Proactive investors

Transense, CAP-XX and how the inside of your mobile phone could make you 515%?

Transense bounces on deal news

Translogik, a subsidiary of Transense Technologies (ticker: TRT) has won a significant order from Cetaris. The order is for its tyre tread depth and pressure inspection kit. Cetaris will deploy the Translogik kits as part of its innovative fleet maintenance solution.

The system will provide its customer fleets with “real-time” mobile data capture capabilities. Following the success of the recent pilot program, it is planned that further kits will be deployed throughout the Cetaris network in 2010.

Transense shares are up 18% on the say.

Click here to receive useful private investor news like this delivered straight to your inbox, completely free.

Could the inside of your mobile phone make you 515%?

Dear Investor,
On the same day two people on my Penny Sleuth e-letter contacted me and asked me what I think of the same company…

Why penny share CAP-XX jumped 88% in two weeks

This is CAP-XX (ticker: CPX), pronounced ‘capex’. And it’s little wonder this has caught some attention. The share price has jumped from 17p to 34.75p in the last few weeks – a gain of 104%... which is typical of what we look for in penny shares.

But if the forecasts of broker Seymour Pierce are anywhere near accurate, CAP-XX shares will rise a whole lot further. So I was eager to take a closer look…

Here are the numbers. In its latest financial year to June Cap-XX made a loss of 3.1m Aussie dollars on turnover of A$7.8m. This year Seymour Pierce’s analyst Derek Brown thinks that Cap-XX will make a A$1.8m profit on revenues of A$ 10.6m. Nothing to get too excited about so far.

But now let us look out to the financial year 2011/12. For this Brown’s crystal ball reveals revenues of A$29.5m, a profit of A$14m and earnings per share of A$22.5c, which in real British money is 12.5 pence.

On that basis the share price trades on less than three times projected earnings. So we can say with certainty that either these forecasts are way too optimistic or else the shares are sure to be about five times higher in three years time.

Brown, in fact, has calculated a fair price of 214p based on a ten year discounted cash flow model. That is even more exciting – a projected gain of 515% from today’s price.

But it is also a huge leap of faith in the notably fast-moving electronics industry.

So what is the basis for all this optimism? It comes in the shape of something small and thin that may be found inside your mobile telephone. It is called a super-capacitor and it can alleviate one of the biggest challenges of the consumer electronics industry…

This week I was given a new mobile phone by Vodafone. It had, unlike my old one, a camera, a radio, internet access and probably all sorts of other exciting things that I am yet to discover. All manufacturers want to load up their mobile devices with extra functions, but unfortunately battery technology is not keeping pace.

How super-capacitors can give batteries super power

Progress in battery technology is being made. The amount of energy that a battery can store is growing by approximately 8% per year. But the power consumption of mobile devices is growing at more than three times that rate. Increasing battery performance is critical to all sorts of new technologies from the handset to electric cars. But a way of making more of what a battery can deliver today is by using a super-capacitor.

A super-capacitor is a variant of a capacitor which is itself a type of battery. Whereas a conventional battery stores a large amount of power and release it gently, a capacitor can store a lesser amount of power but deliver it more quickly.

A super-capacitor is half-way between the two, storing a medium amount of energy and releasing it with medium force.

One application is for cameras within mobile phones. Today most mobile phones include a camera, but the quality of picture is often not very good. That’s because, unlike a regular digital camera, the phone version does not have a flash bulb. The reason for this is that each flash requires a huge burst of energy and too many flashes will soon run down the battery.

A super-capacitor can act as a buffer, storing a low charge from the mobile’s conventional battery and then delivering it when required with the sort of oomph necessary for a flash.

Using advanced materials Cap-XX has created a tiny, thin super-capacitor which it claims is the best on the market. It has made this for a variety of customers in Malaysia. But specifically for camera phones and certain similar applications, it has licensed the technology to Japan’s Murata.

Murata has built a new factory to produce these super-capacitors, and it is due to open next month. Forecast sales from this factory are the basis of Seymour Pierce’s ambitious forecasts.

Will they come true? Well, super-capacitors are not new. And although Cap-XX patented its own version, a technological lead does not necessarily last long in this vast industry.

The shares are intriguing, speculative, and a great example of the type of high growth and innovation that characterises the penny share market. I’m not ready to recommend these yet. But they might be worth a small punt soon.

Good investing,

Tom Bulford
A Penny Sleuth article for Proactiveinvestors

PS. If you want to follow the insights of a small company investor, and uncover the secret gems of the stock market, you can join The Penny Sleuth for free by clicking here.

Copyright © Proactiveinvestors.co.uk, 2009. All Rights Reserved. Site designed and maintained by RISK MEDIA Tehnicom Solutions
Privacy Policy | Terms & Conditions | Copyright Info