Wednesday, September 26, 2012


Good morning. Another busy day for results, loads to cover.
Let's start with Snoozebox (ZZZ) love the ticker! This is one of my stocks, which I wrote about here on 14 July as a "speculative share idea".
They operate Patented mobile hotels, using converted standard size shipping containers. The concept appears to be taking off, so it's a roll-out story as an investment, with some future growth already priced-in. I hold a few shares in ZZZ. At 44p the mkt cap of ZZZ is £22.6m.

The interims to 30 June are not terribly informative, as they traded with 280 rooms from May 2012, whereas the full inventory of 520 rooms is available for the whole of H2. They raised £12m at an IPO in May 2012, and after a surge to 55p the shares are now back down to the IPO price of 45p.

The narrative really is an excellent read, with many events having successfully deployed a Snoozebox temporary hotel, and ALL recurring events attended in 2012 have re-booked for 2013. Examples include Silverstone Grand Prix, Isle of Man TT, plus one-off events like the Diamond Jubilee Pageant and the Olympics.

Less glamorous, but more important to earnings are corporate year-round deals, since occupancy (especially over the winter) is key to making the business model work.

The H1 loss of £1.7m should in my view be seen as start-up losses, and the outlook is that management are confident of meeting market expectations - which are for a £0.35m loss in 2012, and a £2m profit in 2013.
So overall that looks OK to me, providing they don't run out of cash. It's an exciting concept I think, so might buy some more, especially if the market reacts negatively to the H1 loss today.

I've always liked Andrews Sykes Group (ASY) - it's an aircon & pumps hire business. Bizarrely, they keep buying back their own shares, to the point where the free float is now tiny. At 178p the mkt cap is £75m, but 89% of the shares are owned by EOI Sykes Sarl and the Directors. Which perhaps explains why the shares always look cheap, and are currently on a PER of just 6, despite being net cash of £12.6m, and having delivered good solid results today. It's a terrific business though, churning out reliable cashflow every year, and occasionally they pay out a large special divi. The ownership structure will put off many investors, which is a pity as the company itself is surely worth around 300p a share (10 times earnings).

Under pressure from large shareholders, speciality foils business API Group (API) has put itself formally up for sale. Although it's been informally up for sale for most of 2012 already, so one cannot help thinking that anyone who wanted it might have made their move by now? That said, the shares look good value at 64p, which is only 7 times this year's forecast earnings, and less than 6 next year's. They have repaid most of their debt in recent years too. So might be worth a look?

Whenever you see a trading statement from Domino's Pizza (DOM), you just know it will be good. Today is no exception, with their Q3 IMS hitting the right buttons, with continued LFL sales growth, of 3.7% in the UK for Q3. Recession, what recession? They are confident of achieving full year profit, which is good since the share price of 563p puts them on a worryingly high PER of almost 27 times! Much too racy for me, although it is a fantastic business.

IT consultant Scisys (SSY) delivers reasonable interims, with adj operating profit up a smidge to £1.3m for H1. Net debt almost paid off, down to £0.8m. The outlook sounds solid, so at 57p I make that a current year PER of about 8. Reasonable, but not massively exciting in my view. Quite a low margin business. Divi yield unremarkable at 2.3%.

Topps Tiles (TPT) reports an improvement in sales trend for Q4 (ending 29 Sept), achieving +3.7% LFL sales - not bad going at all. That's a good improvement on full year LFL sales decline of 1%. Profits are expected to be "broadly in line with consensus", i.e. slightly below. Why can't they just be honest, and say slightly below? I hate this "broadly in line" BS that so many companies use. But I suppose it gives a bit of wiggle room in case of audit adjustments. Still, not a bad performance given economic conditions. PER is about 9, which given the very weak balance sheet, doesn't seem especially cheap to me.

£20m mkt cap jam tomorrow company, Oxford Advanced Surfaces (OXA) delivers lousy figures, with barely any turnover. It has £5m cash, but appears to be burning around £1.8m p.a.. Why people still pay premium prices for blue sky shares is beyond me, when practically all of them fail to deliver on the hype, or the timing. Having been burned many times before, I am now deeply sceptical about all blue sky investments. I'll stick to solid, cheap cashflows elsewhere thanks very much.

I was staggered to discover that Ken Brooks' 3DM with its "PIM" process (another blue sky company that serially disappoints) is still going! Under the name of Environmental Recycling Technologies plc (ENRT). It's still burning cash, and delivering no commercial results. But now is loaded up with debt from a funder called Oxford Capital, who are owed £5.5m. The mkt cap is £11m, so there are still some believers out there. I wonder how much longer it can carry on?

Very nice IMS from Porvair (PRV), saying that they "continue to trade well", and that the full year is expected to be ahead of market expectations. Can't argue with that!

Have a good day everyone. Regards, Paul.

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