Articles

Edison Investment Research today published a report on Aastrom Biosciences entitled "Patients And Cash". In summary, the report says:

"Aastrom’s Q1 results show its consolidation onto affordable clinical studies and a determination to achieve a solid cash basis. The focus is on the Phase II ischaemic cardiomyopathy (IDC) orphan indication. The ixCELL-DCM study will cost about $7m and has recruited its first patients. If recruitment completes by early-2014, the data will be presented in Q215. Aastrom is reducing its headcount and cash burn by about 50% and plans to raise up to $25m in new equity. This will enable the ixCELL-DCM study to be completed by mid-2015 before further equity or a deal is needed. "

Investorschampion today published a report on Awilco Drilling (AWDR.L, LSE:AWDR, LON:AWDR) entitled "18%+ Yield On Offer From This UK Oil Services Group". In summary, the report says:

"The UK headquarted drilling contractor listed on the Oslo Stock Exchnage recently announced excellent 1st quarter results with the proposed dividend payout ahead of estimates. With the UK sector of the North Sea extremely active there is the prospect of much larger dividend payouts to come!  "

Edison Investment Research today published a report on NetDimensions Holdings (NETD.L, LSE:NETD, LON:NETD) entitled "Growth Acceleration". In summary, the report says:

"NetDimensions (AIM:NETD, OTCQX:NETDY) has announced a further acceleration in its growth strategy on the back of a $6.1m fund-raising in early-May. Under the new business plan, which has a goal of attaining $50m revenues and growing, sustainable profits in five years, headcount is being increased by c 65% from end-2012 levels. This includes a significant increase in front-line sales people. In our view, the strategy is the correct approach required to capitalise on the fast-growing Talent Management Systems (TMS) sector, which has recorded growth in the high teens in recent years, and we expect this strong growth to continue. Nevertheless,..."

Edison Investment Research today published a report on LSL Property Services (LSL.L, LSE:LSL, LON:LSL) entitled "Accelerated Investment On Market Recovery". In summary, the report says:

"The Q1 IMS confirmed that estate agency operations traded well relative to a weak market overall and strong Q112 comparatives, while surveying and valuation services performed satisfactorily, allowing for contract losses in June 2012. Wider-ranging expansion plans will entail additional upfront costs, but given the strengthening market, we maintain our forecasts and will revisit them as new data are released."

Pre 8 a.m. comments I'll comment on Zytronic (LON:ZYT) after 8 a.m., as it's not especially time sensitive. Things that might be time sensitive include a contract win announcement from Pilat Media Global (LON:PGB). This is an Anglo/Israeli company with interesting-sounding company which supplies software to the television sector, globally. I have been a shareholder since being very impressed with their cheap valuation (in my opinion) relative to what struck me as good results, and also an amazing balance sheet which has around half the market cap in genuinely surplus net cash. Pilat (pronounced "pill-at") had already issued an upbeat outlook...

Edison Investment Research today published a report on is yatirim menkul degerler entitled "Challenging Year-on-year Comparatives". In summary, the report says:

"Headline Q113 results from IS Yatirim Mekul Degerler (ISY) appear weak, with net profits down 64%, but are distorted by a number of factors. Subsidiary profit contribution was lower, while 2013 costs have been recognised earlier in the year against broadly flat core investment banking revenues. We have maintained our FY13e forecasts, believing subsidiaries’ contributions will normalise and operating expenses attributable to the firm will revert back to our FY13e cost income ratio of 62% (Q113: 79%). ISY’s FY13e P/E of 5.5x (European peers: 8.6x) and dividend yield of 5.9% (Turkish market: 3.8%) presents an undemanding valuation for a company..."

Part 1: Introduction and basic value I like doing sectoral comparisons between companies. I think most of us intuitively understand that, at the most basic level, similar companies should command similar prices in the market - though defining 'similar prices' (what metric? how similar?) is slightly more slippery than I've made it sound. The necessary clarification is that the companies involved really do have to be alike. It might sound obvious, but sectoral comparisons are only really relevant when the companies involved have very analogous business models - comparing the supermarkets, or the large national housebuilders, for instance. This is something which I...

Edison Investment Research today published a report on Fair Value REIT entitled "Rationalising And Reinvesting". In summary, the report says:

"FVI offers exposure to German commercial property, with creditworthy tenants in secondary, regional locations, which have seen consistently high occupancy rates (c 95%) in recent years. FVI’s core strategy at launch in 2007 was to consolidate unquoted real estate funds. The ongoing process of optimising the acquired portfolio continues to drive property disposals and debt reduction, a gradual increase in ownership of the funds it invested in, plus a welcome simplification of the corporate structure and an increase in distributable income. Management is particularly optimistic about prospects for higher-yielding retail property on long leases and is seeking potential acquisitions that..."

Edison Investment Research today published a report on Optimal Payments (OPAY.L, LSE:OPAY, LON:OPAY) entitled "Strong Trading Continues". In summary, the report says:

"At its AGM, Optimal Payments (OP) updated the market on trading year to date, with both businesses performing ahead of expectations. We have upgraded our revenue forecasts for both businesses driving strong earnings upgrades (FY13 +47%, FY14 +39%) as the gross profit upside drops to the bottom line. On our revised forecasts, OP trades at a discount to its peers."

Edison Investment Research today published a report on Optos (OPTS.L, LSE:OPTS, LON:OPTS) entitled "Don’t Panic". In summary, the report says:

"Optos reported disappointing H113 figures, but the headline declines largely reflect accounting distortions and hide the underlying sales strength. New sales of 492 systems (441 net) in wide-field retinal image highlight the traction being gained across the US, Europe and Japan (324 were outright sales, with 168 new leases). FY13 marks a year of transition, and despite launch problems, Daytona will help expand revenues in FY14. "

Edison Investment Research today published a report on Borussia Dortmund entitled "Feet On The Ground". In summary, the report says:

"Borussia Dortmund is well on course to meet current year expectations. Q3 revenue gain of 27% more than maintained the strong pace of H1, thanks to favourable Champions League comparatives, while pre-transfer EBITDA was again up c 10% despite sharply higher labour and operating costs. Although PBT and EPS forecasts are revised here for the recent transfer of Mario Götze, our company valuation remains centred on pre-transfer EBITDA, which is in any case attractive."

Edison Investment Research today published a report on Bushveld Minerals (BMN.L, LSE:BMN, LON:BMN) entitled "Diversifying Assets". In summary, the report says:

"Bushveld Minerals (BMN) has made a takeover bid for Lemur Resources, a thermal coal explorer with a 136Mt resource in Madagascar. The proposed offer is an all-share deal that values Lemur at A$19.1m. The deal extends BMN’s strategy from focusing on the exploration/development of South African iron ore and tin to thermal coal. Lemur’s cash position suggests that BMN is paying A$1.6m for its coal assets. These thermal coal assets could give BMN the option to participate in the South African domestic coal market. They could also provide fuel for a potential independent power plant for the company’s iron ore..."

Edison Investment Research today published a report on Gino Rossi SA (GRI.L, LSE:GRI, LON:GRI) entitled "Rental Trends Emerging". In summary, the report says:

"The UK housing market environment is shifting in favour of private rental, where Grainger is the largest-quoted owner of private rented residential property. There are signs of underlying housing market revival spurred by government initiatives, an ongoing shift towards renting and growing institutional investor interest in the asset class. A 35% increase in first-half fee income, a figure that has doubled over the last two years, reflects strategic partnerships in the UK and Germany. The value of Grainger’s UK assets grew 3% in H1, above wider measures (1.6% by both Nationwide and Halifax) due to asset management and the 63%..."

Edison Investment Research today published a report on Euromoney Institutional Investor (ERM.L, LSE:ERM, LON:ERM) entitled "Mood Begins To Lift". In summary, the report says:

"Although H1 results contained relatively few surprises, the tone of management commentary was more positive than it has been in recent times. We are taking a cautious view and leaving our core estimates unchanged, but recognise that the path to H2 upgrades looks clearer. Euromoney Institutional Investor (ERM) continues to trade at a premium to the peer group, reflecting the group’s impressive execution record and balance sheet strength."

Edison Investment Research today published a report on ITE (ITE.L, LSE:ITE, LON:ITE) entitled "Showing Growth". In summary, the report says:

"ITE Group, the emerging markets-focused exhibition organiser, has been on a tear this year, +21% year to date, reflecting investor appetite for growth opportunities outside the UK and eurozone. Interim results from ITE underlined the attractions of the investment case; good underlying growth, healthy cash generation and geographic exposure. ITE enjoys the highest rating in the B2B peer group (15.8x calendar 2013 P/E) but this looks well supported given the current momentum in the business."

Edison Investment Research today published a report on DRDGOLD entitled "Benefiting From A Weaker Rand". In summary, the report says:

"We have updated our forecasts and valuation for DRDGOLD to reflect the strong Q3 results and recent movements in the gold price and the ZAR/US$ exchange rate. The recent fall in the gold price drives a 12% decrease in our FY13 EPS forecast and the weakening of the rand against the US dollar drives a 19% increase in our FY14 EPS. The weaker rand also benefits our DCF based valuation – our base case valuation increases 10% to ZAR5.86 and our upside case valuation increases 15% to ZAR8.46."

Pre 8 a.m. comments Good morning! I'll concentrate on the interim results from Zytronic (LON:ZYT) between now (7:17am) and 8:00am. Regulars will recognise it as a company I've followed closely, but not yet invested in. They warned on profits in an unscheduled RNS at 11:30am on Fri 10 May 2013. This is the investor's worst nightmare - an intra-day profits warning, where you just get an email, or a panic call from your broker, and you're forced to make a snap  decision on how to interpret the statement, and whether to sell, hold or buy. That's not easy for people...

Edison Investment Research today published a report on outlook entitled "Platform For Expansion". In summary, the report says:

"Quixant has successfully broken into the gaming hardware market as a specialist supplier. Having proven itself and achieved impressive growth, initially on the back of a major customer, it is now gaining traction with a broad range of new customers. Quixant operates in a niche computing segment, where understanding and complying with complex gambling regulations presents a considerable barrier to entry. The business is profitable and cash generative and our projected 20% growth rate should prove conservative if it can persuade a number of the large manufacturers to outsource. A peer group comparison suggests a value of 63-81p, with..."

Edison Investment Research today published a report on Finsbury Growth & Income Trust (FGT.L, LSE:FGT, LON:FGT) entitled "Consistent Long-term Outperformance". In summary, the report says:

"Finsbury Growth & Income Trust (FGT) maintains a relatively concentrated portfolio of 25-30 stocks, with a focus on well-managed businesses with strong franchises. FGT has an experienced management team, which uses a bottom-up strategy to select positions that are held for the long term (turnover is just over 6% per year). It is moderately geared, aims to provide an above-average dividend yield, and its strong record of outperformance has continued during the last year. During the last 10 years, FGT has outperformed its benchmark, the FTSE All-Share, by 159.6% and 227.7% in terms of NAV and share price total return..."

Edison Investment Research today published a report on London Stock Exchange (LSE.L, LSE:LSE, LON:LSE) entitled "Diversification Pays Again". In summary, the report says:

"Given the disclosure through the year, we do not believe the full-year results (to end-March) will surprise the market. There was a c 1% beat in the core business revenue and continued good treasury income. The benefit of diversification has been seen, with pressure in the core equity businesses offset by growth elsewhere. With the now-completed LCH.Clearnet acquisition, clearing will grow to nearly a quarter of the group, further reducing equity market sensitivity."