The FTSE 100 closed up 0.95% at 6070 , the FTSE250 increased by 1.78% and the Aim Index at 921 was barely changed. GDP figures for the UK showed 0.5% quarterly growth which is not far from annual expectations but the US economy growing at an annual rate of 1.8% is substantially slower than their 4th Qtr rate of 3.1%.
There are interest rate decisions on Thursday. The BOE and the ECB will announce their decisions and there is likely to be no chances. The UK economy is still deemed to be too fragile and inflationary pressure maybe decreasing while the European Bank (ECB) should leave interests at 1.25%. These are followed on Friday by US April Employment, where a slow down in growth to a 175,000 from a 216,000 increase in March can be expected. We anticipate markets moderately gaining.
Noble Investments (NBL) – £23.7m at 153p
Coins and stamps trader Noble had a strong first half which enabled it to increase its interim dividend by 30% to 1.75p a share. Revenue was down 8% but that was because of a large one-off sale in the same period of the previous year. That sale was low margin and that is why profit has jumped 40% £1.52m. Much of the growth in profit came from the auctions business. Baldwins is the company’s main brand and it has a strong reputation in the market. There has already been a highly successful auction in Hong Kong in the second half of the year. There are auctions in New York and London coming up. House broker WH Ireland has increased its 2010-11 profit forecast from £2.45m to £2.6m. The shares are trading on a 12x prospective P/E.
Net cash is £2.39m and there is also £1.1m invested in AIM-quoted Avrae Gold Coins.
Noble would like to be a consolidator in the coins market and move into other collectibles markets.
Avacta (AVCT) – £20.7m at 1.25p
Diagnostic equipment supplier Avacta Group is still finding it difficult to build its sales of the Optim analytical instrument but new distributors and partners should help to grow these sales. The most important of these deals is with US-based Pall Corporation who will distribute the Optim, which helps to reduce the cost of drug development by enabling the early analysis of drug compounds. Pall has no presence in this market but it does have a strong customer base in the pharma market. Revenues grew from £894,000 to £1m in the six months to January 2011. The animal health revenues were flat and the growth came in analytical instruments and contract research. The underlying loss fell from £1m to £537,000. Avacta has launched the AX-1 blood testing system for the animal market but it has yet to contribute to the figures.
Avacta raised £1.95m at 1.05p a share in January. Net cash was £2.51m at the end of January 2011. There is potential deferred acquisition consideration of £250,000.
Lidco (LID) – £26.5m at 15.25p
Heart monitoring equipment developer LiDCO is growing its revenues even though the previous year’s initial stocking orders meant that US sales were flat. Demand in this sector is growing rapidly. Sales of minimally invasive devices are forecast to grow at 12% a year. The European market alone is worth $100m. Revenues grew from £5.37m to £6.24m in the year to January 2011, while the reported loss declined from £1.55m to £490,000. LiDCO made a pre-tax profit in the second half of the financial year. Disposable sales were 26% higher last year. There are just over 2,000 monitors in use and that is expected to rise to 2,400 by next January.This will be helped by higher sales by Covidien in the US. LiDCO has agreed to distribute Argon products through its UK sales force. This should help to boost revenues and make a contribution to overheads. FinnCap forecasts a profit of £300,000 for 2011-12 which puts the shares on a P/E of over 44x. A new distributor should be signed up in Japan.
Net cash was £1.39m at the end of January 2011. Although LiDCO should move into profit this year it probably will not generate cash. The outflow should be small and then in 2012-13 cash should begin to be generated.