Tuesday, September 25, 2012


Good morning. Surprised to see Becky Worthington has resigned from Quintain Estates (QED), to start her own business. Not quite sure what to read into that, although it did seem a bit crowded at the top at QED.

Am having my usual morning battle with a Dell laptop that likes mornings even less than its owner. Random crash no.1 of the day is now behind us. Moving on, I like the results from Regenersis (RGS), and so does Mr Market, with the shares up 5p to 96.5p. Given that they've just delivered adj EPS of 13.85p, only have £2.9m in net debt (vs £42m mkt cap), and have reinstated a divi, although only at 1.1p. On the back of these results & an upbeat outlook statement, it surely deserves a PER of say 10, which implies almost 40% upside on the current share price. Although I do note that, as was the case last year, most of the profit has been dissipated with a £5m exceptional restructuring charge. It's not really exceptional if it happens every year!

Shares in Hornby (HRN) have been pole-axed today, due to a pretty dreadful profits warning - poor sales, combined with supplier disruption mean they will now only make breakeven this year (and what's the betting that they put another profits warning out later on in the year?). Sorry to be harsh, but this just looks like poor management to me. I'd want heads to roll if I were a shareholder. The 5.5% forecast divi yield must be looking unsustainable too, another reason to avoid these shares.

Results from Hargreaves Services (HSP) look quite good to me - so am not quite sure why the share price has dropped sharply to 555p (down 139p on the day). I'm repelled by its activities though, namely coal production & distribution. They also have some kind of difficulties at their Maltby facility. Positive outlook statement and a PER of only 4.5 do look quite interesting though - might be worth a further look.

Private investor favourite, Judges Scientific (JDG), lead by the charismatic & astute David Cicurel (whom we had the pleasure of meeting at one of David Stredder's excellent "Mello Central" meetings earlier this year) has reported another excellent set of results. At around 805p the share price looks about right to me - 13 times forecast EPS for this year, although they look to be a bit ahead of that forecast. Growth will naturally slow, as it becomes harder to keep finding more bolt-on acquisitions capable of making as much impact on overall group results. But well done to everyone who saw the opportunity here, it's not one I'm going to chase up in price.

Good results also from Netcall (NET) who also presented at a Mello Central earlier this year. I recall the CEO had one of the strangest accents I've ever heard - half Scandinavian, and half Geordie.
Adjusted EPS for y/e 30 June 2012 rose by about a third to 2p. Share price now looks up with events at 29p, that's a PER of over 14, although they do have a strong net cash position of £8.4m (compared with £36m mkt cap). Outlook statement positive too.

The market has reacted negatively to a surprise profits warning & small Placing from KBC Advanced Tech (KBC), specialist consultants to the oil refining sector. This company has always seemed accident prone, I held shares in it about 10 or more years ago, and that impression is reinforced with today's wobbly interims, and cash crunch being fixed with a £1.35m Placing. Although their outlook statement does sound positive, so could be a buying opp?

HR software company, Bond International Software (BDI) has always looked a good company, but somehow never seems to deliver much on that potential. Interim results today look uninspiring, with interim operating profit down 40% to £1m. Don't be fooled by their penchant for capitalising internal development costs either, which is an accounting policy I deeply dislike. A balance sheet stuffed full of intangibles is no use to anyone. Mkt cap of £20m looks about right to me.

Have a good day everyone, and I'm delighted to see that our readership has grown usefully, to about 1,000 a day now, do spread the word, the more readers the better! So well worth me carrying on, since people seem to like these reports & I enjoy doing them. The intention is to broaden my knowledge of the market, as there are so many smaller companies out there off the radar, and every now & again we find a nugget of gold!

Best wishes, Paul.


  1. Becky's QED exit doesn't surprise (as you say crowded at the top). always felt it was 'right person, wrong organisation' in her case.

    Love the blog and tweets. here's to a 10-fold readership increase in a few months :)

    PS - met you briefly after QED's fin deal presentation 2 months back.

    Samir / playdumb

    1. Hi Samir, Many thanks for your kind comments, much appreciated! Cheers, Paul.