Monday, October 15, 2012

Mon 15 Oct - SRT, TNI, YOU, SDL, NANO, CMH

Good morning! I was expecting a quiet day today, but actually there are quite a lot of trading statements issued. Very pleased to note that our readership here seems to have suddenly shot up (maybe we've been mentioned somewhere?), and is now around 1,200 per day, great stuff! Do spread the word, it all helps.

Incidentally, this site is also set up so that it works well in a condensed format on smartphones. Please also check out my Half Marathon fund-raising in the box on the right-hand side of this page. All donations to my chosen charities are very much appreciated, so if you like this Blog & have made any money from the ideas here, then why not make a donation to either MacMillan, or the Sussex Beacon, my chosen charities?

Software Radio Technology (SRT) is a popular share with private investors, they make some sort of positioning technology for boats. At 29.75p the mkt cap is £30m. That seems to be supported more from future expectations than the pretty dismal H1 figures of just £3.5m turnover, and £0.1m profit, although apparently even those tiny figures are ahead of internal budget expectations.

Looking at broker forecasts, they shoot up for y/e 31 Mar 2014, to £5m profit, and 3.6p EPS. So if you think they will achieve that, then the fwd PER is 8.3. Personally I don't like paying up-front for growth, so it's not for me.

Our favourite share here, newspaper group Trinity Mirror (TNI) has announced a management restructure - so looks like the new CEO, Simon Fox, has hit the ground running. As was reported in the press last week, TNI are merging their nationals & regionals divisions, which sounds sensible to me, and will create a "flatter, more efficient management structure".

They have also announced an intention to close Happli, the recently launched daily deals business. I'm a bit surprised at that, as Happli seemed a good idea to me, but was said to cost £5m p.a. at the time of launch, so now it's being closed profits should benefit by a similar amount, one assumes.
They say that it, "is unlikely to reach sufficient scale to become profitable in the near term". Fair enough, can't argue with that.

Most importantly, they confirm that "trading remains in line with the Board's expectations", so always reassuring to have an up-to-date trading statement under our belts. The shares remain amazingly cheap on a PER of only about 2.5 times this year's forecast earnings, notwithstanding the fact that the shares are up 160% since August. They were an absolute gift at 25p, when highlighted here earlier this year.

Also interesting to note that in his comments, Fox goes on to say that TNI has "significant unrealised potential". Sounds intriguing! I continue to hold these shares, and would not be surprised to see them continue rising to 100-150p (a PER of 4-6) in due course.

YouGov (YOU) shares have slipped slightly to 78p (mkt cap of £76m) today on the release of preliminary results for y/e 31 July 2012. Adj EPS is up 4% to 4.9p, so I make that a PER of 16, which looks fully priced or a tad expensive to me, given that there are lots of good small caps out there on a PER of 10 or less. Maiden divi of 0.5p looks pretty stingy too.

It does have net cash of about 10% of the mkt cap though, at £7.2m, and current trading is in line. Can't get excited about this one though, at that price.

Shares in SDL (SDL), a mid-cap (£438m mkt cap at 546p) software company, are down 15% to 546p on an IMS that says Q3 is broadly in line. I don't know this company, but cannot see anything in the IMS which justifies such a sharp markdown. Strange.

Prelims for y/e 31 July 2012 from Nanoco (NANO) look pretty awful - £3m turnover, and £4.3m loss before tax. They have £15.5m cash left to burn, so several years' worth. The mkt cap is a staggering £128m! Pretty steep for a jam tomorrow company. It still amazes me how many investors are prepared to pay such high prices for companies that have not yet reached commercial viability, purely on the back of future potential. Yet the reality is nearly always that products disappoint, most fail, and even the good ones have slip-ups on the way to success. It's like searching for a needle in a haystack, so why pay huge prices for things that are so risky? I don't touch jam tomorrow shares any more, too many painful losses in the past. Reality rarely matches the hype in my experience.

Engineering company Chamberlin (CMH) reports an in line trading update, shares are unchanged.

OK, that's it for today. See you tomorrow, hopefully a bit earlier, was up really late last night, hence the late start today.



  1. Hi Paul,

    I've linked to you from my blog on Saturday:

    Don't know if that explains the whole readership boost, but every bit helps, as they say. :)

    Keep up the good work, congrats on the recent super run, too.

    p.s. You might want to play with your comment options, as IMHO they're a bit restrictive, assuming you want more comments that is. :)

    1. Brilliant, thank you very much indeed for the link, much appreciated!

      I'll have a look at the comment options, and see if I can loosen them, as you suggest.

      Cheers! Paul.

  2. You're welcome Paul. A couple more suggestions, from someone who has been at this a while.

    First, if you can install Google Analytics. This takes away the guesswork from wondering where your readers are coming from. In fact, it now has a Live option that tells you who is reading your stuff right this instant -- pretty useful. It's free, you just need to add a bit of code to your blog template. Most blogs/sites now use it.

    I don't actually know if you can use it on Blogger but that brings me to my second suggestion, which is that if you're serious about blogging you go to Wordpress. It's just so much more flexible.

    If you do like Blogger a lot though then fair enough, I'd still finally (third tip!) get your own URL. I believe you can still run the Blogger software off your own domain, which I'd suggest you explore. It's peanuts to register and host a domain these days.

    Just FWIW, obviously if you're perfectly happy feel free to ignore.

    Good luck with the site!

    p.s. That was fast work on the comments! ;)

    1. I've recently been on a Wordpress course actually, and am in the process of setting up a new website, at to showcase an academic system called Performance Analysis, which has a great track record of out-performing the market. The site isn't quite ready yet, but am launching properly on 1st November. But the half-finished site is there if you want to check it out.

      I'll migrate this site over to Wordpress too at some point, but at the moment I get a (very) small income from the Google ads on this site, hence why am keeping it here for the time being.

      I've installed Google Analytics on the new site, but as no readers yet, haven't used it yet. Wordpress is addictive isn't it! So many fun things to play with!!!

      Thx for your helpful advice, much appreciated.
      I've opened up the comments here to be completely open, so let's see what happens!

      Best wishes, Paul.

  3. Hah, sounds like you have it all sorted Paul. :) Apols if I was teaching you to suck eggs. :)

    The only downside to opening up comments in my experience is spam. Wordpress has a plugin that comes with it, Askimet, that is very good. On my site I have a setting that means I have to approve the first comment from a new poster which catches any further offenders. After that, they can comment freely.

    Good luck with the new site, I'll check it out!

    1. "Apols if I was teaching you to suck eggs. :)"

      Not at all, I welcome all feedback and ideas. It's all good, and confirms my feeling that I backed the right horse learning how to use Wordpress.

      Am spending more time than I would like doing IT stuff, but love the way you can set up a pretty professional-looking website in just a few hours with Wordpress. An amazing program, with Plug-Ins for everything conceivable it seems!


  4. What do you think of NANO after the recent announcement of a contract with Dow Chemical? Commercial production seems more of a reality now, I would be interested to get your opinion.

    1. Hi Kevin,

      I've had a look at it again, but have no idea how to value this company at all. It's blue sky stuff, with no historic figures to work off at all.

      I'm a value investor, not a blue sky punter, so really have no way to give a meaningful opinion on this company. The valuation (£385m) reminds me of the sort of valuations things got in the TMT boom in 1999/2000.

      The problem is, if something goes wrong, or results are not as great as everyone expects, then this type of share can collapse back down to nothing.

      It's just not my type of thing at all, I like strong cashflows, dividends, cash on the balance sheet, etc, all on a cheap rating. Not interested in blue sky potential at sky-high valuations!

      People have done well on NANO shares though, so good luck to them!

      Cheers, Paul.