Wednesday, September 5, 2012

Wed 5 Sept - AMS, PRZ, CNS, SMS, HOME, SPD

Good morning. Lots of results again today.

Advanced Medical Solutions (AMS) has cropped up on my radar many times over the years, and their results this morning certainly look impressive, although the growth has come from an acquisition of RESORBA (whatever that is). That has driven a doubling of adjusted interim profit to £5.4m. The outlook also sounds very good, with full year profit expectations confirmed, and a Board which is "very optimistic about our long term prospects". It has also reduced net debt to £10.6m, and pays a small dividend. Looks like the price is already up with events though, at 69p it has a pretty hefty £143m mkt cap.

Restaurant chain Prezzo (PRZ) has put out solid interims. Revenue up 14%, EBITDA up 11%, and adj profit up 4%, so looks like the depreciation charge must have gone up quite a bit due to new store openings. I did well on this share a few years ago, when it was languishing at a ridiculously low price of around 30p, but has since risen to 69p (£156m mkt cap), which looks a fair price.

Broker consensus is for 6.28p this year, which looks possible (as with many companies, H2 is the stronger half) that puts it on a PER of 10.8, although the yield is a miserly 0.5%.
However, I seem to recall that PRZ owns a lot of its own freeholds, so there is hidden value in the balance sheet too, might be worth checking out. That certainly increases the likelihood of a takeover bid (since it could be part-funded by a sale & leaseback of property). Management are smart here, and it's a nice business - a slightly more up-market version of Pizza Express. I would certainly be buying on any sharp pullback, but can't quite convince myself to buy now.

Interesting though how this is yet another example of how good companies manage just fine in economic downturns. Really sorts the wheat from the chaff.

I don't like the look of the interims from Corero Network Security (CNS). They report good turnover growth, but losses have got worse, so what's the point exactly?

Smart Metering Systems (SMS) looks an interesting growth company, results look in line with forecasts, but shares on a very high rating of 41 times this year's profits. Too warm for me.

Another broker upgrade has come through for Home Retail Group (HOME), one of my largest holdings, and main share reports here a couple of months ago. Readers who joined me at 70p are now sitting on a 40% gain, and in my view there's more to come. Still very cheap when you consider the business is in for free, since the mkt cap is equal to the average net cash balance + storecard debtor book. There's no corresponding debt at all. So I think a takeover bid is a strong possibility there, given the balance sheet strength. Trading statement is imminent, on Thu 13 Sept (next week).

Another very strong IMS from Sports Direct (SPD), and it doesn't look particularly expensive on a forecast PER of about 13. Wish I'd held on to my shares here, they've almost 10-bagged from the low point in 2008, and it looks like there's still some more fuel in the tank, but the bulk of the gain has now surely been made? SPD will benefit when JJB finally goes under (imminent), and could end up grabbing some of JJB's best stores from the administrator, who knows? Although by this point they must surely have competition regulator issues in doing so? So as there's probably only around another 20% upside in the shares, it's not for me.

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

1 comment:

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