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HB Markets Daily Smallcap Newsflash including: Avingtrans, Highams Systems, Intercede Group, Metalrax and others
Avingtrans (AVG, 42.5p, 10.83m), the designer, manufacturer and supplier of critical components to the energy, medical, industrial and global aerospace sectors, has secured contract wins for its Aerospace division valued in excess of 10m over the coming 5 years. This provides revenue visibility and highlights the winning of new contracts. We retain our HOLD recommendation to reflect the increasing percentage of precision and thus higher margin manufacture with the hope of profits next year. (Amisha Chohan)
Highams Systems (HSS, 3p, £2.07m) The recruitment consultancy has confirmed continued growth in the number of its contractors on clients’ sites with revenue up Q1 on Q1. The group is optimistic of an improved full year. We maintain our SPECULATIVE BUY recommendation. (Julian Tolley)
Intercede Group (IGP, 29p, £13.97m) has released a positive trading update citing a strong performance in the healthcare sector with over £800,000 of cash generated from an existing UK customer in July alone. US Government customers have continued to buy licences with another US Federal Agency buying the Intercede MyID system, taking the total to 13. IN the US commercial arena both Lockheed Martin and the FAA are using significant amounts of professional service team in support of their ID security programs. Encouragingly the decline in UK Government orders is being offset by growth overseas – especially in the USA. We were holders at 34p and return the group to a BUY with that as a price target. (Julian Tolley)
Metalrax (MRX, 4.88p, £5.85m) Interims to July 2010 saw revenues relatively flat at £29.3m (£30m) with gross profits of £7.7m (£6.7m), gross margins of 26.3% (22.3%) with flat distribution costs at £2.9m and lower admin at £4.3m (£6m) leaving the group moving into an operating profit of £0.6m (loss £0.6m) with the group reporting an adjusted 0.08p EPS (loss 0.68p). Encouragingly after a hard year the first half has seen both divisions at least achieve break-even. Although net debt increased marginally to £12.7m from £12.2m at the year end this is a modest inflow into working capital. The group remains at risk from the dangers of a UK double-dip recession so is still vulnerable to the impact of October budget cuts. Despite the caution the group now expects to exceed market estimates. Despite the dangers we moved the stock to a hold at 5.4p and now return the group to a SPECULATIVE BUY with that as a price target. (Julian Tolley)
Nexus Management (NXS, 0.29p, 3.19m), the provider of specialist IT Managed Services, has reached an agreement with the consortium to dispose of the non-core Nerd Force Franchise Company and certain North American franchises, trademarks, licences and contracts, for a total consideration of $0.32m ($0.26m in cash and $0.06m as to the forgiveness of certain amounts due to Mr Adlam and Mr Sela. In addition, the Purchases have agreed that the existing and any new North American franchises will sell, on an exclusive basis for 10 years. The group still retain the existing franchises, situated in Maine, London and South East England, and will continue, jointly with Nerd Force, to market the franchises internationally. This disposal will allow the group to focus on the core business and ensure the money from the disposal is used for working capital and marketing to accelerate sales. We reiterate our SPECULATIVE BUY recommendation. (Amisha Chohan)
Vislink (VLK, 15.5p, £21.48m) has won orders totalling some £2m for installation of its equipment at an onshore export terminal in the Middle East and is a boost for its aspirations for the Marine & Energy division that is targeting that are for growth. Good news but we still see the group as fundamentally over valued and maintain the SELL recommendation to the 12.5p level. (Julian Tolley)
