My Shares

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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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. 

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MOUNTVIEW ESTATES: Estimated NAV At £210 Per Share After H2 2022 Shows Average Sale Reaching £379k To Realise 66% Premium Over Allsop Valuation

02 September 2022
By Maynard Paton

Results summary for Mountview Estates (MTVW):

  • A steady FY 2022 performance, buoyed by an H2 that saw property sales achieve a record £379k average and realise a 66% premium to their 2014 Allsop valuation. 
  • The final dividend was lifted 11% while expenditure on new properties fell to a 13-year low after management expressed a desire to “not chase purchases at any price“.
  • Net debt remains very modest at just 5% of the property estate and reflects management’s concerns of forthcoming “difficult economic circumstances“.
  • Friction between major shareholders continues, with revised director-pay arrangements perhaps encouraging significant protest votes at the latest AGM.  
  • Net asset value remains at £101 per share, although the balance sheet could be worth £210 per share assuming all owned properties enjoy immediate ‘reversionary’ gains and are then sold at fair-market value. I continue to hold.

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BIOVENTIX: H1 2022 Reveals Dividend Up 21% And ‘Exciting’ Tau Biomarker Although Cash At 6-Year Low Now Reduces Special-Payout Prospects

26 August 2022
By Maynard Paton

Results summary for Bioventix (BVXP):

  • An unspectacular H1 performance, albeit accompanied by a 21% dividend lift, after further pandemic disruption left revenue down 8% and adjusted profit down 9%.
  • Muted progress from vitamin D and other established antibodies continues to leave near-term growth dependent on the fast-selling troponin product. 
  • The “exciting” potential of a Tau biomarker alongside the BVXP website selling pyrene test kits suggest positive developments within the research pipeline.
  • Net cash at £5m is the lowest for six years, and combined with standstill earnings seems likely to reduce the size of any FY 2022 special payout.
  • Troponin’s finite income and a resultant sum-of-the-parts valuation do not indicate an obviously compelling £33 share price. I continue to hold.

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ANDREWS SYKES: FY 2021 Discloses UK Hire Revenue Rebounding 17% To Deliver 34% Margin While Dividend Yield Remains Near 5% Despite Potential FY 2022 Heatwave Bonanza

18 August 2022
By Maynard Paton

Results summary for Andrews Sykes (ASY):

  • An encouraging performance, with profit recovering 35% following the pandemic to almost match the record set during FY 2018.
  • Additional reporting disclosures revealed ASY’s main UK Hire division enjoyed sales rebounding 17% and a wonderful 34% margin.
  • European operations expanded to 27% of group revenue following very strong progress, although Middle Eastern woes included an extra £1m provision. 
  • The books remain in good shape, with useful cash generation lifting net funds to £29m and perhaps increasing the possibility of another special dividend. 
  • An estimated 13-14x P/E and near-5% yield hardly seem expensive given the appealing financials, potential for an FY 2022 heatwave bonanza and scope for further European expansion. I continue to hold.

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