Quality UK Investment Blog
30 June 2017
By Maynard Paton
Happy Friday! I hope you continue to find my Blog useful… and that your portfolio is still performing well during 2017.
After experiencing a buoyant start to the year, I am pleased my investments have generally held on to their value during the last few months.
All in all, the recent news from my portfolio has not been too bad, with a few minor share-price gains helping my performance improve to 9.5% for the year so far.
23 June 2017
By Maynard Paton
Quick update on Record (REC).
Event: Final results and shareholder presentation for the twelve months to 31 March 2017 published 16 June 2017, and proposed tender offer.
Summary: There was a certain irony about these figures. REC makes its money by managing currency movements for clients… yet the group itself has prospered of late largely because the weaker GBP has translated into greater management fees. Whether REC’s clients have actually prospered is harder to say, as there still seems little evidence of a growing customer base. Still, I welcome REC’s decision to hand excess cash back via larger dividends, but the accompanying £10m tender offer does appear as if it was devised primarily to help REC’s founder plan for his retirement. With operating costs expected to rise, too, I reckon the tender price equates to an underlying P/E of 14-15. I continue to hold.
20 June 2017
By Maynard Paton
Quick update on Mountview Estates (MTVW).
Event: Preliminary results for the twelve months to 31 March 2017 published 15 June 2017
Summary: These figures were somewhat better than I had expected. The regulated-tenancy property trader produced a record level of revenue during the second half to counterbalance a rather disappointing first half, and the end result was not far off the very strong numbers delivered for the previous year. I was also pleased net asset value advanced further to a new high while borrowings were reduced to a fresh low. My updated sums now point to a possible NAV of £206 per share based on the firm’s previous gains on sold properties. I continue to hold.
16 June 2017
By Maynard Paton
Quick update on System1 (SYS1).
Event: Annual results and shareholder presentation for the twelve and fifteen months to 31 March 2017 published 15 June 2017
Summary: A change of year-end meant SYS1 had a second opportunity to impress shareholders with a bumper set of annual results. However, this time the group admitted recent trading had been “a little slower than expected” and the highly rated share price reacted accordingly. Still, the group’s executives remain confident about the long term and underlined their confidence by declaring a super 26.1p per share special dividend. I continue to hold.
14 June 2017
By Maynard Paton
Quick update on Castings (CGS).
Event: Annual results for the twelve months to 31 March 2017 published 14 June 2017
Summary: A lack of work at CGS’s smaller machining division meant these annual figures were the engineer’s worst since 2011. Thankfully there were no worrying omens for 2018 — the group’s order book apparently remains “steady” while the second-half performance even showed some promise. The hefty cash pile and a resilient dividend continue to be shareholder centrepieces, and talk of “robotic handling” suggests margin improvements may be on the way. My P/E of 13 does not indicate a bargain and I continue to hold.
23 May 2017
By Maynard Paton
Quick update on Andrews Sykes (ASY).
Event: Final results for the twelve months to 31 December 2016 published 11 May 2017
Summary: These results were very satisfactory and showcased ASY’s best-ever second-half. Notably, this supplier of air conditioners, heaters and water pumps said “robust operational management” rather than “extreme climatic conditions” had supported its positive progress. The accounts remain in good shape, too. With earnings now at their highest level since 2008, the share-price has re-rated to a P/E of 15. I continue to hold.
19 May 2017
By Maynard Paton
Quick update on World Careers Network (WOR).
Event: Interim results for the six months to 31 January 2017 published 28 April 2017
Summary: These first-half results were not too bad, not least because they included a record £5.1m revenue figure. However, the software developer did warn that rising costs would hurt earnings significantly during the second half of 2017 and throughout 2018. WOR recovered very well from its previous investment phase of 2009 and 2010, and I am left trusting the firm can repeat the trick once again. At least the accounts remain simple and flush with cash, and you could argue the underlying P/E is just 5. I continue to hold.
07 April 2017
By Maynard Paton
Quick update on Getech (GTC).
Event: Interim results for the six months to 31 January 2017 published 06 April 2017
Summary: Oh dear… you know you have a ‘debatable’ holding in your portfolio when the highlight of a results statement is an 18% reduction to the workforce. That sadly is the case with GTC, as the geoscience data specialist has slashed its cost base and now hunts for income sources away from its cash-strapped oil clients. These H1 numbers were otherwise quite unremarkable, although the new boss has issued a few glimmers of hope for some sort of turnaround. I continue to hold.
06 April 2017
By Maynard Paton
Quick update on M Winkworth (WINK).
Event: Final results for the twelve months to 31 December 2016 published 30 March 2017
Summary: These were never going to be great figures from the London estate-agency firm. However, at least WINK outperformed larger rival Foxtons while the favourable economics of the group’s franchising model remain quite clear. True, the immediate outlook for WINK is rather mixed and there is online competition to consider, too. However, all that seems priced into the P/E of 8 and 7%-plus income. I continue to hold.
31 March 2017
By Maynard Paton
Happy Friday! I hope you continue to find my Blog useful… and that your portfolio has started 2017 in good shape!
After experiencing a somewhat mixed performance during 2016, I am pleased my investments have generally performed well during the last few months.
Certainly the two new holdings I acquired last year — BrainJuicer and Bioventix — have helped powered my portfolio higher of late. And up until the other day at least, this full-time investing lark was becoming quite comfortable…
But then came another reality check.
Sadly I’ve been humbled yet again by a profit warning — on this occasion from Tasty.
Still, I have survived various ups and downs before… and I need no reminding that it was only nine months ago that my entire portfolio was looking rather sorry.
Anyway, I’m up 7.4% so far for 2017, and my portfolio has not witnessed too much trading during the last three months. I bought one brand-new holding and sold another holding entirely.
30 March 2017
By Maynard Paton
Quick update on S & U (SUS).
Event: Preliminary results and presentation for the year to 31 January 2017 published 28 March 2017
Summary: These results from the car-loan specialist were quite respectable, although a 60% increase to bad debts does suggest the favourable under-writing conditions of the last few years may now have turned. Still, the veteran family management does not seem too concerned and, encouragingly, appears more interested in developing the business towards 2028 rather than 2018. That length of investment horizon suits me just fine. I continue to hold.
28 March 2017
By Maynard Paton
Quick update on Tasty (TAST).
Event: Preliminary results for the 53 weeks to 01 January 2017 published 28 March 2017
Summary: Oh dear — I did not expect these annual results to include a profit warning for 2017. The share price has dropped by a third and I’m no longer so sure the long-term potential here is as great as I had assumed. That said, the restaurant group’s 2016 figures were not too bad while the lowered rate of expansion looks far more achievable based on current cash flow. Everything now rests on the experienced managers to resolve the problems — which I think they can. I continue to hold.
27 March 2017
By Maynard Paton
Quick update on Bioventix (BVXP).
Event: Interim results for the six months to 31 December 2016 published 27 March 2017
Summary: The latest RNS from this antibody developer contained yet more bumper figures, and showcased impressive all-round growth and a record H1 operating margin of 79%. One startling achievement was that the extra £754k of revenue brought with it additional administrative expenses of only £1k. Progress may be interrupted later this year by the loss of certain product income, but the share price suggests there won’t be any problems with a new antibody about to launch. I have my fingers crossed everything works out, and continue to hold.
23 March 2017
By Maynard Paton
Quick update on Electronic Data Processing (EDP).
Event: Strategic review and pensions update issued 06 March 2017
Summary: Oh dear — EDP’s strategic review has not gone as well as I had hoped. The software minnow has taken ELEVEN months to finally own up to holding early-stage talks with just the one interested bidder. Other approaches have disappeared, due in part to unfavourable developments within the group’s defined-benefit pension scheme. I doubt EDP’s main shareholders can force anyone to bid and, without any sign of EDP having a Plan B, I have sold my entire holding.
22 March 2017
By Maynard Paton
Quick update on Mincon (MCON).
Event: Final results for the year ending 31 December 2016 published 21 March 2017
Summary: These were quite reasonable results, given MCON is still plugging away serving the subdued mining sector with its heavy-duty drills and bits. The introduction of a new accounting policy was disappointing, although the chief exec’s bullish commentary was encouraging and suggested the group’s expansion could accelerate in the years to come. Such growth ought to improve MCON’s rather average margin and return on equity numbers — at present those ratios may not be doing justice to the group’s competitive position. I continue to hold.
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