I am not happy with these results and the company seems to have lost its momentum. No mention of new technical developments. One redeeming feature is the order book. Second half is promised to show results leading to full year recovery and I will wait for these whilst holding a little longer
Drop seems about right to me. I quite like this company but I had to chuckle when, after reporting a significant drop in profit margins the company says "Good progress is being made in implementing the Group's margin enhancement strategy". Apparently conflicting statements like that tend to question the credibility of management and yes I know that the company blames product mix for the disappointing profit margins but optimising product mix should surely be part of the company's strategy.
'Looking forward, the Board remains confident that the prospects for the Group remain strong. The Group has delivered significant organic growth in the first half, maintained product line margins, and can report an open order book at 30 September 2017 of £18.0m (2016: £14.8m)'.
In my 24.11.15 post I noted that it would be quite a while before significant growth was regained but the share price is now indicating a degree of recovery. I have held throughout as I think the risk is reduced by the limited debt and the long term track record of management and, like Rhigos, I also like the company's long term record of decent ROCE.
I note SP up 33.7% since 7 July 2017 low and now at the highest its been for 12 months. I have on my watch list as a possible buy for dealing account. Looks like good growth prospects and modest yield (do not want high yield because of new div tax rate). ROE and ROCE fairly good. Forecast PE 16.3 so not cheap. With a market cap of only 44.8M maybe too risky.
I wonder if the Government announcement of £246million to help power battery revolution is behind the slight improvement in the SP recently The full year results were flat and whilst plenty of wording about growth, the only tangible sign is an increase in orders. Not much news from the company and hard to know what is going on.
Well, the shares have really hit the buffers and harder than the trading update would seem to justify. Management will know the year end results now and maybe so do others. If these one off costs and the order delays are truly just a one off, then the shares are a firm buy, BUT, if there are other items that we do not know about, it could all become a great deal worse. A shame, I had become very enthused about the company.
This is a small company and trades with a large spread since the sp tends to be volatile. It is the sort of share that a small cap fund tends to buy which send the sp up and others decide to join in and the rising sp becomes self fulfilling. When the buying spate stops, there is a degree of profit taking which then sends the whole momentum into reverse until some results appear and then it all starts again. Unless the basics have changed and I can see no obvious reason for that, it remains an interesting stock with significant upside potential and I will continue to hold.
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