Belgravium Technologies in bargain territory

Belgravium Technologies supplies mobile computing solutions. That means things like stock control systems and tablet devices (or portable tills) for airlines and rail companies. It also supplies vehicle tracking and telematics systems, which explains the recent unsolicited bid approach by AIM rival Trakm8. That came to nothing, but Belgravium is thriving and the shares look good value.

Half-year revenue rose a respectable 12% to £4.6 million, but pre-tax profit rocketed from a very modest £43,000 in 2013 to an impressive £214,000 in the first six months of this year. And management is confident that current activity and enquiries will underpin what is typically a stronger second half.

House broker WH Ireland is definitely bullish. Its full-year forecasts for pre-tax profit of £0.7 million and earnings per share of 0.66p remain unchanged. Analysts there have pencilled in £0.9 million and 0.8p for 2015, too.

Belgravium has certainly justified optimism. Among a number of new deals are contracts with train operator First Great Western and Leo Express in the Czech Republic, and a security and access control system for Harrods. The company is also developing software applications able to run on multiple operating systems like Android and Apple iOS, as well as Windows.

At 6p, Belgravium trades on only 9 times forward earnings, dropping to 7.5 next year. Strip out £1.4 million of net cash at period-end, worth 1.4p per share, and that sinks to less than 7 for 2014. An enterprise value-to-cash profits multiple of 4.2 screams value, too.

Belgravium shares have more than doubled since August last year, but the upward trend has been both steady and justified. Possible bid interest should underpin the share price, and if the company continues to hit forecasts, WH Ireland's upgraded target price of 8p looks achievable.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.