My Shares

MINCON: Mixed H1 Suffers Pandemic Disruption And Extends ‘Moat’ Questions As Management Expects A Better H2 After Creating A ‘Platform For Future Growth’

22 September 2021
By Maynard Paton

Results summary for Mincon (MCON):

  • A very mixed H1 performance, as record €67m six-month revenue contrasted with profit down as much as 13% due to general pandemic disruption.
  • European construction revenue encouragingly climbed 50% supported by numerous smaller projects and innovative sector products.
  • Customer testing of the “disruptive” Greenhammer system remains on hold, although other developments are now “poised to deliver“.
  • The move to selling a wider range of equipment direct to customers continues to limit margins/returns on equity/cash flow and raise doubts about an indisputable competitive ‘moat’.
  • While a P/E of 20 is not a clear bargain, the long-time family management expects a stronger H2 and claims to have established a “platform for future growth“. I continue to hold.

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SYSTEM1: Better-Than-Expected FY 2021 Results Reveal Accelerating Data Transition And Bold £1 BILLION Market Cap Opportunity

07 September 2021
By Maynard Paton

Results summary for System1 (SYS1):

  • A better-than-expected H2 accompanied some bold management commentary that cited an eventual £1 billion market cap. 
  • The acceleration towards ‘scalable’ data products continues, with ‘disruptive’ pricing and partnerships with ITV and LinkedIn spearheading the transition.  
  • Downgraded option targets and upgraded director pay looked awkward given the optimistic narrative and receipt of government pandemic support.
  • Greater net cash, a mooted share buyback and a 21% adjusted H2 margin suggest the accounts have recuperated from their pandemic nadir.
  • Despite extra growth investment limiting near-term earnings progress, long-term multi-bagger upside may still be obtainable. I continue to hold. 

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MOUNTVIEW ESTATES: Estimated NAV Still Surpasses £200 Per Share After Remarkable H2 Shows Welcome 1.55x Sales Premium And 12.5% Final Dividend Lift

15 July 2021
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • A respectable performance supported by a remarkable H2 comeback, with full-year profit up 5% after declining 18% during a pandemic-disrupted H1.
  • Property sales realising a welcome 1.55x premium to their 2014 valuation alongside the first dividend lift for three years suggest favourable near-term trading. 
  • A small text change to AGM-related statements imply some unhappy shareholders have started to engage with management. 
  • Debt of £22m stands at a 21-year low and represents just 5% of the £398m property estate.
  • Book value inched to a record £101 per share, although my calculations still point to a balance sheet inherently worth beyond £200 per share. I continue to hold.

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ANDREWS SYKES: FY 2020 Small-Print Suggests ‘Comparable’ Performance For FY 2021 After H2 Profit Drops 37%

25 May 2021
By Maynard Paton

Results summary for Andrews Sykes (ASY):

  • H2 revenue down 20% and H2 profit down 37% disappointingly confirmed a lower level of pandemic resilience than H1. 
  • However, the main UK equipment-hire subsidiary apparently delivered a FY 2020 profit only “marginally below” that of FY 2019.  
  • Commendable ‘going concern’ text revealed a “cautiously realistic” assumption of a “comparable” performance for FY 2021.
  • The books remain healthy with robust margins, effective working-capital management and sizeable net cash, although the pension scheme is absorbing extra contributions. 
  • A possible P/E of 16-17 and yield of 4% do not appear completely outrageous given the appealing financials and potential for further European expansion. I continue to hold.

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TASTY: Awful FY 2020 Performance Reveals Improved H2 Cash Flow As Barclays Loan, Imminent Indoor Dining And 16p Options Target Support Pandemic Recovery Hopes

07 May 2021
By Maynard Paton

Results summary for Tasty (TAST):

  • A predictably awful performance, with total sales down 46% and sales at operating restaurants down by approximately 30%.
  • H2 was not as bad as H1, witnessing improved cash flow and much lower write-offs.
  • A loan from Barclays may indicate TAST’s future is “assured“, but effective net cash of £0.25m is not a huge safety buffer.
  • Indoor dining should resume within two weeks, which ought to enhance cash flow and alleviate overdue obligations. 
  • A new option scheme that pays out in full if the shares reach 16p gives some indication of the possible recovery upside from the recent 7p. I continue to hold.

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M WINKWORTH: Record Quarterly Dividend Supports Potential 5% Income After FY 2020 Figures Imply 38% Returns On New Investments

30 April 2021
By Maynard Paton

Results summary for M Winkworth (WINK):

  • A revitalised property market led to a much stronger H2, with management optimism underlined by a record dividend for Q1 2021.
  • Impressive market-share gains continue to be won from London rival Foxtons.
  • Early contributions from in-house branches are encouraging, with implied returns on investment of 38%.
  • The accounts remain in good order with net cash, respectable margins, positive cash flow and satisfactory returns on equity.
  • A possible P/E of 11-14 and a potential 5% income may offer upside should buoyant trading convert into much higher earnings. I continue to hold.

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S & U: £24 Shares May Already Reflect Pandemic Recovery After New Loan Quality Remains At 5-Year High And Management Comments Of Property Profit Quintupling

22 April 2021
By Maynard Paton

Results summary for S & U (SUS):

  • A predictably Covid-blighted statement that confirmed extra write-offs of £19.5m, full-year profit diving almost 50% and the first annual dividend cut since at least 1987.
  • Various calculations indicate credit quality at SUS’s motor-finance division declined by approximately 10%, due mostly to payment holidays.
  • Management’s webinar comments claimed property-loan profit could quintuple to £5m within the next three years.
  • Reduced net debt, interest charges at 3% plus fresh borrowing facilities suggest no obvious funding concerns.  
  • The £24 shares may already reflect improved collection rates, recovering loan transactions, new loan quality at a five-year high and the generally upbeat directors. I continue to hold.

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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.

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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.

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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.

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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.

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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.

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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.

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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-making 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.

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TASTY: Survival Rests On Landlords, Barclays, Vaccinations And Christmas Burgers After H1 Covid Cash Burn Implies June 2021 Receivership

09 December 2020
By Maynard Paton

Results summary for Tasty (TAST):

  • Revenue down 59% led to a £10m operating loss after the pandemic guaranteed an awful performance.
  • Cash of £3.2m and six-month cash burn of £1.6m implies TAST will run out of money by June 2021.
  • Immediate survival hopes seem dependent on landlord negotiations, CVA hints, a loan from Barclays, UK vaccinations and Christmas burgers delivered to your door.
  • One pandemic positive: management has been forced/allowed to instigate much-needed changes to an underperforming restaurant estate.
  • The £4m market cap could be a bargain, assuming government restrictions are lifted, rents are reset, competition is reduced and a recovery one day takes place. I continue to hold.

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