BIOVENTIX: H1 Revenue Up Just 1% To Outpace Wider IVD Market As R&D Efforts Narrow Focus And P/E Stays An Elevated 32x

09 April 2021
By Maynard Paton

Results summary for Bioventix (BVXP):

  • Acceptable interim figures that showed revenue up 1% and profit down an underlying 2% after the pandemic reduced demand for routine blood tests.
  • The performance appeared to have outpaced the wider in vitro diagnostics (IVD) market, with a 20% dividend lift underpinning management’s confidence. 
  • Progress from the important vitamin D and troponin antibodies was positive, while R&D efforts seem now to focus on just three projects.  
  • The accounts remain healthy with a super 76% margin, light demands on cash flow, a £5m-plus cash buffer and a potentially understated investment.
  • Predictable income and a competitive ‘moat’ presently offset the effective dependence on just two products to keep the P/E at an elevated 32x. I continue to hold.

Read moreBIOVENTIX: H1 Revenue Up Just 1% To Outpace Wider IVD Market As R&D Efforts Narrow Focus And P/E Stays An Elevated 32x

MINCON: Direct Selling And Construction Projects Help Lift FY 2020 Profit By 28% But Margin Comparison Raises Further ‘Moat’ Questions

30 March 2021
By Maynard Paton

Results summary for Mincon (MCON):

  • Acceptable pandemic progress, with underlying revenue up 6% and profit up 28% due almost entirely to margin improvements.
  • Strategic efforts to sell drills direct and supply the construction market seem to have borne fruit and underpinned the higher earnings.
  • A margin comparison with larger rivals raises questions as to whether MCON’s products enjoy an indisputable competitive ‘moat’.  
  • Rising costs and enormous stock levels raise further questions about the group’s underlying economics. 
  • New products expected to “transform” drilling plus a desire to “innovate and disrupt the market” might justify the 19x-plus P/E. I continue to hold.

Read moreMINCON: Direct Selling And Construction Projects Help Lift FY 2020 Profit By 28% But Margin Comparison Raises Further ‘Moat’ Questions

[SharePad] Small-Cap Spotlight Report: NORCROS

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24 March 2021
By Maynard Paton

Let me start by confessing this article covers pension deficits.

What follows may not be that thrilling and does require you to concentrate. But please stick with me, especially if you have ever fallen victim to a ‘value trap’.

A burdensome pension scheme is a common reason why companies trade on permanently low ratings. The market essentially believes too much of their future profits will have to plug a retirement ‘black hole’ instead of being paid out as dividends.

A good example is Norcros, a £214 million manufacturer of bathroom showers, taps and tiles.

This share has stubbornly traded on a single-digit P/E for years…

Source: SharePad

… and studying the group’s pension situation goes some way to explain why.

Read my full Norcros article for SharePad.

Maynard Paton

FW THORPE: Dutch Profit Up 15% And Improved Management Outlook Support ‘Resilient’ H1 Results

23 March 2021
By Maynard Paton

Results summary for FW Thorpe (TFW):

  • Resilient” figures that showed both profit and dividend up 2% despite the pandemic, Brexit and a factory fire.
  • Management’s previously gloomy tone has improved and the second half is now expected to witness a “steady” performance.
  • Expectations seem pinned on TFW’s Dutch divisions, where profit gained a remarkable 15% and progress generally within the group has been positive.
  • The cash hoard improved further to a record £65m, but the group margin still languishes below the healthy 18%-plus level of the past.
  • A P/E of 22-29 feels generous, although might reflect TFW’s operational reliability, opportunities for market-share gains and/or potential growth beyond lighting systems. I continue to hold.

Read moreFW THORPE: Dutch Profit Up 15% And Improved Management Outlook Support ‘Resilient’ H1 Results

[SharePad] Screening For My Next Long-Term Winner: BEST OF THE BEST

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10 March 2021
By Maynard Paton

One of my favourite SharePad screens identifies good-quality companies that have grown without acquisition. The screen uses the following filter criteria:

  • Positive five-year turnover and operating profit growth;
  • A minimum 15% for both return on equity and operating margin;
  • Net borrowing of no more than zero (i.e. a net cash position), and;
  • A five-year acquisition spend of zero.

I ran the screen the other day and found 28 matches. I studied Best of the Best — or BOTB as it now calls itself — because I was already aware of:

  • Some very remarkable financials;
  • An extraordinary share-price performance, and;
  • Management deciding not to sell the business despite “extensive talks with a range of parties”.

Read my full Best of the Best article for SharePad.

Maynard Paton

TRISTEL: P/E Reaches Stratospheric 48x As H1 Figures Reveal Profit Improving Up To 31% And Headcount Increasing 19% To Prepare For Future Growth

09 March 2021
By Maynard Paton

Results summary for Tristel (TSTL):

  • A satisfactory pandemic-assisted performance, with revenue up 14% and profit up between 12% and 31% depending on the adjustments made.
  • Sales were bolstered by Brexit stock-piling, which will unwind during H2, with underlying UK progress still difficult to interpret.
  • Overseas sales improved a useful 20% although the United States regulatory project and other ventures remain very slow burners.
  • The 21% operating margin seems impressive in light of “one-off” payroll costs and the headcount increasing 19% to prepare for future growth. 
  • The 48x P/E looks stratospheric, but permanently greater demand for hospital disinfectants, further expansion plus growing economies of scale may justify a lofty rating. I continue to hold.

Read moreTRISTEL: P/E Reaches Stratospheric 48x As H1 Figures Reveal Profit Improving Up To 31% And Headcount Increasing 19% To Prepare For Future Growth

CITY OF LONDON INVESTMENT: H1 Figures Reveal Record $10.9b FuM And Astonishing 55% Margin But Client ‘Rebalancing’ Keeps P/E Stuck At 11x

24 February 2021
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • Very buoyant markets alongside the Karpus merger helped funds under management (FuM) reach a record $10.9b and lift the dividend by 10%.
  • Client ‘rebalancing’ led to FuM withdrawals and, despite fledgling strategies attracting new money, overall fund flows remain frustratingly low. 
  • Recent leadership retirements have not led to any dramatic changes and shareholder information has remained reassuringly comprehensive.
  • The Karpus merger has raised the group margin to an astonishing 55%, but future bonus-pool arrangements could reduce such profitability.
  • The possible P/E is 11 and near-term yield might top 7%, although the shares have been valued modestly for years and a sustained re-rating remains very elusive. I continue to hold.

Read moreCITY OF LONDON INVESTMENT: H1 Figures Reveal Record $10.9b FuM And Astonishing 55% Margin But Client ‘Rebalancing’ Keeps P/E Stuck At 11x

[SharePad] Small-Cap Spotlight Report: ARGO BLOCKCHAIN

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24 February 2021
By Maynard Paton

Let’s start with a wealth warning:

  • This article covers bitcoin miner Argo Blockchain;
  • I am not a bitcoin expert;
  • The bitcoin price is highly unpredictable;
  • Argo’s share price is highly unpredictable, and;
  • Argo issues frequent updates.

Still, Argo is a company worth studying… not least because the shares have soared 25-fold in just two months:

(Source: SharePad)

Let’s find out what is happening.

Read my full Argo Blockchain article for SharePad.

[SharePad] Screening For My Next Long-Term Winner: IG Group

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11 February 2021
By Maynard Paton

For some time now IG Group has been flashing on my SharePad filters.

According to my screens, the spread-betting firm offers:

  • High margins;
  • Decent returns on equity;
  • Cash-rich accounts;
  • Attractive five-year growth;
  • A lack of past acquisitions, and;
  • A modest P/E.

Those characteristics are an unusual mix in a market presently bereft of obvious quality bargains.

Let’s take a closer look.

Read my full IG Group article for SharePad.

Maynard Paton

[SharePad] Small-Cap Spotlight Report: LoopUp

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29 January 2021
By Maynard Paton

I have started a series of occasional articles for SharePad in which I shine an investigative spotlight on particular small-caps.

My aim is to demonstrate how to analyse companies in SharePad and beyond to help you become a more informed investor.

I start with LoopUp, a £44 million developer of software for remote meetings and conference calls.

The other month the company issued a sales warning that caused a 50% share-price crash.

LoopUp should have been a pandemic winner last year selling its remote-meeting systems… so why has the company disappointed?

Read my full LoopUp article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: Avon Rubber

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21 January 2021
By Maynard Paton

Happy 2021!

I trust SharePad will help bring you good fortune in what could be another twelve months of financial thrills and spills.

As usual I plan to trawl the market for interesting shares that I hope assists your company analysis and stock-picking.

I start the year with Avon Rubber, a FTSE 250 member that has rewarded shareholders handsomely since 2009 but recently experienced a trading wobble.

Read my full Avon Rubber article for SharePad.

Maynard Paton

My Portfolio: Year In Review 2020

01 January 2021
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This 4,631-word post provides a ‘year in review’ of my current portfolio holdings. I recap how each business performed during 2020 as well as provide a few remarks about valuation. 

These reviews are very useful to write — not least because they help ensure I am still invested for the right reasons! Any upsets I will suffer during 2021 will most likely be caused by the shares I already own rather than any new shares I will buy.

Read moreMy Portfolio: Year In Review 2020

Q4 2020: 2 Top-Ups And Up 16.9% For 2020

01 January 2021
By Maynard Paton

Happy 2021! I hope you survived last year’s volatile market and you continue to find my blog useful.

A summary of my portfolio’s 2020:

  • Total return of 16.9%*;
  • Eleven holdings recorded a gain while one holding recorded a loss;
  • Returns ranged from Daejan, up 43.5%, to System1, down 9.6%;
  • Two shares were topped-up: S&U and System1, and;
  • One share was sold entirely: Daejan.

(*Performance calculated using quoted bid prices and includes all dealing costs, withholding taxes, broker-account fees and paid dividends)

I publish a portfolio review after every quarter (Q1, Q2 and Q3), and this post recaps my October/November/December activity and my 2020 performance.

Read moreQ4 2020: 2 Top-Ups And Up 16.9% For 2020

SYSTEM1: Remarkable Q2 May Lead To 8x P/E And Potential Recovery Helped By ITV Progress, New Clients And Net Cash

11 December 2020
By Maynard Paton

Results summary for System1 (SYS1):

  • A pandemic-disrupted first half, albeit with headline numbers that disguised a remarkable return to profitability during Q2.
  • Revenue improvements within the Communications and UK segments suggest the tie-up with ITV is working.
  • A bold pricing structure, greater ambition clarity and even improved film-marking may explain why adidas has become a client.
  • The accounts are in reasonable shape, with significant net cash, positive cash generation and perhaps a decent profit margin following various cost savings.
  • Extrapolating the Q2 profit leads to a lowly 8x multiple and intriguing recovery/upside possibilities. I have bought more shares.

Read moreSYSTEM1: Remarkable Q2 May Lead To 8x P/E And Potential Recovery Helped By ITV Progress, New Clients And Net Cash