Member Info for rivaldo

Good to see a series of small buys this morning causing a 3p rise. Perhaps an overhang has cleared.

"The group offers exposure to climate change, too. MTI’s cutting-edge Mottech's real-time irrigation monitoring, control and reporting software offers the agricultural industry, municipal authorities and commercial organisations a smart way to manage water consumption efficiently. At the end of the first half, the group landed €1mn (£0.85mn) of new contracts in Italy for delivery in the current quarter. Water scarcity is becoming a major issue across the globe as more countries face up to food shortages due to soaring temperatures impacting crop yields. Interestingly, Mottech has been able to push through some above inflation price rises, says group chief executive Moni Borovitz, so there is scope for improved margins, too. Although divisional operating profit was flat at $0.86mn on a margin of 10 per cent, Borovitz notes the unit has some big opportunities in the pipeline in Western Europe.

In the six-month period, group pre-tax profit was flat at $2.04mn on six per cent higher revenue of $22.7mn, but this was a strong result given that the exit from Russia (contributed $0.9mn of revenue and a meaningful profit in the first half of 2021), PSK’s acquisition costs ($0.1mn) and a $0.28mn increase in depreciation and amortisation charges held back the reported result. First half cash profit, which increased 11 per cent to $2.9mn, is perhaps a better measure of the underlying performance.

Joint house broker Shore Capital expects full-year pre-tax profit to rise 10 per cent to $4.4mn on six per cent higher revenue of $45.2mn based on cash profit increasing from $5.4mn to $5.7mn, sensible assumptions in my view. Admittedly, a higher tax charge means earnings per share (EPS) are forecast to be flat at 4.1c (3.4p), but the cash generative company should still end the year with net cash just shy of $11mn (10p a share), enabling it to maintain a progressive dividend policy.

On this basis, the shares are priced on a cash-adjusted price/earnings (PE) ratio of 13.8 and offer a 4.3 per cent prospective dividend yield, modest ratings for a technology group operating in market segments that are displaying attractive structural growth: demand for next generation 5G networks; global warming and climate change; and increased defence budget spending. The board adopts a progressive dividend policy, too, having paid out 5.3c (4.3p) a share since I initiated coverage on the shares, at 40p (‘Alpha Research: Tapping into 5G climate change technologies’, 5 September 2020).

So, with analysts expecting MTI to deliver double-digit annual pre-tax profit growth over their three-year forecast period, and the latest order book significantly higher year-on-year, I see scope for the share price to make progress back to the 65p level of my last buy call (‘Farming winners from climate change and geopolitical tensions’, 23 May 2022), and well beyond. BUY."

Https://www.investorschronicle.co.uk/ideas/2022/08/15/a-smart-play-on-defence-spend-climate-change-and-5g/

"A smart play on defence spend, climate change and 5G.

A technology group is winning new contracts and operates in market segments displaying attractive structural growth: demand for 5G networks; global warming and climate change; and defence budget spending.

August 15, 2022
By Simon Thompson

*Flat interim pre-tax profit of $2.04mn on six per cent higher revenue of $22.7mn after accounting for acquisition costs, exit from Russia and higher non-cash charges.
*$10mn contract award in Israel since half-year end.
*Strong order book.
*Analysts maintain full-year double-digit profit growth forecasts.

Israeli-based technology group MTI Wireless Edge (MWE:57p) is reaping an immediate payback from January’s $1.2mn (£1mn) acquisition of a 51 per cent stake in PSK, an Israeli company which develops, manufactures and integrates communication systems and advanced monitoring systems for the Israeli government defence market.

In the first half of 2022, PSK contributed $2mn of revenue on a 5 per cent operating margin and MTI also earns management fees. Moreover, since the half-year end, PSK has landed the largest contract in its history, a $10mn award over seven years from the Israeli Ministry of Defence. Strategically, PSK is enabling MTI’s Summit electronics division, which represents 40 international suppliers of radio frequency/microwave components, to step up the value chain by offering not only components, but turn-key solutions such as fixed and mobile communication, telemetry and signal intelligence systems, too.

The division posted 25 per cent higher operating profit of $1.1mn on revenue up a fifth to $8.4mn. It looks well set to continue delivering strong growth especially as the conflict in Ukraine has had a knock-on effect on military and defence spending by Western Governments, which in turn will pass through to MTI’s distribution and special consulting services divisions.

The group’s antenna business has strong growth prospects, too, albeit the global microchip shortage has impacted clients and led to delays in fulfilling orders. The unit returned to profit in the second quarter, but first half operating profit of $0.1mn was still down from $0.25mn in the same period last year on flat revenue of $5.7mn. However, there is evidence of an easing of chip supply issues and MTI’s backhaul solutions should deliver significant growth as the roll-out of 5G infrastructure gathers pace. India recently completed its 5G auction and MTI has seen a flurry of customer enquiries for the group’s manufacturing capabilities. MTI is working with five of the seven leading OEMs in the sector, so is well placed to benefit."

Shore Capital have reiterated their 90p target price and 4.1c EPS forecast.

They also reiterate their forecast of a 3c dividend and $10.9m cash pile (almost 20% of the m/cap) at the end of this year.

They conclude:

"Outlook and valuation:

As highlighted above, MTI will continue to seek to deliver revenue growth, both organically and through acquisitions. Each of the divisions has growth drivers with, in our view, Mottech particularly well placed in the medium term to potentially see stronger demand than we forecast for its water management and control software. The Antenna division is expected to benefit from the rollout of 5G across the world. Finally, assuming Israel remains at the forefront of global technology development, we expect Summit/PSK to see continued good demand for its products and services evidenced by the recent record contract win for the Israeli
Ministry of Defence.

We initiated coverage with a 90p fair value on the basis of a DCF analysis, which is corroborated by MTI achieving an FY22F EV/EBITDA multiple of 13.7x (the average of our peer group). Please see initiation note for a more detailed analysis. HOUSE STOCK."

Cheers ARL. There was quite a lot of buying last week after the Notice of Results RNS. I suspect we just have to wait for the short-termers who bought in last week prior to the results to take their small profits (or more likely losses) and move on.

Whilst the rest of us look forward to the prospects going forward.

Excellent news dated in June from recent acquisition iTrinegy of an expanded relationship with BT not posted here before:

Https://itrinegy.com/bt-chooses-ne-one-for-sd-wan-cloud-emulation/

"BT Chooses NE-ONE for SD-WAN Multi-Cloud WAN Emulation

Programmable, Automated Software Defined Test Network gives insight on how SD-WAN technology can transform customer and user experience.

June 12th 2022

Calnex Solutions plc, an industry leader in network synchronization and network emulation, today announced that it has expanded its relationship with BT, one of the world’s leading communications services companies, to provide powerful multi-cloud WAN Emulation. BT’s Dynamic Network Services (DyNS) Explorer Lab first became an NE-ONE Customer in 2019. It has since implemented NE-ONE as its preferred WAN Emulation solution to power a safe, agile platform in which to demonstrate the value of of purchasing SD-WAN solutions from BT and help enterprises accelerate their digital transformation.

“We’ve invested in creating a world-leading environment so that customers can validate the potential benefits of a range of SD-WAN technologies to distinguish between hype and reality,” said Konstantinos Rigas, Head of Overlay Products at Global, BT. “NE-ONE continues to play a critical part in this process and has enabled us to build a wide range of pre-modelled sophisticated test networks and simulations for customers to use.”

“Enterprises wanting to truly understand the benefits of SD-WAN need to look no further than BT’s Explorer Lab,” said Peter White, NE-ONE Product Manager. “We’re thrilled that NE-ONE is helping BT to create accurate, controllable and repeatable test networks in which enterprises can get a first-hand view on what deploying SD-WAN means for their applications and users.”

BT’s DyNS Explorer Lab uses NE-ONE to:

Create real-world enterprise network topologies including branch to data center, data center to data center, branch to branch or any combination of these
Apply normal and degraded network conditions to one or more network links in which to validate how customer applications work with SD-WAN
Simulate network degradation including limiting available bandwidth, increasing latency, randomizing jitter, applying loss or creating errors
Automatically start, update and stop the test network using NE-ONE’s RESTful API

NE-ONE provides organizations with a way to create real-world network conditions in which to analyze, predict and verify application performance before deploying applications into potentially challenging network environments. The insight it provides allows businesses to effectively manage their digital products and brand, reducing deployment costs and risk, mitigating remediation expense and impact to resources at the same time as improving quality.

Organisations that would like to learn more about NE-ONE can visit booth #719 at Cisco Live, Las Vegas from Monday 13th to Thursday 16th June, 2022."

Good to see Stockopedia's Paul Scott has bought into ADF. He opined last week on ADF's trading update as follows FYI:

"Paul’s Section: Facilities by ADF (LON:ADF) (I hold)
62p
Market cap £47m

Trading Update

“Continued to trade strongly throughout H1”

High levels of fleet utilisation.

H1 revenues “marginally ahead” of “exceptional” prior year H1 comparatives.

Shorter hire periods this year has meant more costs moving equipment around.

“Strong order visibility for the remainder” of FY 12/2022 – order book almost full for 2022.

Overall trading – looks fine -

“continues to trade in line with market expectations for the FY22 year*

*FY22 market expectations as at the date of this announcement of £31.8 million revenue and adjusted EBITDA** of £7.8 million.”

Outlook -

Additionally, market dynamics remain strong, with continued robust demand for film and high-end television the UK and the Group’s 2023 order book continues to grow. Therefore, the Group remains confident of further success.

The Group raised £15m of gross proceeds on admission to trading on AIM and a portion of these funds have been deployed in increasing the size of the Group’s fleet to meet demand. Management also continues to actively review initial acquisition opportunities in line with the Group’s strategy detailed at Admission.

My opinion – I’ve covered ADF a few times before. In particular, the SCVR for 5 Jan 2022 looked at ADF on its listing at 50p, and I formed a favourable view – which we hardly ever do here for new issues. ADF was one of very few decent small cap recent floats. In particular, the valuation was sensible, and the funds raised were for expanding its hire fleet of TV production vehicles, not previous owners cashing out at an inflated valuation.

Since listing, performance has been good. ADF is benefiting from strong demand for its equipment, given a recovery in TV/film production post pandemic. Also the growth in streaming services is boosting the sector – also noticeable at Zoo Digital (LON:ZOO) . Whether this lasts, is the big question, because streaming services seem vulnerable to customers cancelling subscriptions. Could that have a knock-on impact on ADF in due course, if its customers begin to rein in production of new shows? No idea, you’d have to ask a sector expert.

For now though, ADF looks a decent niche business, and priced reasonably, on a forward PER of 12.4.

My main question is over European expansion. ADF already has a big UK market share, so expansion was planned, by acquisition, into Europe. Has management got the experience & bandwidth to execute on that strategy? Sometimes it’s better to focus on what you do best, and dominate a niche, rather than over-reach.

ADF is still above its 50p float price (Jan 2022), testament to the fact that Cenkos priced this deal sensibly.

Note that the Stockopedia algorithms have taken a shine to it more recently too."

The US rig count has drited a tad for the last couple of weeks, but is still up 53% on a year ago:

Https://www.mysanantonio.com/business/oil/article/Rig-count-declines-for-second-consecutive-week-17370626.php

Solid H1 results out today, with revenues up 6% and EBITDA up 11%.

Most importantly, MWE are confident about the outlook for the year, and EPS is trading in line with forecasts of 4.1c EPS given the usual H2 weighting and the contracts already won kicking in.

The cash pile has reduced to $5.2m due to the acquisition, dividends etc and is expected to rise again in H2.

Every division is performing OK and has great prospects. Progress in 5G sounds particularly exciting, but also military spending should increase globally post-Ukraine and we can all see the need for water management and efficiency given what happening at the moment.

Yesterday's tip might just as well be a tip for CLX rather than Spirent as it applies equally.

The difference being that at £1.6 billion Spirent's m/cap is ten times that of CLX, so it's far easier for CLX to achieve material upside/multibag:

https://www.thisismoney.co.uk/money/investing/article-11108441/MIDAS-SHARE-TIPS-steady-5G-profit-try-Spirent-Communications.htmlhttps://www.thisismoney.co.uk/money/investing/article-11108441/MIDAS-SHARE-TIPS-steady-5G-profit-try-Spirent-Communications.html

As Masurenguy posted elsewhere in respect of relevance to CLX:

"1. The number of 5G connections expected to climb from 500 million last year to 1.3 billion by the end of 2022. But it will pick up pace, more than tripling to 4.8 billion in five years' time

2. The tech is much more complex than anything that has gone before, so comprehensive testing is essential.

3. Testing is a competitive market, but Updyke is determined to keep Spirent ahead of the pack, spending around 20 per cent of annual sales on research and development, and constantly eyeing up opportunities in new countries and sectors of the market."

As ex-CEO of Yorkshire Water and with over 12 years' experience in the regulated water sector she should bring lots of contacts and insights in helping to grow RNWH's water division:

Https://uk.advfn.com/stock-market/london/renew-RNWH/share-news/Renew-Holdings-PLC-Appointment-of-Non-Executive-Di/88831378

INSE are featured in a new article in the IC about winners from the "electric revolution":

Https://www.investorschronicle.co.uk/ideas/2022/08/11/electrification-s-hidden-winners/

"For investors interested in this space, Inspired (INSE) is also worth a look. Inspired helps companies manage their power bills, quantifying their carbon output and selling energy efficiency advice. Growth has been solid so far, driven largely by its assurance arm, but energy ‘optimisation’ sales are starting to catch up, and are due to overtake assurance revenue in 2023."

Robert and Virginia Millington have been buying and increased their stake to 4.19%, or 355,000 shares:

Https://uk.advfn.com/stock-market/london/touchstar-TST/share-news/Touchstar-PLC-Holdings-in-Company/88823214

They appear to run this Private Asset Management company:

Https://constancepam.com/index.php/who-we-are/

"Founded by Robert and Virginia Millington, Constance is an unincorporated association of investment professionals based principally in the UK and Spain. Constance does not charge fees, members’ input is in the form of intellectual capital and the contribution to aggregate portfolio returns. Portfolios are managed individually. Constance has developed particular expertise in UK smaller capitalisation companies (<£100mn) quoted principally on the London Alternative Investment Market (AIM) and Venture Capital Trusts, but invests in equities worldwide and across the full market capitalisation spectrum. Constance also uses commodities, indexed linked bonds, peer to peer (P2P) loans and other alternative instruments to spread investment risk."

There's a nice plug for ETP in this chat yesterday between Paul Hill and Jamie Constable of Singer Capital Markets, at just over 20 minutes in:

Https://www.linkedin.com/feed/update/urn:li:activity:6963076334847725568/

The new issue of SCSW is out on Saturday, so it should be OK to publish their prior issue Buy verdict on the interims to 31st March:

"Renew Holdings

(Sharewatch) Renew’s H1 was in line. Sales were +13% to £414m, pretax profit +21% to £21.8m and eps +15% to 26p.

The Engineering Services side now accounts for 98% of revenue: Sales increased by 15% with EBITA +17% to £26.6m and EBITA margin +30bp.

Chief executive Paul Scott notes that the business has brushed aside most but not all of the inflationary headwinds, in part because his business is not newbuild so it is “not about hulking around tonnes of steel with volatile prices nor is it dependent on supply chains as it has a direct delivery model. Its long term maintenance framework contracts are based on a cost recovery model.”

In addition, it’s been the rising proportion of work from Rail, which is now >50pc of sales (9% margin) versus other sectors (6-7%) that has also helped push the average. The period saw a number of new framework appointments and extensions, and good progress in developing rail electrification capability. Another key highlight was the Brown water business, which was bought in March and is trading ahead of expectations whilst AMP7 boosts prospects overall in water. Order book grew 4% to £705m.

Scott has also confirmed the buy-in of the Amco pension scheme with a final one-off cash contribution of £1.6m, which going forward saves £0.5m annually - and it is virtually debt free at present.

Slightly longer daylight hours in H2 will repeat the usual seasonal bias so Renew looks well placed to beat the forecast of £53.2m pretax profit/eps 54.5p. Keep buying."

Just featured on the BBC lunchtime news - Disney's latest quarterly streaming numbers to June beat expectations by some distance, up to 221m subscribers (from 207m), just ahead of Netflix's current total, and their shares rose sharply. Disney are of course another ADF client.

More detail here:

Https://www.theguardian.com/film/2022/aug/10/disney-plus-netflix-streaming-subscribers

I finally got round to watching the July 29th presentation. The main team are not hugely impressive presenters, but that's fine by me as this normally suggest that management are more concerned with getting on with the job than hyping the company.

SWG themselves seem to be in fine fettle and continuing to thrive, with lots of emphasis on a pipeline of potential acquisitions from the cash pile and a strong Q1 giving rise to confidence in the 12p EPS forecast.

The cyber security market presentation by the former GCHQ deputy head was excellent, and he really should be a terrific asset for SWG as Progressive state:

"Presentation by Marcus Willett CB OBE – very insightful and very useful

The presentation to analysts on 29 July included a section on the cyber security market by Marcus Willett CB OBE, a member of the group's Advisory Panel. Marcus was formerly the deputy head of GCHQ and its first Director Cyber. This presentation was useful not only as an insight into the nature, direction and the scale of cyber security issues globally, but also as a reminder of the underlying quality of Shearwater and the people it works with. The session is to be repeated within the presentation to current investors on 3 August at 12:30pm, at https://www.investormeetcompany.com/shearwater-group-plc/register-investor"

New note is out from WH Ireland. Mostly summarising the production update, and reiterating forecasts and the 9p target price. but also a few interesting comments looking forward:

Https://www.whirelandplc.com/research-portal#/portal/whireland/companies/b1d42408-adb8-4d57-8e10-a086cc2a5f5e

"? Local pricing robust
Average CPO and PKO prices of €973/MT (local) and €1,431/MT (international) in July remained ahead YoY, in the case of PKO (Palm Kernel Oil) by as much as 79%. International prices have softened since then, but local CPO prices in particular have remained robust, and are expected to contribute to a profitable outturn for the period notwithstanding the reduced volumes associated with the low season. International CPO prices, albeit reduced, are still at multi-year highs around €1,100-1,200 per tonne.

? Looking further out, we anticipate some recovery in FBB volumes either on a seasonal basis in the autumn or as we move into next year. On that latter point, although not reflected in our forecasts, a poor harvest may be expected to be followed by a strong production year, while recent planting in-country will support a further rise in FFB volumes longer term.

? Cashew project – final pieces of jigsaw slotting in The colour sorter, which arrived in June, has now been commissioned and looks to be integrating well; this leaves only the shelling machines as the final pieces of equipment which will usher in full production, and these are now being moved into the plant. We expect the cashew business to lift operating capacity significantly, from 20% to near full production, and we see a c.€24m sales lift by FY24E (and more to go for subsequently), coupled with 25%-plus gross margins.

? Recent site visit confirms strategy and unfolding implementation Having in recent weeks visited both of DKL’s key sites in West Africa, we feel confirmed in our interpretation of the strategy, with the cashew operation representing a game-changer for the company, not only in terms of greatly increased cash-generation opportunities but also affirming the meaningful diverse income streams available to DKL from broadening the agri-business range.

? Forecasts / Valuation
We retain forecasts set on June 13th (see our initiation note : DKL Initiation Note) as well as our DCF and comparator-based fair value assessment of 9p."

R&M UK Micro Cap Investment Trust's July factsheet is just out.

CAPD is the Trust's largest holding now at 5.6% of the portfolio, and R&M have now bought more after a "strong update":

Https://riverandmercantile.com/funds/rm-uk-micro-cap-investment-company/

Jonathan Whitmore has been buying more - he's now up to 30m shares having bought another 3.65m shares:

Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Holdings-in-Company/88810405

Not sure why he's disclosed this to the company though. He's now up to 2.86%, i.e less than the 3% disclosure threshold, and he's not a connected person AFAIK. Oh well, it's good news anyway!

I've confirmed a couple of points which may be of interest.

Firstly, ADF provide their facilities within the film/TV studio complexes as well as on location, since these studios aren’t built or operated with all of the services which are provided by ADF. Plus the studios themselves are immense, covering a large area, so mobility is key.

Secondly, the extra capacity and ongoing investment in facilities this year means that ADF have been consistently "almost" fully booked up for the year.

And these are Cenkos's current forecasts:

this year : £7.8m EBITDA, £3.5m adj. PAT, 4.6p EPS
next year : £10.2m EBITDA, £4.5m adj. PAT, 5.9p EPS

Which means that at 60p ADF are on a forward P/E of barely above 10.