“We might have an unusual coincidence this year: a triple–dip recession and the FTSE 100 soaring past 6,500.”
The Sunday Times
There is indisputable weight of empirical evidence that leads to the definite conclusion that smaller companies simply have more room to grow and for share prices to increase.
In a former life I enjoyed being the Editor and main Tipster for Penny Share Focus. The challenge of trying to find and report unrecognised corporate value is a great fun and I have been encouraged by TradersOwn to repeat the process.
You are invited to click the link to www.tradersown.co.uk where shares can be bought and sold for £6 a trade. As encouragement to check-on this new informative share trading site there will be a speculative share tip from Tuesday 8.30, a tip where I think the potential for high reward more than compensates for the risk of you putting hard earned money into a small cap gold exploration share.
Last week …
… markets staggered forward with the FTSE100 at 6154 improving 0.5%, the AIM All Share at 736 was up a marginal 0.25%, while the FTSE 250 gained 1.2%. UK Inflation was virtually unchanged, Retail Sales volumes were down by -0.1% further evidence that GDP continues to bump along the bottom. In Euroland Industrial Production fell 3.7%, Germany forecast its GDP to grow by 0.4%. A spurt forward was the fall in US Unemployment to a five year low of 335,000 claimants.
This week …
… the warm-up to the main UK news, which is Friday’s GDP announcement, will be Employment on Wednesday and a State of the Economy Speech on Tuesday by the outgoing Governor of the Bank of England. It could be that on Friday GDP will have fallen back into recessionary territory with a -0.1% decline during the last quarter of 2012. Eurozone Consumer Confidence will be reported on Wednesday. Markets are likely to gently retreat.
UNIVERSE GROUP (UNG) – £7.7m at 4.13p
A very Good year
Following the ‘Ahead of Expectations’ Trading Statement in mid-December, a contract win was announced on the 16th of January. It is to supply 100 Petrol Stations in the UK with payment systems including hardware. Universe is a developer and supplier of payment and on-line loyalty systems and as a result of past divestment have a dominant position in UK Petrol Forecourts. The new contract, which came after the December year-end is to supply the Petrol Stations with terminals that incorporate remote diagnostics, and the ability to upload and download terminal configurations, parameters, libraries and applications, thus ensuring maximum ‘up-time’ for the terminal. In December Trading was reported to be ahead of expectations partly due to the early fulfillment of orders as well as a better sales mix and improved internal efficiency. Profits to be reported in March are currently forecast at £0.8m on £12.7m turnover giving an EPS 0.6p which makes a prospective P/E of 7x. As profits at the interims were £0.41m the risk seems to be on the upside. Directors acquired £20k worth of shares at 3.75p on January 11th.
Strong cash-flow reduced short term debt to £0.52m while a £1.65m fund raising in July 12 at 2.3p substantially repaid the expensive debt.
Empresaria (EMR) – £11.92m at 26.75p
Far East from dead
The recently reported annual Trading Update managed to impress after a year of share price decline. Empresaria is an international staffing group with revenues of £200m. Run along the lines of a cooperative with staff holding equity they operate in 19 countries with 800 staff. The Trading Update iterated that full year expectations would be meet and stated that trading in the UK (cir.35%) is stable and there is a resumption of normal business in Chile. There are improving prospects in Germany, which has been restructured and a strong performance reported from the Asian operations. At the interims operating profits improved by 6% showing the robustness of providing permanent and temporary recruitment in sectors such as Construction, Financial Services and Insurance. Other staffing services include HR consultancy, training and recruitment process outsourcing. The finals to December 2012 are to be reported on the March 20th and are forecast at £4.6m for an EPS 4.9p. This gives a Prospective P/E of 5.5x, while yielding 1.7%, the is a large discount to the Support Services average of 18x and reflects a combination of historic issues and perhaps the downside of decentralised reporting.
Net debt at the interim’s was £8.5m and higher than expected due to slow payers but debt is likely to be falling.
Regenersis (RGS) – £75.3m at 174p
Electronic products repair services provider Regenersis is on course to meet expectations for the year to June 2013. The trading statement on January 16th for the first half reported strong trading helped by a contribution from recent acquisition HDM, which operates in Spain, Mexico and Argentina. Organic growth was reported to be in double digits. The advanced solutions division is growing strongly on the back of initial revenues from its In Field Tester that enables remote fault assessment. Clients include HTC, Nokia, Samsung, Orange, John Lewis, LG, Toshiba and others. RGS helps its clients to deliver after market services to its customers. Through the provision of technical call centres or managing returns and repairs, the company supports a wide range of products including mobile phones, laptops and tablets, set top boxes, televisions and other electronic equipment. Regenersis has won a “very significant, multi-geography, multi-year contract” which is predominantly in emerging markets and the details are still being negotiated. Further acquisitions are likely as Regenersis follows its strategy of expanding in emerging markets. The interims are to be reported on 14th March. Full year, pre-amortisation profit is forecast to jump from £1.7m to £7.8m in 2012-13 giving a prospective P/E of 11x, while yielding 1.1%
Cash flow has been better than expected in the first half.Net debt was £2.9m at the end of June 2012 but that was before the HDM acquisition.