Category Archives: My Shares

My Portfolio: Year In Review 2019

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10 January 2019
By Maynard Paton

Happy January!

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

This 5,562-word post provides a ‘year in review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2019, as well as provide a few remarks about valuation.

As I mentioned this time last year, I find writing such reviews extremely useful — not least because I double-check my investment logic to ensure I am still invested for the right reasons! The upsets I will suffer during 2020 will most likely be caused by the shares I already own rather than by new shares I purchase.

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Daejan: £120 Per Share NAV Is More Than Double The £55 Share Price As H1 Update Reveals £46m US Property Devaluation

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31 December 2019
By Maynard Paton

Results summary for Daejan (DJAN):

  • The statement revealed fresh first-half records for revenue, up 12%, underlying operating profit, up 7%, and net asset value, up 4%.
  • New rent laws in New York led to a £46m devaluation and put DJAN on course to register its first annual valuation loss since 2009.
  • A 6% strengthening of the USD counterbalanced the New York devaluation and helped support net asset value.
  • The accounts remain conservatively financed, with capital expenditure reduced significantly following earlier cautious remarks from management.
  • The share price represents only 46% of net asset value — despite net asset value advancing 75% during the last five years. I continue to hold.
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Mountview Estates: H1 Figures Show NAV Inching 4% Higher To £96 Per Share After Management Suffered Significant AGM Protest Votes For The Third Consecutive Year

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28 December 2019
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • Brexit “uncertainties” led to a dull performance, with revenue falling 1%, underlying operating profit improving 1% and an unchanged dividend.
  • An improved gross margin and the disposal of four investment properties for prices well above book were encouraging.
  • Debt represents a modest 10% of the group’s property estate — which continues to be accounted for at cost.
  • This year’s AGM witnessed further protest votes against the independent non-executives, the board’s pay and the auditors.
  • MTVW’s book value increased by 4% to £96 per share, although the balance sheet could inherently be worth £200-plus per share. I continue to hold.
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Oleeo: Bombshell Tender Offer And Delisting Proposal Forces My Exit At A 30% Loss

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23 December 2019
By Maynard Paton

Results summary for Oleeo (OLEE):

  • A bombshell tender offer and delisting proposal overshadowed details of the 2019 results.
  • I have tendered my full holding and recorded a 30% loss after owning the shares for four years.
  • The tender offer was not exactly generous, given OLEE’s net cash represented 93% of the tender valuation.
  • A delisting was always a risk when the executive chairman (and related parties) owned 84% of the business.
  • Full-year revenue climbed 7% to reach a new high, although the significant development expenditure seen since 2015 is set to depress profit for at least another year. 
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System1: As H1 Figures Show Just 4% Top-Line Growth And AdRatings Burning £2m A Year, Could ITV’s Euro 2020 Competition Validate A Potential Recovery?

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20 December 2019
By Maynard Paton

Results summary for System1 (SYS1):

  • Another unremarkable performance, with underlying gross profit up 4% and profit (without AdRatings) rebounding 24% due mostly to improved cost control.  
  • The start-up AdRatings service continues to lose £2m a year and is increasingly dictating the company’s progress, potential and valuation.
  • An ITV competition to determine the most “emotionally engaging” advert during Euro 2020 could create extra recognition for System1-type marketing and SYS1’s services. 
  • The accounts remain cash rich and the business (without AdRatings) exhibited a healthy 21% margin.
  • The P/E could be anywhere between 8 and 26 depending on how AdRatings, share-based payments and the cash position are viewed. I continue to hold.
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Bioventix: Satisfactory 2019 Results Reveal (Yet Another) Special Dividend And Indicate Growth During 2020-2025 Depends Entirely On Troponin

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17 December 2019
By Maynard Paton

Results summary for Bioventix (BVXP):

  • Satisfactory double-digit growth spearheaded by notable demand for the group’s main antibody.
  • Progress beyond 2020 now appears dependent entirely on the new troponin product, revenue from which remains low.
  • An unsettling tweak to management’s outlook suggests the pipeline antibodies may require a further five years of development.
  • The accounts remain in excellent shape with terrific margins, appealing equity returns and minimal reinvestment requirements that have prompted yet another special dividend. 
  • The valuation remains rich with an underlying P/E of 28. I continue to hold.
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Tristel: Record Annual Figures (Once Again) And Impressive Three-Year Targets Support An Understandable 30x P/E

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12 December 2019
By Maynard Paton

Results summary for Tristel (TSTL):

  • Record annual figures for the sixth consecutive year, supported by satisfactory progress both within the UK and abroad.
  • The underlying performance was complicated by Brexit stock-piling, an acquisition, US regulatory costs and option expenses. 
  • The publication of new three-year financial targets was impressive, and suggested the company could grow organically at 10-15% per annum. 
  • The accounts are still healthy with high margins, net cash and respectable cash generation. 
  • The valuation remains understandably rich with an estimated underlying P/E of 30. I continue to hold.
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Andrews Sykes: Milder Winter Leaves H1 Profit Down 25% Although Margins Remain High, Cash Exceeds Debt And Current Trading Signals A Better H2

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02 December 2019
By Maynard Paton

Results summary for Andrews Sykes (ASY):

  • Revenue dropped 8% and operating profit dived 25% following lower demand for ASY’s heaters and boilers.
  • European operations continue to represent almost a quarter of the business, with new depots opened recently in France.
  • Accounts now affected by IFRS 16, although the fundamental attractions of decent margins (19%) and net cash (£20m) remain in place. 
  • Outlook comments appeared encouraging, with the company blog suggesting busy demand for pumps to combat flooding.
  • The underlying P/E could be 16 and the yield is 3.9%. I continue to hold.
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Getech: H1 Results Reiterating ‘Lumpy’ Revenue, Fragile Accounts And Other Drawbacks Prompt My Exit At A 47% Loss

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02 December 2019
By Maynard Paton

Results summary for Getech (GTC):

  • Revenue fell 15% to its lowest first-half level since 2010. At least the H1 operating loss did not increase from H1 2018.
  • GTC continues to be dependent on oil and gas operators purchasing its “market leading” data — the income from which remains “lumpy”. 
  • The level of recurring revenue implies a lot of work is needed before GTC can sustain positive earnings.  
  • The accounts are still rather fragile, with cash flow shored up by tax credits and capitalised development costs becoming more significant.  
  • Delays to both a Sierra Leone project and a property sale have not helped support the £9m market cap. I have sold out entirely.
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S & U: Record H1 Figures Show Profit Up Only 3%, Although Welcome News On Bad Debts Now Signals A ‘Resumption’ Of Growth

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19 November 2019
By Maynard Paton

Results summary for S & U (SUS):

  • Record first-half figures that showed revenue up 7%, operating profit up 3% and the dividend up 6%.
  • Bad debts within the Advantage car-loan division have started to subside following 18 months of sharp increases.
  • Management remains upbeat as loan applications continue to flood in, and has appointed an industry ‘heavyweight’ as the new Advantage MD.
  • Progress at Aspen Bridging was “slightly short of expectations” but the division’s long-term potential could be considerable. 
  • Possible P/E of 11 and yield of 5.8% do not appear expensive if indeed the business can enjoy “a resumption of [its] usual rates of growth”. I continue to hold.
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Tasty: Woeful H1 Results Leave Shareholders Relying On Bumper Christmas Bookings To Avert Terminal Cash Trauma

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07 November 2019
By Maynard Paton

Results summary for Tasty (TAST):

  • Woeful figures showed weaker revenue and greater losses — with the excuses this time including Brexit rather than unfavourable weather and the World Cup.
  • A £3m equity placing has shored up the balance sheet, while an absence of further write-offs and utilised provisions lends support to turnaround hopes. 
  • This year’s Christmas performance is crucial, with TAST going all out to capture festive-party bookings. Management’s outlook remarks seemed encouraging.
  • Poor Christmas trade causing further cash flow traumas could leave TAST no option but to de-list.  
  • The market cap is £4.1m for sales of £45m from 57 restaurants. I continue to bravely/stupidly hold.
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FW Thorpe: 2019 Results Declare Record £57m Cash Hoard Despite Slowing LED Sales And Brexit Reducing Profit By 10%

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18 October 2019
By Maynard Paton

Results summary for FW Thorpe (TFW):

  • “Ongoing economic uncertainty” caused by Brexit led to flat sales and lower profit. 
  • Talk of a “healthy order book” provides hope that trading won’t deteriorate into 2020. 
  • Comments concerning new products imply slowing LED growth and a plucky move into non-lighting applications.
  • Accounts boast enormous £57m cash hoard that could be used for acquisitions — or (fingers crossed) further special dividends.
  • Underlying P/E of 19 seems optimistic given recent progress. I continue to hold.
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M Winkworth: Subdued H1 Results Leave P/E At 10x As Foxtons Beaten Once Again In Brexit-Stifled Market

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23 September 2019
By Maynard Paton

Results summary for M Winkworth (WINK):

  • A standstill London property market left first-half revenue down 3% and profit unchanged. 
  • Subdued trading conditions have persisted since the Brexit vote and are likely to continue until the “political and economic uncertainty” clears. 
  • Further market-share gains have been won from London rival Foxtons, while the online competition continues to struggle.
  • The accounts remain simple, high-margin and cash-flush.
  • A possible P/E of 10 and yield of 6.6% do not appear expensive should earnings ever resume their momentum. I continue to hold.
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Tristel: 2019 Open Day Yields No Revelations Although Encouraging Sales Developments Have Emerged In The UK, France And Italy

04 September 2019
By Maynard Paton

Trading update and presentation summary on Tristel (TSTL):

  • TSTL’s 2019 open-day presentation and the associated scuttlebutt did not yield any ground-breaking news. 
  • Unpicking the accompanying trading update suggested second-half UK sales gained an impressive 12%.
  • However, the contribution from international operations was distorted by the purchase of Ecomed in November.
  • The former Ecomed boss was confident sales in France could one day exceed those in Germany — TSTL’s largest overseas market. 
  • The purchase of the group’s Italian distributor — which has expanded quickly during recent years — appears very sensible. 
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Mincon: Remarkable €8m Disposal And Promising ‘Challenger’ Contracts Offset Mixed H1 Trading And 14% Profit Drop

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27 August 2019
By Maynard Paton

Results summary for Mincon (MCON):

  • Mixed progress, with little underlying revenue growth and profit down 14% due to a “softening market”.
  • Earnings were bolstered by the remarkable €8m disposal of a subsidiary purchased 15 months earlier for effectively €1m.
  • New ‘challenger’ plan of selling direct to customers appears to have started well with two new contracts won.
  • Financials could be improved after accounts show modest margins, notable write-offs and significant working-capital investment.
  • The underlying P/E of 20 is not a bargain. I continue to hold.
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Daejan: NAV Reaches New £119 Per Share High But Management Remarks Of Slowing Growth Now Leaves Price-To-Book At 46%

14 August 2019
By Maynard Paton

Results summary for Daejan (DJAN):

  • These full-year figures set new records for revenue, up 9%, net asset value, up 7% and the dividend, up 3%.
  • The 3.5% valuation gain was DJAN’s lowest since 2012 following the “uncertainty” caused by Brexit. Management remarks suggested current-year growth could slow further.
  • A significant purchase in the States has lifted the proportion of US properties to 29% of the group’s estate.
  • The accounts remain conservatively financed and the property valuations continue to appear prudent.
  • The share price represents only 46% of net asset value — the lowest percentage for seven years. I continue to hold.
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City Of London Investment: Dividend Yield Still Tops 6% After Mixed 2019 Summary Shows FUM At Record (GBP) High But Fee Rates Sliding Lower

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26 July 2019
By Maynard Paton

Results summary for City of London Investment (CLIG):

  • These 2019 summary figures contained no surprises, as lower funds under management (FUM) throughout the year left revenue down 6% and profit down 16%.
  • FUM ironically ended the year at its highest-ever level in GBP terms (£4.2b), as client money once again trickled out of the main emerging-market funds and in to other strategies.
  • The overall fee rate paid by clients slid from 80 basis points to 76 basis points.
  • The accounts continue to sport high margins, a robust return on equity, decent cash flow and net cash.
  • The P/E is approximately 10 and the yield tops 6%, although the shares have traded on a similar rating for years. I continue to hold.
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Mountview Estates: 2019 Results Show Encouraging H2 As NAV Climbs To £94 Per Share And Closer To £97 Share Price

15 July 2019
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • Brexit “uncertainties” led to MTVW’s lowest annual revenue and earnings since 2013.
  • At least the dividend was held and net asset value reached a fresh £94 per share high.
  • A higher gross margin during the second half was encouraging and may indicate MTVW is enjoying slightly stronger sale prices.    
  • Debt represents a low 12% of the group’s property estate — which continues to be accounted for at cost.
  • My sums suggest MTVW’s balance sheet could actually be worth £200-plus per share — more than double the recent share price. I continue to hold.
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System1: 2019 Results Prompt Awkward Questions After Woeful £3k AdRatings Revenue

25 June 2019
By Maynard Paton

Results verdict on System1 (SYS1):

  • An unspectacular performance with gross profit unchanged and profit rebounding due only to cost cuts.  
  • The new AdRatings service suffered a woeful start after generating revenue of just £3k.
  • The lack of all-round progress prompts awkward questions as to whether the group’s advert-analysis services are actually of much interest to the marketing industry.
  • The accounts remain cash rich and would exhibit respectable ratios were it not for the chunky AdRatings start-up costs.
  • The P/E could be somewhere between 10 and 15 assuming AdRatings one day breaks even (or is scrapped). I continue to hold.
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Andrews Sykes: 2018 Results Show Profit Rising 18% To New High But Absence Of ‘Cautiously Optimistic’ Outlook Hints At Weaker 2019 Figures

22 May 2019
By Maynard Paton

Results verdict on Andrews Sykes (ASY):

  • Very favourable weather helped revenue gain 10% and profit jump 18% to set new records.
  • European sales soared 24% to represent almost a quarter of the business, and continue to offer further potential.
  • Accounts showcased wonderful margins, robust returns on equity, reassuring cash levels and respectable cash flow. 
  • Absence of “cautiously optimistic for further success” within management’s outlook hinted that 2019 may not be as buoyant as 2018.
  • The underlying P/E could be 16 while the yield is 3.3%. I continue to hold.
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Getech: 2018 Results Showcase Impressive 24% Products Revenue Gain But Full Profit Recovery Remains Dependent On Stronger Oil Price

10 May 2019
By Maynard Paton

Results verdict on Getech (GTC):

  • Total revenue gained 11% to set the highest level since 2015. The dominant and more attractive Products division impressed with a 24% revenue improvement.
  • Progress was achieved in particular by a last-gasp $3.2m sale that contributed approximately 30% to the top line.
  • Profit was hampered by the loss-making Services division, although significant cost savings have since been made.
  • The direction of the oil price may largely dictate whether GTC’s oil-exploration software sells well (or not) during 2019.
  • The £11m market cap requires greater earnings to underpin obvious upside potential. I continue to hold.
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Oleeo: 155-Word H1 Statement Could Strangely Mark The Low Point For Earnings As £13m Market Cap Compares To £11m Net Cash Position

07 May 2019
By Maynard Paton

Results verdict on Oleeo (OLEE):

  • A terse 155-word statement revealed an unsurprising 50% profit plunge as OLEE extends its “capacity to suffer” to four years.
  • At least revenue continues to inch ahead and might even be growing at a reasonable pace if the largest customer is excluded.
  • Recent client installations include all four Welsh police forces — cementing OLEE’s 50%-plus share of supplying UK police recruitment IT.
  • A lack of guidance for the full-year could strangely mark the low point for earnings. 
  • A £13m market cap is almost entirely supported by the £11m net cash position. I continue to hold.
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M Winkworth: Franchisees Continue To Gain On Foxtons As Acceptable 2018 Figures Support Yield Of 6%

18 April 2019
By Maynard Paton

Results verdict on M Winkworth (WINK):

  • Collecting a greater proportion of franchisee estate-agent income supported an acceptable rate of growth.
  • Subdued sector conditions likely to persist until “relative [political] stability” emerges. 
  • Further market-share gains won from London rival Foxtons, while threat of online competition continues to subside.
  • Accounts still exhibit high margins, a cash-flush balance sheet and appealing returns on equity.
  • P/E of 11 and yield of 6% do not appear expensive should earnings resume their momentum. I continue to hold.
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Bioventix: Bumper H1 Results Showcase ‘Modest’ 24% Growth As Renewed Troponin Optimism Helps Sustain 34x P/E

16 April 2019
By Maynard Paton

Results verdict on Bioventix (BVXP):

  • Very satisfactory 24% growth led by ongoing “modest” demand for the group’s vitamin D antibody.
  • Effect of terminated product licence may have obscured an underlying 28% revenue advance.  
  • Fledgling troponin product plus various pipeline developments offer intriguing long-term potential.  
  • First-class accounts continue to exhibit terrific margins, net cash and scope for further special dividends.
  • Valuation remains understandably rich with an underlying P/E of 34. I continue to hold.
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S & U: Record FY Results Show Dividend Up 12% But Management Hints Of Slowing Growth Leave Yield At 6%-Plus

05 April 2019
By Maynard Paton

Results verdict on S & U (SUS):

  • Satisfactory double-digit growth supported mostly by additional car loans issued during the first half.
  • Rising bad debts clearly indicate borrowers are no longer as profitable or reliable as they once were.
  • Improved first-payment rate suggests underwriting tweaks have started to curb future write-offs.
  • Reduced level of customer lending during the second half generated surplus cash and lowered group debt.
  • P/E of 10.7 and yield of 6.2% reflect management hints of slowing progress. I continue to hold.
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FW Thorpe: H1 Results Confirm 10% Profit Drop As Cash Piles Up To New £53m Record

29 March 2019
By Maynard Paton

Results verdict on FW Thorpe (TFW):

  • Lower revenue and profit due to “challenging trading conditions” caused perhaps by the collapse of Carillion.
  • The statement’s highlight was management talk of orders having returned to “record levels”.
  • Fresh product developments continue and include “radical” new range of workplace lighting.
  • Accounts showcase huge £53m cash pile while dividend on course for 17th consecutive annual increase. 
  • Underlying P/E of 21 seems optimistic given recent progress. I continue to hold.
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Tasty: Equity Placing On The Way As Results Offer Glimmers Of Hope Amid Further Losses And Significant Debt

22 March 2019
By Maynard Paton

Results verdict on Tasty (TAST):

  • Miserable figures blighted by debts and losses that confirmed — albeit within the small-print — that an equity placing is on the way.
  • The shares are now a gamble based on how much shareholders are asked to raise and at what price.
  • Second-half trading offered hope through greater cash generation alongside improved sales per restaurant and per employee.
  • Restaurants continue to be sold for cash although current trading was described as “slow”.
  • Market cap now £4.2m for sales of £47m and 58 restaurants. I continue to hold.
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Mincon: Acceptable 2018 Results Show 10% Organic Growth And Outline ‘Disruptive’ New Drilling Product

20 March 2019
By Maynard Paton

Results verdict on Mincon (MCON):

  • Acceptable double-digit growth supported by encouraging organic sales and the purchase of Driconeq.
  • New ‘Greenhammer’ product appears to offer attractive possibilities through “disruptive technology”.
  • Year ahead to focus on consolidating operations after bumper orders created production constraints during 2017 and 2018. Recent trading not buoyant.
  • Accounts offer scope for improvement as hefty stock build-up unwinds, capital expenditure falls and cost savings are found.
  • The underlying P/E of 19 is not an obvious bargain. I continue to hold.
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Tristel: Record H1 Results Deliver Wonderful 28% Dividend Lift But Further FDA-Project Mishaps Dash Any Hope Of Early US Sales

28 February 2019
By Maynard Paton

Results verdict on Tristel (TSTL):

  • Very satisfactory double-digit growth supported by encouraging progress both within the UK and abroad.
  • A new product and a recent acquisition offer attractive medium-term potential.
  • Continued bungling of the US regulatory project raises awkward questions about the associated consultants and decision-makers.
  • Accounts remain in good shape with high margins, net cash and conservative reporting of ‘one off’ costs.
  • Valuation remains understandably rich with an underlying P/E of 26. I continue to hold.
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City Of London Investment: Dividend Yield Now 7.5% As H1 Profit Drops 21% And Tough Markets Extend Wait For Significant New Clients

18 January 2019
By Maynard Paton

Results verdict on City of London Investment (CLIG):

  • Monthly updates had already braced shareholders for lower funds under management — which in turn reduced first-half profit by 21%.
  • Tough markets have again prompted the fund manager to cut its projections, as fee rates are trimmed and costs creep higher.
  • As before, significant new clients are required to bolster earnings and support a decisive share-price re-rating.
  • I am hopeful the replacement chief executive might one day re-energise the group’s marketing.
  • The accounts remain cash-rich and high-margin, and the shares yield 7.5%. I continue to hold.
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