Market Snapshot:  Flat between the peaks

From OMG! on ADVFN a premium blog.

This week …

the Budget and Politics will be the theme for the UK. Markets would be pleased by a political savvy Budget and maybe willing to ignore some of the economics. The latest Employment figures are also announced on Wednesday.

The Euro news flow continues with Retail Prices Index on Tuesday, which should be up and Balance of Trade on Wednesday, which should be down. If so then both would be pointing in the right direction.

There is plenty of US news, which may provide evidence of economic growth and so supporting the increasing likelihood of a June interest rate raise.

A flat week seems the most likely outcome.

Last week …

the FTSE 100 at 6,740 was 2.3% off, the FTSE 250 decreased by 0.92%. The AIM ALL Share and FTSE Small Caps were both virtually unchanged at 0.03%.

The UK economy is spluttering back into growth in time for the election. Retail sales improved 0.2%, after a fall in January but Industrial Production at -0.1% and Construction output, down 2.4% are both perhaps ‘just’ pausing for breath.

The turning on of the QE taps was the thankfully the dominant Eurozone feature and not Greece’s debt negotiations. The Euro was down to a 12 year low against the dollar while with the Eurofirst 300 share index reached a 7 year high.

China’s news was mixed with fixed asset investment, retail sales and industrial production all growing at less than forecast but importantly Consumer Inflation rebounded from a 5 year low.

US markets are weakened by surprisingly Retail Sales were flat given the high dollar and low energy prices.


Pause for Thought

Growing Wealth Disparity …those on the highest incomes were in a better financial position today than before the Financial crisis but the reverse was true of those on lower incomes.

According to Research from the Social Market Foundation Think Tank


Previews

7Dig                     Finals should make a noise next week

STL                       Unchanged ahead of finals on Thursday

 

7Digital Group (LSE:7DIG) – 13.5p (13p-16p) – Mkt Cap: £14.37m

Next Results:  Finals Tuesday 24th March

7Digital was formed from a Reverse Takeover and integration into UBC Media in June 2014 when £5.7m was raised at 27p on a £16.5m purchase consideration and the deal was supported by industry players such as Dolby 3.8%, DC Thompson, 6.9% and Goodmans Capital 20.4%.  The acquisition created a business with significant experience in both digital music and radio as the two industries coverage.

Since the Interim’s in September a number of broadcasting partnerships have been concluded. Such as with the SBS who are one of the largest owners and operators of Radio Stations in the US. The partnership will create new music offerings such as radio streaming services to the Hispanic market. 7Dig are partners with Will.i.Am for the development of on demand music applications and operation of the music service.

The business model is transitioning rapidly from low-margin sales of downloaded music to the provision of a platform from which customers can quickly build new streaming services

7digital is the power behind innovative digital listening experiences. Its robust, scalable technical infrastructure and extensive global rights are used to create comprehensive music and radio services for leading consumer brands, mobile carriers, broadcasters, automotive systems, retailers, record labels, artists and agencies. Clients include Sky,BBC, Panasonic, Onkyo, Guvera, ROK Mobile, as well as Samsung, BlackBerry and T-Mobile. There are 5,000 hours of radio content, 1.7m monthly users of 7digital’s Music app andit owns a music library containing 29m tracks with 150,000 added every week.

The interims showed progress, as 7 Digital shifts from low margin content sales to high margin recurring platform licencing revenues. Turnover was down 11% to £5.1m, while gross margins improved by 6% to 49%. This gave a gross profit of £2.5m but a loss of £2.9m.  For the full year losses of about £4.5m are anticipated.

Financials

After selling £3.5m worth of Autioboom, 7Digital have 58m shares left worth cir. £4m and 8m warrants at 1.5p, which can be added to interim cash balance of £5.3m.This clearly reduces the strain on the stretched working capital where the ratio is 1.2x. There is no structured debt.

Trading Strategy

There should be sufficient cash for the year to fund winning further licensing deals perhaps with an added per-user revenue stream.

 

Stilo International (LSE:STL) – 2.5p (2p-3p) – Mkt Cap: £2.75m

Next Results: Finals Thursday March 19th

Stilo’s results are this Thursday. We reported last week that January’s Trading Statement for the year to 31 December 2014, reported that although profitable, revenues and EBITDA would be below expectations. The moderate easing of the share price was perhaps due to the £1m net cash held, which is after paying an interim dividend of 0.03p. After the Interims, the Chairman brought £24k’s worth of shares at 3p, taking his holding to just over 11%.

STL provide XML content processing technology and cloud content conversion services through Migrate. This is a cloud service that enables organizations to automate the conversion of their content to XML, providing for greater control over content quality, This can be sold as ASAS or on licence. It dramatically reduces the time and cost of conversion projects of ALL sizes, from just a few hundred pages, up to many thousands of pages, and enables very rich content — including text, graphics, tables and equations — to be converted with a high degree of precision and quality. Demand should grow as large organisations need to process ever increasing amounts of digital content and publish information to multiple media channels including print, web, CD-ROM, smartphones, ebook readers and mobile device. Stilo’s solutions are used by commercial publishers, technology companies and government agencies and include organisations involved in the production and maintenance of technical documentation.

Sales for 2014 were impacted by the shelving of a significant project by a major European customer.  The Company continues to trade satisfactorily and other customers include SAP, Intel, Atmel, IBM and Vestas.  Good progress is being made with the development of AuthorBridge, a new web-based XML authoring solution being piloted with a major customer in early 2015. Thursday’s finals should allow for an upgrade of prospects.

Financials

At the interim’s sales were £617k on which a profit of £40k there is no debt and net cash of £1m.

Trading Strategy

There should be a global market for its products and Stylo have the cash to get on with it. Otherwise it may make an attractive acquisition target which may be supported by 32% shareholder, Brewin Dolphin.

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