Thursday, November 22, 2012

Thu 22 Nov - DTG, CUP, SEPU, DGB, IGP, PYM,

Yes I'm back, sorry for going AWOL for a few days, have been having problems with insomnia lately. Here goes with some results from this morning.

I've always quite liked Dart Group (DTG), which is a budget airline (, travel operator, and a haulage business called Fowler Welch. The shares always look very cheap (on a PER of 5 or 6 usually), and have had a good run up to 100p recently (for a mkt cap of £142m).

Interims today from Dart look pretty good, with group profit before tax up 37% to £57m, which looks amazing until they say that the business has become more seasonal, so a larger loss is expected in H2.

It has considerably more than its own mkt cap in cash, at £206m, but bear in mind that £98m of that is advance payments by customers.
Still looks like an awful lot of business for the mkt cap. In the key Outlook section they state that H2 losses will be larger, but they should exceed full year market expectations for y/e 31 Mar 2013. I would imagine these shares are likely to have a decent further increase on these good results, and that the fwd PER is now probably only around 5. I'm not keen on airlines, as the margins as thin, and risk high, given that they are so dependent on the oil price & other factors (e.g. the Icelandic dust cloud).

Very small dividend, which seems odd. Surely they could pay out a more sensible amount?

Dating websites group, Cupid (CUP) has put out a positive-sounding trading statement. Strange to see that the shares have fallen back recently from over 200p to 175p. It looks surprisingly good value (based on fwd PER) for a company that is growing earnings so strongly. Could be worth a look?

I made a bit of money on specialist radio maker Sepura (SEPU) some time ago, but decided the shares were fully priced so sold out. Their interims today certainly look good, with adjusted EPS of E2.8c (important to note that their accounts are stated in Euros, so adjust for that when working out price, which is in pence). The outlook for the full year sounds confident too, but that seems to put them on a current year forecast PER of 15.5, which is hardly cheap. Good company though.

I've not looked at Digital Barriers (DGB) before, it seems to have consolidated some security surveillance companies, including Coe Group (which rings a bell from a few years ago).

Their interim results today look diabolical, with £8m turnover, and a £7m loss! So the £61m mkt cap (at 143p a share) seems to be supported entirely by expectations of future growth. Not my cup of tea, I'd rather have cheap cashflows now, rather than paying up-front for future growth which may or may not happen.

Security software company Intercede (IGP) issues lousy-looking interims, with turnover flat at £3.5m, and a fall into losses of £185k. I'm struggling to come close to justifying the mkt cap of £34m, although it does have £7.2m in cash.

Drug developer Phytopharm (PYM) seems to have been promising jam tomorrow for many years. Results today say that they've got enough cash to last until Q1 of 2014, so test results due in Feb 2013 look pretty crucial. Too high risk for me.

OK that's it for today. Normal service has resumed, so see you tomorrow morning.

Regards, Paul.


  1. With Dart Group I'm put off by the share register:

    Rather a large amount in the hands of the chairman which I guess helps explain the small dividend from a tax perspective?

    1. Hi Simon,

      Yup good point, thanks for flagging the fact that DTG's Chairman holds a very large number of shares. Which reduces the attractiveness of them somewhat.

      Regards, Paul.

  2. Hi Paul,

    I have been watching Cupid as well - as can see these types of sites being taken over - brought out by larger social media sites - in regards to the fall maybe it could do with the fact that the Finance Director getting rid of 610,228 @ 202.08p netting a cool £1,233,149 !! ( I dont even know what a million quid looks like ha ha )

    This has reduced his stake holding by quite allot down to only 24,650 shares. This put me and maybe others off being and they have fallen off the high of £2 plus since he sold.

    Obviously I am not a clever as you but it surely doesn’t ring well when you FD gets rid of such huge stake and is left with hardly anything in comparison.Meaning that if more growth was expected why sell nearly everything ?

    That has put me off buying in - unless they go alot further down - think there £1.85 ish at the mo

    Be interested to hear your thoughts Paul ?

    Kindest Regards


    PS love the site -keep it up !

    1. Hi Hardeep,

      Thanks for your kind comments!
      Well spotted re the Director selling at Cupid. He seems to have exercised some in the money share options, and then simultaneously sold them.
      A Director selling a hefty wedge of stock is never a good thing, I agree. Although as they were Options, he would have had to sell at least half to cover tax & NI payments, I guess.
      And Options could be seen as part of remuneration, so cashing them in is understandable.

      But I agree that is probably the most likely reason for the weak share price before today. Thanks for flagging it up!

      Cheers, Paul.