc (LSE: DIA.L), the global leader in sustainable LED lighting for industrial applications, is today issuing the following AGM trading update.
AGM trading update - encouraging start to the year
This relates to the FY 12/2021.
Looking back at its last results for FY 12/2020, the figures were a £(6.4)m underlying operating loss, not bad considering covid hit revenues hard, down 21% to £119m.
The outlook comments alongside these results sounded OK - this was published on 31 March 2021, so I’m providing it now for context -
Full year guidance for 2021
We are experiencing an increase in quoting activity early in the year and while the Group will continue to be impacted by COVID-19 during 2021 and will take steps to mitigate to the extent possible, we see a range of profitable outcomes for the full year.
Longer term the actions taken during 2020 will help ensure we are strongly positioned to return to significant growth as the pandemic eases, and as a market leader to satisfy the increased structural demand for more environmentally friendly products.
[Paul: this was published on 31 March 2021]
While previously highlighted Covid-19 impacts continue, current trading is in line with management expectations, with orders ahead of expectations. Our focus will continue to be on meeting our customer needs and thereby growing our revenues. The Group's outlook for the year remains unchanged.
For the longer term, the actions we took during 2020 mean we are strongly positioned to return to significant growth as the pandemic eases. The demand for more environmentally friendly lighting products is growing as the focus on net zero continues to gain momentum around the globe.
What a pity the company failed to provide a footnote, to tell us what their expectations are, how are we supposed to know?!
There’s no broker research available on Research Tree.
Broker consensus figures on Stockopedia are -
FY 12/2021: 8.65p (PER 37)
FY 12/2022: 20.45p (PER 15.6)
Net debt - has gone up - note the comment about raw materials shortages -
We have mitigated against potential raw material shortages by increasing our inventory. As a result, net debt at 30 April 2021 was £14.4 million compared to £11.4 million at 31 December 2020.
My opinion - I don’t have enough information to form a view. If the company wants investors to buy into the turnaround story, then it would be helpful to get some research notes out there for us to read.
I can’t see anything particularly attractive about buying shares in a company with a poor track record, which made losses in 2019 and 2020, where the share price looks about right if Dialight achieves 2022 forecast earnings.
The turnaround might work, it might not, how am I supposed to assess the probability of that happening? It’s not much more than guesswork, based on the limited information available.
I’m happy to look into it in more detail, if more information is provided. I think there might be a webinar coming up, which would be of interest. I like turnaround situations, so would be interested in finding out more.
As you can see from the long-term chart below, Dialight was previously very successful, before it all went wrong. Interestingly though, there doesn't seem to have been any dilution in the last 6 years I have data for, with 32.6m shares in issue throughout. Therefore, in theory the share price could recover to previous highs, if profitability also recovers to previous highs.
Stockopedia is also unsure, with a middling StockRank of 50.
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Science (LON:SAG)
370p (up 6% at 08:55) - mkt cap £152m
This is an AGM update, relating to FY 12/2021.
Here is my review of the FY 12/2020 results, which is useful as a quick reminder to get up to speed. I have a positive view of this share, due to its strong track record, impressive 2020 results, and decent balance sheet. Plus management has plenty of skin in the game, very important in my view.
Today’s update - very clear, and positive-sounding -
All three divisions of the Group have had a good start to the year.
In the Services businesses, the R&D Consultancy division has seen particularly strong momentum in the Medical sector, while the Regulatory & Compliance division has continued the progress demonstrated in 2020.
The Frontier product division continues to perform well with material supply constraints likely to be the biggest risk in the current year.
So many companies are now reporting supply constraints. I don’t have a clue how long, or how serious such supply constraints could become, so it does worry me. That ties in with the risk of higher inflation - prices go up when things are in short supply, and people start hoarding, making the supply problems worse. However, higher prices then trigger more production, hence re-balancing supply & demand, and bringing prices back down again. Who knows how long this process might take? Anyone who claims to know is probably making it up as they go along!
H1 Guidance - this sounds impressive, but H1 last year was the worst affected period for covid/lockdown 1, so I’ll need to check the numbers next -
Given the continued business momentum, the Board now anticipates that the Group will report adjusted operating profit ("AOP") for the first half of 2021 around 30% higher than in the same period of the prior year. This is a particularly notable performance since H1 2020 reported a record AOP for the Group and the current year includes a significant currency exchange rate headwind relative to the strong 2020 comparator.
OK, I’ve checked the H1 2020 results, and fair do’s, they were strong numbers - e.g. adj operating profit up 50% to £4.9m. Although I would deduct from that £376k in finance costs, and £691k in share-based payments (the company is rather too generous with share based payments in my view, and we can’t just ignore these, as they’re a form of staff remuneration).
This means H1 2021 should see adj operating profit of c.£6.4m - very impressive.
In EPS terms, it was 8.5p (adj. diluted) in H1 2020, add 30% to that, we get to just over 11.0p EPS in H1 2021.
Seasonality - there doesn’t seem to be any particular bias from H1 to H2, with both 2019 & 2020 seeing sequential half years roughly in the same ballpark, or maybe a bit of a favourable H2 profit bias.
Put that together, and it looks to me as if SAG is probably on track to beat broker consensus of 19.9p EPS for FY 12/2021. Maybe 23-25p could be on the cards (my guess)?
Liquidity - looks fine, and could give scope for M&A deals -
Gross cash at 30 April 2021 was £29.5 million with net funds of £13.3 million.
Strategic review - SAG has been looking at options for its digital radio business, called Frontier, for a while now. It’s decided to keep it -
… the Board has concluded that retaining Frontier in the Group is the most attractive option for Science Group shareholders and has decided to terminate potential sale discussions.
That makes sense to me. An excellent turnaround has been achieved at Frontier, and it’s now contributing strongly to group profits, so why sell it? The only reason I can see would be if someone offered a big premium price. If not, then keeping it seems a good idea, but obviously management are the best judge of that.
Freeholds - I’m not entirely sure what they’re saying here, it mentions a sale & leaseback valuation. The upshot seems to be that valuation hasn’t changed much, and ownership of one of the properties is being moved within the group, I think.
My opinion - the only thing that puts me off buying this share is that it’s painfully illiquid, with a wide spread (although often the real prices for small caps are inside the published spread).
Today’s update is excellent I think, and shows that the group appears to be well on track to beat full year market expectations of 19.9p EPS. If it gets to say 23-25p, as I suspect could be on the cards, then at 370p the valuation is between 15-16 PER.
That looks attractive value to me, for a quality business. Hence a thumbs up from me, as previously. A thumbs up from the Stockopedia computers too, with the StockRank currently very high, at 92.
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Roland’s section
Creo Medical (LON:CREO)
197p (pre-market open) - £303m market cap
Creo Medical Group is a medical device company focused on the field of surgical endoscopy. From what I understand, the company’s products use microwave energy and other techniques to provide less invasive treatment options than traditional methods.
Today’s trading update starts with an upgrade to full-year revenue guidance - even though we’re only in May. That seems an encouraging start.
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Creo was founded in 2003 and only floated in 2016. It’s yet to make a profit, but my initial impression is that it’s a credible medical tech business that could do well over time. I note that Baillie Gifford is the second-largest shareholder. Founder and chief technology officer Chris Hancock has a 2.8% stake in the business, so also has some skin in the game.
After an initial post-IPO surge, Creo shares have remained somewhat range bound. But the firm has not destroyed shareholder value like some new floats. Despite some equity fundraising, dilution hasn’t been too awful either, in my view.
Trading update
Creo’s sales into hospitals were hit by Covid-19 last year, which caused many elective surgeries to be postponed. However, management says that activity levels are returning to pre-COVID levels more quickly than expected, especially in the UK and France. This has led the company to upgrade its revenue guidance for 2021.
The board now expects revenue for 2021 to be “at least 10% ahead of current market expectations of £20.1m”.
This clear guidance suggests a figure of £22m or more, which shows a strong rate of growth from the £9m expected in 2020.
Management says that there has been “an increase in commercial activity from Creo’s core products” but also notes “strong contributions from Albyn Medical and Boucart Medical”. Both of these firms were acquired during 2020, for a combined consideration of up to €32.5m.
Although I’m often sceptical about acquisition-led growth, Albyn and Boucart do seem to be well matched to Creo. Both of the acquired firms sell endoscopy products and consumables in Creo’s target markets. They should provide the firm with stronger distribution channels and improved commercial scale. Interestingly, it seems that Albyn was acting as a consolidator in its markets before being acquired itself by Creo.
Creo plans to use a similar acquisition strategy to build out its presence in the US market. Management are currently said to be looking at “high-quality prospective acquisition candidates”.
My view
Creo’s technology appears to have the potential to deliver commercial and medical benefits. The firm’s picturesquely-named Speedboat Inject device is said to offer potential savings to the NHS of £5,000 per procedure, compared to traditional open surgery.
My knowledge of this sector is limited, so I’m not in a position to judge Creo’s technology or its clinical credentials. However, I can take a look at the company’s equity.
Stockopedia awards this share a lowly StockRank of 13, understandably. Creo has never generated a profit and only started generating any revenue in 2020:
Fortunately, this company appears to be quite well funded. The most recent accounts (30 June 2020) show a cash balance of £71m.
Half-year cash burn last year was around £10.5m and the company has also completed the acquisition of Boucart for €4.5m upfront since then. But I’d guess that the current cash balance could still be in the region of £50m. We’ll get an update when the firm’s 2020 results are published in early June.
Creo’s cash balance should give the firm room to keep growing, at least for a while. However, the firm’s £303m market cap values the business at around 13 times 2021 forecast sales, even after deducting cash.
This valuation suggests to me that significant levels of growth are already priced in. The firm’s technology and strategy seem credible to me, but I don’t have the sector knowledge needed to judge the potential scale of Creo’s markets. For this reason, this situation is too speculative for me to want to get involved. But I’ll watch with interest.
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Knights Group (LON:KGH)
444p (+2% at 08.30) - £371m market cap
Listed legal services businesses seem to be multiplying fast on the London market. Knights Group says it was one of the first to convert from a partnership model to a corporate structure, in 2012. This company is a full-service legal business serving corporate clients and high-net worth individuals, who are typically clients of its corporate customers.
CEO David Beech is the largest shareholder, with a 20% holding.
Trading update
Knights Group floated on AIM in 2018 and has since tripled its revenues. Today’s full-year update for the year to 30 April continues this theme, guiding investors to expect “revenue for the full year to be in excess of the market consensus of £100.8m”. This implies growth of at least 36% from last year’s figure of £74m.
Profits are also expected to be ahead, at least on an adjusted basis. Management says that underlying pre-tax profit should be “moderately in excess of market consensus” of £18m. This represents a minimum increase of 32% from FY20.
As with Creo, Knight’s RNS writers have helpfully included the consensus, rather than just referring to it. Great stuff.
Trading is said to have been much stronger during the second half, as “momentum returned”. However, although these growth figures look strong, Knights Group has been highly acquisitive since its flotation. Organic growth has been much more modest over the last year:
- H1 FY21: organic revenue -15% (Covid-19 impact)
- H2 FY21: organic revenue +8%
For some historical context, organic revenue growth was 10% in FY20, which ended on 30 April 2020.
Acquisitions: Covid-19 did not stop Knights from making acquisitions. The company acquired OTB Eveling LLP (£2.1m) and Mundays LLP (£5.3m) during the year. Since the year end, the acquisition of Sheffield firm Keebles LLP has been agreed for £11.5m.
Knights expects to “selectively execute on an attractive acquisition pipeline” during the current year.
Balance sheet & liquidity: Knights says that year-end net debt was £21.2m, excluding lease liabilities. This represents 0.9x underlying EBITDA, according to today’s update. I prefer to use a more concrete measure of profitability, but this level of leverage doesn’t seem excessive when measured against guidance for underlying pre-tax profit of at least £18m.
IFRS 16 lease liabilities are excluded from the figure above, but are quite material. Knights’ half-year accounts showed lease liabilities of £32m. I imagine these relate to long-term office leases, which shouldn’t be problematic unless the space becomes surplus to requirements. But I think this liability is worth noting, all the same.
CEO comment: CEO David Beech says that the group’s growth through acquisition has helped to achieve “critical mass”. Mr Beech says that this has enhanced Knights’ credibility and is helping to attract “high calibre talent and an increasing number of [client] opportunities”.
My view
Despite Knight’s strong share price performance since listing, Stockopedia’s algorithms take a cautious view on this stock, awarding a StockRank of just 19.
To some extent I share this view, for a couple of reasons.
Knights’ profitability seems to have worsened since its flotation. On a statutory basis, profit growth has not kept pace with revenue growth:
Although Covid-19 hit performance last year, I think the main reason for this decline in profitability is the ever-increasing set of costs relating to acquisitions. These are excluded from Knights’ underlying measure of profit but remain very material:
For a company that’s executing an acquisition-led growth strategy, I don’t think all of these costs should be treated as non-underlying. In my view, they’re clearly part of the cost of doing business.
We could argue that as the group’s scale improves and the pace of acquisitions slow, these underlying costs will drop out and profitability will improve. That’s perfectly plausible, in my view.
However, my second concern is that I’m not convinced a plc structure is ideal for services businesses that have traditionally been operated as partnerships.
In general terms, I think the partnership model for professional services firms creates a balanced alignment of rewards and responsibilities for partners. In contrast, I’d argue that a corporate structure introduces the risk of moral hazard.
More tangibly, I think that shareholder returns are likely to be limited by variable remuneration to fee earners, in lieu of partnership earnings.
I think we can see this with Knights’ dividend. Despite relatively conservative gearing and good cash conversion, consensus forecasts for 2021 and 2022 suggest that the dividend will be covered around five times by earnings in both years. That’s a pretty mean payout ratio in my opinion, unless there’s not really much cash to spare.
The bullish argument here is that Knights is preserving cash to use on acquisitions and support growth. I see that. But the accounts show that staff costs accounted for more than 60% of revenue. Each acquisition brings more fee earners, so I expect remuneration as a percentage of revenue to remain high.
Final thoughts: So far my scepticism has proved unfounded. Knights Group’s share price has risen by around 150% since its flotation in 2018 and no problems have yet emerged.
However, the stock now trades on around 20 times 2022 forecast earnings and offers a yield of just 1%. Until I see evidence of a material improvement in profitability, this isn’t a situation that interests me.
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42 comments
Hi Paul, there was a Dialight (LON:DIA) webinar last week. It sounded from your comments above that you might have missed it so here is the link.
I see Bitcoin is rolling across the table heading towards the edge.
It will be interesting to see what Tesla did. Either Elon fibbed and they dumped bitcoin earlier (my hunch), in which case the memestocks crowd will desert him and possibly memestocks in general, or Tesla did not sell and just lost a tonne (Bitcoin below Tesla's announcement price as I type but who knows by time you read this, or I finish writing it), in which case institutional holders will desert him and futuretech stocks in general.
When Tesla rolls, so rolls Arkk et al, so rolls tech.
The dump-off begins?
It will be interesting to see what Tesla did. Either Elon fibbed and they dumped bitcoin earlier (my hunch),
Surely its highly unlikely that Musk would say anything factually incorrect (hmmm do i believe my own spill it is musk we are talking about ??) - that being the case i would think it highly unlikely any had been sold AFTER he started his "*hitposting" but before he clarified the situation. They might have sold something just before then though :) or just after his comments before the spike down.
Anything is possible with musk tho if he has lied or misquoted reality i presume he will be up infront of the sec in no time - probably no biggie for him and his paper/cash/crypto wad.
Afternoon all - any views on the £IDHC results today? Reads positively to me as a holder with expectation growth will continue. Muted reaction an opportunity? Revenue up 19%, Net Profit up 21%, Net cash up 78%. Positive outlook: targeting double-digit growth in 2021 and an EBITDA margin of c. 40%. Maybe a hint of slower growth than before, but I find the reporting really encouraging. #Integrated Diagnostics Holdings is one I expect to compound for years to come. We will see!
Hi MaxPower27, I hold Integrated Diagnostics Holdings (LON:IDHC) and was pleased with the results too. I liked their scalable model of labs and, like you, hope it will be one that grows. The approved dual listing in Egypt would seem to be a good sign and, I understand, would increase liquidity. I put in my notes that they have a 7-year growth streak. Hoping regional stability gives them the chance to perform and expand, although their diagnostic services would , I imagine, always be in demand.
Edit: It's a Mid Cap
Thanks Indie. Will be interesting to see impact of dual listing. Was also impressed with their management metrics in some of their presentations - gives me the feeling they are on top of things. We will see!
Profits in line with expectations set in Feb. Sequential H2 on H2 increase of 45% - so pretty impressive. Current estimate for FY 21 (EGP 708) effectively implies slightly negative growth assuming H1 is 75% of last H2 - which is what it has been. Still need to read the details but that looks almost certain to be too low,
This morning I 'attended' (via zoom) the AGM of EKF Diagnostics Holdings (LON:EKF) - full marks to those who encourage companies to have greater engagement with PIs, in this case Walbrook PR. Also this morning I find that the previously investor-shy Driver (LON:DRV) (last results presentation for analysts only) will be giving an investor presentation at its interim results next month (credit to Equity Development).
The EKF meeting gave more light on the board changes. The incoming CEO (current head of the Group's US operations) is based in the US for much of the year but spends time in Wales (where the company's HQ is) and to prove it his Welsh accent does not have an American twang overlaid! 57% of revenue last year was in the US and that will probably increase sharply so that makes sense. He was also given most of the credit for the deal with the 'large customer' that we are not allowed to name (but timarr has).
Is it worth contacting Walbrook PR to be able to Zoom-attend future Ekf Diagnostics Holdings (LON:EKF) meetings? Would have tried to attend if I had known this was possible.
EKF Diagnostics Holdings (LON:EKF) have advertised meetings in 'Notice of....' RNSs:
https://investegate.co.uk/ekf-diagnostics-hldg--ekf-/rns/notice-of-results/202103030700099258Q/
https://investegate.co.uk/ekf-diagnostics-hldg--ekf-/rns/posting-of-annual-report--accounts---notice-of-agm/202104230700073690W/
This morning they said that there would be a roadshow beginning Monday 7th June so suggest you look out for that.
For all Angle (LON:AGL) followers. Still looking for that Finncap alleged valuation / target valuation to be realised, and fell off a bit today. I have tried to addsomething to the Discussion page for Angle (LON:AGL) which covers a letter I wrote to the CEO last week, and the response which I read as positive for £AG. Failed, so seeking forgiveness from other contributors not interested in Angle (LON:AGL), here it is:
I was concerned about the effect of the negative results of the long term study on improved identification of ovarian cancer announced on 13th May. I wrote to the CEO of Angle (LON:AGL) to ask for their thoughts, and received this reply from the Head of Investor Relations.
Thank you for getting in touch. Andrew asked me to respond. We don’t believe there should be any impact on the market’s view of ANGLE as a result of this news.
The failure of this large screening study, whilst disappointing for women who may be at risk of ovarian cancer, is not a surprise to us especially given the previously reported results. Current diagnosis, as employed in this study, relies on imaging and elevated levels of serum biomarker CA-125. CA-125 can be elevated in healthy women for numerous reasons which makes it a poor analyte for detecting cancer. As a result, tests focused on CA-125 have poor specificity (false positives) in early-stage cancer.
As you know, ANGLE’s efforts in ovarian cancer are not focused on asymptomatic screening. Our clinical verification study, which is expected to report headline results in Q4 this year, is designed to establish the combination of Parsortix and our proprietary molecular analysis tool HyCEAD as a test to triage women with pelvic mass prior to surgery, to ensure that women receive the appropriate treatment while saving healthcare resources. Our test is measuring CTCs, which is a specific analyte (i.e. low false positives). Our previous studies have already demonstrated excellent sensitivity and specificity (AUC-ROC of 95.1% accuracy). Similar results in the ongoing study would position our test as ‘best-in-class’ and enable launch of a laboratory developed test from our newly established clinical labs around the end of this year. The molecular analysis could yield important information about the biology of the ovarian cancer allowing targeted therapies to be used which could improve outcomes.
Kind regards Andrew Holder Head of Investor Relations
Parsortix has been around for a long time. Angle acquired it years ago. Sorry if I sound jaded but I was interested five (?)years ago. If I remember correctly Microfluidics is the name of the field they are in and it was when I started investigating their competitors that I lost interest. I may be wrong but I just can't summon the energy to investigate them again.
Good luck, things may have changed. I'll say no more.
I see that £PCF has suspended trading in its shares pending a review of financial controls and reporting. Hopefully none of the posters on here are impacted. fortunately I don't hold at the moment.
PCF (LON:PCF)
I hold unfortunately for me - can't blame anyone other than me for holding this one there has sort of been clues here that there could be issues here - ignore the red flags and you only have oneself to blame - not good though that for what should be a reasonably simple business model they are in this situation. It's annoying when well paid bods can't get the basics right for whatever reason.
Anyone interested in premium single malt scotch? PrimaryBid are offering shares in the upcoming AIM IPO of the Artisinal Spirits Company, owner of the Scotch Malt Whisky Society. Think of the Naked Wines (LON:WINE) business model but for single malt whisky rather than non mainstream wines. Perk/requirement for applicants is to join the SMWS and receive some appropriate freebies and ongoing membership. More details including financial info (including a useful Edison IPO research report) on the PB app. Applications required by May 21st. Probably not one for me - been teetotal for the past few years!
Gus.
Gus, here's a overview of The Artisinal Spirits Company by the MD, as you say an online membership club to buy single cask Scotch malt whisky. Video & podcast.
The capital raised will be used to finance the growth of the business over the next 2-3 years, including investment in stock, supply chain efficiency; membership promotion and recruitment; selective investment in existing and new venues and investment in brand and digital development.
As you say, available though Primary Bid.
Benchmark Holdings (LON:BMK) interim results presentation to analysts, 18.5.21 by Trond Willliksen, CEO, and Septima Maguire, CFO. Good H1 performance with revenue growth +11% and Adjusted EBITDA +13% reflecting a strong performance in Advanced Nutrition and solid trading in Genetics and Health. Significant progress towards commercialisation of BMK08 and Clean Treat. Positive outlook and trading in line with market expectations, with good revenue visibility for the second half. Video & Podcast.
Forthcoming piworld webinars:
(As mentioned above) Stockopedia/piworld StockSlam is tonight at 6pm. Register here.
Cerillion (LON:CER) Interim results webinar following excellent results earlier this week. Thursday 27th May, 4pm. Register here.
Ig Design (LON:IGR) Full year results webinar on the day of results, 15th June, 12 noon. Register here.
Michelmersh Brick Holdings (LON:MBH) investor webinar May 18th, 10am. Although hit by CV19 for FY20, going forward the sector looks to be a beneficiary. Register here.
Here are my SCVR heat maps for today (prices as at ~9:15am).
I share these heatmaps with the intention of giving a visual indication of what is going on in the SCVR world: who’s reporting (and it's impact on the share price); and what’s moving more than 'normal'. There are no associated recommendations, implied or otherwise, just information. How, or indeed if, you choose to use that information is up to you. Please feel free to ignore them if you don't find them useful.
Please read my heat map thread for a great deal of explanation of how the heat maps are formed and how I use them to guide me with my research, and for a full key to the contents.
I very much welcome feedback so if you do have any feedback, not already covered in the heat map thread, it would be very helpful if you could post your comment in the heat map thread rather than the SCVR thread. The more specific and constructive the feed back is, the more that likely it is that I will be able to act upon it. Thank you all for the feedback so far.
Small / Micro Caps reporting today:
Big movers today in the SCVR world (moving more than a 20d EMA of the ATR against either yesterdays close, or today's open):
Warm regards, stay safe, and best of luck!
greensiax
Hi All, here's my take on the Dialight (LON:DIA) chart, for anybody interested.
This is on the weekly, as I note the Daily chart is a bit 'sketchy' - seems to have quite a high spread and low liquidity, so not something that I personally will get in to, but more suited to a buy-and-hold methodology.
The key resistance area to break is 340p-360p IMO, this area has acted as support or resistance a few times going back to late 2018.
Ideally, I think a consolidation around the current price levels would be good, before a push through and close above 360p on volume.
If there is an immediate push through this level (I note SP up +6.49% at the moment), there may be a re-test of the 360p level before upwards momentum continues.
Price is currently above the weekly 10SMA, and the 30SMA, but the averages are not yet moving up so technically its still in a stage 1 consolidation.
Welcome to the SCVR Roland.
Today's Ekf Diagnostics Holdings (LON:EKF) AGM update is rather more than the normal cursory message as it sets out a new strategy to 2024, a bunch of board changes to execute the strategy and an update to the bonus scheme. The latter, not coincidentally, will likely end the odd situation with the previous one that directly incentivised the executives to get the company taken over. The implication seems to be that the company is eyeing a long-term, profitable, dividend paying future.
There's a lot to unpick in it, but this statement is interesting:
We are already in discussions with our private sector partner, with whom we have a recently signed, multi-million dollar global supply contract, regarding the expansion of our support beyond their world-wide COVID-19 testing programme for their staff, to supporting a much broader commercial testing capacity to cover other areas of infectious disease, chronic disease and general health and wellness.
https://www.investegate.co.uk/...
The "private sector partner" is believed to be Amazon.
I also note that the EKF / Mount Sinai spin off Trellus Health is destined for AIM at the end of the month.
timarr
Yes, the Ekf Diagnostics Holdings (LON:EKF) AGM statement is well worth reading. There's also this: "Strong trading continues into the second quarter 2021 and the Board is now confident that trading for the full year will be comfortably ahead of already upgraded management expectations."
Morning Paul and Roland. Would welcome your thoughts on Premier Foods (PFD). Results look good. Conscious its now above your normal market size, but you have covered it before in the past and still think the recovery still has some mileage left in it.
Seconded Premier Foods (LON:PFD) FY results. Look good with additional benefit of a 1p dividend, first for 13 years
cheers
Francis
Premier Foods (LON:PFD) is a bit big for us, at £875m market cap. I know Jack mentioned a disposal it did late last year, but I stopped covering it when the price more than doubled, taking it from c.£400m to the current £875m size.
If you want to look at a small cap foods company, check out Finsbury Food (LON:FIF) (I hold) - this one is off the radar, and looks really cheap to me. Could be a bid target maybe? Its balance sheet is reasonable too.
https://www.stockopedia.com/co...
Thanks Paul I will have a look.
It looks a solid set of results
I have held Premier Foods (LON:PFD) for a while now (~5% portfolio) based on a long term turnaround and with the debt continuing to go down and the pension being managed downwards too, so slowly going from a single digit to double digit PE rating.
I look at the dividend as a nice bonus, but was not expecting for it for a couple of years, I was hoping that the focus was on clearing debt, but I guess this then adds this to "dividend payers" screen and funds, so maybe will get a little lift from funds thinking to add.
Tommy
The refinancing of its £300m 6.25% interest 2023 debt is obviously very important.
Suggestion here...
https://www.globalcapital.com/...
is that interest rate may go down to circa 3.75%. If so, this would be a £7.5m p.a. benefit to Premier Foods (LON:PFD) which would be helpful to their annual profits.
Morning Paul and Roland. Would welcome your thoughts on Mti Wireless Edge (LON:MWE) please.
Morning all,
Another excellent update from £SAG!
Still well under the radar of most investors, i feel...
Regards.
My morning smallcap tweet: Dialight and Knights bright
Chamberlin (LON:CMH) Creo Medical (LON:CREO) Knights Group (LON:KGH) Dialight (LON:DIA) Sigmaroc (LON:SRC) Tirupati Graphite (LON:TGR) IXICO (LON:IXI) Science (LON:SAG) EKF Diagnostics Holdings (LON:EKF), Alliance Pharma (LON:APH), Safestyle UK (LON:SFE)
Chamberlin (CMH) wins 3-year contract to supply components for diesel engine generator. Also "existing Tier 1 customer has included the Company on a new low volume, high value 5-year programme to manufacture turbocharger bearing housings for a leading luxury sports car manufacturer, with supply commencing early 2022." Russell Ductile Castings order book strong. [SP=12.2 Cap=8m]
Creo Medical (CREO) Q1 ahead of management's expectations, hikes FY(Dec) rev guidance by at least 10% from £20.1m. [SP=192 Cap=303m]
Knights (KGH) guides FY(Apr) rev above market consensus of £100.8m. Expects to make acquisitions. [SP=434 Cap=359m]
Dialight (DIA) trading in line, orders ahead of mgmt expectations. [SP=320 Cap=104m]
SigmaRoc (SRC) guides last 4 months trading ahead of mgmt exp. [SP=82.5 Cap=231m]. I hold.
Tirupati Graphite (TGR) has filed an application to trade on the OTCQX Market. [SP=95.41 Cap=82m]
IXICO (IXI) wins contract to provide neuroimaging services for a Phase III clinical trial. No £££. [SP=87.5 Cap=42m]
Science Group (SAG) guides H1 adj op profit up 30%. "This is a particularly notable performance since H1 2020 reported a record AOP for the Group and the current year includes a significant currency exchange rate headwind" [SP=350 Cap=144m]
EKF Diagnostics (EKF) CEO steps back to NED from Oct. He is thanked. 2 NEDs to leave. [SP=68.2 Cap=310m]
In line: Alliance Pharma (LON:APH) Safestyle UK (LON:SFE)
Hi Mr C,
Ixico (LON:IXI) did state the value of their new contract (new field, existing customer) - £0.5m over 4 years. I hold
cheers
Francis
No longer a small cap, but “golden egg” award for simplicity and clarity of homeware specialist Dunelm (LON:DNLM) trading update this morning.
https://www.investegate.co.uk/...
Quite good numbers too and another data point for status of the U.K. retail sector.
Gus.
New Capital Employed just published featuring Shree Viswanathan, who is the founder of SVN Capital.
He walks us through his thesis for investing in two companies, both of which are high quality compounders - Evolution Gaming and Copart Inc.
You can listen here - https://podcasts.google.com/fe...
Welcome Roland
Management changes and trading update from Ekf Diagnostics Holdings (LON:EKF) https://www.stockopedia.com/sh...
"After multiple upgrades last year and a step change in year-on-year performance, the announcement in March of a multi-million dollar contract expansion for the supply of sample collection devices to a large multinational customer drove a further material upgrade to revenue expectations and a significant one for profit for 2021. The March upgrades were based just on visible orders under the supply agreement and a continuing conservative approach to forecasting on the core business. Strong trading continues into the second quarter 2021 and the Board is now confident that trading for the full year will be comfortably ahead of already upgraded management expectations."
Good morning, Paul and Roland. I know Paul doesn't cover miners but wondered if Roland might feel able to comment on the Tharisa (LON:THS) update this morning. On the face of things, very good news for holders.
[EDIT] I hold ... and welcome aboard Roland!
Isn't that a profit warning? The forecast I have for EPS is 56c for the current year. The RNS suggests 22ish cents for the interims. Capex is heavy, too. It still may be a bargain, however.
[I don't currently hold.]
Its for first six months. Bear in mind first quarter had much lower basket price than present. Second half will be much higher if basket price remains at current level.
Not sure the Tharisa (LON:THS) update is necessarily a miss - the 22-23 cents figure is for six months against full annual forecast of 51-56 cents. Given the 6 month’s figure is several multiples of previous year’s equivalent eps, the rate of growth is such that they may well be on course to meet or beat expectations for the full year. I guess the share price reaction after the market opens will tell us.
Gus.
Re Tharisa (LON:THS) in April they said their average PGM basket price was $3,290 per oz in Q2 which was a 37% increase over Q1 and that the current April spot price was $4,011 per oz.
So yes just multiplying the first half by two isn’t likely to be correct.