Quality UK Investment Blog
26 May 2015
By Maynard Paton
Quick update on Mincon (MCON).
Event: Trading statement published 26 May.
Summary: A lacklustre Q1 update. Although underlying revenue managed to remain flat, margins have slumped as MCON’s drills and bits continue to face pricing pressure. I reckon the group’s Q1 profits may have fallen by 24%, while the net cash position is somewhat lower, too. I just hope the inherent strengths of this business can show through during the rest of 2015. I continue to hold.
22 May 2015
By Maynard Paton
Quick update on Tristel (TSTL).
Event: Trading update published 21 May.
Summary: At last — one of my shares has issued an ‘ahead of expectations’ trading statement! TSTL’s medical wipes appear to be selling very well and second-half profits now seem set to grow by 35%. There could be further upside, too, if TSTL’s past ‘sandbagging’ form is anything to go by. My valuation sums still suggest annual returns of 15%-plus could be earned. I continue to hold.
06 May 2015
By Maynard Paton
Quick update on Andrews Sykes (ASY).
Event: Final results published 06 May
Summary: Results better than I had expected. A dismal first half was followed by a less dismal second half and the outlook for 2015 appears relatively promising. Accounts still showcase solid financials and I’m pleased ASY’s 90% owner continues to share the wealth through sizeable dividends. The yield is 7.9% at 300p. I continue to hold.
06 May 2015
By Maynard Paton
Today I’m continuing my hunt for Watch List shares with a look at Bioventix (BVXP).
Here are the initial attractions that prompted this research:
Super profitability: Operating margins were a stratospheric 67% in 2014
Asset rich: The balance sheet carries net cash and freehold property
Owner management: The chief exec owns 12% of the business
As usual, I’m applying a question-and-answer template to help me pinpoint companies that match the criteria set out in How I Invest. I’m looking for as many Yes answers as possible.
24 April 2015
By Maynard Paton
Quick update on French Connection (FCCN).
Event: Trading update published 24 April
Summary: Profit warning — poor H1 Retail sales will mean greater-than-expected group losses this year. However, the profitable Wholesale and Licensing divisions continue to perform as expected. Turnaround possibilities remain, but the protracted wait has become just that bit longer once again. What’s needed now is some radical management action. I continue to hold.
15 April 2015
By Maynard Paton
Today I’m revealing one of the two new investments I’ve made during recent months.
The company in question is Mincon (MCON), a specialist engineer that designs, manufactures and sells drilling equipment for miners. I bought the shares during February and March 2015 at an average of 44.6p including all costs. The mid-price is now 54p.
All told, I feel this £114m Irish business is an excellent fit for my portfolio. Important attractions include a respectable competitive position, high margins, a cash-flush balance sheet and very favourable family management. A languishing share price and a possible P/E of just 10 also clinched it for me.
However, MCON is by no means perfect. In particular, the group is dependent on the vagaries of the mining sector, has an ambitious acquisition plan and does not boast the greatest of free cash flow.
A wide bid-offer spread and 71% boardroom ownership may put some people off, too.
14 April 2015
By Maynard Paton
Quick update on M Winkworth (WINK).
Event: Final results published 14 April
Summary: A quite satisfactory set of full-year results, albeit the second half produced flat profits. WINK has become slightly more dependent on the booming London property market, but its estate-agency franchising operation continues to produce super margins and high returns on equity. There are not many shares with such finacials that I have found that presently trade on a P/E of about 10. I continue to hold.
30 March 2015
By Maynard Paton
Quick update on Tasty (TAST).
Event: Preliminary results published 30 March
Summary: A very promising set of results, buoyed by a strong second half. Notable features included robust cash flow and the clearing of some debt, which might suggest TAST is able to expand significantly without hefty external financing. Either way, I firmly believe the family management here can replicate its earlier success at Prezzo (PRZ) and could perhaps quadruple TAST’s current market cap. I continue to hold.
24 March 2015
By Maynard Paton
Quick update on Getech (GTC).
Event: Interim results and acquisition details published 24 March
Summary: A better-than-expected set of results that was blessed with a reasonable outlook statement — a pleasant surprise given GTC serves the battered oil and gas industry. Progress was not perfect, though, with sizeable intangible expenditure and details of a substantial acquisition leaving me on ‘amber alert’. I am minded to await further results before considering any top-up. I continue to hold.
20 March 2015
By Maynard Paton
Quick update on FW Thorpe (TFW).
Event: Interim results published 19 March
Summary: Good set of reliable figures with revenues, profits, the dividend and net cash all moving higher. Progress was made throughout the group’s different divisions, with sales of LED products apparently booming. A loss-making subsidiary has also been sold. I could find no accounting worries and wish all my investments could issue such dependable results. I continue to hold.
20 March 2015
By Maynard Paton
Quick update on Pennant International (PEN).
Event: Annual results published 17 March
Summary: Headline results as expected, but they hid a weaker second half and some disconcerting cash-flow movements. The figures contained plenty of other irritations and worries, while the chairman’s statement was notable for what it did not say. All told, the results carried too many signs of profit trouble ahead and I sense PEN could return to its haphazard ways witnessed between 2000 and 2009. I have sold.
17 March 2015
By Maynard Paton
Quick update on French Connection (FCCN).
Event: Annual results published 17 March
Summary: Mixed results. The Retail division was subdued, and gave a disappointing second-half performance. However, trading at the Wholesale and Licensing divisions appeared promising. There was further welcome progress on cost cutting, too. This turnaround has still to really turn, and I’ve trimmed my recovery assumptions. But the upside potential remains sizeable. I continue to hold.
25 February 2015
By Maynard Paton
Here’s a an update on Tristel (TSTL).
Event: Half-year results published 25 February.
Summary: Figures met my expectations, showing good all-round progress. Management commentary noticeably upbeat — confidence underlined by first RNS mentions of group sales target and ‘North America’. Firm’s healthcare products remain attractive to investors — repeat purchase and patent protected. Share-price upside could be attractive if growth forecasts come good. I continue to hold.
12 February 2015
By Maynard Paton
Quick update on City of London Investment (CLIG).
Event: Half-year results published 11 February.
Summary: Figures already heralded by January trading statement — therefore no surprises. Previous guidance all repeated. Still on course to pay 24p per share dividend and support 7% dividend yield at 335p. Vague hints of dividend increase now emerging. Cash position remains high. P/E remains modest. I continue to hold.
6 February 2015
By Maynard Paton
Today I’m studying the smallest holding in my portfolio — M Winkworth (WINK).
In fact, this £16m estate-agency business represents less than 1% of my portfolio… and so is unlikely to send my wealth into orbit even if it does multi-bag!
I bought WINK at 90p during June and July 2011, but then sold 70% of my shares between August 2013 and February 2014 at an average of 173p.
At the time I was a bit worried about WINK’s substantial exposure to London’s booming housing market — and I probably would have sold the rest of my shares were it not for the price dropping to today’s 123p. Including some very useful dividends collected along the way, my total return to date has been a respectable 92%.
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