Google invested in the Lending Club, the largest peer-to-peer (p2p) platform in the world and it could be ready to take on mainstream banks. Its not Wonga and the Archbishop of Canterbury is likely to approve. .
where shares can be bought and sold from as little as £8 a trade.
It is an informative share trading website.
Last week …
… the dominant economic feature was Chinese manufacturing, which fell to the lowest level in 11 months. The FTSE100 fell by 1.1% to 6,555, the FTSE250 decreased by 0.6%, with the Aim All Share at 718 flatly unchanged. UK GDP grew at the predicted moderate rate of 0.6% and the UK economy remains 3.3% lower than it was in early 2008.
This week …
… sees plenty of news but for a holiday depleted audience. The UK BOE monthly Interest Rate meeting is on Thursday and similar meetings are being held in the US and the Eurozone. Markets have been guided on on monetary policy expectations, but the amount of QE is a highly sensitive market driver. The US also reports GDP on Wednesday and Employment on Thursday. There is plenty of room for volatility within the flat trend but markets could ease.
Scientific Digital Image (SDI) – £4.85m at 20p
Growth not hard to see
Finals to April from this supplier of digital imagery scientific instruments reported a 6.9% increase in turnover to £7.7m but an 854% leap in EPS to 1.01p. A £850k fund raising in June 2013 at 15p will clearly dampen EPS growth this year. PBT was reported at £213k compared to £20k although there was a near £60k reorganisation charge last year. These specialist instruments are sold world-wide and gross margins are 57%. The manufacturing has been restructured and new systems have been implemented which should result in greater efficiencies and cost savings. The Chinese State Food and Drug Administration have ordered the Synbiosis System which allows microbiologists to automatically count and measure microbial colonies used for microbiological testing in the food, water and pharmaceutical markets. These systems benefit users by reducing labour costs, providing more reproducible results, and by automatic recording data for audit purposes. Microbiological testing is increasingly important and is becoming highly regulated. R&D was £0.6m representing 7.8% of sales and a new PXi Touch system for image capture is selling well. For the April 2014 year end profits of £0.4m would give an EPS of 1.7p for a prospective P/E of 12x. Ken Ford, the Chairman and former Corporate Financier states that acquisition are part of the growth strategy.
Cash flow improved and expensive debt has been replaced with equity since the year-end. The improvement in working capital should help fund further Asian growth.
Allocate Software (ALL) – £55.2m at 86p
Organic growth enough
Workforce optimisation software provider, Allocate Software had a much stronger second half in the year to May 2013. Allocate continues to gain new deals for its healthcare software, which dominates the group. Hospitals need to be more efficient and reduce costs and Allocate’s software helps them do this while maintaining safe staffing levels. Revenues were 1% higher at £37.1m with growth in healthcare from £26.7m to £29.3m offsetting a decline in the defence sector because the previous period benefited from a one-off contract in Australia. The maritime division also grew its revenues but it is less than 8% of the total. Higher costs meant that profit fell from £6.2m to £4.5m. The pipeline is strong particularly in the healthcare sector and deferred income is £2m higher at £14.6m. A higher margin cloud product has been launched for the healthcare sector and this will help to further grow recurring revenues, which were 47% of last year’s total. Profits are forecasts at £6.1m and EPS of 6.8p putting the shares on less than 13x prospective earnings, while yielding 1.6%.
Cashflow is strong and there is net cash of £9.1m and is expected to increase to £13.1m by May 2014.
Corero Network Security (CNS) – £12.2m at 14.25p
Cash the security for growth
The GM, this Wednesday the 31st of July should pass the resolution to dispose of its Business Systems division for around £11m. The price at an equivalent to more than 2.2 times 2012 revenues seems fair enough. The net cash of £10.9m is not far short of the current Mkt Cap and allows CNS to concentrate on its core business. The network security market remains highly attractive and proceeds will fund indefinitely the continuing enhancement of the Corero Network Security division. The core strategy has been to establish a strong presence in the network security market by way of organic growth and strategic acquisition. The launch of the next generation of First Line of Defence (FLoD) product for cloud and OEMs should be before the end of the year. A loss of £3.8m is forecast for the December 2013 year-end.
The net cash is $15.2m (£10m) and it seems likely that the acquisitive growth strategy will be accelerated.