{"id":45107,"title":"Slowing for a car crash","publisher":"Share Talk","author":"sharetalk","published":"2018-12-10T09:51:46+00:00","modified":"2018-12-10T10:06:47+00:00","canonical_url":"https://www.share-talk.com/slowing-for-a-car-crash/","markdown_url":"https://www.share-talk.com/slowing-for-a-car-crash.md","json_url":"https://www.share-talk.com/slowing-for-a-car-crash.json","category":"Blogs","categories":["Blogs","Financial"],"tags":["AMO","EVRH","FCRM","NCYT","PCA","PCF","SFOR","TRAK","ULS","WYG"],"featured_image":"https://i0.wp.com/www.share-talk.com/wp-content/uploads/2023/11/Stencil-Google-Chrome-2023-04-19-at-2.47.43-PM.jpeg?fit=1231%2C615&ssl=1","format":"news","language":"en-GB","content":"The FTSE 100 fell 2.9% to 6,778 while the FTSE Aim All Share was off 3.5%. Over the last three months these markets are 6.16% and 18.2% lower. Since Friday’s close the US fell 2.5% on Trade wars, a ‘softening’ trend in employment and an inverted bond yield curve. (Interest on 5-year bonds are lower than 3-year ones, which possibly signals a recessions.)\n\nOn Monday the UK is set to report very flat GDP and then on Tuesday The Brexit Vote …..and a potential step into the excitement of the unknown.\n\nThen in the US, if Wednesday does come, a slightly higher CPI inflation will be followed by a steadying speech from the Chair of the Fed on the economy.\n\nWhile hoping for a relief rally, the heightened political uncertainty is likely to continue.\n\n \n\n![](https://www.share-talk.com/wp-content/uploads/2018/12/ST-Skyline--300x100.jpg)\n\n## **Reviews**\n\nPCA – 108.5p – Patience will be rewarded\n\nPCF – 36p – Bank licence paying off\n\nTRAK – 21p – Fundraising\n\nFCRM – 51.8p – Fall overdone\n\nEVRH – 6.13p – Live streaming planned\n\nULS – 76.9p – Digital potential\n\nWYG – 43.5p – Recovery in sight\n\nAMO – 118p – Investors reassured\n\nNCYT – 34.5p – Chinese order delivered\n\nSFOR – 126.5p – Merger deal\n\n=================================================================================\n\n**Reneuron Group (LSE: Rene)**\n\n54p (52-55p)\n\nMkt Cap £17m\n\nNext Results Interims Friday 14th December\n\nReNeuron is a leading, UK based, cell therapy development company. Its primary objective is to develop novel cell-based therapies targeting areas of poorly met medical need. Its targets are moving into clinical-stage so its Interim milestones, reported on Friday, may become less poorly understood as it may start licensing to third parties.\n\nRecent data from a study suggested that its stem cell technology could be adapted to specifically attack cancerous cells. It was undergoing a clinical evaluation for treatment of stroke-related disability, the company’s human stem cell line (CTX) was successfully reprogrammed to a pluripotent state (can develop into ant type of cell) for the first time, an embryonic stem cell-like state that enables future differentiation into any cell type.\n\nThis stem cell platform can be an effective treatment for reduced motor function in stroke patients but may have even further reaching applications ie cancer. The company will now look to develop allogeneic cell lines, including NK and T-Cells, as potential therapeutic agents for licensing to third parties. For the 12 months to March 2018 it burnt £15m cash producing these development near clinical milestones. Directors have been buying shares at current levels.\n\nFinancials\n\nCash and bank deposits at 31 March 2018 were £37.4 m (£53.1m). We anticipate there being sufficient cash for over 12 months.\n\nTrading Strategy\n\nThe prospects of delivering further significant better understood ‘clinical’ milestones, makes Rene a buy.\n\n=================================================================================\n\n**The Fulham Shore (LSE: FUL)**\n\n9.75p (9.5p-10p)\n\nMarket Cap £55.65m\n\nNext Results: Interims Wed 12th December\n\nFulham Shore owns and operates two successful low-price restaurant themes; The Real Greek and Franco Manca restaurants. In the last trading statement before these interims it reported that the first six months of the financial year had been successful with turnover and customer numbers. There are 16 Real Greeks serving fresh Mediterranean food and there are around 40 Franco Manca restaurants which are a competitively priced Italian offering which relies on volume.\n\nDavid Page, the seasoned restaurateur started as a dishwasher at Pizza Express 40 years ago. He is experienced in building brands and rolling-out successful formats and the strategy is to open new units ‘largely’ funded through internally generated cash-flow (key word largely). There plans to open further Franco Manca restaurants early in 2019, with more openings following the financial year end to March 2019. The finals to March showed a 35% increase in revenue to £54m and after impairment charges of £0.867m the loss before tax was £0.15m compared to a profit of £1.2m. Like on like sales were only marginally improved. We anticipate a small profit for the current year on unchanged turnover as the brands are being built in a background of a slow to declining restaurant market.\n\nFinancials\n\nThe company generates cash and net debt is £12m.\n\nTrading Strategy\n\nCurrent trading could be cautious, but the brands could have the legs to run. Wait as we could consider buying on weakness.\n\n=================================================================================\n\n**Plastics Capital (LSE: PLA)**\n\n108.5p (107p/110p)\n\nMkt Cap: £42.3m\n\nNext results: Finals, June\n\nPlastics Capital (LSE: PLA) has been a frustrating recommendation. It has won additional business but some of this has been delayed. The investment in the business should pay off in the next couple of years.\n\nIn the six months to September 2018, revenues improved 11% to £40.6m and underlying pre-tax profit recovered from £1.2m to £2.1m.\n\nNet debt was £15.7m at the end of September 2018 to £14.5m by March 2019. There is no dividend.\n\nCenkos forecasts a 2018-19 profit of £5m, rising to £5.4m next year. The shares are trading on nine times prospective earnings for this year.\n\nTrading strategy\n\nPatience should be rewarded.\n\nOriginal recommendation: 114p/117p\n\n=================================================================================\n\n**PCF Group (LSE: PCF)**\n\n36p (35p/37p)\n\nMkt Cap: £79.2m\n\nNext results: Interims, June\n\nPCF Group (LSE: PCF) produced full year figures slightly ahead of expectations with a pre-tax profit of £5.4m.\n\nNew business has increased by 75% to £148.4m. There were retail deposits of £191m at the end of September 2018.\n\nThe small business lending portfolio is larger than the consumer finance portfolio for the first time. The target is a lending portfolio of £750m by 2022.\n\nThe 2018-19 pre-tax profit forecast is £8.1m, which has been trimmed due to additional investment. The prospective 2018-19 earnings multiple is less than 12.\n\nTrading strategy\n\nGood value.\n\nOriginal recommendation: 13.5p/15p\n\n=================================================================================\n\n**Trakm8 (LSE: TRAK)**\n\n21p (20p/22p)\n\nMkt Cap: £6.7m\n\nNext results: Finals, July\n\nTelematics equipment and services provider Trakm8 (LSE: TRAK) is raising £3m in a heavily dilutive placing at 22p a share – a slight premium to the market price.\n\nMicrolise Group is taking a stake. The partnership should help Trakm8 to grow internationally and Microlise has complementary equipment that could provide cross-selling opportunities\n\nTrakm8 has already warned that full year like-for-like revenues could decline by 15%. There will be a full year loss.\n\nTrading strategy\n\nA longer-term recovery opportunity.\n\nOriginal recommendation: 88p/92p\n\n=================================================================================\n\n**Fulcrum Utility Services (LSE: FCRM)**\n\n51.8p (51.6p/52p)\n\nMkt Cap: £114.1m\n\nNext results: Finals, June\n\nMulti-utility connections provider Fulcrum Utility Services (LSE: FCRM) grew organically and through the contribution of recent acquisitions Dunamis and CDS Pipe Services. In the six months to September 2018, revenues were 49% ahead at £29.2m and there was organic growth of 12%.\n\nUnderlying pre-tax profit was 13% higher at £4.2m. There was cash of £10.4m in the bank. A debt facility of up to £20m has not been used yet. The interim dividend was raised by 7% to 0.75p a share.\n\nThe order book is worth £45.8m. A profit of £11.4m is forecast for this year. The historic tax losses are running out and combined with recent share issues, this means that earnings per share growth will be slower than pre-tax profit growth. The shares are trading on less than 12 times prospective 2018-19 earnings and the forecast yield is nearly 4.1%.\n\nTrading strategy\n\nThe share price decline is a buying opportunity.\n\nOriginal recommendation: 49p/50p\n\n=================================================================================\n\n**EVR Holdings (LSE: EVRH)**\n\n6.13p (6.05p/6.2p)\n\nMkt Cap: £80.1m\n\nNext results: Finals, April\n\nVirtual reality music content developer EVR (LSE: EVR) is streaming its first virtual reality event, and this should show that the technology works. The even involves Liam Payne, formerly of One Direction. The location is a secret.\n\nThis has boosted interest in EVR.\n\nTrading strategy\n\nThe share price has bounced back and, hopefully, taken profit at an earlier stage the shares are worth holding.\n\nOriginal recommendation: 3.5p/3.6p\n\n=================================================================================\n\n**ULS Technology (LSE: ULS)**\n\n76.9p (76p/77.8p)\n\nMkt Cap: £49.9m\n\nNext results: Finals, June\n\nOnline conveyancing intermediary ULS Technology (LSE: ULS) reported interims in line with expectations. The housing market appears to have stopped declining and market share is still being gained.\n\nEarnings per share are still likely to fall to 6.3p this year but the 2018-19 prospective multiple is 11. ULS has a solid base from which to grow when the property market recovers and it has still to benefit from its investment in DigitalMove, which will be launched in early 2019.\n\nDigitalMove makes the conveyancing process more straightforward for customers and advisers. There is also potential for additional revenue streams.\n\nTrading strategy\n\nGood value.\n\nOriginal recommendation: 88p/89p\n\n=================================================================================\n\n**WYG (LSE: WYG)**\n\n43.5p (41p/46p)\n\nMkt Cap: £31.9m\n\nNext results: Finals, June\n\nConstruction and professional services provider WYG (LSE: WYG) managed to do slightly better than expected at the interim stage. Underlying interim pre-tax profit was £1.1m, even though trading was tough in the international business.\n\nHowever, the full year pre-tax profit forecast which has been maintained at £3.3m, with an improvement to £4.8m next year.\n\nNet debt was £13.2m at the end of September 2018 and this is expected to fall to £10m by the year end.\n\nThe order book is still worth £169m. An unchanged total dividend of 1.8p a share offers a 4.1% yield. The shares are trading on ten times prospective earnings.\n\nMiton has been trimming its stake and the share price has failed to recover so far.\n\nTrading strategy\n\nThe share price should recover with further positive news.\n\nOriginal recommendation: 105p/108p\n\n=================================================================================\n\n**Amino Technologies (LSE: AMO)**\n\n118p (116p/120p)\n\nMkt Cap: £85.9m\n\nNext results: Finals, 5 February\n\nIPTV hardware and software supplier Amino Technologies (LSE: AMO) has reassured investors about the outcome for the year to November 2018. There are still restraints to growth in the US, based on concerns about tariffs, and Europe. The tariffs could help to reduce the price pressure on components\n\nThe full year pre-tax profit estimate is unchanged at $11.5m, although earnings per share are expected to be 14.2 cents a share. A slightly higher profit is expected next year.\n\nNet cash of $20.3m at the end of November 2018 was better than expected. The dividend will still be increased by 10% this year and next year.\n\nThe shares are trading on 11 times prospective 2017-18 earnings and the forecast yield is 6.2%. The share price fall looks overdone.\n\nTrading strategy\n\nGood value ahead of an eventual share price recovery.\n\nOriginal recommendation: 109p/112p\n\n=================================================================================\n\n**Novacyt (LSE: NCYT)**\n\n34.5p (34p/35p)\n\nMkt Cap: £112.3m\n\nNext results: Finals, March\n\nDiagnostics firm Novacyt (LSE: NCYT) has completed the delivery of a gensig q16 molecular diagnostics equipment order for a Chinese distributor. The order covers 100 molecular diagnostic instruments\n\nThis should help to further increase reagent sales next year. So far in 2018, reagent sales are already 35% higher than in the same period in 2017.\n\nTrading strategy\n\nBuy for long-term growth.\n\nOriginal recommendation: 60p/64p\n\n=================================================================================\n\n**S4 Capital (LSE: SFOR)**\n\n126.5p (124p/129p)\n\nMkt Cap £325m\n\nNext Results: Finals, March\n\nSir Martin Sorrell has wasted no time in finding another deal for his new vehicle S4 Capital (LSE: SFOR) and it will be partly financed by a placing and open offer.\n\nS4 is merging with MightyHive Inc, which provides programmatic solutions for marketing organisations, in a deal with an enterprise value of $150m. This is a 50% cash/50% shares payment to management and cash for other shareholders. There are also $5m in bonuses payable. The deal is part of the strategy to build a digital-focused marketing business.\n\nIn the year to October 2018, MightyHive generated revenues of $40.7m and adjusted EBITDA of $11.1m.\n\nA firm placing will raise £28.1m at 110p a share and a further placing and open offer, which closes on 18 December, will raise £45.9m.\n\nThe share price had drifted back but it is recovering following the merger news. The deal enhances the attractiveness of the shares.\n\nTrading strategy\n\nGood value.\n\nOriginal recommendation: 112.5p/120p post-consolidation\n\n \n\nBy  **Andrew Hore** & **Jon Levinson **\n\n**Andrew** has been writing about small companies for 25 years, following the fortunes of many companies, both successful and unsuccessful. He worked at the Investors Chronicle for 12 years, ending up as smaller companies editor. He then went on to write AIM Bulletin and he is currently editor of AIM Journal and [AimMicro.com](http://aimmicro.com/). He is a former AIM journalist of the year and was on the shortlist for the journalist of the year at the Small Cap Awards.\n\n**Jon** has been an analyst, a journalist, a fund manager and is currently a corporate broker. He will strictly never write on corporate clients. His MBA dissertation was on filling the Smaller Companies Equity Gap. When writing the Penny Share Focus he learned that not all that glitters is gold.\n\n "}