Small Cap Report - HRO, BEG, SSY, RBN, RST

Another week kicks off with mostly trading statements as opposed to results.

H.R. Owen (LON:HRO)

Small top-end car dealership, H R Owen (HRO) puts out an (unusual these days) "exceed market expecations" trading update today. They flag Ferrari, Lamborghini, Rolls-Royce, and Bentley as having done well. Somewhat surprising, but perhaps good times are back for the rich, whilst the rest of the country chugs along in first gear?There is however caution about 2013, saying H1 is expected to be quieter, due to the timing of new models, so that might limit any upside today on the shares.

The mkt cap is £16m at 67p/share. The PER on current 2012 forecast EPS of 5.8p is 11.6, so as we know they are going to exceed that figure (but don't know by how much), then the PER looks reasonable.

I'm not so excited by the balance sheet, which has a lot of debt on it, although that's par for the course with car dealers, to fund their stock. Margins are also wafer thin. There might be some merit in buying into the upturn, but on my admittedly very brief glance at it, value doesn't jump out at me.

Also I would be concerned at the impact that higher interest rates will have once the economy does improve, on a low margin business which needs a fair bit of bank debt to operate. So it's not for me.

A share in my portfolio, Begbies Traynor (BEG) issues a statement saying that it is launching "BTG Financial Consulting". I'm a bit confused as to what is actually new, it sounds like some kind of rebranding exercise, so doesn't seem to have any potential impact on the share price. Do let me know if I've misunderstood.

SCISYS (LON:SSY)

Scisys (SSY) is a company that has been on my watch list for some time, but I've never pushed the button and bought any shares in it. Anyway, they've put out a reassuring, in line with expectations update for calendar 2012. They also mention improved margins, and that strong cash inflows underpin their progressive dividend policy. The pipeline for 2013 sounds healthy.

Even though the shares are up about 50% in the last 6 months, from 50p to almost 75p, they still look quite good value based on forecasts for 2013 - the forecast PER for 2013 is only 8, although a 1.95% dividend yield is pretty unexciting.

It looks as if they will deliver about 7p EPS for 2012, so the PER there is just over 10, so reasonable value, especially as the balance sheet looks solid, without much debt. But in the short term I'd say perhaps the main upside has been had, so I'm not going to join the party at this stage.

Packaging company Robinson (RBN) issues an in line trading statement for 2012. With forecasts of 10.5p EPS for 2012, that puts it on a PER of just under 12, which sounds about right.

A better 2013 is expected, due to new business coming on stream, and forecasts reflect that with EPS expected to rise to 13.7p in 2013, for a PER of 9, which is starting to look a bit more interesting.

We met management of Robinson at a "Mello Central" event last year, or the year before? I vaguely recall there is a surplus property angle with this share too? Perhaps anyone who knows about this could quantify it in the comments section below?

Portmeirion (LON:PMP)

Ceramics & homewares maker,   Portmeirion (PMP) looks like a good steady growth company, I like their track record of increasing earnings & dividends in a difficult economic environment. There's also no doubting the increasing international appeal of British brands.

They report strong trading in December, and 2012 profit expectations to be in line. It has a net cash balance of £7m, and with 46.6p EPS expected for 2012, that puts it on a PER of 11.7. Not exactly bargain basement, but allowing for the good 3.7% dividend yield, and the very strong balance sheet, I'm going to take the plunge and add Portmeirion shares to my new page on this website, called "Paul's Picks", where I highlight (and keep track of the price of) my favourite value situations that arise.

I see that housebuilder Crest Nicholson announces its intention to IPO and List on LSE. A further sign that the housing market is doing well.

US markets are closed today, it's Martin Luther King Jr day apparently, so that usually reads across to the UK being quiet.

Craneware (CRW) is actually (I assumed it was something to do with cranes!) a software company selling into the American medical system. I've not looked at it before, but the growth in recent years looks very impressive indeed, as does the high operating margin.

Their trading update today shows further growth of EBITDA of 15%. Looks interesting. It's not my usual type of thing, as the PER is high at 16.9, but given that it has net cash, and a terrific growth record, plus high margins, this might actually be a reasonable price as a GARP share. Looks worthy of a further look at least. Horrible Bid/Offer spread though, which deters me from buying any shares in it.

Had a very quick look at Restore (RST) trading update, but can't see anything interesting in there, at their current valuation.

My DryAthlon is going great, not touched a drop of alcohol all month, and seeing considerable benefits in weight loss, good mood, energy, etc. So thanks for the generous sponsorship from readers here to Cancer Research, very much appreciated! The total (including side donations outside of JustGiving) is now over £700, which I think it terrific, thanks again!

Have a good week.

Regards, Paul.

Of the companies mentioned today, Paul only holds shares in Begbies Traynor