Monday, July 23, 2012

Mon 23 July 2012 - Morning Report

Good morning! Already feeling warm & sunny, at 07:14, so looks like this heatwave could be real - markets likely to be quiet then, as people head for the beach!

Shares in XP Power (XPP) might be worth a look. Whilst Interims to 30 June 2012 look poor (diluted EPS down from 52.9p to 40.4p), the dividend has been raised from 19p to 21p, and more importantly the Outlook statement is very bullish - saying that orders are up, such that H2 should see "substantially higher" revenues and earnings than H1. That indicates a prospective PER of about 9, and yield of about 4%, which looks interesting.

Dialight (DIA) Interims look very good, with EPS up from 12.7p to 17.2p. But at a share price of 997p, full year forecast of 37.25p EPS puts these on a racy PER of 26.8! No room for any slip-ups with that valuation.

£6m mkt cap tiddler Sopheon (SPE) has put out a positive-sounding trading update, saying that H1 revenue is expected to "comfortably exceed" last year, but costs are also up. Nevertheless, EBITDA is "expected to show significant improvement compared to the first half of 2011". Sounds good, although the company's history is of making little to no profit, so one would lean towards scepticism here. But might be worth a look.

Hygiene products company, Tristel (TSTL) sounds positive, saying adjusted profits for y/e 30 June 2012 will be in excess of £700k, together with a year-end cash balance of £600k. Mkt cap is £12.2m, so that doesn't look particularly exciting. But it might be if further growth is expected.

Dominos Pizza (DOM) yet again serves up decent figures, showing that good companies do well even in recessions. How on earth have they achieved UK LFL sales increase of 5.7%. They even managed a 2.9% LFL increase in Ireland, that's really impressive.

Diluted EPS is up 12% to 10.2p, and interim divi up 20% to 6.6p, although against a share price of 519p that doesn't look cheap to me! Broker consensus of 21.3p EPS for this year puts them on a PER of 24. Too rich for me, even though this is a terrific business.

Microgen (MCGN) Interims to 30 June 2012 show flat EPS at 4.2p. Net cash of £27.1m is striking (compared with £109m), although as with all software companies it is vital to check that this is not just down to customer prepayments (shown as "deferred income" creditor on the balance sheet). The outlook statement makes nervous noises about H2 being dependent on a number of sales opportunities closing - preparing the ground for a possible profits warning? Prospective PER of 15 looks toppy to me, given the uncertain outlook.

Senior (SNR) reports impressive Interims, with revenue up 20% to £377m, and adjusted PBT also up 20% to £45.5m. Prospective PER of 10.5 and yield of 2.5% look pretty good to me, although there is £74.8m of net debt.

Filtronic (FTC) results for y/e 31 May 2012 show a bounce back into operating profit of £0.8m (vs £5.3m loss in 2011). Although hardly exciting, given their £32m mkt cap.

Gooch & Housego (GHH) reports that delayed orders have now been received. Prospective PER of 14 doesn't excite me.

Online casino 32Red (TTR) puts out a positive trading update, confirming profits in line with expectations. Looks an interesting growth company, at a reasonable price. Worth a look perhaps?

That's it folks, have a good week & enjoy the sun!


  1. Just found your blog today and think it's an excellent idea. Have bookmarked it.

    I hold XPP - there was also a director buy of 11k shares today at £10.15.

  2. Thank you Malcolm - much appreciated!
    I'm getting almost 1000 hits per day, so people must like what I do. Also am working on ideas to further develop this Blog, to make it more useful to investors in smaller caps.
    Cheers, Paul.