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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[SharePad] Screening For My Next Long-Term Winner: SDI GROUP

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08 September 2021
By Maynard Paton

Everybody loves a share that keeps going up.

SharePad lists 168 names that have delivered 15% or more annualised turns during the last one, three and five years:

(Source: SharePad)

SDI Group is ranked tenth of the 168 and its shares have certainly kept going up. They have surged 146% during the last twelve months and 12-bagged since 2016:

(Source: SharePad)

Let’s take a closer look.

Read my full SDI Group article for SharePad.

Maynard Paton

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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[SharePad] Small-Cap Spotlight Report: PURPLEBRICKS

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28 August 2021
By Maynard Paton

Investors love disruptors. Find a pioneering upstart that is stealing market share from industry dinosaurs, and your portfolio may enjoy a huge stock-market winner. Amazon of course is the textbook example.

But not every disruptive idea actually works. In some cases the old way may still be the best way.

Take estate agency. Despite vast amounts of investment and marketing, online estate agents presently handle only 8% of UK property transactions.

Let’s see what can be learned from Purplebricks shares, a company which has led a high-profile challenge against traditional estate agents — but has yet to prove truly disruptive.

Read my full Purplebricks article for SharePad.

Maynard Paton

[SharePad] Small-Cap Spotlight Report: HORNBY

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22 August 2021
By Maynard Paton

Turnarounds can be tempting.

You find a business that has hit big trouble with a stock price at rock bottom…

…but you believe your contrarian instincts will yield a huge return as the company enjoys a full recovery.

Mind you, distinguishing genuine turnarounds from shares heading for the graveyard is never easy. And even if the company does recover, the journey typically involves multiple false dawns and takes far longer than anyone ever expects.

One potential recovery worthy of consideration is Hornby. Although the manufacturer of the famous model trains has suffered numerous setbacks during recent years, the following bull points may attract the turnaround investor:

  • The company owns a collection of celebrated old brands that could be hard to replicate;
  • Customers include enthusiastic hobbyists, with the recent success of wonder-stock Games Workshop showing what is possible with such committed purchasers;
  • A previous company recovery led to a 10-bagger share-price gain;
  • One institution seems very keen on the group’s prospects by owning 75% of the stock;
  • The limited free float, £78 million market cap and absence of broker forecasts keep the company off many investors’ radars, and;
  • The latest results showed a return to profitability and a net cash position, which may negate the chance of further major problems.

Read my full Hornby article for SharePad.

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: ASOS

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28 July 2021
By Maynard Paton

One of my favourite screening strategies is to hunt for attractive growth companies with unloved share prices.

The criteria I use for these searches are:

  1. A negative share-price performance since the start of the year;
  2. A compound 5-year earnings growth rate of 10% or more;
  3. A forecast 1-year earnings growth rate of at least 0%, and;
  4. Net borrowing of zero or less (i.e. a net cash position).

The other day the filters returned only 14 matches:

(Source: SharePad)

I selected ASOS because the company:

  • Had the largest market cap on the list;
  • Boasts an incredible growth story, and;
  • Recently issued a trading statement that wiped 18% off the share price.

Read my full ASOS article for SharePad.

Maynard Paton

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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[SharePad] Small-Cap Spotlight Report: CALNEX SOLUTIONS

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15 July 2021
By Maynard Paton

Warren Buffett admitted the other year that he had not bought shares at an IPO since 1955.

“They’re picking the time to sell to you; I like it when I am picking the time to buy“, the investing master warned when asked about flotations.

Mind you, every great share went public at some point… and who would not want to have bought, say, Microsoft, at its IPO? (a 3,717-bagger since).

SharePad shows 47 companies joined the UK market during 2020:

(Source: SharePad)

I suspect Mr Buffett’s warning would apply to the majority of those 47 names. But maybe not to small-cap Calnex Solutions, which at first glance appears to be one of the more appealing new issues of last year.

Immediate highlights include:

  • A track record of profitable expansion;
  • Prospects of future double-digit growth;
  • A founder chief executive with a significant shareholding;
  • A competitive position based on in-house technical research, and;
  • Accounts that display high margins and net cash.

Could Calnex become a long-term IPO winner?

Read my full Calnex Solutions article for SharePad.

Maynard Paton

Q2 2021: 2 Top-Ups And 5 Lessons From Owning 5 Shares For 10 Years

01 July 2021
By Maynard Paton

Happy Thursday! I trust your shares are thriving and that you still find my blog useful.

A summary of my portfolio’s progress:

  • Q2 change: +7:4%*
  • Q2 trades: System1 and M Winkworth
  • YTD change: +13.2%*
  • YTD winners/losers: 9 winners vs 2 losers

(*Performance calculated using quoted bid prices and includes all dealing costs, withholding taxes, broker-account fees and paid dividends)

I am pleased the portfolio gains recorded during Q1 were extended during Q2. Recent RNSs from my portfolio have been mostly encouraging, and I anticipate boardrooms will remain optimistic as the pandemic subsides and social restrictions ease.

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[Podcast] RAMP Investing With Maynard Paton

24 June 2021
By Maynard Paton

I recently spoke to Jon Kingston on his Capital Employed podcast. I talked about:

  • My investing background and approach (more details here);
  • The types of companies I invest in;
  • Two recent purchases: System1 and M Winkworth, and;
  • What I learned from Jim Slater.

You can listen to the podcast here:


Alternatively you can listen through Youtube…

…or through the links below:

I mention these links at the end of the podcast:

Happy listening! 

Maynard Paton

[SharePad] Screening For My Next Long-Term Winner: IMPAX ASSET MANAGEMENT

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14 June 2021
By Maynard Paton

Everybody loves shares that keep going up.

SharePad lists 167 names that have consistently delivered 15% or more annualised returns during the last five years:

(Source: SharePad)

The shares of fund manager Impax Asset Management have certainly kept going up; they have almost tripled during the last twelve months and have 20-bagged since 2016.

The winning combination appears to have been:

  • Impressive profit growth driven by favourable long-term trends;
  • A ‘scalable’ business that could service extra customers without a commensurate increase to the workforce;
  • A shareholder register dominated by company insiders and a key client, and;
  • A modest valuation that gave scope for a significant P/E re-rating.

Let’s take a closer look.

Read my full Impax Asset Management article for SharePad.

Maynard Paton

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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[SharePad] Small-Cap Spotlight Report: WANDISCO

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21 May 2021
By Maynard Paton

The market is home to many companies with ground-breaking products that boast credible growth stories told by persuasive management…

…but which also need a bit more money from shareholders to see them through to profitability.

Sometimes they get the money they need and things work out.

And sometimes they get the money they need and, well, keep coming back for more.

WANdisco is one of those companies that keeps coming back for more.

Investors have handed $217 million to this software specialist since 2012…

…and yet customers, sales and profits remain extremely elusive.

But could WANdisco finally come good during 2021 after signing milestone deals with Microsoft and Amazon?

The directors are naturally optimistic, although they appear reluctant to help fund the company themselves.

Read my full WANdisco article for SharePad.

Maynard Paton

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.

Read more

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.

Read more

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