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Advanced Power Components (APC, 13.5p, £3.01m) Trading update from the distributor of electronic components has warned of a loss before tax to August 2009 of some £0.5m. Included in the loss are one-off charges relating to the reorganisation of £0.14m which is expected to save £0.04m a month from September onwards and £0.25m relating to bad debt and stock provisions. The actions taken should return the group to monthly profitability immediately. Brokers have correctly anticipated the underlying losses though next year the bounce back to £0.8m pre-tax profits may be optimistic, investors may be better to work on £0.5m pre-tax profits with 1.5p EPS – putting the group on a Yr2 Per of 9x – ahead of events – the correct level is surely around 7* or 10.5p – SELL.
Brammer (BRAM, 123.5p, £65.63m) Trading update for the first 6 months to June 2009 has reflected the poor economic conditions with sales down 10.5%, though on a constant currency basis the sales on a like-for-like basis (sales per working day) were down 17.8%. Cost cutting has taken £12m out of the sales, admin and distribution costs for the current year, with the cash cost less than one year’s savings. Inventory reductions have helped net debt fall by £15m to £69m. The group believes trading has reached stable levels in March and April. Forecasts around £15m with 19.5p EPS puts the group on a prospective PER to December 2009 of 6.3 times, appropriate given the high debt levels. HOLD
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Focus Solutions (FSG, 39p, £11.55m) Has announced an agreement with Mastek, a global software solutions specialist for the Insurance and Government verticals, to integrate Focus’ e-commerce platform with Mastek’s policy administration software. A good move as Mastek will act as a global systems integrator for the combined product, so expanding Focus’ reach. We last commented on 23/06/09 at 36p that, with a price target of 40p there was just sufficient for a buy recommendation, given the current price the share drops to a HOLD.
Gladstone (GLD, 19p, £9.18m) Has announced new client wins in Northern Ireland and Eire for its leisure membership relationship management software, complementing positive news that existing clients are growing the use of its systems substantially. We last commented on 24/04/09 at 20p when we made the shares a BUY with the right price around 25p, based on expectations of £1.6m pre-tax profits with 2.2p EPS to August 2009.
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Hornby (HRN, 105.5p, £40.08m) Has won the licence to develop a range of products based on the London 2012 Olympics. Forecast ahead of this news were for pre-tax profits of £4.8m pre-tax profits with 8.7p EPS to March 2010, putting the group on 12* prospective PER, high enough HOLD.
Microgen (MCGN, 70p, £60.78m) Interim results to June 2009 showed revenues down slightly to £16.4m (£16.9m) but pre-tax profits were up to £3.23m (£2.75m) with underlying EPS of 2.8p (2.4p) with an increased interim dividend of 0.8p (0.7p). The group has a strong balance sheet with net cash of £12.8m (£17.3m) but that is after a share buy-back programme that cost £8m in November 2008. Key performance has been the Microgen Aptitude and Accounting Hub which has strong pipeline for the future. The group is confident it will meet or potentially exceed market expectations for the year which currently stand around pre-tax profits of £6.7m with 5.3p EPS, putting the group on 13.2 times to December 2009. Back on 07/07/09 we commented the group was a buy at 68p with the target price of 77p – so just sufficient to maintain the BUY stance.
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Eckoh (ECK, 6.125p, £12.24m) has received a request for an EGM to remove the Chairman and appoint John Samuel instead. We have been unimpressed by recent trading and the group remains a HOLD.
SmartFocus (STF, 7.875p, £7.39m) Trading update for the 6 months ending June 2009 reports sales will be ahead of expectations, up 13%, with profits significantly ahead. The outlook is well reflected in forecasts of £0.35m pre-tax profits with 0.37p EPS to December 2009, followed by £0.64m pre-tax profits with 0.69p EPS, putting the group on a prospective PER of 21.3x falling to 11.4x.
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ANT (ANTP, 37p, £8.99m) Has announced a contract with Arab Media Corporation to supply its technology for a new service across the Middle-East and North Africa. The service is expected to launch in 2010 and roll-out across 26 countries. With no financial information relating to this news we can only re-iterate our support with the SPECULATIVE BUY recommendation.
MOBILE STREAMS (MOS, 5.375P, £1.95M) Trading update for the interims to June 2009 is level with last year – a small operating profit, despite revenues down 23% on the comparable period last year and slightly down on H2 2008. With a move to modest operating profits the cash usage should abate, making the shares well supported by the £2.1m net cash at the end of June, though trading does not support any upwards movement in the share price – yet, but for the adventurous it is still a Speculative Buy, however base recommendation move to a HOLD.
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Cashbox (CBOX, 3.75p, £5.42m) Has been awarded an extension to the contract with Mitchells & Butler for ATM management taking the total to 500 units, up 260 machines. With loss on-going but progress in the right direction the group remains a SPECULATIVE BUY.
Globo (GBO, 12.25p, £16.00m) Trading update for the 6 months to June 2009 have confirmed continued improvement with revenues up 15% to €8.3m (€7.2m) together with a net debt reduction of €2.3m to €7.5m. Overall pre-tax profits for the first half are expected to be marginally ahead of the 2008 level so around €0.9m. The progress bodes well with the traditionally stronger second half trading underlining the forecasts of “2.8m with 2.1p EPS, putting the group on a prospective PER of just 5.8x. We remain firm fans, not least due to the recent launch of ConnectGo which is a Blackberry style service available to all types of phones. We have a short term target price of 15p based on existing trading and a longer term target of 22.6p based on the potential value of ConnecGo. BUY.
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Treatt (TET, 227.5p, £23.13m) The group has updated on trading for the start of the second half, from 1 April to 20 July, where it confirms the strong H1 trading has continued with the UK ops doing well with sales and profits ahead though the smaller US operation is still finding trading conditions difficult. Losses at Earthoil are much reduced, but not yet at break-even. The combined effect is that the board now expects profits ahead of the £3.06m reported to September 2008. Forecasts ahead of this statement were for pre-tax profits of £2.75, so forecast are being upgraded substantially. Provisional forecasts around £3.2m pre-tax profits would give EPS 20.29p and potentially underline the DPS forecast of 11.4p. The company is thus on a prospective PER of 11.2x with a forecast yield of 5%. We repeat our BUY recommendation, last iterated on 26/05/09 at 226p, but raise our target price to 275p from 250p which would equate to a PER of 13.5x with a yield of 4.1%.
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