Quality UK Investment Blog
01 January 2018
By Maynard Paton
Happy New Year!
I trust you have enjoyed the festive break and are now raring to do battle with the market for another twelve months!
This first Blog post of 2018 provides a ‘year in review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2017, as well as provide a few remarks about valuation.
29 November 2017
By Maynard Paton
Update on Daejan (DJAN).
Event: Interim results for the six months to 30 September 2017 published 29 November 2017
Summary: From what I could tell from the chairman’s 216-word update, DJAN has had to work hard of late to achieve somewhat modest progress. Currency movements and Brexit apparently kept a lid on this H1 performance, although NAV still managed to creep to a £103 per share all-time high. Dull updates from low-profile businesses often cause share prices to stagnate, and so I’m not too surprised the property group’s discount to book has widened since I first bought during 2015. I now wonder whether I should buy once again. I continue to hold.
23 November 2017
By Maynard Paton
Update on Mountview Estates (MTVW).
Event: Interim results for the six months to 30 September 2017 published 23 November 2017
Summary: It took MTVW’s chief exec just 265 words to describe the group’s weakest first-half performance for four years. Still, the nature of this property-trading firm means earnings can be somewhat variable from time to time. What is important, though, is that net asset value improved once again to a fresh high while debt continues to be reduced to a new low. My sums point to a possible NAV of £209 per share based on the firm’s long-term margin. I continue to hold.
20 November 2017
By Maynard Paton
Update on Record (REC).
Event: Interim results and shareholder presentation for the six months to 30 September 2017 published 17 November 2017
Summary: This was another frustrating RNS from the specialist currency manager. The cost base has ‘inevitably’ increased, yet revenue and client numbers remain stagnant and — as usual — there’s no real sign of the business enjoying an upturn anytime soon. At least REC continues to generate cash, retains a robust cash pile and distributes a healthy dividend. The yield is 5%, which is not too bad in the current market. I continue to hold.
10 November 2017
By Maynard Paton
Update on Castings (CGS).
Event: Interim results for the six months to 30 September 2017 published 10 November 2017
Summary: Last month’s statement concerning a review of CGS’s machining division had already braced me for worrying news. In the circumstances, this RNS was not too bad. Sure, the machining division has reported a loss and will cut back on certain projects. However, CGS’s main foundry operation appears to be performing very satisfactorily, with profit per tonne reaching a new high. I continue to hold.
03 November 2017
By Maynard Paton
Update on World Careers Network (WOR).
Event: Preliminary results for the twelve months to 31 July 2017 published 02 November 2017
Summary: These figures from the recruitment software developer were never going to be great. The overriding theme of the last three years — greater marketing and product investment — once again hit earnings and will continue to do so throughout 2018. The statement talked of some client-fee reductions, too. Still, at least overall revenue and the hefty cash position have both advanced to new all-time highs. Exactly when a profit revival will occur remains anyone’s guess — but I am hopeful the chief exec/71% shareholder will one day oversee a recovery. I continue to hold.
31 October 2017
By Maynard Paton
Update on Getech (GTC).
Event: Interim results for the twelve months to 31 July 2017 published 31 October 2017
Summary: These results were never going to show a major turnaround, but glimmers of hope continue to emerge at the geoscience software specialist. In particular, a new chief exec has cut costs, reorganised the firm and spotlighted some of the company’s product attractions. True, minimal earnings are likely during the short term. But with the upbeat stock market making obvious buying opportunities hard to find, I am beginning to warm to GTC’s recovery potential. I continue to hold.
27 October 2017
By Maynard Paton
Update on System1 (SYS1).
Event: Interim results and shareholder presentation for the six months to 30 September 2017 published 27 October 2017
Summary: The marketing-services group had already alerted investors to these disappointing figures. However, the setback was explained honestly by management and I note 50% of the business continues to grow at a fair rate. So everything does not appear completely lost just yet. That said, adopting the tag of industry ‘pioneer’ will always court competition and it seems rivals have tempted some customers away. The share price has been thumped since the summer, but is now looking quite interesting. I continue to hold.
25 October 2017
By Maynard Paton
Update on Tristel (TSTL).
Event: Final results and shareholder presentation for the year to 30 June 2017 published 19 October 2017
Summary: July’s trading statement from this medical disinfectants specialist had already signalled these record results. However, the update showed underlying revenue growth of just 7%, with the UK up 3% and overseas up 10%. I’ve therefore had to delve deep into the numbers to ensure TSTL’s main products continue to sell relatively well. At least the company’s accounts and recent acquisition showed more obvious appeal. I must confess, I am nervous comparing the share-price valuation against the medium-term expansion potential, especially with the prospect of sizeable North American revenue as distant as ever. I continue to hold.
16 October 2017
By Maynard Paton
Update on Bioventix (BVXP).
Event: Preliminary results for the year to 30 June 2017 published 16 October 2017
Summary: The antibody specialist delivered another outstanding set of results, as astonishing margins, robust cash production and magnificent equity returns once again underlined the group’s wonderful economics. However, matters were tempered somewhat by management remarks about the immediate revenue potential of a new product. It could mean progress during 2018 won’t be very impressive, which may leave the current 29x multiple rather exposed. I’m hoping things work out for the best, and continue to hold.
29 September 2017
By Maynard Paton
Happy Friday! I hope you continue to enjoy my Blog… and that your shares have fared well during the summer.
After experiencing positive first and second quarters, my portfolio has maintained its gains and its performance has improved to 14.0% for the year so far.
Furthermore, following an inactive second quarter, I have since dusted off my share-dealing account and executed a few buys and sells.
I have top-sliced one holding and added to two existing holdings. More on those trades a bit later.
Sadly, I have to admit that — once again! — a lot of my time of late has been absorbed by matters outside of investing.
While I’ve managed to keep on top of the news from my own portfolio, I’ve still not had the chance to study other companies and publish fresh watch-list reviews.
28 September 2017
By Maynard Paton
Update on Andrews Sykes (ASY).
Event: Interim results for the six months to 30 June 2017 published 28 September 2017
Summary: I was very satisfied with ASY’s first-half progress. The specialist hire group reported positive performances both within the UK and overseas and could now be on course to deliver its best-ever annual results. A 20%-plus operating margin and substantial net cash remain key bookkeeping features, while management hints of an encouraging second half have kept the share price buoyant. I continue to hold.
26 September 2017
By Maynard Paton
Update on S & U (SUS)
Event: Interim results for the six months to 31 July 2017 published 26 September 2017.
Summary: These results displayed further “steady and sustainable” growth from the used-car loan firm. Although the seasoned executives remain optimistic about the group’s prospects and the wider economy, margins have dipped once again as the impairment charge representing potential bad loans continues to rise. Still, the 11-12x multiple appears modest given the company’s growth rate and there is a near-5% income, too. I continue to hold.
22 September 2017
By Maynard Paton
Quick update on FW Thorpe (TFW).
Event: Preliminary results for the twelve months to 30 June 2017 published 21 September 2017
Summary: Yet again this lighting specialist has delivered a very satisfactory annual performance, with revenue and profit attaining fresh all-time highs and the dividend lifted for the fifteenth consecutive year. Although the group’s largest division appears to be performing very well, other subsidiaries did not enjoy the very best of second halves. Management comments about 2018 seemed quite cautious, too. The accounts remain in pristine condition, but I am mindful of the shares trading at a rich multiple. I continue to hold.
13 September 2017
By Maynard Paton
Quick update on M Winkworth (WINK).
Event: Interim results for the six months to 30 June 2017 published 13 September 2017
Summary: These figures could have been a lot worse, given the estate-agency firm remains dependent mostly on the standstill London property market. The major highlight derived from the statement was that WINK continues to outperform Foxtons, and it appears the group is now using the difficult sector to expand its franchising network. Meanwhile, the financials remain in order, the outlook seems relatively promising and yet the valuation is still in the doldrums. I continue to hold.
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