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.

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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.

Regards,
Paul.