Hoodless Brennan daily smallcap newsflash including Optos, Intellego, Mid-States, 1PM and others

Optos (OPTS, 98.5p, £68.5m), the retinal imaging company, provides an update on Q1 2010 covering 3 months ended 31 December 2009. Total pay per patient (PPP) revenues remain flat at $22.7m, despite a lower installation base. The renewal rate increased to 85% (Q109: 79%) and a 5% increase in average monthly PPP revenues per site to $2,092 (Q109: $1,987). However, revenues from capital sales fell to $0.6m (Q109: $0.9m). Average monthly usage is up 10% to 105 optomaps per site. Strong cash generation has helped net debt fall to $40m. 2010 consensus suggests PBT of £4.4m, EPS of 4.8p and in 2011 PBT of £7.4m and EPS of 8.2p. The stock trades on a 2010 PER of 20.5x falling to a more reasonable 12x in 2011. 2011 estimates combined with the strong cash generation encourage us to upgrade our Sell recommendation to a HOLD.

Brulines Group (BRU, 142.5p, £40.0m), the provider of real time monitoring systems and data management services for the UK leisure sector, has won a contract to supply a range of vending telemetry services to a international fast moving consumer goods company, for a period of 3 years. This is excellent news. It illustrates the groups’ expansion into international markets. The value of the contract has not been disclosed. Given the bid situation, we train our HOLD recommendation.

Intellego (IHP, 0.45p, £0.9m) reports a trading update to the 3 month ended 31 December 2009. Order intake for Q3 ending 31 March 2010 stands at £0.9m, driven by contract wins, which is encouraging. We remain concerned about their current liabilities. The share price has fallen 25% since our sell recommendation on 3/11.09, which encourages us to upgrade our recommendation from a Sell to a HOLD.

Mid-States (MST, 5.625p, £6.51m) Trading update for the first half to December 2009 confirms continued progress for its air disinfection business. The group received 679 orders in the first half, albeit a number of smaller orders to potential distributors. Revenues for the first half is expected to be near £0.2m and the group had £0.94m cash in the bank (£2.2m at the June year end). Given the rate of cash usage we move the shares to a SELL in anticipation of a dilutive share issue to meet the cash requirements of the business.

Oxford Instruments (OXIG, 215.75p, £106.61m) Trading update for the period from the end H1 in September to 17 January confirms trading in-line with expectations with the group benefitting from the cost reductions the previous year and currency translation benefits. The group reports research markets remain robust and the tentative signs of recovery in the industrial sector reported in H1 are continuing. We maintain our BUY recommendation, last iterated on 17/11/09 at 221.25p.

Gresham Computing (GHT, 25p, £13.21m) Trading update confirms the cost savings programme is complete and will deliver some £2.6m savings into the 2010 year at a one off cost of £0.5m. Q4 trading has improved markedly on Q3 and that trend is continuing. Cash is flat compared with October 2009 and will benefit from £0.8m inflow related to a deferred consideration. We move the shares to a HOLD given a relatively high rating in the 2010 year.

Character Group (CCT, 80p, £27.75m) First 4 months of the year has seen a 1.2 % rise in revenues – against a market down 8.5%. A stronger product line ensured less discounting with low margin sales down 40%. The group remains debt free and is continuing to develop its own product ranges. The group expects a significant turnaround in H1 profitability (2008 an underlying loss of £2.78m) which is expected to go on into the following periods. With expectations of £1.8m PBT with 3.86p EPS the rating is well up with events in this unpredictable business. Even next year forecasts are for £3.8m with 8.16p EPS - putting the group on a Yr2 PER of 9.9x – well up with events still - HOLD.

1PM (OPM, 0.245p, £3.72m) Interim results to November 2009 confirms disappointing new levels of business together with high levels of bad debt write-offs was seen in the first half. However the second half has improved and the group expects a significantly stronger trading result for the year. To November the group turned over £0.68m (£0.66m) with virtually breakeven at the operating profit level (£0.04m) before bad debt write-offs of £0.1m (nil). The group had a total loan book of £6.42m £7.25m) with unused facilities of £1.17m. New business totalled £0.98m (£2.90m) but that was partially a decision not to chase volume. Still a HOLD.

Wynnstay (WYN, 243p, £35.3m). FY results.  Wynnstay manufactures and supplies agricultural products. The company also operates 2 specialist retail chains, Wynnstay Stores (products for farmers) and Just for Pets (comprehensive range of pet products). Revenues of £215m (2008: £234.6m) and PBT of £5.2m (£5.2m) were in line with expectations while EPS of 26.42p (29.26p) was ahead of the markets 24.9p. Net assets of £39.5m (£36.3m) mean the company is trading at a small premium. A final dividend of 4.3p takes total to 6.5p (6.0p) providing a yield of 2.7%. The Agricultural Supplies businesses turned over £160.7m Specialist Retailing contributed £54m. Agricultural supplies activities saw reduced demand for feed and fertiliser but Specialist retailing activities performed very strongly with Just for Pets chain - pro-forma revenues increasing by 16%, with 2 new store openings and  Wynnstay Stores increased by 7% (lfl). A very good performance in total in view of challenging markets, the business offers some defensive attractions and a decent balance sheet but fairly limited growth prospects.  We retain our HOLD.

Mid-States (MST, 6p, £6.95m). The developer of air disinfection technologies provided its interim update to 31 December 2009. The company cites continued progress with 679 orders for the Company's AD air disinfection device. These included larger orders from distributors in Spain, the Middle East and Norway and additional low volume orders elsewhere. As a small company the distribution route is key. The group is presently working with/in discussions with 25 distributors around the world. There are now over 450 AD units in use at UK hospitals, successfully proving concept. Revenue for the first half is expected to be around £0.2m and at 31 December 2009 cash at bank was £0.94m this is down from £2.2m in June suggesting a case burn of over £1.2m per half. With no debt facilities in place this would seem to signal the need for further funding unless sales traction increases or cash flow improves in H2. SELL

Finsbury Food Group (FIF, 21.75, £11.5m) the manufacturer of cake, bread and morning goods announced the appointment of Stephen Boyd as Group Finance Director to replace Lisa Morgan who will immediately step down from the Board. This is an interesting move given Finsbury’s high gearing that could signal a move to address that issue and we await the new FD’s view on any changes to financial strategy. Trading in line with market expectations.  SPECULATIVE BUY

Protonex technology Corporation (PTX, 37.5p, £11.90m) Has been awarded a $1.85m contract from the US Army Cecom for the development and delivery of an advanced portable battery charger based on its fuel cell technology. The first phase covers a programme spanning potentially 5 years. There is a potential of 3 option phases that would include delivery of up to 100 units - taking the potential value to $6.4m. The group remains a SPECULATIVE BUY.

Mobile Streams (MOS, 5.125p, £1.9m), the global retailer of mobile content, expects revenues in excess of £7m, EBITDA to be positive and net cash of £1.7m (£3.1m on 30 June 2009) for the year ended 31 December 2009. The group has seen a shift in the revenue mix in H2 from mobile operator services to mobile internet services. H2 performance has been stronger than we had expected. The Board believe revenue growth from retailing contents and apps on the emerging mobile internet combined with cost control will ensure cash is reserved in 2010. We retain our BUY recommendation from 22/09/09, with a target price of 5.8p. http://www.proactiveinvestors.co.uk/companies/news/12412/hoodless-brennan-daily-smallcap-newsflash-including-optos-intellego-mid-states-1pm-and-others--12412.html