… amid signs that the worst may be over, according to a survey.
The Markit Purchasing Managers’ Index rose to 47.9, from 46.1 in December. The index has been below the 50 mark that separates growth from contraction since August 2011. Markit’s chief economist Chris Williamson said the January data pointed to the eurozone returning to growth in mid-2013.
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Last week …
… the strength of the equity trend was tested. The surprise fall to 0.1% in US GDP could be a statistical blip while slow US jobs growth, ‘kinda’ insures that the Fed will continue its loose monetary policy including it’s $85bn a month bond purchases, thus helping equities pass the bear test. The FTSE100 improved 1% to 6347, the FTSE250 up 1% and the Aim All Share at 740 was unchanged.
This week …
… could show continued flat economies in UK and the Eurozone. In the UK, there are PMI figures on Construction and Services on Monday and Tuesday, Retail Sales on Wednesday and the BOE Interest Rate Decision reported on Thursday. Also on Thursday, the new BOE Governor, Mark Carney comments to a Treasury Committee may give an insight into his thoughts on Monetary policy (nterest rates and inflation). Germany’s Industrial Production is reported on Thursday while in the US, Balance of Trade and Consumer Credit is on Thursday and Friday. The bullish market seems set to continue.
Next Fifteen Coms. (NFC) – £60.1m at 100.5p
Digital Services at PR Prices
The Annual Trading update reported a good start for the financial year to July 2013. This reiterates the success of the strategy of moving away from traditional PR to being an international group focused on social and digital marketing services. NFC is an acquisitive marketing communications group predominantly serving clients in the technology and consumer sectors. The Update reported strong growth in its social and digital services as clients move their marketing spend toward this area, while traditional PR services are declining as a proportion of group revenue. Bourne, the full-service digital agency acquired by Next Fifteen in 2011, and has recently been integrated into long-established subsidiary, Bite Communications, which will help accelerate Bite’s global transformation from strategic communications consultancy to a marketing services agency. The Fraud in a US office is behind the company with the cost around £0.3m. Interim are reported in April and full-year profits are forecast at £10.5m for an EPS of 10.7p, which gives a prospective P/E of 9.4x, while yielding 2.5%.
After investing £5.7m in acquisitions net debt was £2.6m at the 2012 year-end but should fall to under £1m from cash flow.
MEDIWATCH (MDW) – £3.2m at 2.25p
Finals to October 2012 from this urological diagnostic company reported sales down 5% to £10.1m while PBT falling to £91k from £195k. Gross margins of 38% are swallowed by administration costs which increased 4% to £3.87m.The present and historic lack of turnover growth despite international expansion and an inability to cut administration expenses have contributed to the lack of earnings growth over the years. MDW have developed a range of point-of-care medical equipment for the diagnosis of urological disorders, because it is an age related disorder it’s an area of increasing need. Clients are mainly in Europe and the US where markets are reported to be tough although traditionally urology equipment purchasing is uncorrelated to the economy. Expansion into Asia is a key target and new dealers have been appointed while regulatory approval is sought from China. During the year a further £710k was invested new product development some of which will in launched in March and May. The new products and new markets could see an improvement although there is a long way to go. Back in 2008 profits were £410k on £9.3m turnover which gave a P/E of 12x. Mediwatch does its own IP but it’s future maybe as part of a bigger group which has Asian and US distribution. The CEO recently increased his stake to 17.26% at 2.25p a share.
Net borrowings are £1.1m with facilities recently renewed.
dAmino Technologies (AMO) – £42.7m at 77.5p
Not to be missed
A strong improvement in margins helped Amino’s pre-tax profit jump from £1.8m to £2.9m in the year to November 2012. Revenues from this digital entertainment solution supplier for IPTV and multi-media were lower as low margin sales were not repeated. Operating margin jumped from 3.4% to 6.9% and should continue to gradually improve. The US is the main revenue generator in but business is generated world-wide, although Russian revenues were minimal in the second half. During the year, it was decided to focus all product development around the proven Aminet software stack which has been at the core of the Company’s research and product development for over 10 years and it can aligned functionality to a price point. Amino continues to win new business from new and existing customers. Profits to November 2013 are forecast at £3.2m for an EPS of 5.75p and a prospective P/E of 13.5x. The dividend has been increased by 50% to 3p a share so yielding 3.8%. Directors have been recently paying 75p per share to increase their holdings.
The balance sheet is strong with net cash of £17.1m at the end of November 2012 which is 32p a share.