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Hoodless Brennan Daily Small Cap News Flash including Morse, Kewill, Visonic, ACTA, Research Now and others

Published: 07:17 22 Oct 2009 EDT

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Morse (MOR, 36p, £46.8m) states the trading outlook across the Group remains consistent with Q1 IMS. We retain our BUY recommendation from 09/09/09 (share price 31.5p) and our target price of 41p.

 

Kewill (KWL, 96p, £78.0m) reports that C. Steinweg Handelsveem B.V.,the Dutch-based logistics service provider, has selected Kewill Warehousing to implement a new warehouse management system. Steinweg will replace in-house systems with Kewill Warehousing and also use Kewill software to provide radio frequency functionality and customs support. Steinweg have purchased an initial 250 user licenses with related professional services and support and with flexibility to add further users as required. The project will commence in October 2009, with full implementation scheduled for spring 2010. This large contract wins helps support the current market expectations. On 16/07/09, we reiterated our Buy recommendation with a target price of 83p. The share price has exceeded our target price. We believe further contract wins will help enhance the share price. We retain our BUY recommendation with a 12 month price target of 106p.

 

Visonic (VSC, 66.5p, £27.64m) Has announced Q3 trading is in line with expectations and remains on a growth trend. Underlying operating profits are improving, augmented by favourable exchange rate movements. Overall sales are down 3.8% Q3 on Q3 at $21.8m ($22.5m) though this is an improving trend against last year, in terms of sequential quarters. Despite the lower sales in the first 9 months against last year the group is expecting a strong Q4 to enable flat year on year sales performance. We maintain our BUY recommendation despite the group making clear it expects to place more shares in public hands as its free float is currently below 25%.

 

ACTA (ACTA, 16p, £6.56m) Has announced the trade launch of its electrolyser and is undertaking a series of trade shows around the world over the next 2 months. The group expects first sales by the end of 2009 with first shipments by Q1 2010. The valuation is extremely low given the progress. SPECULATIVE BUY.

 

Intellego Holdings (IHP, 0.58p, £0.96m), the eLearning and compliance courseware solutions business, has won a contract with BPP, to implement Intellego’s Xyleme Learning Contact Management System. The first phase of the contract is valued at c.£0.4m. On a historic 2009 revenue multiple of around 0.5x, we initiate with a SPECULATIVE BUY.

 

Research Now (RNOW, 437.5p, £82.08m) The group has received a bid approach, announced last night, at the 430p cash level. Investors should look forward to the 2010 forecasts which look for £9.5m PBT with 32.34p EPS, so the offer puts the group on a Yr2 prospective PER of 13.5x. We believe the offer will increase and shareholders should HOLD and await developments with a target in excess of 500p.

 

Luminar (LMR, 86p, £86.36m) Interims to August highlighted sales of £88.7m (£94.3m) with same sales outlets showing a 4.5% decline, though average sales per head rose slightly by 0.7% to £12.50m. Following the £37.7m equity placing in August the group reduced net debt from £158.7 to £104.4m, banking facilities are secure till 2012. The outlook is of continued weak trading with same outlet sales down 14% in the 7 weeks to October and so the group remains heavily dependent on Christmas trade. Underlying pre-tax profits on continuing businesses fell to £4.9m (£8.4m) gave EPS of 5.4p (9.7p). The group took hits against its investment in 3DE and Eminence Leisure - in which the group had stakes and a loan to 3DE. With difficult trading but lower interest and the traditional Christmas boost, forecasts around £12m with 10.5p EPS seem sound, putting the group on an 8.2x prospective PER. A continued HOLD.

 

Sceptre Leisure (SCEL, 75.5p, £41.8m) reported sales for the five months period to 30th September 2009 of £17.5m (H1 2008: £18.0m). The group has increased the installation base of machines in pubs and license betting offices.  The group is still in negotiations with its banks to renew and increase overdraft facilities. The uncertainty in future funding coupled with a 2010 PER of 19x encourages us to initiate with a SELL recommendation. 

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