Hot Features
Premium
Trade smarter, not harder: Unleash your inner pro with our toolkit and live discussions.
Good morning and welcome to this edition of “AIM’s Essential Top Ten”, a brief and early roundup of the main news announcements. This morning’s edition includes IGG and RMG from the Main Market.
Horse Hill: Alba Mineral Resources (LSE:ALBA), Evocutis (LSE:EVO), UK Oil & Gas (LSE:UKOG), Stellar Resources (LSE:STG)
Horse Hill Update: A group of Horse Hill-related stocks have issued an identical update, informing the market of a threefold increase in calculated total oil in place per square mile at the HH-1 well. Previous estimate of 7.7 MMbbl per square mile upgraded to 22.9 MMbbl per square mile.
GN view: Can only be interpreted positively. The question of when and how this oil might be extracted remains critical to the investment case.
Brady (LSE:BRY)
Share price: 68p. Market cap: £55 million.
Trading Statement: Trading in line with management’s expectations. Revenues 4% ahead of last year, including revenues from acquisitions. Return to profitability. Nt cash in excess of £6 million.
GN view: Interesting geographical focus in the Americas, representing seven of nine new contracts signed. Management pleased with results from Cloud strategy. Overall, this is a software play worthy of further research.
Entu (LSE:ENTU)
Share price: 54.5p. Market cap: £36 billion.
Interim Results: Record order book for home improvements business. Annualised cost base reduced by £2.1 million, target of £4.0 million. Full year outturn will be below market expectations. Profit £0.4 million. Net cash outflow from operations £2.2 million.
GN view: Still reeling from the disappearance of the solar panel business, it’s a potential turnaround story where investors should only consider getting involved at an absolute bargain price. Not much balance sheet backing.
Gateley (LSE:GTLY)
Share price: 108p. Market cap: £115 million.
Full Year Results: Maiden annual results since admission to AIM. Revenue up 10% to £67 million. Profit before tax up 12% to £11 million.
GN view: Has successfully made the transition from LLP to PLC. No problems here so far. As always, important for investors to understand the potential pitfalls when buying into legal firms that were traditionally in partnership form.
IG Group (LSE:IGG)
Share price: 845p. Market cap: £3.1 billion
Results for 2016: Strong revenue performance. Net trading revenue up 14%. Profit before tax up 7.6% to £208 million. New client number ahead of prior year by 29%. Switzerland and Dubai offices ahead of expectations.
GN view: One of the best quality companies on the LSE, it is little surprise to see this continuing to storm ahead. Market volatility helps it as it encourages existing customers to trade and new customers to sign up. It’s also a cash cow, and generated £198 million of own funds from operations. Great long-term hold.
Ideagen (LSE:IDEA)
Share price: 54p. Market cap: £97 million.
Preliminary Results: Revenue up 52% to £22 million. Recurring revenues £11.5 million at year end.
GN view: The focus on adjusted profit measures is off-putting but a decent net income result of £1.3 million was achieved. Has an impressive customer list and the software appears to be highly regarded, so high earnings multiple might be justified in this case.
Kromek (LSE:KMK)
Share price: 25p. Market cap: £38 million.
Final Results: Revenue £8.3 million, up slightly. Gross margin 53%, down from 69% due to product mix and non-recurring £0.6 million payment.
GN view: Impressive new contracts and agreements with contracts worth over $40 million signed during the year. Radiation detection technologies are not a simple business and Kromek is loss-making on an EBITDA basis, investors should be aware of the risks involved.
Petropavlovsk (LSE:POG)
Share price: 7.6p. Market cap: £249 million.
Trading Update: H1 production of 187,400oz. Decrease caused by scheduled processing of lower grade material and severe flooding. Average realised gold price of $1,194/oz including hedging effect.
GN view: Still a leveraged play after its restructuring, but might finally come good for investors after the $600 million of outstanding net debt is paid down. Estimates FY 2016 year-end net debt of $570 million based on $1,200 gold price. Remains high risk in my view.
Royal Mail (LSE:RMG)
Share price: 502.5p. Market cap: £5.0 billion
Trading Update: Three month period to June in line with expectations. No material change in overall trends. UKPIL revenue down 1%. Parcels up 2%, letters down 3%.
GN view: Surprisingly resilient business and fantastic example of how buying into the shares of a monopoly (or semi-monopoly) often makes good sense.
Versarien (LSE:VRS)
Share price: 11.75p. Market cap: £12 million.
Final Results: Group revenue £4.4 million (down from £5.0 million). Net assets £5.5 million (down from £7.3 million). Loss before tax of £1.8 million.
GN view: Three divisions with mixed overall progress this year. Company states that it has made considerable progress this year, CEO is pleased with what the company achieved. As an early-stage business, investors should undertake considerable research to avoid overpaying for the prospects here.
