Tue - 11 Sep 2012 - HFG, BET, SGP, BRBY, ECK, Mello Central

Good morning. A moderate down day in the offing, with the FTSE 100 Futures off almost 30 points at 5765, on nervousness about (yawn) the Eurozone crisis yet again - in particular whether the German constitutional court will do something bad, concerning bail-outs one assumes.

Hilton Food Group (HFG) is capitalised at £211m at 298p a share. I rarely invest in food companies, because the power all lies with the supermarkets (which function as an oligopoly and squeeze out most of the profit in the supply chain). HFG shows volume & turnover up both up around 10%, but profits and EPS flat at 12.8p for the interim period, so full year looks to be around 25p. Shares on a PER of 12, looks about right to me. Forecast 4% divi yield looks OK. I note that net debt is falling quite rapidly, the progression being £24.8m, £18.7m, and £14.9m over the last 3 consecutive half years. Looks OK, but doesn't excite me on growth prospects or valuation.

Even though it's above my normal size, Betfair (BET) results are always interesting, as it's such an innovative & interesting company, with a brilliant betting platform. At 748p/share the mkt cap is £766m. As you would expect their Q1 (to 31 July) IMS is strong, given the summer of exceptional sporting activity. Sports betting is up 21%, and remember that as purely a middleman, BET are not dependent on luck - all bets are matched between 2 parties, so they make money regardless.

Mobile is absolutely key for growth in everything these days, and sure enough mobile revenue is up 98% in Q1. Any consumer-facing business that is not doing well in mobile is probably going downhill fast - absolutely vital area as people now use their smartphones as mobile computers.

Q2 so far (Aug-now) is actually down 2%, so the question is has the business gone ex-growth, or is that just an expected hangover after the Olympics? The fwd PER is 19.4, so that prices in some growth, although not stellar. Will be interesting to see how the market reacts, but it's difficult to see any justification for chasing the price any higher.

SuperGroup (SGP) is a share I've dabbled in, in the past, and usually made money buying as a short-term trade, after the big sell-offs, although I missed the last big bounce. Their IMS for Q1 (3m to 31 July) shows group sales up 10%, and retail LFLs up 1.7% in the UK - not bad as the weather was so poor, which is a major factor for clothing retailers in the summer particularly.

Wholesale is down 5.6%, but they cleverly refocus attention on the current order book, which is 7% up (nicely done, whoever wrote this RNS knows what they are doing!). Overall they reiterate they are on-course for the year so far. At 531p a share that makes them look good value to me, on a fwd PER of about 11.5, I would have thought the shares could carry a PER of 14 or 15 given the international growth potential?

Another fashion brand, this time Burberry (BRBY) puts out a mild profits warning, with Q2 LFL retail sales flat, and new space adding 6% to the total. They now expect profit for y/e 31 Mar 2013 to be "around the lower end of market expectations". That leaves a forecast PER of 19 looking decidedly warm. £6bn mkt cap too! Wow. Apparently the Chinese absolutely love Burberry, so a slowdown/crash in China is something to consider here too. Not one for me, unless the PER gets down to about 12.

Speech recognition company Eckoh (ECK) announces a contract win with Serco, for a public sector project, but doesn't give any indication of how material the contract is. That bugs me a little, because it comes across as using the RNS as a PR tool, rather than helping investors understand the actual performance of the company. A lot of companies do this though.

David Stredder's "Mello Central" quarterly investment evening (hosted by FinnCap) is happening this week, in London, at 5:00pm (for 5:30pm start) Thursday evening. Usually around 50-75 investors & city people go to these evenings, which are informative & enjoyable, with free drinks and buffet laid on afterwards.
I'll be there, so if you'd like to say hello, please do so!

To book yourself a place, please email your details to: mellomeet@gmail.com (NB. you must put the word "meeting" in the subject line, in order to get through David's highly sophisticated spam filter!).

Once you are booked in, come along to FinnCap's offices at:
60 New Broad Street, London EC2M 1JJ . A short walk from Liverpool Street station/tube. 

There are 4 companies, each doing a 30 minute presentation this Thursday, as follows;

• Universe Group
• Trifast
• Imaginatik
• Avingtrans

I find it very useful meeting management, and understanding their businesses better, even if I rarely invest immediately, sometimes I do after subsequent results. Also, there is a Q&A session after each presentation, and you can of course chat to mgt & other investors over a glass or two of wine afterwards. It's all pretty friendly & relaxed.

Hope to see some of you there!

Let's have a quick look at some of the main movers this morning;

Top 5 risers;

1. Summit Group (SUMM) up 30% at 3.25p (£10m mkt cap) - very interesting-sounding license deal announced with Bristol-Myers Squibb.
2. Silence Ther. (SLN) up 12%
3. Reneuron (RENE) up 10% on a trading update.
4. ILX (ILX) up 8%
5. Havelock Europa (HVE) up 7.5% on its half-yearly report.


Top 5 fallers;

1. Aerte Grp (AER) micro-cap down 32% on dreadful-sounding trading update.
2. Burberry Group (BRBY) pretty savage reaction (down 17%) to mild profits warning.
3. Conti Coal (COOL) down 15%
4. Sefton Res. (SER) down 15%
5. Johnston Press (JPR) down 11% to 5p, which is 5p too much in my opinion since their debt is never likely to be repaid.

OK that's it for this morning, have a good day!