Character Group (LON:CCT) (CCT, 173.0p, £42.96m), the designer, developer and international distributor of toys, games and giftware, reports prelims for the year ended 31 August 2010 are ahead of market expectations. The group has moved back into profitability with PBT of £7.6m (2009: -£2.2m) and EPS of 20.1p (2009: -4.1p) on a 24% uplift in revenues to £85.2m (2009: £68.6m) driven by the increase in product offerings. A four fold increase in the DPS to 4p (5x dividend cover) signals the group’s confidence in growing profitability. The outlook statement is positive. With excellent brands including Bob the Builder ®, ZhuZhu Pets®, Peppa Pig®, Doctor Who®, H. M. Armed Forces Collection™, Fireman Sam®, Postman Pat®, Let's Cook®, Scooby-Doo®, Christmas is a key period for the group. We are excited about the group entering the US market, where we see huge opportunities in the long-run. The group continue to widen their product portfolio and wide their sales distribution in the UK and internationally. The increases in raw material and freight costs are already feeding through and next year's programmed rise in UK VAT will add some pressure on margins in the short-term. There is no doubt that these challenges will prove tough across all businesses over the next few years. However, we continue to believe the group is undervalued trading on a prospective PER of 7.6x with a yield of 2.3%. We reiterate our BUY recommendation with a target price of 198p.



Contentfilm Plc (LON:CFL) (CFL, 1.15p, £2.0m) Interims to September 2009 are no surprise with flat normalised pre-tax losses of £0.1m on relatively flat revenues of £6.6m (H109: £6.5m). The digital division is expanding its library of titles. Market conditions remain challenging. The outlook statement is relatively positive given the anticipated stronger performance in H2 driven by visibility of library sales and major TV series being delivered. However, slippage in timing of delivering the main titles could deliver a weaker than anticipated H2 performance. The group remains highly geared with net debt of £19.7m (2009: £20.0m). The latter combined with the foreign exchange exposure encourages us to retain our SELL recommendation.



Forbidden Technologies (LON:FBT) (FBT, 36p, £31.02m) has signed a license agreement with Siemens in India who will host the ForScene video management/editing system.…

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