I Read The News Today Oh Boy! 30-Apr-2019

30th Apr '19 by matylda

9 comments 2166 reads

Morning all!

Focusrite ( Focusrite (LON:TUNE) ) – 517p – £300m – PER 28.5

Interim Results For The 6 Months To End February 2019 – Revenue up 4.1%, PBT up 22.6%, EPS up 23.6%, Net Cash at £26.2m and the Interim Dividend is up 20%.

Still lots to like here and these are impressive results but I do reckon it's fairly valued here.

Park Group ( Park (LON:PARK) ) – 75.5p – £141m – PER 12

Trading Update For The 12 Months To End March 2019 – Trading ahead of expectations, but due to new IFRS15 reporting PBT to be marginally below market expectations. Will also be moving costs and other one off costs this year.

I am as keen here today as I was yesterday, not for me at present. Could be OK as an income play (4%+ Yield and decent Net Cash, although there's no mention of it in this update, which is weird considering it's significance), perhaps!

Solid State ( Solid State (LON:SOLI) ) – 465p – £39.5m – PER 13.5

Trading Update For The 12 Months To End March 2019 – Revenue ahead of expectations (£56m), PBT to be slightly ahead of recently upgraded market consensus of £3.5m.

Looks quite good, will be keeping an eye out for updated Broker notes here today.

As always, all comment most welcome!

Unlock with Email

Unlock with Google

Already have an account?
Login here

MrContrarian

30th Apr '19

My morning smallcap tweet: Changla shags shareholders

Independent News & Media (LON:INM), Scisys (LON:SSY), Chagala (LON:CGLO), Solid State (LON:SOLI), Park (LON:PARK), Orchard Funding (LON:ORCH), Oleeo (LON:OLEE)

Independent News & Media (INM) 10.5c recommended offer, a 5% premium. INM confirmed offer talks a month ago.
SCISYS Group (SSY) further €9.7m orders for Galileo Ground Segment work. Order does not alter existing market guidance.
Chagala Group (CGLO) will delist on June 3, without the need to trouble holder with a vote. That's how they do things in Kazakhstan. Cites management time and legal and regulatory burden, lack of liquidity and they don't give a toss.
Solid State (SOLI) guides FY adj pretax slightly ahead of recently upgraded market consensus forecasts which are £3.5m.
Park Group (PARK) FY trading ahead of mgmt expectations but IFRS15 adj pretax marginally below market expectations of £12.9m. Blames "particularly strong growth in our more profitable card business...[effect of] IFRS15 is now expected to be approximately £0.5m higher than previously anticipated, as a greater proportion of profit will be deferred until the current year." Outlook: profitability will be lower in the current year before growth resumes thereafter due to costs of running two sites while co moves to new offices, as well as additional technology and marketing investment.
Orchard Funding (ORCH) has withdrawn its application for a banking licence because its considering acquiring an existing bank with a licence. If that does not proceed it will re-submit its application for a banking licence.
Oleeo (OLEE) H1 rev up a touch but pretax down 40% due to higher employment costs. Gloomy outlook: "a competitive market place, known reductions in client subscriptions, and economic uncertainty provide continued pressure on sales and profits and a highly challenging and uncertain outlook for the foreseeable future."

Albertos

Chagala (LON:CGLO)

Nice spread - 143%

andrea34

Focusrite (LON:TUNE) remain as overvalued as they were, with such meagre increases in revenue and EBITDA... and perhaps the market is finely waking up to this with the price currently down 3%

Having bought Solid State (LON:SOLI) only last week, and wondering how much more it had to go, I am very happy with today's update. The Q4 update, LFL figures, and order book in particular all bode very well, as does the excellent cash conversion.

I just don't see where the long term growth for Park (LON:PARK) is going to come from.

There is a good sounding update from Breedon (LON:BREE) with turnover +50% so far this year, lfl +10%... though debt has shot up after the Lagan acquisition, and the business is a bit weather-affected

gary3980

Focusrite (LON:TUNE) - very quick calculation I get current year to be on track for a PE - stripping out cash - of less than 19. This is based on similar H1/H2 weighting to last year and H1 margins being maintained, giving conservative PBT of £14m.

Pretax forcasts of £11.91m of which £7.15m has already been done. Last year PBT was £11.67m with £5.83m coming from H1.

On the plus we have new product development, on the downside uncertainty over tarriffs.

I hold.

matylda

Re: Focusrite (LON:TUNE) - It is in fact the <10% EPS growth forecast for next year and the year after that puts me off.

With Solid State (LON:SOLI) it's the negative EPS growth forecast for 2020E that puts me off, not exactly inspiring that the broker doesn't even see growth 2 years out.

Just my simplistic take on both, which keeps me out of both.

Breedon (LON:BREE) is not a company I have ever looked at.

Please can you tell me where you get your information for broker forecasts Matylda? I don't ask this because I doubt anything you say, but more because I am interested from a general point of view. In relation to Solid State (LON:SOLI) the broker forecast seems a bit low considering the very positive updates they have issued, including the increased order book, and also their recent acquisition.

I did mention this yesterday, Research Tree.

Figures from FinnCap today for 2018A, 30.9p, 2019E, 34.5p, 2020E, 33.9p.

Hope it helps.

Steve L

Microcaps that are sparsely covered by analysts offer compelling opportunities as their forecasts (if there are any) are much more likely to be inaccurate, especially if the company is trading well. This can lead to earnings upgrade surprises which can be a catalyst for share price movements. In addition to the difficulty associated with predicting earnings and revenues 1 or 2 years out that is applicable to all companies, there is relatively little institutional investor interest in microcaps, especially those whose shares are illiquid, therefore analysts forecasts are more likely to be outdated as there is little institutional demand for them. As Peter Lynch said, "If you find a stock with little or no institutional ownership, you've found a potential winner. Find a company that no analyst has ever visited, or that no analyst would admit to knowing about, and you've got yourself a double winner". What makes Solid State (LON:SOLI) a little more trickier is that according to stockopedia it appears to be covered by 3 brokers-more than the traditional microcap- therefore if you are an adherent of this investment style you have to ask yourself how much more (or less) likely those forecasts are to be wrong.

William K

3rd May '19

Re Park (LON:PARK) - I am as keen here today as I was yesterday, not for me at present. Could be OK as an income play (4%+ Yield and decent Net Cash, although there's no mention of it in this update, which is weird considering it's significance), perhaps!

Good decision to hold back! Price has fallen from 75.5 pence to 63 pence (down 17%). Seems to be related to a 'marginal drop in profit expectation'.

I Read The News Today Oh Boy! 30-Apr-2019

Unlock the rest of this article with a 14 day trial

About the Author

Matylda

9 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...