Wednesday, August 29, 2012

Wed 29 Aug - BQE, CRG, 888

Good morning. As usual, here are my remarks on RNS results which interest me this morning (See the "What Sectors?" tab above to see which parts of the market I tend to focus on).

Bioquell (BQE) issues interims to 30 June today. I like this company, and have come close to buying shares in it, but never quite pushed the button. At 131p (£54m mkt cap) these shares have been steadily rising this year. They have 2 divisions, bio-decontamination products, and specialist testing. They are based in Andover.

Interims are a tad disappointing, with turnover down a little (caused by lumpy defence orders drying up), but EBITDA has held up reasonably well at £3.7m for the 6m (£0.2m down on equivalent period last year). Basic EPS fell from 3.5p to 2.7p. There was an H2 bias last year, so broker consensus of 8p for the full year still looks possible.

So that gives a PER of 16, which isn't cheap. However, the interesting thing is new product launches lined up for H2, which sound exciting - "more than doubling of the Group's manufacturing facilities in preparation for roll-out of new products ... with attractive recurring revenue profiles to be launched in 2012 ... transformational range of new products ..."

I shan't be rushing out to buy the shares, but it remains high on my watch lists, and I suspect these shares might well end up a good bit higher in a couple of years' time, it just looks to me like an ambitious & well-run company.

Another small cap that I like, but didn't quite get as far as buying, is maker of artificial hips, Corin Group (CRG). Mkt cap is £26m at 60p/share.

Their interims show group sales up 15% to £25m, and operating profit of £1m, so not particularly exciting margins there, but usefully up on last year.
The main risk here is litigation, as a number of claims have arisen against Corin because of issues with Metal-on-Metal products (potentially causing small fragments of metal getting into the blood, or something like that). Although Corin do state that they have commercial insurance which covers this, and £0.1m costs in H1 are hardly irksome.

The outlook statement is unexciting, with H2 sales predicted to be down, due to a stocking-up effect by a customer in the prior period. So overall nothing here makes me want to rush out and buy the shares. A bit like Bioquell, these shares are really a bet on their new products doing well in the future.

FirstGroup (FGP) issue an interesting RNS rebutting Virgin Rail's claims about the disputed inter-city west coast rail route. I can see the reasons for privatisation in some areas, but rail has always struck me as being one of the less obvious ones. Surely it would be better to have an integrated network, run by competent people, in public ownership? Other countries seem to manage that.

A cracking set of interims are announced by 888 Holdings (888), showing revenue up 21%, and EBITDA up a whopping 81% to US$36m for the 6 months. They say the increase in profit is due to their improved product, which looks pretty exciting, if true. Interim divi is being reinstated 2.5c per share.

So whilst I can only give a very quick review to anything in these morning reports, due to lack of time, this one certainly looks worthy of further investigation, based on these excellent results, and mkt cap being £288m at 82p/share. Looks like their results seem to be well ahead of broker estimates, so I suspect this share could rise from here. But as usual, please do your own research!

They do however caution that H2 margins will be impacted by higher marketing costs to drive growth in Spain & Italy.

There are a few more results I might look at, so possibly another supplementary report a bit later, depending on how things go. Have a good day! FTSE looks set to open roughly flat in a few minutes.

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