UK Investor Show - Mark Slater (Part 2: Share Picks)

Tuesday, Apr 16 2013 by
UK Investor Show  Mark Slater Part 2 Share Picks

This is a continuation of an earlier post (part 1). I have split them into two parts, as the length of the post was causing formatting problems.


"What would I buy today?"

Mark Slater then circled back to his stock picks, and zoomed in on his current favourites, as follows:


Entertainment One (ETO)

Film distributor

Peppa Pig is doing well

Single digit forward PER, unusual for growth company.

Shares held back by large Sep 2012 Placing.

Modestly geared.

Very low risk.

Benefitting from move online, e.g. NetFlix.


My comments:

I like this one, and the forward PER does indeed look good value for a growth company. I shall wait until the next set of results, due on 23 May 2013.


Huchison China Meditech (HCM)

Share price 541p - market cap £280m

"There's normally something wrong with overseas companies that want to List in the UK"

I couldn't have put it better myself, so I switched off and didn't take notes on this company, but mention it for completeness.


Alliance Pharma (LON:APH)

Share price 36p - market cap £90m

Last two years fairly quiet

Problems largely behind them now.

Buys up old drug rights cheaply.

On a PER of 10.5.

None of brokers have included any growth from acquiring new products.

Growth should actually be double-digit.


My comments:

Very impressive operating profit margin, so they have a lucrative niche. Once debt is factored in though, it looks reasonably priced to me, rather than particularly cheap.



Restore (LON:RST)

Share price 125p - market cap £142m

  • Document storage company
  • Cheaper for e.g. solicitors to securely store documents, than more expensive scanning.
  • Buys smaller companies.
  • Low PER of 10.8.
  • More deals likely.



Cineworld (LON:CINE)

Share price 278p - market cap £415m

Has 25% of the UK cinema market Resuming its roll-out, currently has 78 sites. Will add 4 new sites this year, and 5 each year thereafter. ROCE is 20%, so roll out makes commercial sense. Managing its estate well. Digitising screens, so they can be used for other purposes. 11% p.a. growth. PER is quite low at 11.8 Good dividend yield of 4.6%


My comments:

As with almost everything, the shares have had a good run, so the question is whether they are still good value? The PER looks reasonable,…

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5 Comments on this Article show/hide all

CantEatValue 15th Apr '13 1 of 5

I don't like Entertainment One (LON:ETO) for the following reasons:

1) Heavy dilution has pretty much meant no growth in per share attributes. Sales per share were £2.63 in 2009 and were £2.58 in 2012. There has been further dilution since then. Amazing growth if you can completely ignore heavy share issuance, which you can't.

2) Aggressive profit accounting. The company has since 2009 been a net consumer of cash to the tune of 18.7p per share (I'll ignore 2008, which makes this figure even worse, because I'm being generous). All the 'profits' are accounting ones and the company has not translated these in to cash. Perhaps it's a case of the business needing to consume lots of cash in order to finance growth (As per point 1 - what growth?!) but that's not a positive sign.

As I'm a fan of businesses that end the year with more cash than they started with or can demonstrate that their extra investment is leading to genuine growth (ETO has failed both these metrics since floatation) ETO doesn't interest me and I think it's one Slater's weaker picks. My favourite is £C21 (the only one of his I own) so I hope he's right there though :)

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andybe 15th Apr '13 2 of 5

Mark Slater also mentioned Restore (RST), records management/archiving. Market cap is £141m, they are growing through acquisition and the forward P/E is 11.7.

I see that on 20 March, alongside their final results for y/e 31 Dec 2012, they announced the acquisition of File & Data Storage Ltd for £6.1m, with the intention to raise £7m from institutional investors through a share placing. Net debt is £17.8m which looks a bit high for me compared to profit and forecast profit, although I haven’t looked at this company in any detail.

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Paul Scott 16th Apr '13 3 of 5

In reply to post #72511

Thanks for flagging up this omission. I did include Restore in the report, but it vanished at some point due to technical problems! So I've put it back in now, many thanks for flagging up this problem. I also didn't feel particularly warm about Restore when I looked into it following the meeting.


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bsharman 23rd Apr '13 4 of 5

I note that Mark didn't mention NCC and since the UK investor event the company has issued a warning on a lower than expected profit (3-4% below expectations). The share price fell on the news and is today trading at 111p. This is the first profit warning for 10 years and is due to "small, unrelated factors have held back the Group's overall rate of expected growth" any thoughts on NCC. Would this be a good opportunity to buy at a discounted value or perhaps there will be more warnings to come in the future...

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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