Maynard Paton | Category: My Shares

ANDREWS SYKES: 90% Family Ownership May Explain 4.7% Yield After Satisfactory H1 2022 Reveals European Revenue Up 17%, £34m Net Cash And Welcome £7m Special Dividend

30 April 2023
By Maynard Paton

Results summary for Andrews Sykes (ASY):

A satisfactory performance, with H1 revenue reaching a new £38m high, H1 profit gaining 8% and the welcome declaration of a £7m special dividend.

Assisted by strong Italian progress, European revenue climbed 17% to represent 27% — a record proportion — of the total top line.

A healthy 22% margin and favourable cash conversion lifting net cash to £34m left the accounts in good shape.

A bombshell delisting on AIM brings greater attention to ASY’s 90% family ownership and the associated ‘relationship agreement’ small-print.

The 10% free float may explain why the shares yield a useful 4.7% despite the robust financials, upbeat company-blog commentary and potential further European expansion. I continue to hold.

SYSTEM1: Proposed Board Changes Still Have My Support After Stefan Barden Explains Data-Platform Sales Focus, 5-Bagger Exit Ambition And ‘Now Or Never’ Vote Decision

07 April 2023
By Maynard Paton

Notice of general meeting summary for System1 (SYS1):

Confirmation of a vote on 21 April to i) appoint former director Stefan Barden as executive chairman; ii) demote founder John Kearon from executive to non-executive, and; iii) retire two non-executives.

Data and Data-led revenue advancing 33% during FY 2023 and 50%-plus during Q4 2023 suggests SYS1’s mooted 25% growth target is achievable.

My conversation with Mr Barden revealed his data-platform sales focus, plans for a £100m-plus exit and the reasoning behind SYS1’s $1 billion market-cap ambition.

SYS1’s proposed new US advisory team emphasised Mr Kearon’s advert-creative sales approach, which I now believe explains the group’s lowly revenue and lack of profit.

Shareholders have, according to Mr Barden, a “now or never” decision to support SYS1 becoming the “definitive” marketing-data platform with a potential 5-bagger outcome. I still support the proposed board changes and continue to hold.

UPDATE 17 April 2023: Following the publication of this blog post, Stefan Barden/James Geddes and SYS1 have referred to its contents within this RNS announcement issued on 13 April 2023. Mr Barden has since provided a further statement that is now published at the end of this blog post.

S & U: Record H1 2023 Prompts Management To Cite Broker’s £33 Price Target As £22 Shares Trade At Possible 1.2x NAV And Yield 6%

24 March 2023
By Maynard Paton

Results summary for S & U (SUS):

A seemingly lower-than-normal bad-debt charge underpinned a record H1 performance, which in turn supported fresh highs for net asset value (NAV) and the dividend.

Mixed signals remain at the primary motor-finance division, with encouraging collection rates offset by lingering pandemic-related provisions and talk of “choppy waters ahead” testing “policies and procedures“.

Bumper progress at the property-loan operation heralded the subsidiary declaring its maiden dividend and another divisional executive appointed to the board.

Debt remains under control at 42% of customer loans, although admin and other costs have reached their highest combined proportion of revenue since at least FY 2016.

Management’s webinar commentary cited a broker’s £33 price target, with subsequent RNSs suggesting the £22 shares are not expensive at a potential 1.17x NAV with a 6% income. I continue to hold.

SYSTEM1: Proposed Board Changes Have My Support After H1 2023 Cash Outflow Of £2m, Underwhelming Strategic Review And Frustrating Management Q&A

09 March 2023
By Maynard Paton

Results summary for System1 (SYS1):

H1 2023 revenue falling 15% to FY 2012 levels and underlying cash losses running at £2m-plus raised further doubts about SYS1’s services, marketing, pricing and expenditure.

Despite encompassing “all strategic options” and the board’s composition, a three-month strategic review simply “validated” SYS1’s existing plans with a greater focus on the United States.

A management presentation revealed the transition to automated Data services still requires old-style consultancy work, and overlooked questions about partnerships, cash flow and expenses.

The unsatisfactory H1, underwhelming strategic review and frustrating Q&A were thankfully followed by two former executives proposing very welcome board changes.

Fresh executive leadership seems needed to maximise SYS1’s “superb, proven suite of products” and re-establish worthwhile levels of profit. I support the proposed board changes and continue to hold.

MINCON: First Greenhammer Contract Heralds ‘Transformational Potential’ As H1 2022 Reveals Profit Up 18% Following 55% Construction Sales Surge

21 February 2023
By Maynard Paton

Results summary for Mincon (MCON):

A very satisfactory performance buoyed by healthy post-pandemic orders, showing revenue up 27% and profit up 18% to set new H1 records.

Positive progress was reported throughout the group, with construction-related sales up 55% helped by greater demand for specialist drilling.

The long-awaited Greenhammer system has won its first commercial contract and now offers “transformational potential” to MCON and the mining industry.

Greenhammer and other new developments may hopefully improve MCON’s financials, given the group’s modest margin, significant stock level, net debt and poor cash conversion.

The shares do not appear outrageously expensive on a possible 16x P/E, although the group’s expansion led by the dominant family owners has yet to deliver superior returns to outsiders. I continue to hold.

FW THORPE: FY 2022 Celebrates 20th Consecutive Annual Dividend Increase After Profit Up 29%, SmartScan Sales Up 49% And Encouraging Start Within EV-Charging Market

01 February 2023
By Maynard Paton

Results summary for FW Thorpe (TFW):

A record FY outcome (profit +29%) bolstered by the acquisition of Spanish firm Zemper that supported TFW’s 20th consecutive annual dividend increase.

Progress at Thorlux was supported by impressive SmartScan sales (+49%), with the innovative lighting system reducing running costs for customers by as much as 62%.

A positive Dutch performance has led to a reassuring non-exec appointment and an encouraging start within the electric-vehicle charging market.

Net cash of £39m may arguably be only £9m following the subsequent purchase of TFW’s largest customer plus the eventual earn-out for Zemper.

A possible 24x P/E seemingly reflects TFW’s healthy order book, savvy acquisition approach, distinguished operating history and growth opportunities beyond the UK and lighting. I continue to hold.

[Podcast] BIOVENTIX With Roland Head And Maynard Paton

IMPORTANT! The podcast below remains freely available, but from 1 August 2023 all my podcasts became part of a premium service for UK private investors. Please do consider joining if you enjoy the conversation. More details here >>

28 January 2023
By Maynard Paton

I have recorded a podcast with my good friend Roland Head. This time we talked about Bioventix, the antibody specialist that at the start of 2023 represented my largest shareholding. We discussed the wonderful economics of antibodies, information gleaned from the AGM and the research into testing for Alzheimer’s Disease:

TRISTEL: Pandemic-Disrupted FY 2022 Reiterates Reassuring 10-15%/Year Sales-Growth Ambition As US Regulatory Approval Now Relies Upon FDA ‘Negotiation’ Over Product Batches

12 January 2023
By Maynard Paton

Results summary for Tristel (TSTL):

Another pandemic-disrupted performance, although 10-15% per annum sales-growth guidance suggests hospital customers will soon resume normal purchasing activity.

Progress was complicated by an accounting U-turn, with Brexit stock-piling, share options, US costs and write-offs creating a wide range of profit outcomes.

Management webinar comments suggested a positive US regulatory verdict is dependent on a “negotiation” with the FDA concerning data tests using different product batches.

A useful 17% operating margin, net cash of £10m, worthwhile cash conversion and low capital requirements imply the group’s disinfectants still enjoy favourable economics.

An estimated 24x P/E for FY 2025 is not an obvious bargain, but a premium rating may be justified by a US product approval and hefty royalties appearing soon thereafter. I continue to hold.

My Portfolio: Year In Review 2022

01 January 2023
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 4,680-word post provides a ‘year in review’ of my current holdings. I recap how each business performed during 2022 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 2023 will most likely be caused by the shares I already own rather than any new shares I will buy.

I undertook the same annual review at the start of 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022.

My portfolio lost 23.3% during 2022. This other post explains that performance in more detail and clarifies how my portfolio begins 2023.

[Podcast] CITY OF LONDON INVESTMENT With Mark Atkinson And Maynard Paton

24 November 2022
By Maynard Paton

I have recorded another episode of The Private Investor’s Podcast with my good friend Mark Atkinson. We discussed City of London Investment (CLIG) and my recent share purchase, my AGM attendance and the company’s 9% dividend yield:

BIOVENTIX: Exceptional H2 Profit (+30%) Plus Promising Biotins Sales (+67%) Support Better-Than-Expected FY 2022 And 7th Consecutive Annual Special Dividend

22 November 2022
By Maynard Paton

Results summary for Bioventix (BVXP):

A somewhat better-than-expected FY performance, with record revenue and earnings supported by an exceptional H2 profit (+30%) that was bolstered by a post-pandemic recovery and stronger USD.

Encouraging sales progress from best-seller vitamin D (+13%), future big-seller troponin (+81%) and sudden surprise-seller biotins (+67%) more than offset lost income from an expired product.

Tweaks to management’s commentary plus a revised pipeline grid suggest the development work on dementia research now offers a greater chance of becoming a real money spinner.

The accounts remain in great shape, with an astonishing 82% H2 margin, terrific employee productivity and robust cash conversion leading to the company’s seventh consecutive annual special dividend.

Troponin’s finite income and a basic sum-of-the-parts valuation may explain why the £36 shares have not made headway during the last three years. I continue to hold.

M WINKWORTH: Yield Approaches 7% Despite Acceptable H1 2022, Quarterly Dividends Lifted 23% And Confidence Towards £2m Profit Forecast

04 November 2022
By Maynard Paton

Results summary for M Winkworth (WINK):

An acceptable H1 performance that would always struggle against the comparable (and exceptional) H1 but encouragingly matched the preceding H2.

The subsequent Q3 update provided reassuring ‘mini-budget’ commentary, reiterated an earlier £2.1m profit forecast and announced a further 23% quarterly dividend lift.

Claims of a leading SSTC market share may contradict statistics from Foxtons, with fresh leadership at the London rival set to create stiffer competition.

A robust 25% margin plus £4m net cash left the accounts in good order, although cash conversion was impacted by rising intangible expenditure and more franchisee loans.

The gloomy outlook for the economy and housing market looks responsible for the possible 10-13x P/E and yield that approaches 7%. I continue to hold.

[Podcast] SYSTEM1 With Mark Atkinson And Maynard Paton

23 October 2022
By Maynard Paton

I have recorded another episode of The Private Investor’s Podcast with my good friend Mark Atkinson. We talked about System1 and the investment potential of testing adverts:

CITY OF LONDON INVESTMENT: H2 2022 Profit Drops 20% And FuM Slides To $8.5b Although Yield Now Tops 8% And Run Of Net Inflows Extends To 4 Quarters

21 October 2022
By Maynard Paton

Results summary for City of London Investment (CLIG):

Rough market conditions causing funds under management (FuM) to fall 17% to $9.2b led to H2 net fee income dropping 5% and H2 profit diving 20%.

A post-year update showed FuM sliding a further 8% to $8.5b, but also the fourth consecutive quarter of net FuM inflows that may signal clients re-appraising CLIG’s ‘value’ approach.

Buying SPACs at discounts to cash helped merger partner KIM outperform the original CLIM division with 6% five-year annualised returns versus 3-4%.

Revenue “100%” denominated in the stronger USD, handy cash conversion plus net funds and investments of £30m counterbalanced an H2 margin squeezed to ‘only’ 42%.

Near-term earnings could now be running at 36p per share, which should still support the 33p per share dividend and 8%-plus yield at 400p. I continue to hold.

SYSTEM1: £100m Revenue Ambition Disappears Following Disappointing H2 Loss As Tender Offer Cancelled And Agitated Shareholder Initiates Strategic Review

24 September 2022
By Maynard Paton

Results summary for System1 (SYS1):

A disappointing FY 2022 performance, with a Q4 sales warning alongside greater costs leading to a small H2 loss.

SYS1’s ‘Reasons to Believe’ have been diluted, and hint at reduced long-term expectations following the disappearance of a £100m revenue ambition.

The transition to new data and consultancy services continues, with such income representing 51% of total revenue for FY 2022 and possibly 70% for Q1 2023.

A fresh non-exec reveals the agitated shareholder who has initiated a strategic review, which in turn led to the sensible cancellation of a tender offer.

Net cash represents 31% of the market cap, with long-term multi-bagger potential presently obscured by weak legacy services and costs running ahead of new-product revenue. I continue to hold.

Maynard Paton: “Hi Andrew With timescales, the AGM results RNS gave the standard ‘within six months’: “The Board notes that a recent…” 16 Nov 2023

Andrew Rolfe: “Maynard, Thanks for this. How long do we have to wait until the Board issues a formal response? They must…” 16 Nov 2023

Maynard Paton: “Hi Andrew, I have managed to contact George Karpus, obtain a copy of his AGM statement (reproduced below) and garner…” 16 Nov 2023

Maynard Paton: “Thanks Bertie. MTVW did say it had welcomed shareholder feedback earlier this year, and I speculate that feedback came from…” 29 Oct 2023

bertie: “Having been a shareholder for a number of years, it seems to me that the management is both cosy and…” 28 Oct 2023

Maynard Paton: “Mountview Estates (MTVW) AGM attendance 09 August 2023 Below are my notes from MTVW’s AGM. All five directors were present,…” 28 Oct 2023

Andrew Rolfe: “Thanks, Maynard. Yes; I agree with all your comments on the voting. Tom Griffith has been around for a long…” 24 Oct 2023

Peter Broughton: “Many thanks to Andrew and Maynard for your AGM feedback and viewpoints. Very helpul indeed. I will be watching with…” 24 Oct 2023