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Hoodless Brennan Daily Small Cap News Flash including Omega Diagnostics, E2V, Vyke Communications, Clean Air Power, Eleco and others

Published: 03:48 09 Oct 2009 EDT

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Omega Diagnostics (ODX, 24.5p, £5.06m) Trading update for the interim period to September 2009 reports revenues up 9% to £2.87m (£2.64m) with trading in-line with management expectations. Sales were driven by the Food Detective macro-array kits which sold 14,957 kits (5,266) leading to revenues of £0.35m (£0.13m) and Genarrayt sales up 19% to give revenues of £0.44m (£0.37m). The group expects sales of reagent kits to expand following the sale of 13 Genarrayt systems in the first half (taking total installed base to 35). Forecasts for March 2010 are for £0.8m PBT with 3.8p EPS, putting the group on 6.5x prospective PER. BUY to the 8.5x PER level - or 32p level.

 

E2V (E2V, 77.5p, £48.49m) Trading update for the interims to September is in-line with expectations. Q2 saw lower revenues whose impact was partially offset by cost cutting measures. While spares demand is resilient, the sales of the Electron Devices and subsystems division have been impacted by significantly lower demand than last year. Imaging saw continued reduction in demand from dentists – primarily served by the group’s French operations. Semiconductors is seeing lower demand while sensors, the smallest operation, saw growth.  The order book stands at an encouraging £130m (£118m) which supports the view that the second half will be stronger. Borrowings have fallen from £137m to £105m with £20m from organic cash generation. We continue to recommend the shares as a SPECULATIVE BUY despite the well flagged equity cash raise planned.

 

Vyke Communications (VYKE, 14,75p, £9.32m) Has signed a distribution agreement with Steen Group for its VOIP products across Latin & South America. We maintain the shares at a HOLD in anticipation of equity dilution from a capital raise.

 

Clyde Process Solutions (CPSP, 51.5p, £20.79m) Has won a £1.1m order for pneumatic conveying systems from a world leading cement producer. This represents the first group order for a fly ash conveyor system and could open a growth opportunity for the future. We maintain our BUY recommendation with a 58p price target.

 

Clean Air Power (CAP, 25p, £13.80m) Has signed a Letter of Intent with another major global truck manufacturer. The letter outlines a development agreement to deliver a joint demonstration vehicle designed to establish the technical and commercial viability of a jointly produced dual fuel vehicle with the possibility of formal contract and commercial production should the development project prove successful. Still a SPECULATIVE BUY despite rising 31% on the news.

 

Publishing Technology (PTO, 84p, £7.07m) Has announced a partnership with Sunmedia to re-launch Japan’s leading online publishing platform by utilising Publishing Technology’s pub2web technology that will introduce a range of extended features to the site that carries 35 journals from seven publishers and articles from over 4,000 journals on a pay to view basis. Forecasts for the year ending December 2009 are for £0.77m PBT with 9.18p EPS, putting the group on a 9.2x prospective PER – low enough to justify a move to a BUY recommendation with a 110p price target.

 

Eleco (ELCO, 32.5p, £19.71m) Full year results to June 2009 highlighted the impact of the downturn in the building sector with revenues down to £70.6m (£84.9m) and an underlying pre-tax profit of loss of £0.50m (profit £8.75m) before amortisation and impairment charges. Net cash declined from £5.85m to £0.91m and the retirement benefit obligation increased from £7.96m to £9.60m. Despite the loss the group has recommended a final dividend of 0.4p - taking the year total to 0.8p (3p). The group was hit hard by a setback in the pre-cast concrete operations with a major decline in the hotel and student accommodation projects. Some projects are now receiving funding – but many are still struggling to raise finance. Existing forecasts for the year ahead are for £3.1m PBT with 3.8p EPS which seems optimistic given the statement talks about the group being well placed to benefit from an upturn when it occurs. We look for £2m PBT with EPS around 2.5p, putting the group on a prospective PER around 13x, still too high, and we maintain our SELL recommendation with a lowered 25p price target.

 

Imaginatik (IMTK, 7.75p, £12.3m) is trading in line with market expectations of pre-tax losses of £0.03m and EPS of -0.02p. Trading in H1 2010 (ended September 2009) has ended with several significant contract wins. The group raised £1.6m of new funds in August 2009, which has been invested in sales and marketing operations, to enhance growth.   Matthew Cooper has been appointed as Non-executive Chairman, replacing Howard Marshall who retires from the Board today following three years with the company. We retain our HOLD recommendation.

 

Workplace (WSI, 7.5p, £11.1m) reported a trading update for the 6 months to 30 September 2009. Trading in Q1 2010 was disappointing, but a significant improvement during the summer, will lead the group to a break-even point in H1 2010 – an improvement from H2 2009.  The group’s US subsidiary, WorkPlace Systems Inc has won a contract with a major US retailer to roll out WorkPlace Saas Workforce Management Solution, WorkPlace On-Line, to the entire estate of several thousand stores during the current WorkPlace Financial Year. Work on this roll-out commenced in September and the benefits will be recognised during the H2 2010 and into future periods. Workplace remains debt free, with a healthy cash position. The board is confident for the FY2010, where the market estimates pre-tax profits of £0.8m and EPS of 0.5p. Trading on a 2010 prospective PER of 15x falling to 9.4x, we believe the group is fully valued. On 26/06/09, we initiated with a Speculative Buy recommendation, when the share price was 3.875p. We downgrade our recommendation to a HOLD.

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