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Hoodless Brennan daily smallcap newsflash including Bglobal, Rheochem, Matica, Supercart and others

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Webis (WEB, 1.875p, £3.9m), the global on-line gaming group, reports interims to 29 November 2009. Turnover fell by 21% to £56.4m (H109: £71.5m) and the group moved into the red, with pre-tax losses of £0.06m (H109: PBT of £0.25m). As stated in their trading statement in October, H1 was extremely challenging due to 1) adverse results at the start of the current football season led to betinternet reporting a reduction in margins and 2) a downturn in the ‘high-roller’ player within its casinos, which further reduced margins. However, the Wagering Services division reported 22% revenue growth. The market remains challenging and the group continues to seek methods of further enhancing customer experience. The weak sterling against the dollar will continue to have an adverse impact on administration expenses. There are no estimates in the market. The share price has fallen by 42% since our sell recommendation. We therefore upgrade our recommendation from a Sell to a HOLD.

Bglobal (BGBL, 52.5p, £41.31m) Trading update includes the announcement of a contract win with British Gas Business for smart meters which could generate some £12m revenues in 2010 and deliver recurring revenues of £1m thereafter. The contract formalises the amount of work to be received that was previously covered in a framework agreement announced in July 2006. It has also announced an end-to-end contract with Dual Energy Direct, a new entrant into the UK electricity market. The group has established relationships with 5 national providers of field services. The adverse weather did limit installations, so are below target currently, but the group is broadly trading in-line with market expectations in terms of revenues but increased transport costs needed to meet higher demand and investment ahead of the British Gas contract has led to profits below expectations for the year ending March 2010. We remain firm fans and it is one of our “Thoughts for 2010” stock tips. BUY with a maintained 75p price target.

Rheochem (RHEP, 7.25p, £15.73m) A disappointing short term trading update which cites its customer base moving to longer term projects which is costing revenues in the short term but increasing the longer term prospects for the group. The shift to coal seam gas and on-shore LNG exploration does offer excellent long term potential opportunities for the group as they require multiple wells. The North Sea assets continue to offer good upside via its 50% in Zeus Energy with the Athena Discovery opportunity awaiting investment decision (Zeus holds 10%), a 1 year extension to December 2010 for its 100% ownership in Block 14/11 and is actively marketing Block 14/26b that includes the Thunderball discovery (90% interest). Revenues for the year are expected to total some $30m with $12m in the first half, below the $34m reported last year. The price has already fallen 13% - we maintain our HOLD recommendation.

Quadnetics Group (QDG, 150p, £26.4m), the leader in advanced video surveillance technology and security networks, reports interims to 30 November 2009. Revenues fell by 17% to £29.8m (H109: £35.8m), adjusted PBT and EPS fell by 70% to £0.16m (H109: 0.53m) and 0.7p (H109: 2.4p) respectively, driven by delayed orders. A new management team is restructuring the group and has generated annualised cost savings of £2.2m. Net cash fell from £7.1m to £3.4m. The total order book of £22.1m and a pipeline of £52.5m suggests a stronger than usual H2 weighting.  Activity levels in the UK are beginning to pick up with major contract wins the prisons, transport and police sectors. Managed services for multiple retailers continued to feel the effects of reduced client budgets and we expect this to continue. Interim DPS is maintained at 2.5p. Management expect full year results to 31 May 2010 to be in line with market expectations of £2.3m and EPS of 10.7p. The group is very heavily H2 weighted and there is a risk that potential contract delays could miss current market estimates. The stock trades on a prospective PER of 14x, which we believe is expensive. Since our sell recommendation on 5 November 2009, the share price has fallen 8%. We retain our SELL recommendation.

Matica (MAT, 10.5p, £4.75m) The company announces that it has received a written requisition from the company's CEO and major shareholder, Sandro Camilleri to convene an EGM to seek to cancel its AIIM membership. As Sandro Camillero is deemed to control 65.2% of the company there looks a strong possibility that the company will go off market. The stock is trading on only 3.3x market estimates for 2009 but the potential that the company will become private triggers an automatic sell recommendation for us. SELL

Ten Alps (TAL, 27.5p, £17.8m) will launch online science channel Newton HD from Newcastle, with 2 years of funding from One North East, the Regional Development Agency covering North East England. Ten Alps was selected after a competitive tender to provide a pilot launch of an online science channel. The soon to launch online science channel Newton HD, will have production funding from One North East covering a 2 year period. Newton HD has been developed by Ten Alps in conjunction with the Science Museum, the Royal Institution and the Open University and aims to provide high-quality, science programming, and an online space for scientists and the public to share research, ideas and discoveries. The development is comparable to the company’s very successful Teachers TV which has a long running government contract until at least 2013. The news that Newton’s first two years of development is effectively underwritten by a third party is excellent news. The website is currently under construction and programming in production. The business plan aims for the channel to be self-financing after the 2 year pilot period with revenues targeted from programme sales, sponsorship, online advertising, content syndication and events. BUY

Walker Greenbank (WGB, 22.5p, £13.4m) the luxury interior furnishings group including brands Sanderson, Morris & Co., Harlequin and Zoffany expects to report FY year profits in line with December's upgraded market expectations. Cash generation has been strong such and there is an expected reduction in net debt to £3.2 million as at 31 January 2010, compared with £6.2 million a year earlier. Upgraded consensus calls for 2.96p of earnings, suggesting a 7.7x rating. We would retain some caution on luxury furnishings but the stock is undeniably cheap.  BUY. Target price 26p, (just under 9x year to Jan 31st 2010 earnings, which seems undemanding given this statement).

Shed Media (SHDP, 86p, £72.2m) a leading UK creator and distributors of television content, announced a trading update for the year ended 31 December 2010. The group has continued to trade well and anticipates results in line with market expectations; Fidessa indicates pretax £12.4m, EPS of around 11.6p, suggesting a 7.4x rating. Current trading looks robust. Although early and markets remain challenging, visibility is good with 54% of group production revenue targets for 2010 commissioned and 30% of Group IP revenue secured for the year. On 14 December 2009, the company confirmed that it had received an indicative approach for the company from a consortium formed by funds managed and/or advised by Bowmark Capital LLP and Darwin Private Equity LLP working with certain members of Shed management, discussions are ongoing.  This seems a clear example of private equity and management recognising value in a situation which for some reason has become unloved by the market. Whilst normally the bid speculation would force us to reduce our recommendation to hold, the stock looks good value and in light of solid trading we maintain our BUY stance and 114p price target.

Acal (ACL, 145p, £41.21m) Q3 trading statement reports continued improvement and the group has returned to profits. Order backlog in electronics has recovered 16% from the April 2009 low point and is even up 3% year on year. January sales are up 8% on the previous quarter’s average and the group has a positive book to bill ratio. The recent acquisition, BFI Optiplas, is also seeing a similar improvement. The supply chain division is losing a major contract at the end of the year - but that is already in the price and the losses already covered. Margins in this area are under pressure. Sales in the Medical division continue to improve in stable markets. Surprisingly spending from the UK NHS has increased in the second half of the year – but the group sensibly does highlight caution for the future given the state of the UK economy. We remain enthusiastic and maintain a BUY with a 190p price target.

Dawson Holdings (DWN, 6.63p, £4.76m) had at the time of the finals announcement warned about the UK economy and in a trading statement today has confirmed that other company’s actions are impacting its own profitability. Dawson Media Direct has seen publishers reducing the volumes of promotional copies and the Dawson Marketing Services support operation has not seen a recovery in client spending. Dawson book has traded in-line with expectations though e-books are making up for lower physical volumes. The group expects results to be significantly below market expectations though it remains profitable and cash generative. Annoyingly we made the group a hold at 9p on 21/12/09 on our profits expectations of £1.6m with EPS of 0.8p but failed to appreciate the market was looking for £2.1m PBT. Retaining the £1.6m forecast puts the group on 8.3x prospective PER – which given the statement looks slightly ahead of events. We move the shares to a short term SELL with a 5.5p price target.

Creston (CRE, 84p, £51.52m) Trading statement highlights a continued improvement with Q3 up on Q2 and in-line with the same period in the previous year. With 17% margins being maintained from the first half short term profits are improving. The group is optimistic with a tint of caution.  We maintain our BUY recommendation with a 97.5p price target.

Straight Group (STT, 99.5p, £11.44m) has won a position in a major frame work agreement with the Eastern Shires Purchasing Organisation and the Central Buying Consortium that covers a range of products for a 3 year period. Potential revenues within the framework are some £8m. The group is the sole supplier of compost bins and is a joint supplier of wheeled bins, kerbside boxes and food waste cadies. We maintain our BUY recommendation with a 120p price target.

Supercart (SC., 13.5p, £8.57m) Has announced Plasti-cart has won a further order from Toys-R-US worth in excess of £0.48m and will be delivered in Q1 2010.We maintain our SPECULATIVE BUY recommendation with a 20p price target.

Sopheon (SPE, 8.75p, £12.74m) has won a contract in association with Concurrent Technologies and 28 other companies to support a military programme for the development of manned and unmanned vehicles for the US Army Tank Automotive Research Development and Engineering Centre. The total programme could be worth some $430m for the 30 companies involved over the 5 year period.  We move the shares from a Sell, last iterated at 11p on 16/06/09, to a HOLD.

Intelek (ITK, 14.25p, £12.5m) Its subsidiary, Paradise Datacom has received further orders for the supply of C, X, Ku and Ka Band solid state power amplifiers for a multi-year U.S. government programme. The value of the order is $1.0m, bringing the total value of orders from this programme to $5.3m in the current financial year. The strong order book provides is with some confidence for the future. The market forecasts 2010 pre-tax profit of £3.3m and EPS of 2.8p, which puts the stock on 5.1x. Assuming DPS is maintained at 0.41p, the group offers a yield of 2.9x. We retain our BUY recommendation and our target price to 20p.

Redhall Group (RHL, 166.5p, £49.3m) the specialist engineering support services group, reports trading for Q1 2010 is in line with management expectations. The Energy division has performed well, Defence is in line and Process continues to face competitive market conditions. The Group has been named the preferred bidder on a new construction project for Vivergo Fuels Limited in partnership with Aker Solutions Limited. The project is valued at £18m and is expected to be completed by the end of October 2010. The contract win further strengthens the group’s pipeline for the current financial year.  The group is well positioned in the Energy, Defence and Process markets, which offer prospects of long-term growth. Further acquisitions should enhance earnings and broaden its services. The share price has risen 21% since our BUY recommendation on 3/12/09. The stock trades on a prospective PER of 9.9x in 2010 and 9x in 2011. We continue to believe the stock is undervalued and retain our BUY recommendation.

First Derivatives (FDP, 237.5p, £34.3m), has entered into an exclusive agreement to acquire certain parts of the business and assets of Cognotec Group, a Dublin based company delivering sophisticated, flexible and component-based technology products to the FX market, from the receivers. Cognetics’s AutoDeal+ product, a leading pricing and execution engine, and RealStream product, an extensive "next generation" product technology suite for the FX market, provide excellent cross selling opportunities for the group. RealStream delivers direct access to the world's top 15 FX liquidity providers and is already in use at some of the world's largest global FX market players. The potential acquisition would be beneficial operationally with the potential to reduce operating costs, accelerate top line growth. The potential value of the deal has not been disclosed, but given it generated revenues of $18.5m and reported a loss before tax of $1.8m for the year ended November 2008 and the deal is through the receivers, we believe First Derivatives will be able to get a good price. The deal is expected to be finalised in the next few days. We retain our BUY recommendation and our target price of 335p.