Tuesday, September 4, 2012

Tue 4 Sep - STAF, SDM, ALU, QPP, JSG

Good morning! It seems like people are coming back from holidays, as the number of daily hits here is rising again from the August lows. I don't promote this Blog, so do feel free to flag it up to friends or colleagues, as the more readers, the merrier!

We've got readers from all over the world, and I'm amazed at how many readers we have across the pond in America, plus of course Britain & Ireland, and France. About to hit 50,000 page views imminently too, which I find rather exciting!

I'm just putting the finishing touches to my Staffline (STAF) report, after meeting management yesterday for their interim results presentation, so look out for that here later.

Busy morning for results, with 22 companies reporting. I'll pick a few that look interesting, so here goes.

Electronics company Stadium (SDM), £21m mkt cap at 70p a share, has had a poor H1, with profit before tax down two thirds to £500k. There's a pension deficit too. Although they are saying H2 should be similar to last year (and it looks to be an H2-weighted business) it looks vulnerable to further disappointment to me, with the valuation hanging on a decent H2, so I'll be taking this one off my watch list. They also announce an acquisition today.

Building & engineering products company Alumasc (ALU) issues annual results to 30 June, which look pretty poor, with underlying EPS down from 8.3p to 3.0p. That's in line with broker consensus, so looks like the poor performance has been well-flagged.

However they do flag a record order book, and say they expect a "much improved performance", so that should give some support to the shares. Broker consensus is a big bounce back to 11p EPS for y/e 30 Jun 2013, but I can't see the attraction in paying up-front for that with the shares at 80p, so will pass on this one.

Results from Quindell Portfolio (QPP) look pretty spectacular, due to the prior year comparatives not including big acquisitions. They seem to be calling themselves an IT and outsourcing company, but their activites seem to actually be heavily based on accident claims management, a very spivvy sector that I detest, having lost about £250k on my shares in Accident Exchange Group a few years ago. So I avoid like the Plague anything even remotely connected with accidents, compensation, etc these days.

I see that Quindell has got the extremely high Debtors which caused Accident Exchange (and Helphire) to unravel. In essence in both those cases the profits were an illusion, and were pretty much all subsequently written off as bad debts. Quindell looks too similar to me. Bargepole. Do let me know if I'm misjudging Quindell, as it's only based on a cursory glance.

Hydro International (HYD) has always intrigued me - they have innovative products for controlling waste water - but it somehow never seems to really get off the ground. Interims this morning reinforce that view, with disappointing underlying EPS more than halving to just 2p. They do have net cash of £3.6m, but the mkt cap of £19m looks hard to justify on these figures.

They emphasise that trading is expected to be heavily H2 weighted, but there's a lot of catching up to do, to meet 12.9p consensus FY EPS. Hence not for me at this stage.

I've never liked textiles hire & dry cleaning business, Johnson Service Group (JSG) because it carries a lot of debt, has a pension deficit, and seems to be permanently restructuring. Trouble is, the write-offs have been so large that it makes you wonder if any of the profit in the good years is real? I can't see anything exciting in their interims today, although the H2 outlook sounds reasonable.

Futures have improved nicely in the last hour, from flat, to a FTSE100 start up 17 points. My main stock picks, Trinity Mirror, Home Retail Group, and IndigoVision are all doing well, and I have high hopes for further gains from all 3.

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