The mouse "shares" his thoughts

5 Micro-caps that will 10-bag or more in 5 years or less - September 2023 update

2023-09-29T11:34:00.000-07:00

Firstly, here's the link to last year's comments:-

The mouse "shares" his thoughts: 5 Micro-caps that will 10-bag or more in 5 years or less - September 2022 update (michae1mouse.blogspot.com)

Ok it's the end of the third year. Below is a very brief update on the five companies in question. Needless to say in the current environment the share prices of all the companies in question have not faired particularly well, although it's more of a mixed bag in terms of yearly performance. I'm really not concerned with the prospects of any of these 5 companies going forward. If anything they're much better placed than 3 years ago when I first mentioned them. With the long term in mind, prospects look promising. Anyway here goes:-

1) IXICO current share price 19p (down 72.5%)

Judging by the collapsing share price over the past three years, you'd be forgiven for thinking that Ixico was ready for the knackers yard. It's down 72.5% over three years and 51% in the past year. However, they issued a trading update today which says that

" FY23 earnings performance is anticipated to be in line or slightly ahead of market expectations despite a small shortfall in revenues caused by delays in the timing of new client trial initiations."

Whilst performance in 2024 will be similar to this year, they expect to see double digit growth return in 2025 and beyond. My comments from last year still apply here, and whilst the wait for the more lucrative phase 2 and phase 3 trials has been longer than anticipated, if/when these awards materialise then the step change in revs and profitability will be very significant. The current market cap. is around £9m but they have cash of over £4m and no debt. Cash burn for 2023 was circa £1m which should reduce this year. There may even be news of significant contracts during 2024 which will benefit 2025 and beyond. Their current order book is healthy at £14.5m.

2) CRIMSON TIDE current share price 1.9p (down 44%)

Current share price is about the same as last year albeit slightly up. Their interim report was published this week. Revs were up 31%, ARR was up 35%, gross margins are 84% and they moved back to a small EBITDA profit. Revs are expected to be 20% ahead at the year end. They're expanding in the US. They've encountered a couple of minor blips this year (imo) but growth remains strong and the future still looks very encouraging. As mentioned last year, moving forward additional revs should pretty much start to drop straight to the bottom line.

3) BIOME TECHNOLOGIES current share price 150p (down 36%)

Stellar 3 fold recovery in the share price from last year's 52.5p. Biome's interims were released this week and are in line with expectations. Both the Bioplastics and RF divisions are making good progress. Bioplastics revs were up 50% at £3.1m with RF up to £0.5m (£0.4m last year). The outlook for both divisions suggests excellent growth prospects. Even after the outperformance of the share price in the past 12 months the market cap. stands at around £5.5m. Not exactly expensive. Indeed it has the potential to really multibag with a medium to long term horizon (imo).

4) SRT Marine Systems current share price 48p (up 13%)

Best performer over 3 years and up 66% since last year. My only comment on this one is that the huge systems contracts are now landing and that the transceivers business is showing excellent growth. Rapid growth has it's own challenges but this company has a wide moat and over time I'm optimistic that they'll steer this company towards very large revs and profits.

5) TRAKM8 current share price 15.5p (down 17%)

Down 14% from last year and priced to fail. Ironically it's better placed than it's been for some years. Trakm8 is currently on target to meet adj. profit expectations of circa £2m. Clearly the market doesn't believe them, valuing the company at less than £8m. Even if the company achieves, let's say £1m adj profit for the full year, it's still cheap (imo).

That completes the round-up for this year. Stay healthy, happy and enjoy your investing.

5 Micro-caps that will 10-bag or more in 5 years or less - September 2022 update

2022-09-27T07:47:00.002-07:00

Yes it's that time of year to provide an update on the blog I started two years ago, and perhaps I should be embarrassed to provide this update, but I'm not. From the outset I've pointed out that I'm not tipping these shares and that micro-caps are extremely volatile and their fortunes and subsequently share prices can turn on a sixpence. We are currently in the throes of a savage bear market, and even great news is largely met with a shrug of the shoulders. Bad news is catastrophic to share prices, particularly illiquid tiddlers like these.

If you have the right mind set though, you'll see massive opportunity which only arrives once every 10 to 20 years. There are so many companies at knock down prices presently, it doesn't mean prices won't go even lower in the short term but if you have spare cash then these are the moments to start buying not selling. Anyway, without further ado here's the update. Readers of a nervous disposition might like to look away now as they may find the content disturbing.

1) IXICO current share price 37.5p (down 46%)

Ixico is fundamentally still doing well and is on track to grow longer term. I have no major concerns with this company. It's share price was initially rocked when phase III trials with a major lucrative client were terminated and as a consequence Ixico's services on this project were scaled back significantly. This affected Ixico's growth projections for 2022 and 2023. This is a clear risk factor for Ixico, but they have and are very sensibly picking up a broader and bigger client base over time which will ensure that there is far less reliance on just one major contract.

A recent trading update is encouraging. In year-end 2022 (end of this month), they expect EBITDA to comfortably exceed previous guidance, and their order book will exceed £15m. For 2023, they expect revenues to come in at around £7m, £5m of which has already been contracted. The company (as mentioned) has a more diversified order book, a strong balance sheet and is debt free with cash.

2) CRIMSON TIDE current share price 1.8p (down 47%)

Crimson Tide is an excellent little company that is doing exactly what it has set out to do. Currently it's investing for growth and is achieving expectations. Hence the share price has fallen by 47% over two years. Spot the sarcasm. Indeed, it reported it's interims this morning which were in-line with expectations showing revenue growth of 15.3%, and Annual Recurring Revenue (ARR) growth of 22.7%. They recently secured two significant contracts which will further contribute to revenues in the second half and most importantly to ARR.

They expect to return to profitability in 2024 since at present they are continuing to invest for growth, but with very high gross margins (currently 84.5%) it'll be worth the wait since the revenues will pretty much start to drop to the bottom line. Needless to say, with the visibility of recurring revenue streams and a strong pipeline, management are very optimistic. Client churn is negligible which speaks volumes about their offering.

3) BIOME TECHNOLOGIES current share price 52.5p (down 78%)

It was all going so well until.......Yes, a profit warning last week!! In short, they've suffered from supply chain challenges, a major project delay and a far more uncertain economic backdrop which is severely curtailing the expected ramp up in revenues for the BioPlastics division. By contrast the RF Technologies division is beginning to recover and should show a marked improvement in the second half of 2022. However, the company warned on profits for both 2022 and 2023.

There are some interesting projects in BioPlastics including in the packaging film area, tree shelters and Home compostables, but clearly we're now looking medium to longer term.

Biome believes it has sufficient working capital for the foreseeable future, and growth is expected from 2022 to 2023 with revenues above £5m and rising, the selloff (imo) therefore is massively overdone leaving Biome on a market cap. of just £2m.

4) SRT Marine Systems current share price 29p (down 32%)

SRT has two key revenue streams, the transceivers business which is growing nicely and the systems division where major projects are promised. One of the systems projects has been confirmed this year for £40m and more large value contracts are expected imminently. So why is the share price at 29p? Largely because the company has promised imminent contracts for some time now and it does have a habit of having to raise cash from the markets at a discount.

If they do deliver the promised systems contracts and the transceivers business continues to grow then SRT shareholders should really prosper. It's a waiting game like with so many of these smaller companies.

5) TRAKM8 current share price 18p (down 4%)

In terms of share price performance Trakm8 is almost a success story compared to the above at a mere 4% down. In fairness, this is a recovery stock and a chink of light has appeared on the horizon.

Trakm8 have seen an uptick in business and recently reported a 13% increase in the number of telematics devices reporting to their servers (299,000). This is the number to look for since it translates into recurring revenues and encouragingly, they are expecting the number of devices to increase significantly in the second half of the year.

They are also streamlining the business and expect to make cost savings of £2.4m per annum. A small profit is expected this year with good growth again the year after. Microlise have confidence and recently backed the company with a loan to cover the restructuring process and provide working capital.

Has the corner been turned? We'll find out in the next six months or so I'd guess.

-----------------------------

In conclusion, after two years it might look like a bit of a blood bath and it has been, but largely due to sentiment rather than company performance and prospects. If you look at my previous reports, you'll see just how illiquid and volatile the share prices of these companies can be. Biome for instance was 75% up at one stage and is currently 78% down.

Market sentiment will change and so will the economic conditions, and I am optimistic that the medium to long term prospects of all 5 companies remain sound and hopefully when the tide turns (no pun intended) these will become multibaggers from here and from the prices I first recorded them at in 2020.

5 Micro-caps that will 10 bag or more in 5 years or less - September 2021 update

2021-09-25T06:52:00.003-07:00

It's been just over one year since I last updated this blog about the 5 companies that I have boldly predicted will 10 bag in 5 years or less. It's not a tipping sheet so thoroughly carry out your own research if any of the five companies catch your attention. Be aware that all 5 are micro-caps and listed on AIM so expect some illiquidity and often large swings in their share prices. I am an advocate of buy and hold and my holding period is often greater than 5 years.

This is the second update since my original post back in August 2020. Obviously, it's been a pretty uneventful year worldwide :-$

Sarcasm aside, for the five companies that I am covering, I'm more than happy with the progress of their respective businesses, and see nothing to alter my vision of their future prospects. I will add the caveat that absolutely nothing can be taken for granted in this game so I always remain vigilant but try to distinguish between short term disappointments and the long term prospects of a business.

So let's start. Firstly here was the original post in August 2020:-

The mouse "shares" his thoughts: 5 micro-caps that will 10 bag or more in 5 years or less (michae1mouse.blogspot.com)

and the follow up in January of this year:-

The mouse "shares" his thoughts: 2020 (michae1mouse.blogspot.com)

1) IXICO (current share price 81.5p - up 18%)

Ixico was on a real roll and up 36% when I last reported, but in March a major client stopped dosing participants in its phase III trial and open-label extension studies in Huntington's disease following a pre-planned review of the data. This led to some uncertainty re: IXICO's short/medium term revenues and order book from this client and the share price took a hit. Since the basic story remains in tact, and expectations from this particular client have now been clarified, it proved to be a buying opportunity. Strong half year results, a solid trading update in August for the full year (£1.2m EBITDA in-line with prior year), strong order book, excellent balance sheet and more contract wins have reassured and the share price has bounced back.

This week the company gained more momentum with their first contract award from a new Imaging Master Vendor Agreement with a top 5 global CRO. The contract itself is worth greater than $750,000, but more significantly being selected as a dedicated imaging vendor is expected to significantly enhance IXICO's opportunity to partner with the CRO's client portfolio.

I'm very pleased with the progress here, and continue to envisage huge upside potential.

2) CRIMSON TIDE (current share price 3.05p - down 10.3%)

Excellent set of results released in April for year ending December 2020 with revenue up 21%, EBITDA up 22% to £946,000, cash up to £1.157m from £320,000 and a very bullish outlook. So why the slight share price fall? Simply put, the company sees a huge market opportunity in which to grow significantly, but that needs investment and in April the company raised £6m via a placing at 3p. This is a big positive, and in the medium to long term prospects for Crimson Tide look even bigger and brighter. Crimson Tide is a hidden gem, and whilst the full benefits may take a little time to become apparent, this is a company that has gross margins of 87%. is growing long term subscription revenues and winning sizeable clients across supermarkets, rail and the NHS.

We might see their interim results this week, certainly in the not too distant future.

3) BIOME TECHNOLOGIES (current share price 410p - up 75%)

The star performer so far. Their bioplastics division is really beginning to gain traction, and the company is targeting 40% growth per annum from 2022 onwards. Ongoing delays in shipping and transportation constrained the first half of this year, although there was still some growth. However, looking forward into Q4 this year and beyond it gets very exciting with new large customers in the USA coming onboard and a strong pipeline of projects. The icing on the cake could be a pick up in orders in their RF division which has generated annual revenues of between £4m-£8m in the past and is very cash generative. A possible perfect storm for outperformance in 2022 and longer term.

4) SRT MARINE SYSTEMS PLC (current share price 41p - down 3.5%)

Not much to say about this one since last reporting since there has been very little news. Final results were released in July and as anticipated. This company just needs to deliver on these figures:- £550m systems division validated system sales opportunity pipeline, of which £71m are very near term. I think they will, and then it gets very exciting.

5) TRAKM8 (current share price 23p - up 23%)

It's beginning to look likely that Trakm8 have not only survived after disappointing in recent years but are now likely to prosper. They've successfully navigated the "lockdown" storms and look like a leaner outfit. They released a trading statement this week with revenues predicted to be around 19m and a break-even performance, in-line with market expectations. Next years profits are expected to be around £2m which means the market cap. looks anomalous at just £11.5m, particularly when compared to their peers. In the background we have the recently listed telematics company Microlise who hold 20% of Trakm8 and hold ambitious plans within a rapidly consolidating sector.

That's it for the update. This overall portfolio is up 20% from my first post. As stated, I'm happy that all five still retain the potential for huge outperformance and I'll update again in 6/12 months time.

5 Micro-caps that will 10 bag or more in 5 years or less - January 2021 update

2021-01-08T06:01:00.002-08:00

It's now just over 4 months since I wrote the blog "5 micro-caps that will 10 bag or more in 5 years or less":-

The mouse "shares" his thoughts: 5 micro-caps that will 10 bag or more in 5 years or less (michae1mouse.blogspot.com)

Here's the follow up blog I wrote in September:-

The mouse "shares" his thoughts: 5 micro-caps update (michae1mouse.blogspot.com)

It's still very early days, but I thought I'd provide a brief review of progress.

1) IXICO (IXI) current share price 94p (up 36%)

Ixico is the star performer so far with a current share price gain of 36%. The share price gains have come on the back of excellent full year results and a host of new contract announcements which underpin expectations for the year ahead and add to their already strong order book.

Their full year results showed EBITDA of £1.3m (more than double the previous year), 26% growth in revenues to £9.5m (another record for the group), superb gross margins at 67% with a strong balance sheet which boasts nearly £8m cash. The contracted order book was up 36% at £21.7m and operating cash inflow was £1.5m.

The only surprise is that the share price isn't higher.

2) CRIMSON TIDE (TIDE) current share price 3.35p (unchanged)

Not much news since the September update other than two new contract wins and some holdings notices. Perhaps that explains the currently static share price? Probably worth repeating my original thoughts:-

Gross margins 87%. Profitable. Minimal debt. Growing long term subscription revenues. Unaffected by Covid-19. Winning sizeable clients across supermarkets, rail and the NHS. Stick some figures into a spread sheet and see what happens to their profitable growth with double digit revenue growth.

3) BIOME TECHNOLOGIES (BIOM) current share price 220p (down 6%)

The share price has recently recovered following a share fall after they announced a discounted placing back in September. This company really should capture investors imagination this year. Basically it's in the right place at the right time, and their Bioplastics division is really gaining momentum. Results should be in line with expectations for 2020. They have an expanding list of potential new customers, particularly in the US.

Given the potential for Bioplastics and their expanding US based client roster, the market cap. at £8m is absolutely tiny. They release their full year trading update on the 28 January.

4) SOFTWARE RADIO TECHNOLOGY (SRT) current share price 39.75p (down 6.5%)

Apart from the interim results there has been very little news from the company. The interims contained no surprises. Investors are patiently waiting for news of major contracts which will be transformational for all. There should be fireworks if they can announce one or two contracts over the next three months.

5) TRAKM8 (TRAK) current share price 16p (down 15%)

Half-year results suggested that this is still very much a possible recovery play. Whilst lockdowns continue to hamper and delay their full recovery, they are surviving and will hopefully move through the gears as we begin to see an end to the current stop/start economy.

This is the line for investors to latch on to from the November interims, "the Group expects revenue in the second half to be significantly higher than the first half given current orders, even with a reasonable downside scenario taken into account for the ongoing impact of Covid-19."

In summary after 4 months, apart from Ixico, the share price performance of the other four companies has been fairly flat. However, most importantly I'm happy with the progress of all five, and still anticipating an excellent performance over the five year time scale.

5 micro-caps that will 10 bag or more in 5 years or less

2020-08-22T09:12:00.002-07:00

It's been a while since I last penned a blog post so here goes. It's a brief one and it's a bold one. The five micro-caps listed below will 10-bag or more in 5 years or less. I'm not going into too much detail about the companies themselves, you'll have to do your own research. Have I chosen multi-baggers before? Yes. Here's my most successful one:-

https://uk.advfn.com/cmn/fbb/thread.php3?id=20681152&from=1

Avesco. Went from around 20p to the final £6.50 take-over price with substantial dividends along the way.

Have I made mistakes? We all have, but experience makes you a far better stock picker and builds resilience. I'm very confident about these five micro-caps, as I was with Avesco.

For various reasons I've had a sabbatical from posting too much or talking about my holdings. I hold all 5 of these and won't be selling a single share until they've multiplied manifold times in value. Let's start.

1) Ixico (share price 69p, market cap. £32m) - Due to report on trading on Tuesday.

"IXICO's data analytics services are used by the global biopharmaceutical industry to interpret data from brain scans and digital biosensors to enable better trial design, site qualification, patient selection and clinical outcomes. "

Strong growth. Excellent gross margins. Plenty of cash. Very strong order book. Minimally affected by Covid-19. No debt and strong balance sheet. Recent trading statement indicates £9.1m in revenues for full year 2020 and £0.9m EBITDA. Double digit revenue growth expected across 2021. You'll also feel good about owning this one when you read about the work they're doing.

2) Crimson Tide (share price 3.4p, market cap. £16m)

"Crimson Tide plc is the provider of the full service mobility platform mpro5 - #notjustanapp. mpro5 is delivered on smartphones, tablets and PDAs, and enables organisations to transform their business and strengthen their workforce by smart mobile working. "

" I believe there are exciting times ahead." Luke Jeffrey CEO.

3) Biome Technologies (share price 234p, market cap. £6.5m)

"a leading bioplastics and radio frequency technology business"

Bioplastics is the exciting bit and it's come of age! RF division is cyclical, but profitable and cash generative in normal times. At the interims the Bioplastics division had grown revenues by 53% and this week they announced an order worth US$550,000 from an existing major client operating in the United States packaging market. It was "the largest single order to date for Biome's heat-stable and compostable bioplastic for coffee pod applications". They work closely alongside their clients (largely US based) to meet their exact needs and hence their clients stick with them. Commercialisation is really beginning to take-off now.

4) Software Radio Technology (share price 42.5p, market cap. £69m)

"SRT Marine Systems PLC (SRT), a global provider of maritime surveillance, monitoring and management systems"

It's taken them a long time and many injections of cash but the promise has always been there. They've navigated the recent crisis admirably (see recent trading statement) and are about to deliver in spades. That's it, time to enjoy the rewards!

5) Trakm8 (share price 18.75p, market cap. £9m)

"global telematics and data insight provider"

From stock market darling to pariah. Priced to go bust. It won't. Superb client list, and supportive shareholder in a company called Microlise. Half their revenues are recurring. Hot and competitive sector, but Trakm8's offering is second to none. Worst case scenario is they're acquired at about 3 times the current share price.

And that's the five. Don't expect a smooth ride with any. Micro-caps are generally very volatile, but staying the course proves very worthwhile if you've done your research.

I should add that I'm not a stock tipper and that these are merely my own personal views, and as mentioned I own them all.

Good luck with your investments.

Valuations matter

2020-03-12T09:04:00.000-07:00

A relatively short blog post this one. It's really for those who are relatively inexperienced in 'stock picking' and those fretting about the current situation.

This is the third bear market/huge correction I've encountered since starting my 'stock picking' passion.

I suspect it's more of a bear market than correction because it feels very much like 2007/2008. Just when you think a company's share price can't get any lower, it does.

In truth, the huge sell off has been a long time coming. I thought last year would be the year, but of course there were no triggers. However, along comes Covid-19, mass hysteria, mass panic and stock markets around the world plummet as potential worldwide recession casts it gloom across the globe. It's the end of the world!! Again.

In future, some of the signs to look for before a mass sell off are stock pickers relatively new to investing believing they're demi-gods after a couple of years or so of positive returns, a rise in the 'investment gurus' on social media and elsewhere where their mere mention of a company moves it's share price up regardless of it's valuation (I'll come to this in a minute), a significant number of companies on p/e ratios of 30+ which can all be justified of course because earnings will eventually reach infinity and beyond, companies with market caps that are a significant multiple of it's revenues. These are just some signs, but I could go on.

Largely, I learnt my lesson (and it was an invaluable lesson) in the dot-com boom and bust (look it up if you're new to stock picking or a youngster). I wanted a piece of the 'stock market' action, but knew sod all about balance sheets, p/e ratios, balance sheets etc. I got lucky at first, every one's a winner!! Big percentage rises, easy money! Of course, along came the non too friendly bear and oh dear!

Here's the thing though. At that stage of my 'stock picking' excursion I thought I was being sensible and conservative. Two of the companies in my portfolio were GlaxoSmithKline and British Telecom.

I bought GSK for about £20 and BT for around £8 per share. During the bear market, their share prices plummeted. These are quality companies (certainly in GSK's case) but in nearly 20 years the share prices of these companies has never returned to these levels. I should add however that at least you'd have received a nice income stream, but capital appreciation would have been less than zero. Quality companies but not great investments at those prices.

The bear market was the best thing that happened to me however. I couldn't understand why the share prices of these two stalwarts of the market had fallen so dramatically?

That's when I started to read extensively. I'm not talking about the shite website tipsters, the bloggers, the twitter gurus or bulletin board heroes. Ignore all these. Get some books and information about the proven great investors with track records e.g. Buffett, Graham, Lynch, et al and learn about dividends, p/e ratios, net asset values etc.

When I did this in the early 2000s it was transformational. I quickly ditched GSK and BT and took the losses on the chin. The stock market made sense and was no longer a scary place. Knowing how to value companies sensibly is the key to successful investing. Bear markets create huge opportunities. Life changing opportunities.

Of course, I still make mistakes and pick some howlers, but being able to pick companies on a cheap valuation gives you an edge. Where's the evidence then? Well here's one example. The majority of the shares were bought around the 25p mark. The company eventually got bought out for £6.50, not to mention all those dividends and special dividends along the way:-

https://uk.advfn.com/cmn/fbb/thread.php3?id=20681152&from=1

If you read no further than post 2 on this thread it'll give you an idea of why the valuation of this little known company was fantastically appealing. It'll also give you an idea of how low valuations can sink in times of irrational panic.

In conclusion, valuations matter!

Can it rise from the ashes once more?

2020-02-03T09:55:00.000-08:00

It's difficult to believe that SpaceandPeople (SAL) was a former darling of the stock market, as the share price languishes at 11.25p down a further 6% after today's trading update. I think today's fall may reflect a lack of interest in a forgotten micro-cap rather than a reaction to today's news, but more of that later.

In summary the company describes itself as follows:-

"SpaceandPeople (AIM:SAL), the retail, promotional and brand experience specialist which facilitates and manages the sale of promotional and retail merchandising space in shopping centres and other high footfall venues"

In 2007 the share price of SAL hit the dizzy heights of 220p only to fall sharply to around 45p (like so many other companies at the time), and then rise once more like a "phoenix from the flames" to around 150p in 2014. Sadly, and perhaps not surprisingly, the share price alongside the company's fortunes has slid back to today's 11.5p seemingly mirroring the demise and troubles of the high street.

Can it rise once more?

Firstly, let's be realistic and confront the negatives. Over recent years SAL has been a serial disappointer, always on the verge of returning to growth, but never quite managing it. Indeed this morning's trading update reported revenues below expectations and slightly below last year at £7.7m.

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/SAL/14407056.html

On the plus side, they have recorded a very small profit before tax (around £100,000) which is broadly in-line with expectations. It should be noted these were revised targets following higher expectations at the beginning of the year. So not inspiring so far.

However, context is everything and SpaceandPeople is valued at around a measly £2m, and there are some positives worth considering.

Their year end cash position was £1.2m with £0.6m of bank debt.

Most interestingly, they've upped the dividend payout by 50% to 0.75p from last year's 0.5p. If you bought the shares at today's price of 11.5p then you'll get a nice yield of 6.5%. Perhaps, more pertinently, the dividend hike suggests that they're confident of an improved performance in 2020.

So what has inspired that confidence?

In today's trading statement, they also announced a contract win with Abellio and a contract extension with Network Rail:-

"The Group is also pleased to announce that a multi-year agreement has been signed with Abellio to provide commercialisation activity in the Greater Anglia and West Midlands rail regions. This is the first time that SpaceandPeople has worked with Abellio and we look forward to growing this relationship.

Also, the Network Rail agreement that was due to expire in September 2020 has been extended by a further year and we look forward to continuing to expand on this very successful relationship."

Furthermore, at the interim stage the company had this to say about prospects for 2020:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/SAL/14245740.html

"However, the foundations for a sustainable and significant turnaround have begun. Although the resurgence of German RMUs has come too late to have a significant impact on 2019, the new venues joining our service this year and the pipeline of additional venues in development for 2020 is the most positive it has been for many years. This will result in substantial revenue improvements next year."

As mentioned, they've disappointed in recent years, and who's to say they won't disappoint again this year? However, with such a tiny market cap., a current progressive dividend policy, and hints of a turnaround (I suspect they would payout at least a 1p next year or 8.7% at today's share price), there is the potential for a significant upside surprise from this tiddler imo.

As ever, no recommendations are made and it's AIMHO.

Madness? Probably, but profitable madness.

2020-01-25T10:43:00.001-08:00

A man who writes this vitriol about a company and his losses is surely not daft enough to even contemplate a punt in the same company at any future date? Only an idiot would do such a thing.

https://michae1mouse.blogspot.com/2019/04/liars-incompetence-and-foolhardy-choices.html

Yes I'm an idiot or maybe not so much actually? I'll explain, and I'll keep it brief.

On Tuesday, 7digital released a trading statement. If you read my blog regularly you'll know I am extremely au fait with this company.

I read the statement several times, and decided to risk some "punt" money. The market took some considerable time to react to 7digital's news, and hence I managed to purchase at below 0.2p. The shares finished up a little on the same day and advanced a little more on Wednesday. On Thursday the share price went berserk. I sold and took a 78% profit. If I'd held until Friday then I'd have made twice as much profit. Slightly galling, but a very successful trade nonetheless. I wish I could do that every week.

What next then? No idea short term, but here's my thoughts.

I know this company very well. I like the technology. I've always liked the story. I love the gross margins. The trading update gives cause for hope, but context is everything.

Things I liked. Trading for 2019 is in line with management expectations and their new strategy is performing well (apparently). They've significantly reduced operating costs. They've secured much of their expected revenues for 2020 and should achieve operational profitability by the end of the half year 2020. Plenty of positives and fortunately for me it clearly enticed many short term traders.

What could possibly go wrong?

Firstly, since I've been following 7digital, they've often said they're on the verge of profitability. Vintage 2018 trading statement:-

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/7DIG/13527293.html

"Following the acquisition of 24-7 in June, operational restructuring has already begun and has resulted in the closure of the Company's office in Paris and a reduction in headcount. The Board is pleased to report good progress towards its goal of profitability in the current financial year."

Didn't quite happen. In fact the company nearly went bust.

Secondly, despite all the positive noises, where are the figures that matter in the latest trading statement? There is no mention of cashflow, cash remaining or indeed revenue for 2019.

They have raised money over the last 12 months, but if you take a look at their last interim statement I can't for one moment imagine it'll be enough? They lost £3m between January and June 2019, and their balance sheet is just awful. They had a negative net asset balance of around £7m. Horrendous even after considering the cash they raised during the year. My guess is another major dilution is on the way. The last one was at around 0.2p.

I've no idea what will happen to the share price in the short term, although after such a hefty spike I know what normally occurs. What I can say is that at the current £12m market valuation and a very good chance of further dilution and losses for another 6 months before the possibility of operating profitability, I'll stick to the sidelines again and watch for developments. There are some great little micro-caps that are currently priced less than 7digital with much stronger balance sheets. Some already having achieved profitability.

Having been wrong about this one in the past, I don't offer any advice and maybe 7digital will pull the proverbial rabbit out of the hat, but with the share price having already 3-bagged in as many days, other options appear a better risk/reward unless they release earth shattering transformational news!

As ever, DYOR and this blog doesn't offer advice.

Good luck if you're a holder.

33% increase in the dividend with more to come?

2020-01-18T09:44:00.000-08:00

Here's my second post in as many days after a self imposed hiatus of several months, and it's another update. The company in question this time is the minnow Aeorema Communications (AEO) which I previously wrote about in July 2019. Here's the blog:-

http://michae1mouse.blogspot.com/2019/07/dividends-can-keep-you-happy-whilst-you.html

So what's happened since that time?

Well most significantly full year results were released 30 Sept, and the share price has risen 46% on well received figures and an encouraging outlook statement. Despite the share price appreciation, I believe that the shares are still significantly undervalued.

Firstly, as anticipated in my previous blog post, the dividend was hiked by a more than healthy 33%. It currently stands at 1p which is a coupon of 2.6% at the current share price of 38p. It should be noted that management have a progressive dividend policy in place.

Revenues were up 40% to £6.7m with a profit after tax of £288,000. Cash in the bank was £2.2m.

Not bad in the context of this company's market cap. still being a mere £3.4m. The P/E ratio is therefore around 12. The FCF for the year was £774,847.

Think about the cash in the bank and cash generated in the context of the current market cap. and the investment case is very compelling. The dividend is covered more than 8.5 times by the FCF.

They had this to say about this year's outlook,

"Focus remains on sustaining client relationships and effective client acquisition to ensure that a robust pipeline of business is in place. To this end, I am confident of future growth having already secured new client wins in the current financial year including a leading global law firm, a number within the technology sector and a high-profile, established confectionery brand. Another upcoming highlight is set to be the execution of an extraordinary event at MIPCOM in Cannes, an annual trade show for entertainment content, in October for a global media brand. "

The MIPCOM event was for the BBC btw and it's a three year project. I'd urge readers to take time and read their full report:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/AEO/14245785.html

In particular, although this was a very successful year for AEO (as illustrated in the figures above) they say the following:-

"Whilst the Group has delivered an unusually high number of low profit margin events during the year, new events to be delivered in 2020 are expected to have higher gross profit margins."

A share price at least double the current value wouldn't be unreasonable at this stage in my view assuming growth remains on track.

As ever, AIMHO.

OptiBiotix (OPTI) - I'll continue to avoid

2020-01-17T06:24:00.000-08:00

I haven't written a blog post for a little while now but thought I'd revisit a company that I've suggested was grossly overvalued 4 years ago. Has anything changed my mind in the intervening period or was I correct in my initial assessment?

I will let readers be the judge, but in my own opinion the past 4 years has borne out my initial summation and I'd still give this company a wide berth. It's still hugely overvalued. The company is a little outfit called OptiBiotix. Here was my last blog post in October 2018:-

http://michae1mouse.blogspot.com/2018/10/theres-no-nonsense-like-bulletin-board.html

When I initiated a thread on ADVFN (16 March 2016) the share price was around the 73p mark. It is currently down 30% from that date following today's trading update:-

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/OPTI/14387837.html

https://uk.advfn.com/cmn/fbb/thread.php3?id=35291865

Let's look at today's update. Firstly, revenue for the full year is a paltry £808,000 which is just £266,386 better than last year (£541,614) a company with a ludicrous valuation of around £43m. Of course there is no mention of losses incurred during the year as is always the case with such companies.

If you read the trading update in full and take time to digest the information then you'll notice several red flags. I'll take them in turn.

1) There is great play on other income of £617,000 during the year from the sale of shares in a holding in their spin off company called SkinBiotherapeutics (SBTX) (Equally overvalued incidentally!!). Without this then cash in the bank at the end of November would have virtually been zero given that they report they had £687,699 on the balance sheet. Worryingly they appear to be relying on more share sales of SBTX to raise cash. They say :- "We have the option to further reduce our holding (circa £7m) in SkinBioTherapeutics plc if growth capital is required. " Really? A buyer already lined up? What if nobody is interested? Do they realise share prices go down? In fact SBTX is down a further 6% today.

2) They also say this:-

"The 12 months to 30 November 2019 have seen the transition of the Company from a research and development business to a company building commercial revenues" .

If you check back then you'll see they've been using this same line for three years now. It appears to be a very long and very slow process.

3) "In line with previous years, the majority of income was generated in the second half of the year (H1 2019: £148,818). We expect this trend to continue in 2020"

So that'll be "sod all" revenues in the first half of 2020 then?

4) I notice that the aim for profitability has now been set for the end of 2020 with the caveat of no guarantees. It would be helpful to know what losses were incurred this year and then perhaps we can come to our own conclusions about the likelihood of profitability in 2020. My guess is not very likely.

5) Finally a ridiculous idea of exploring a listing on the NASDAQ in the same breath as saying they are trying to manage costs. Laughable. Anyone would think the CEO is trying to pump up the share price on crap results? Surely not?

The rest of the trading statement is the same old verbose puff and bluster that has been spouted out numerous times before.

If OptiBiotix was valued at around £7m-£10m then it may be worth re-examining as a speculative punt but at over £40m it's hugely overvalued.

As ever, AIMHO.

Stilo de-lists.

2019-10-07T08:00:00.003-07:00

Following on from a blog post I penned back in April, Stilo International will de-list from the AIM market tomorrow (Tuesday 8th October) :-

This is April's blog post giving my thoughts at that time:-

http://michae1mouse.blogspot.com/2019/04/a-de-listing-bring-it-on.html

There's not a huge amount to add other than I've retained my entire holding in Stilo International and remain cautiously optimistic for the future.

The interims were released with a notice of their intention to de-list, and as anticipated the outlook for this year is lacklustre at best. There was a tender offer of 1p to purchase shares from private shareholders, but it appears that almost all private shareholders (like myself) have passed on the tender offer and are happy to hold their shares in the private company. Indeed it was pretty much a no-brainer since if you'd wished to sell out some or all of your holding since the de-listing announcement it's been possible to sell shares significantly above 1p. It should be noted that the company did buyback over 15,000,000 shares from Giltspur and Brewin nominees at 1p to reduce the share capital to around 98,000,000. It also worth mentioning that C.Lee has been acquiring shares and now owns over 10% of the company.

I am very happy that the company has de-listed since it doesn't need to raise funds from the market with a very solid debt free balance sheet and a cash balance (last reported) of over a £1m. This is against a market cap. that had fallen to around the company's cash level. The saving over £120,000 per annum on listing costs will be very significant for the company. In fact £120,000 represents around a 0.12p possible dividend. If you were lucky enough to get shares for around 1p then that's a 12% return. I expect dividend payments to return very soon following their de-listing.

From the General Meeting circular issued in August
(http://www.stilo.com/wp-content/uploads/2019/08/General-Meeting-Circular-23-August-2019.pdf), we also had this included in their reasons to de-list:-

"the Directors believe that the Company’s AIM-quoted status – in which the Company has a tangible share price and hence a perceived “value” - has presented a significant barrier, in practice, in advancing M&A discussions with potential acquisition candidates. Additionally, the Board’s experience is that many privately owned companies are not attracted by the prospect of acquiring, or becoming part of, a publicly traded company. The Directors believe that if the Company was off the market, it might be possible to command a much higher company valuation than that which is currently reflected in our share price."

My guess is that the company will return to profits and cash generation in the not too distant future and then sell the company at a hefty premium to its listed market cap.

Anyway, I'll keep you posted, and it'll be interesting for me since it's the first time I'll have held shares in a private limited company.

Dividends can keep you happy whilst you patiently wait for capital returns

2019-07-19T07:01:00.000-07:00

It's a little while since I last produced a blog post so I thought I'd write a short article about Aeorema Communications (AEO). I've mentioned them several times in the past. It's basically a great value micro-cap that's returned to encouraging growth. The market is currently overlooking this little gem, although it does appear that micro-caps are, in general, currently out of fashion with Mr. Market. It'll all change in time. It always does.

From 2014-2018 revenues at AEO fluctuated in the £4m-£5m range, although pre-tax profits were declining. It's worth noting that the company did remain profitable during this period and continued paying dividends.

However, AEO's current management appear to have now got the company back on a growth trajectory. After reporting a half-year loss, chiefly due to the lag between making two senior appointments to their team and the inherent recruitment costs and time to make an impact, and the usual second half weighting they've now rapidly turned the half year loss into a full year profit which has beaten market expectations at over £350,000. Revenue took a big leap forward to £6.7m which is a quantum leap from the 2014-2018 figures. It appears that the new appointments are already beginning to prove their worth.

Their cash position is strong and it's their intention to continue with dividend payments. In 2018 the dividend was 0.75p so I'd expect a further increase this year. The current p/e ratio is around 7, and I'd guess the cash on the balance sheet is at least half the current market cap. of £2.4m.

Bizarrely, after the ahead statement yesterday and an initial 20% rise in the share price, the shares have now fallen back to where they started on Thursday.

From a personal perspective whilst it can be frustrating waiting for the market to recognise AEO's true worth, and in my view the company is stupidly cheap, I've received around 25% of my money back in dividends already with more to come following the release of their full year results.

Finally, a Mr Jonathan Hicking appears a regular and keen buyer and has today upped his stake further to 13%.

A de-listing? Bring it on!

2019-04-30T11:46:00.000-07:00

I've written about Stilo International several times in the past. It's a tiny company with a market cap. around £2.3m. The share price has bounced up and down for years, and currently sits near its all time lows. It's disappointing since I had high hopes for Stilo, and have written very positively about them in the past.

There are two key reasons that the share price is currently languishing at 2p. Firstly, growth suddenly stalled in 2018 after looking like the company might be reaching an inflection point. Through 2015, 2016 and 2017 revenues had been steadily growing and although EPS had remained flat due to increased development costs, the company boasts 99% gross margins and it doesn't take too much imagination to see how quickly operational gearing would have kicked in and increased sales would have dropped to the bottom line. Alas in 2018 revenues suddenly dipped, and although the company was still profitable, growth had stalled. Unfortunately, sentiment was not helped by the following comment in their preliminary report, "2019 is going to be a challenging year for the Company, with potential demand, as always, difficult to predict at the current time."

The uncertainty regarding trading in 2019 coupled with the following hint that management may favour a de-listing i.e."Given our size, we continue to incur significant financial overheads associated with being a public listed company, but notwithstanding this we were able to generate a post-tax profit for the period of £177,000.", "spooked" investors and decimated the share price.

If you don't like the possibilty of holding shares in a de-listed company then I'd suggest you stop reading now. However, if you're more adventurous then read on.

My feeling from the tone of the 2018 prelims is that management would be happy to de-list. Indeed why wouldn't they be? Currently the shares yield a 6% dividend, a dividend that has incidentally doubled in the past four years. In fact, it rose 20% this year (a dip year) which indicates huge confidence in the long term future and an extremely robust balance sheet. In essence, de-listing would save them a further £150,000 per annum which is enough to double the current dividend immediately i.e. a potential 12% yield. That's mouth watering! It should be noted that the Directors hold around 25% of the shares and consequently a (potential) double digit dividend would be highly appealing. It should be noted though that they would need the support of all their major shareholders to secure the 75%+ votes to enable a de-listing to happen.

For such a tiny company, the balance sheet is absolutely superb. Cash stands at £1.3m and there is zero debt. The NAV is £3.8m (TNAV is £1.3m) against a current market cap of £2.3m, although if you do your research I believe the true value of Stilo is very significantly higher.

From the prelims, it suggests that their trading statement in May will be lacklustre and it's possible that they might even try and persuade investors to back a de-listing. I'm comfortable holding or even adding whatever happens.

Stilo has excellent financials and the potential to restart their growth trajectory again. Whilst growth may not resume this year, I very much suspect that the medium to long term looks far more rosy.

The shares are already highly illiquid, so any potential de-listing won't improve that situation but by way of compensation you just might get a double digit dividend yield!!

As a final note, I'd add that I've never held a micro-cap company before that was profitable, pays a generous and improving dividend that has doubled over four years and has a rock solid balance sheet.

I hope that they can regain their growth trajectory in the medium to long term because that would truly be very exciting whether they're listed or not!!

De-listing? Bring it on!!

It's not all bad thank goodness!

2019-04-09T09:01:00.000-07:00

Hot on the heels of the 7digital debacle, I'm reporting a successful share sale in a company (to make myself feel better) which is the antithesis of 7digital. The company in question is Scientific Digital Imaging where I've banked a 3-bagger (203% profit to be more precise). I bought shares in SDI in December 2016, and have watched a wonderful success story where the management have done a great job in growing the company both organically and by acquisition. The company is profitable, cash generative and has a strong balance sheet. It's gross margins are very healthy at around 66%. As I said, the opposite of 7digital's fundamentals.

I love this company and believe it has far further to run, but I wanted to release some funds because I believe that there are bargains to be had and others that will materialise in the coming weeks or months. It's always a difficult decision to sell a company if it's performed well and I do believe in running winners, but the reality is that occasionally you need to raise cash for other perceived opportunities and you need to make choices. With SDI the compounding return for me after just 2.25 years was 64% per annum. If only all of my choices could do as well.

In further good news, One Media IP (OMIP) reported very encouraging interims today alongside the acquisition of a music catalogue:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/OMIP/14033376.html

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/OMIP/14033329.html

I don't envisage selling any shares in OMIP in the near future. Again it's a great little company with good growth prospects and excellent fundamentals.

As ever DYOR, and listen to nothing I say.

Liars, incompetence, and foolhardy choices

2019-04-09T08:14:00.000-07:00

FFS I never saw that coming! Maybe I should have? I'll try not to be to harsh with myself, but I must show more discipline in future.

This morning's shock came in the form of a "Business Update" from 7digital. The previous CEO Simon Cole has just left the company after saying the following on 25th March, "I leave 7digital in good shape". It's now become obvious that he was referring to himself rather than the company, and has clearly been spending too much time at the gym since today's business update from the new incumbent says the following, "the Board's current view is that the business will require material further equity and/or debt funding in the next quarter without which the Company would be unable to continue as a going concern. The Board will assess financing options for the Company however, it is likely that this would entail significant dilution for shareholders."

I'm glad Simon's in good shape, and enjoyed his journey since it provides me with great comfort having today sold my entire holding for a whopping 94% loss overall. The only saving grace for me is that I wasn't suckered in by these rats when the previous share price collapse happened back in January. I have massive sympathy for those who were. In my previous two blog posts I had this to say:-

http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html

"7digital (7DIG) - current sp 2.3p, market cap. £9.2m. Big promises but disappointing so far. Has had a habit of pulling defeat from the jaws of victory. Up until now it's been a big cash guzzler and diluted shareholders. Major acquisition should now be fully integrated? Cost savings will be £5m per annum? Gross margins should be 70%+ , and profitability just around the corner in a potentially exciting space. Market doesn't currently believe the promises, but if 7digital proves them wrong then expect a multi-bagger in double quick time."

Followed by:-

http://michae1mouse.blogspot.com/2019/03/the-micro-cap-update-3-months-later.html

"7digital (7DIG) have probably released more news than all of the others since December. Initially bad news including the termination of a contract with Juke a significant customer, and the non payment of a tax bill. The market was spooked and the shares plunged. However, since then they settled the tax bill and received a very healthy 4m Euro settlement from Juke, alongside announcing new contracts. The share price has recovered a little and stands at 1.18p (down 49%). Very recently there have been significant changes to the management team."

Given the newsflow, shareholders had every right to believe that, despite the January issues, the company was recovering and with a 4m Euro settlement received had enough cash for the foreseeable future at least. I can't even express how angry this makes me. At best it was financial incompetence, I'll let you surmise what it was at worst.

I don't care what happens to this company or it's share price from now on since I've been 100% wrong up until this point. However, given it's history then who in their right mind is going to stump up extra cash and/or lend them money when they've pissed so many millions up the wall already. Good riddance.

In terms of lessons learnt then I'm not going to be too harsh with myself, but I'm not best pleased either since this now ranks as my worst investment since DCD Media and there were some worrying parallels e.g. crap balance sheet stuffed with intangibles, ill advised acquisitions, management promises never fulfilled etc.

Firstly, in my defence I'd say that the company was beginning to generate very healthy revenues, gross margins were around 70% (very appealing for operational gearing), they were last man standing in Europe and profitability and cash generation was promised and appeared highly likely in 2018.

It's all "jam tomorrow" bollocks though really. At the 2018 interims, despite a healthy increase in revenues, losses were over £2.5m, net current assets were nearly minus £2m and they were still burning cash like it was going out of fashion. The fundamentals will always out in the end! I know this and must do better next time.

I've been in this game for a long time now, and the successes are invariably those companies which have most of the following qualities:- Profits, good cash generation, a solid balance sheet, high gross margins, good management, dividend payments and Directors with "plenty of skin in the game". Small companies don't need to have all of them to pique my interest, but 7digital only boasted growing revenues and high gross margins. It's not enough.

What still amazes me after all this time is investors (including myself in this instance) chasing companies with none of the above and sometimes barely any revenues. 99% of the time it ends in disaster for such companies. 7digital being one of them. What on earth was I thinking?

Remember ignore all I say and do, but (just for myself) don't listen to bullshit by CEO's, sharetipsters, multi-handled bulletin board idiots, tweeters or any one else. It's always the fundamentals stupid with some potential for growth and a bit of luck thrown in! They might not always be multi-baggers, but some will be and the ones that aren't are unlikely to lose you 95% of your capital.

GLA, and commiserations if you own(ed) 7digital or indeed any other company that has lost significant value.

The micro-cap update - 3 months later!

2019-03-30T01:52:00.001-07:00

Back in early December I wrote the following blog post:-

http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html

Just for clarity, I may or may not have added or sold (partially or fully) any or all of the following company shares or simply done nothing since writing the above article. Indeed, I may or may not have acquired or be acquiring shares in other companies since December that don't appear in the list above. I am not recommending buying or selling any of the companies mentioned, but merely reporting on progress at regular intervals (probably every 3 months).

As I outlined in the article in December, I'm looking at a 5+ years horizon so after just 3 months we are very early on in making any judgements. It's also worth pointing out that the majority of the company shares mentioned are highly illiquid and can move very quickly in either direction so it goes without saying they're not for widows or orphans or the faint hearted.

Anyway, a quick progress check.

First up Mediazest (MDZ). The current share price at 0.09p is up 20%. Since I last reported, Mediazest now has a new Nominated Advisor, it raised £110,000 at 0.10p for working capital and to strengthen the balance sheet, and recently issued a trading statement. The full year performance will be below market expectations, but will show an improvement on the prior year. A company called "In Ur Face Media Limited" has taken a 8.5% interest in the company.

Aeorema Communications (AEO) has released one significant news item (this week) which was it's interim report. The shares stand at 26p (20% down). Despite an in-line statement and robust cash position most of the share price fall occurred this week. They intend to continue dividend payments.

Stilo International (STL) released full year results on 14 March. There were no surprises from earlier trading statements. Despite a fall in revenues they still recorded a £177,000 profit and upped the dividend again by 20%. The balance sheet is still strong with plenty of cash. The share price is 2.35p (down 15%) with the dividend yield now standing at 5%. Incidently, Stilo's progressive dividend policy has meant that the payout has doubled in 4 years.

Immedia (IME) has produced no significant news but the shares have risen to 29p (up 9.5%).

Space and People (SAL) produced a profit warning in January causing the shares to plunge, and have since released their final results. Renewals and new contracts provide for optimism in 2019, as does the payment of a dividend this year at a yield of 3.8% at the current share price. We shall see if they can recover in 2019 of course. The share price is currently 13p (fallen 38%).

Trakm8 (TRAK) released a trading statement that was a bit of a mixed bag in February although they expect to be profitable in the second half of 2018, and promise a much improved performance in 2019. They've sold their property in Dorset for £506,000. The shares are flat at 21p.

One Media IP Group (OMIP) have announced a new contract and the acquisition of a new catalogue. Finals will be on the 09/04/19. The share price stands at 5.05p (down 8%).

7digital (7DIG) have probably released more news than all of the others since December. Initially bad news including the termination of a contract with Juke a significant customer, and the non payment of a tax bill. The market was spooked and the shares plunged. However, since then they settled the tax bill and received a very healthy 4m Euro settlement from Juke, alongside announcing new contracts. The share price has recovered a little and stands at 1.18p (down 49%). Very recently there have been significant changes to the management team.

Crimson Tide (TIDE) released a very positive trading statement which bodes well for their short, medium and long term future. The shares are currently 2.65p (up 20%).

Biome Technologies (BIOM) had an excellent 2018 where it recorded the first profit in it's history, largely due to a stellar performance in it's RF division. Revenues were up 44% at £8.9m with EBITDA at £600,000 and a maiden operating profit of £100,000. The shares have fallen since I last reported chiefly because the RF division won't record the same revenues in 2019, but will outperform results in 2017 which were still very good. Investors appear to be overlooking the progress in the Bioplastics division which will be the real growth driver going forward. The Finals which were released this week read very positively and "the Board is confident in the group's outlook for 2019". The share price is currently 365p (down 33%).

Scientific Digital Imaging (SDI) is the star performer so far at 47p (up 25%). SDI released their interims results with all of the key metrics showing excellent progress, in particular cash generation was up 103% at £1.5m. The group's outlook remains positive. They have since made a further two acquisitions which should further enhance earnings alongside organic growth.

Last but not least is PCF Group (PCF). They've raised capital in the markets to accelerate their impressive growth, and a trading statement which was very encouraging in the short, medium and long term. The share price at 33p is down 8%.

It's very early stages at the moment, but if you'd invested £1000 in each company mentioned then currently you'd be sitting on a loss of 8% at the moment (average share prices), although paper losses would be greater if you include bid/offer spreads and buying fees. Not great, but in the current climate for micro-caps not a disaster either. Current political and economic uncertainty is certainly adversely affecting the performance of very small companies.

It should be noted that 6 companies in the list are now valued at less than £5m namely STL, IME, AEO, 7DIG, SAL, and MDZ with STL, AEO, IME and SAL having excellent balance sheets and plentiful cash (STL, AEO and SAL pay a dividend). Four more of the companies are capitalised below £13m i.e. TRAK, TIDE, OMIP and BIOM with the remaining two less than £100m (SDI and PCF).

As mentioned previously, the gains or losses mentioned above do not relate to my own losses or gains and I may or may not still hold all or some of the above. I may or may not have acquired shares in companies not mentioned in the list. From time to time, I will update my blog with details of my own purchases or sales of companies and report losses or gains. As a very long term holder though, these occasions are relatively rare.

Good luck with your stock picking, and enjoy. As ever no advice is given or implied!!

Stilo results and important matters re:AIM listing

2019-03-14T13:48:00.000-07:00

Following the release of today's results from Stilo International, I have written a short blog post about the figures, the narrative and their AIM listing:-

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/STL/14001536.html

Firstly, let's address this line where some have hinted it suggests that Stilo will seek a de-listing,

"Given our size, we continue to incur significant financial overheads associated with being a public listed company, but notwithstanding this we were able to generate a post-tax profit for the period of £177,000."

Whilst a de-listing is not out the question, it should be noted that Stilo's Directors hold less than 25% of the company's shares which makes it impossible at this juncture to secure a de-listing without significant support from it's other shareholders. If the company wanted to de-list they would need to make an offer for the entire share capital in my opinion i.e. a Management buyout. As a shareholder I would expect a far higher offer than the current lowly market cap.

As for today's results, I'm pleased that they still managed to make a profit after warnings earlier in the year, and I'm extremely pleased with a 20% hike in the proposed dividend (2018:0.12p, 2017:0.10p). Incidently, this is the 5th consecutive year of rising dividends. In short, they continue profitably with plenty of cash and a strong un-geared balance sheet.

As for the outlook, they appear non-committal at this stage. In fact, mixed messages possibly? We have:-

"The Company continues to invest in the development of leading technologies for the structured content market and in so doing build long-term value for shareholders. As we look forward to growing future sales, supported by healthy cash reserves and a strong balance sheet, I am pleased to announce the payment of an increased final dividend of 0.06 pence per share, providing a total dividend for the year of 0.12 pence".

then

"In the short term, growth will be primarily driven by sales of Migrate and OptimizeR solutions to new customers and we will be stepping up our sales, marketing and development efforts accordingly. 2019 is going to be a challenging year for the Company, with potential demand, as always, difficult to predict at the current time. "

Here's my blog from September 2018.

http://michae1mouse.blogspot.com/2018/09/its-steal.html

Not much has changed for me following these results. Stilo is undervalued and I continue to hold and await developments.

Some very mice news from Angle!

2019-01-10T09:56:00.000-08:00

Well investors in Angle should be smiling this evening following the release of this RNS and a near 80% jump in the share price:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/AGL/13930951.html

Fabulous stuff. Not least because Angle's Parsortix diagnostic kit has the potential to help in saving thousands of lives. Whether you're a shareholder or not you should be extremely pleased that companies like Angle are assisting in the search for effective ways of personalising cancer treatment.

I'd be a very happy shareholder, except I'd already sold my shareholding. It's a familiar story, and one that sometimes comes back to haunt me from time to time. I bought my shares in December 2012 at around 27p:-

http://michae1mouse.blogspot.com/2012/12/a-new-angle.html

I recognised they were speculative, but could see potential. The share price raced ahead in the early days around the levels seen towards the end of today, but quickly retreated again. After what I deemed slow(ish) progress and several fund raisings, I eventually took profits selling my shares for around 50p.

As a long term buy and hold investor, I must remind myself just to tough it out most of the time. Many companies take many years to make the required progress, but when they do the rewards can be spectacular. I hope Angle eventually rewards it's patient and loyal following.

I note that today's RNS says it's "ground breaking" work, but fairly early stage since the tests were on mice. However, it's another potentially significant use of the parsortix system. I wish the company and long term investors good luck.

I must remind myself that I must not get frustrated and remain patient. Whilst some investments will fail to perform, my personal experience is that if you have a reasonable flair for spotting long term potential, the winners eventually render the laggards insignificant.

As such, Angle's news today has provided a timely reminder to just hang on in there with my current holdings and patiently wait until latent potential has been fully realised or the company becomes a total non-starter. For those that missed it, here are a few ideas of micro-caps with the possibility of a big future yet to be fulfilled:-

http://michae1mouse.blogspot.com/2018/12/micro-cap-christmas-presents-or.html

Wishing you all a belated, but healthy and happy new year.

Micro-cap Christmas presents or Christmas Turkeys?

2018-12-08T08:02:00.002-08:00

It's a little while since I last posted, and market turbulence is still evident. That said, whilst I'd be very nervous holding stocks on p/e ratios of 50+ or loss making, low revenue companies on multi-million pound market caps. of say £30m+, it does appear that the rout in micro-caps (under £10m market caps.) may be close to an end? Or is that just wishful thinking on my part? We'll see.

Common sense does dictate that when a company's market cap. falls below a certain level, assuming it's reasonably well funded (i.e. not going bust) then it's unlikely to fall as heavily as the over-priced multi-million pound companies briefly referred to above. However, this is the stock market and short term you can find that almost anything is possible! If you're not familiar with the quote about "voting" and "weighing" machines then it's worth looking up.

Anyway, I'm going to list a number of small and micro-caps that I'm currently invested in and that you might want to investigate yourselves. Most have been mentioned before in my blogs or twitter or the bulletin boards. I am not recommending that you buy or sell any of these companies of course, and I am currently sitting on paper profits in some of these companies and losses in others. All I'm going to do is list bear and bull points for each stock, and if one or more companies pique your interest then you might wish to do some extensive research.

Will these stocks turn out to be Christmas presents or Christmas Turkeys? I can't say for sure, although of course I'm hopeful that they'll all prosper. At this point I should emphasise that I'm looking at their performance with a minimum 5 year outlook, and I'll review their performance at regular intervals. From my past record of serious investing from the early 2000's then I'd hope that in 5 - 10 years time then 3/4 will have more than 10 bagged. I'm listing 12 companies in order of market cap. (smallest to largest) alongside their current share prices (please note these are not the share prices I purchased at). In all my time investing only one company has ever gone bust on me, although that might be tempting fate! I sincerely hope not. Anyway, here goes:-

Mediazest (MDZ) - current sp 0.075p, market cap. £0.96m. Tiny company that's never made a full year profit and always appears on the brink of a cash call. Latest interims show a maiden profit and increasing recurring revenues. Has it turned a corner?

Aeorema Communications (AEO) - current sp 32.5p, market cap. £2.94m. Always looked a good value share, but growth has never been sustained. There's a new management team. Excellent start. Balance sheet still provides considerable comfort. If they deliver sustained growth then it's off to the races.

Stilo International (STL) - current sp 2.75p market cap. £3.13m. For many years it's been a bit of a plodder. Suddenly growth kicked in, and then disappeared this year when two major contracts came to the end of their lifetime. Can't believe this is the third cheapest company on my list? Fabulous balance sheet and progressive dividend policy even in this dip year. Can they resume growth from 2019 onwards and get back on track? Certainly the product list is expanding. Impressive client list.

Immedia (IME) - current sp 26.5p market cap. £3.86m. History has seen IME win big contracts and lose others in equal measure. Recent acquisition failed to have an immediate impact. Client retention is much improved, and the acquisition is beginning to bear fruit. Encouraging interims. Is growth about to take off?

Spaceandpeople (SAL) - current sp 21p market cap. £4.1m. This was a rising star that fell from grace with a large bump. In 2017, it looked like it had got it's mojo back and they reinstated a dividend. Disappointing again this year unfortunately, but certainly not a write-off with management confident that this year is a temporary blip and they can indeed restore former glories. We'll certainly find out in due course.

Trakm8 (TRAK) - current sp 21p market cap. £7.3m. Another rising star that came unstuck. Well documented on my blog and elsewhere. Ambitious plans that unravelled through slower than anticipated growth. Fabulous client base though and second half of this year will be far better than the first six months. Recurring revenues are building very nicely. A white knight has appeared in the form of a company called Microlise in the same telematics space. They bought a 20% stake in Trakm8 at a 22% premium to the depressed sp. Huge opportunities for Trakm8 if they can execute this time around. If not then Microlise might just snap them up anyway?

One Media IP Group (OMIP) - current sp 5.5p, market cap. £7.46m. Shift in music consumption caused a temporary halt to their growth. Inflection point has been reached and growth restored. Nicely profitable and cash generative business. A recent cash raise came out of the blue as the company was joined by industry heavyweights and an ambitious plan for much accelerated growth. The cash raise is to fund acquisitions in the music rights space. Big gamble? Spectacular if it pays off.

7digital (7DIG) - current sp 2.3p, market cap. £9.2m. Big promises but disappointing so far. Has had a habit of pulling defeat from the jaws of victory. Up until now it's been a big cash guzzler and diluted shareholders. Major acquisition should now be fully integrated? Cost savings will be £5m per annum? Gross margins should be 70%+ , and profitability just around the corner in a potentially exciting space. Market doesn't currently believe the promises, but if 7digital proves them wrong then expect a multi-bagger in double quick time.

Crimson Tide (TIDE) - current sp. 2.2p, market cap. £10.06m. Hasn't really put a foot wrong in recent times, but excellent progress is being temporarily masked by investment for growth. Market sentiment has currently depressed the share price, but TIDE is growing impressively with huge gross margins (80%+) and a great balance sheet. One of those companies that is currently overlooked, but will set the market alight when investors twig about future growth prospects?

Biome Technologies (BIOM) - current sp. 545p, market cap. £12.88m. A stock market favourite in it's early days. A loss making "story" stock that was valued far too highly with little to show in terms of revenue. Share price collapsed to around 80p at one time. It was friendless. Now beginning to fire on all cylinders. Two businesses in one company. RF business is profitable and in demand, Bioplastics is currently loss making but in the right place at the right time. Recent reports suggest Bioplastics revenues could see very significant growth in the medium to long term. Very exciting space, excellent balance sheet with plenty of cash. Mouth watering potential with a still modest market cap.

Scientific Digital Imaging - current sp 37.75p, market cap. £31.6m. Not a micro-cap, but was when I bought in. Like TIDE it hasn't put a foot wrong in recent times. Growing organically and through acquisition. Buy and build can be risky, but so far so good. Another JDG?

PCF Group - current sp. 36p, market cap. £77m. Certainly not a micro-cap, but a very promising company. PCF has endured it's hardships in the past, but has now transformed itself and investors should be handsomely rewarded. Don't listen to my blathering, but read PCF's finals released earlier this week. One year ahead of schedule with impressive growth and modestly valued.

That's it. They are not tips, but you may wish to have a more detailed look at one or two of the companies listed. As I said earlier, I'd be disappointed if there aren't at least 3/4 potential 10 baggers in there (with a long term time frame e.g. 5+ years). Which ones will they be though, I have no idea? Of course it could be all of them or none of them since (as they say) past performance is not a guide to future performance, or something like that anyway?

May I be the first to wish you all a ……...No it's still far too early!

ATB.

I'll always play the long game!

2018-11-20T08:47:00.000-08:00

In my last blog post I wrote a little bit about my stock picking journey and how an early investment in Trakm8 was life changing, and how Avesco put the icing on the cake. It's not meant as a boastful post, but I'm hoping it provides comfort to some novices as we currently endure a bear market in the small cap. sector.

I should re-iterate that bear markets are opportunities. "Be greedy when others are fearful". In Trakm8's case we might actually live the phenomenal share price appreciation again and then some more?

I previously mentioned that I started to invest seriously in the 2000's. What do I mean by that? Well to summarise, if you can't read a balance sheet, don't know what a p/e ratio is or TNAV or dividend yield etc then you should probably stick your money in a tracker fund. I'm not patronising, but you do need to (at least) find out about the basic financial measures to avoid many of the pitfalls. I also advise, as I did before, to read extensively about the "Great Investors" and their investing ideas. I did all those things before getting heavily involved in stock picking.

Anyway I digress. Why did I become a long term investor rather than a trader? Personal experience basically. Before my success with Trakm8 and Avesco, in 2002 I had invested in a company called Ashtead and a shipping company called Clarkson.

Starting with Ashtead. I bought my first tranche of shares in Ashtead for about 34p. At the time, I remember thinking that they were easily supported by NAV. Slightly naively perhaps, I hadn't taken into consideration their huge debt pile. I'm a little more clued up these days hopefully! Ashtead got into trouble and the share price fell to around 2p. "Oh dear, how sad for me" are words I didn't use at the time, my language was a little more colourful I seem to remember.

Anyway, I just held on and hoped for the best. Disaster was averted, and slowly but surely the share price began to rise. I bought more at 15p to average down, and let out a sigh of relief when I sold for a small 7% profit. Phew! Dodged a bullet there?

Have a look at the chart from 2002 to now. It's certainly not been a straight line journey, they never are, but even in today's market the share price stands at £17.12. My first purchase would have been a 50 bagger, and my second purchase a 115 bagger. Oops! Hang on, did I mention they also restored a dividend payment? They've paid out £1.39 in dividends since 2002. In fact last year's dividend alone would have given me nearly half my money back without selling a single share.

Clarkson is a slightly different story, but a similar theme. I bought Clarkson in 2002 for £2 a share. It was debt free and paid a 7% dividend yield. Pretty safe stuff I thought. I then watched the share price drop to £1.30 or so. Let's just fast forward shall we. I eventually sold mine for a handsome 74% profit. Not so handsome sadly! Today's share price is £23.65. The dividends paid out since 2002 amount to £7.30. So that would have been 3.65 times my money back in dividends alone, and a 12-bagger.

Now don't get me wrong, not everything you buy will become a multi-bagger and if you're a speculator i.e. having a punt on early stage oil or mining companies or low/non-revenue multi-million pound "story" stocks then prepare for lots of disappointment or even total wipeout. However, if you grasp "value" investing or GARP stocks or preferably companies exhibiting both characteristics then the chances are that in a portfolio of 10-15 companies (at least) 2 or more should prove to be multi-multi baggers in the long term, and eventually you won't really care what happens to the ones that don't. I might add that in the past 18 years, only one company has ever gone bust on me and that was a speculation.

I don't do advice or share tips, but this current market will throw up some absolutely fantastic buying opportunities if you've got the cash and if you're fully invested already then maybe switch off your monitor and do something else for a while.

ATB.

Market madness and setting personal goals!

2018-11-17T08:26:00.002-08:00

Investing in illiquid small caps is not for the faint hearted. I should know since it's where I concentrate all my efforts. Yesterday I experienced the worst one day share price collapse in a company I hold (if memory serves me correctly) since I started investing seriously in the early 2000's. The company in question is Trakm8. I'll address yesterday's debacle later.

Of course these things work both ways. Yesterday largely reflects the panic and irrational behaviour of a current bear market in micro-caps pushing their share prices well below fair value. Bull markets do just the opposite with the exact same companies.

With all the above in mind, whilst I'm constantly banging on about being a long term investor, it's vitally important to keep personal goals in mind and act accordingly.

I bought all my shares in Trakm8 back in 2011 when the share price was even lower than it is now i.e. it was in the teens. Here's my blog post from that time:-

http://michae1mouse.blogspot.com/2011/09/your-m8-my-m8-trackm8.html

Trakm8 was one of my largest investments. It ticked so many of my personal investing criteria for a micro-cap.

Fast forward to Spring 2015 and Trakm8's share price had risen above £1, and I took a gamble. Trakm8's results were improving, trading statements were excellent and the share price had real momentum. I quit the day job with a (hopeful) £2 plus price target in mind which would make my dream of full time investing possible. In early October of the same year (2015), as the share price rose above my £2 target, I attempted to sell half my holding. I managed to sell a good portion, but given the huge illiquidity of the shares, I didn't sell all that I wanted to. As luck would have it, share price momentum continued and I actually sold the rest of that 50% for well over £3.

My two sales gave me a 12 bagger and a 20 bagger respectively. This translated into more than 6 times my original investment with the remaining 50% to hold for "free".

I hope this doesn't sound like bragging because it's not, I'm just trying to state the importance of having personal goals when making buy or sell decisions.

Trakm8 changed my life and I'll always be grateful to the management team that had done so well up until that point in their development. For regular readers, I hope this also goes some way to explain why in the past I've defended them so vociferously (and clearly I still hold 50% of my original investment).

My personal experience in the micro-cap sector has taught me to pick 10-15 such companies that you believe have significant potential. Carefully consider their financial situation and prospects before investing and buy them as cheaply as possible. Hold tightly unless the story changes or you've reached a personal goal. One or two of these success stories will change your life. There are other successful strategies of course, but buy and hold works for me. Never forget with all the best research in the world then you'll still need a bit of luck, but "the more you practice the luckier you'll get".

Hot on the heels of Trakm8 came another success story. Avesco. What I don't think I've mentioned about my investment here is that before I started the thread below, I'd bought a small maiden purchase at around 80p, which I thought was very reasonable at the time.

https://uk.advfn.com/cmn/fbb/thread.php3?id=20681152

How I laughed as the price plunged to as low as 20p. I kept thinking maybe I was missing something, but the shares seemed ludicrously cheap. That's when I bought the bulk of my holding. In 2016, Avesco was bought out for £6.50 and along the way investors enjoyed generous dividends that included a bumper £1.10 payout after winning damages against Disney.

http://michae1mouse.blogspot.com/2016/11/avesco-value-realised-after-recommended.html

This brings me back to yesterday's interims and trading statement from Trakm8.

The interims and trading statement were extremely disappointing there is no denying it, but a near 70% drop in the share price is just plain silly.

As a long term investor, what you need to decide is where will they be in 5 years or more?

I see a company that's still making good progress (albeit slower than hoped) but had a bit of bad luck in regaining momentum. It's recurring revenues make up 58% of total revenues which in 2018 are likely to be around £22m or so. Lexis Nexis and EE are two major contract wins recently announced and join the AA, Scottish Power, Direct Line, Marmalade, E.ON etc in employing Trakm8's cutting edge technology. Reading yesterday's report again, I still believe the company has excellent medium and long term prospects.

I don't give advice, but I'll be holding my shares now until the end game which I'm hopeful will conclude in a few years time in a similar manner to Avesco i.e. huge capital appreciation, dividends when appropriate and an eventual buyout at a premium.

ATB to regular readers, and if you're relatively new to investing then don't be depressed by the current sell off in micro-caps, it's an opportunity and not a negative.

As ever, AIMHO and please do your own research.

How much longer can AEO be ignored?

2018-11-07T09:23:00.002-08:00

AEO (Aeorema Communications) released their full year results this morning:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/AEO/13857561.html

I've written about this company before. Here is my last blog post from around the same time last year:-

http://michae1mouse.blogspot.com/2017/11/update-aeo-no-brainer-now-surely.html

Since that time the share price has largely remained unchanged, but the company is making excellent progress. Undervalued/unloved stocks can be ignored for very long periods, but in my experience it's always worth the wait in the end.

In my last blog post, I said AEO was undervalued. Following today's results I'd suggest it's even cheaper.

This morning they recorded a 16% leap in revenues to £4.8m (2017:£4.16m) and a profit before exceptional items of £289,650, a year-on-year increase of 17% (2017: £248,368).

They maintained a strong cash position with £1,436,314 in the bank, and have proposed a final dividend payment of 0.75p (2017: 0.5p), up 50% on last year.

Taking the profit (post tax) before the exceptional items gives EPS of around 2.6p, and hence a p/e ratio of just over 10.

The exceptional items were in relation to the departure of its two founders, Peter Litten and Gary Fitzpatrick, from the board of directors.

The new management team are more focussed on growth than Litten and Fitzpatrick, and although they intend to keep paying dividends when possible, they will "use the cash reserves to invest in new talent capable of driving the business forward organically, as well as exploring new acquisition opportunities which can help the Group increase in scale and drive increased revenues and profits."

They've certainly made an excellent start whilst maintaining a very healthy balance sheet boasting cash of £1.4m and remaining virtually debt free.

The growth story moving forward is looking very promising indeed. The average growth in revenue from their top five clients this financial year was 29% and although some of their larger individual projects continue to be repeated every two to three years, they have added some new annual large-scale conferences to their calendar and continue to seek out repeating six figure revenue generating events to support their growth plan. They are especially pleased to report that their pitch to win ratio has increased by approximately 40%.

Their outlook statement reads very positively:-

"Looking forward to the financial year ended 30 June 2019 and beyond the outlook is very positive. The strength of the new team has led to an excellent series of new business gains since the year end with both existing and new clients. These gains include a major new client in the technology sector and a new global brand within the media sector. The Group continues to win new film production projects and the appointment of Julian Staveley as Experiential Director is also proving successful, with the Group recently winning a roadshow event for a global electronics company."

Everything points to a company achieving excellent growth with a solid balance sheet, a forward p/e ratio in single digits and a respectable 2.7% dividend yield. At a market cap. of just £2.4m it's an opportunity to pick up a value company with very good growth prospects. Surely, AEO can't be ignored for much longer?

I am a shareholder of AEO, and no advice is offered or given in this blog.

Zesty interims!

2018-11-05T01:43:00.003-08:00

Mediazest released their interim results this morning rather earlier than I'd anticipated (in 2017 it was mid December). I'm impressed, pleased and will continue to hold my existing shares in the company. I last commented on Mediazest in September:-

http://michae1mouse.blogspot.com/2018/09/zesty-and-promising-or-just-lemon.html

This mornings interims were very much in-line with the encouraging trading update and the key metrics are as follows:-

Revenue up 36% at £1.819m, EBITDA at a healthy £156,000 (they recorded a loss in 2017) and a maiden profit of £90,000 (they made a loss of £149,000 in 2017 at this juncture).

As mentioned in my previous blog post, the cash position is the worry for Mediazest, and on the face of it cash of £12,000 recorded at period end is insufficient. However, this is because of a late payment of EUR130,000, the bulk of which has now been received and cash is therefore healthier than the headline figure.

Gross margins have improved by 3 percentage points to a healthy 51% largely driven by their pursuit of recurring revenues which currently stand at around £700,000. They hope by year end these will increase to around £800,000 and cover 50% of costs on an annual basis.

Whilst we're all aware of uncertainty in the UK retail market, Mediazest are having considerable success overseas and :-

"the Group is developing, currently, several roll out / substantial deployment opportunities which would enable the Company to show further progress both in the current and future reporting periods." Their client list remains very impressive, and as far as I'm aware, this is their best half-year performance to date? Given all the above and a lowly market cap of around £1.4m, I don't see any reason not to stick with the shares I already own and see how things develop in the future.

Jam delivered and currently stuck in a jam!

2018-11-01T07:33:00.001-07:00

There were very few RNS announcements in October from companies that I'm interested in, but November has started with a terrific trading update from Biome Technologies:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/BIOM/13850420.html

This was a Q3 update to 30 September. It reads very well indeed.

Firstly, overall revenues are £7m for the first 9 months of 2018 which is a 56% improvement on last year. Significantly, this 9 month revenue figure is already well ahead of the full year figure from 2017 which came in at £6.2m.

As mentioned in my previous blog post, it's the RF division that's outperforming at the moment with £5.5m of the £7m revenues generated coming from the exceptional demand for fibre optic furnaces in 2018. The remainder of 2018 also looks strong for this division, and the outlook for 2019 sounds optimistic with orders "reasonably strong" at this stage.

The Bioplastics division is the laggard at this juncture, but I believe that this division has huge potential given the publicity regarding the environmental damage being caused by conventional plastics.

Whilst the revenues generated in 2018 by the bioplastics division are marginally down on last year at £1.5m (1.7m in 2017), 2019 could see a significant uplift in revenues. Most of the revenues from this division are currently "for the commercialised outer packaging and non-woven filter mesh for the US coffee pod market." It's worth noting that "a contract for the supply of material for the rigid ring material in this coffee market sector has been signed recently and commercial revenues are expected to commence in Q1 2019 following the completion of final validations."

Even more significantly, there are two projects underway, one in the US and one in Europe, that could lead to substantial revenues in 2019 and 2020 with "further new customer relationships (are)underway within this division which should lead to exciting projects emerging in 2019."

I'm still very excited by the prospects here, and it's a long term hold for me. The shares rose sharply this morning, but they are extremely illiquid and have since fallen back a little from profit taking (the shares are up around 4% as I write).

At the opposite end of the scale, 7digital's share price has been falling sharply in recent weeks. There is or has been a relatively large seller in the market recently which explains some of the decline:-

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/7DIG/13826986.html

A major issue is that many investors are probably sitting on their hands waiting for some positive news from the company. Whilst they work towards cashflow and profitability, they have burnt through cash very quickly and recently needed an additional £1.5m loan from three shareholders for working capital as the company completes it's restructuring.

https://londonstockexchange.com/exchange/news/market-news/market-news-detail/7DIG/13843278.html

Promises of cashflow positivity and profitability accompanied by one or two large client contracts is needed from 7digital. So far it's been too many promises without the delivery, and we need under-promising and over delivering from now on.

I remain hopeful that 7digital can achieve their goals, and of course if they do then the share price will recover and move sharply higher. Ever hopeful, but it's never comfortable until you see the evidence of success rather than just jam tomorrow.

One thing that's worth noting is that Biome Technologies was very much a "jam tomorrow" company and many investors will have left the party never to return. That's a pity because it looks like the party may well be just starting? Biome's jam is being delivered now, let's hope 7digital does exactly the same. At the moment 7digital appears stuck in a jam.

Finally and very briefly, PCF have today announced the completion of an earnings enhancing acquisition following an encouraging trading update in late October. I hold.

As ever DYOR, no advice offered or given.

Fond memories - not really!

2018-10-23T07:41:00.000-07:00

A brief blog post from me today. It's a company whose shares I don't hold, but have in the dim and distant past. Talking of dim, I remember taking a loss of 27% back in 2004. More positively and looking at the current share price that could have been a lucky escape? We'll see in the fullness of time.

The company in question is Coral products. If memory serves me correctly, I vaguely remember them producing CD casings? Do you remember CD's? Yep, that's why the share price went into freefall I think? Like most investors my memory becomes a little hazy when recalling the duff investments. Anyway, that was then and this is now. Perhaps Coral products is about to rise from the ashes? If they don't go under it's surprising how many companies rebuild and prosper. They can be the most lucrative purchases if you catch them near to their recovery path.

Anyway CRU released an encouraging trading update today and the shares are up 5% as I type.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/CRU/13838153.html

Firstly, I should point out that they're still a specialist in the design, manufacture and supply of injection moulded plastic products. So what are the all important figures?

The market cap is just over £8m, and the results to the end of April 2018 showed a loss of £370,000 on revenues around £23.5m, although the underlying operating profit was £879,000 with earnings per share of 0.84p. Net assets came in at £13.2m, but just over £7m of that is goodwill and intangibles.

The company does generate cash, but had just £471,000 in cash on the balance sheet against approximately £6m debt back in April. Gross margins are ok at around 35%.

In summary, it's not one that interests me too much at the present since I always compare the financial metrics, market cap and prospects against company shares I already hold, and at the moment I'd tend to add more to some existing holdings rather than add CRU.

However, others may beg to differ or wish to do far more research than I have.

Incidentally, on the subject of plastics, if you haven't read my post on Biome Technologies then you may wish to do so by clicking the link below:-

http://michae1mouse.blogspot.com/2018/09/buy-one-get-one-free-bogof.html

I hold.

twitter: @michae1mouse