Looking Back 21 September 2014
Last week was pretty hectic for me, not aided by the ferrying of two teenagers off to University.
Still, I wouldn’t have it any other way and am now enjoying a bit of catch up time with some of the news from later in the week,
a result of which brings me to adding a few comments.
One company that certainly caught my eye with a pretty significant fall in its share price was MONITISE, a company focused on mobile banking solutions.
I have touched on this one a few times in the past, most recently a couple of months back, when the company delivered some less than spectacular news.
I had felt for sometime, that although enjoying exposure to a growing market, the valuation was plenty high enough, particularly as it was expected to remain loss making for some time.
Firstly, on the 15 September 2014, the company delivered its preliminary results which saw an increased pre-tax loss of £63.4m, a figure that had jumped from the previous £51m of last year.
Revenue, which had already been flagged at growing at a reduced rate, came out at £95.1m, representing a 31% increase.
However, while the share price was largely stable, it subsequently took a notable hit a few days later when VISA, which has previously been a major shareholder in the business revealed that it was mulling over its investment within Monitise, as it increases investment in its own in-house development.
Shares in Monitise fell from around 42p to 27p on the news, closing Friday at 29.25p, which values the business at £574m.
That still looks a pretty hefty market cap to me, despite the company sitting on £146m in cash.
Monitise earlier this year raised a significant £109m in what was described as an over-subscribed placing, which saw Mastercard taking a minority stake in the business.
In that sense and with the company apparently now enjoying an extended reach with some major banks that includes Santander and RBS, some may conclude that the fall has been overdone.
However, despite a chunky 270k Director purchase in the wake of the news, along with the company continuing to sound a positive note, it is worth
remembering, that VISA, remains the largest Debit and Credit Card company across the Globe.
Monitise, currently has a contract with VISA that runs until the end of 2016 focused on mobile banking solutions and services, so the uncertainty is bound to continue to unnerve some investors.
No doubt, there have been some watchers who viewed the sharp fall in the share price as an opportunity to buy or add and good luck to anyone in that category.
From a personal perspective though, it isn’t for me, despite acknowledging the fact that the market does remain immense and could ultimately deliver some extensive profits further down the line for the company.
VISA Europe is listed as holding 5.9% of the company while VISA Intl seemingly sits on 5.5%.
Another company that has also delivered its preliminary results and which I rather like, is THORPE FW,
a business very much concentrated on lighting products.
I covered this one in the weekly column back in July, which followed an initial look around this time last year.
Although the spread is a bit off putting to say the least, the company enjoys a balance sheet stuffed with cash and is a reliable performer.
Announcing numbers for the twelve months to the end of June, Thorpe delivered a pre-tax profit of £12.4m on improved revenue of £62.9m against the previous £55.3m.
LED lighting within both Industrial and Commercial markets showed continued progress and which accounts for more than 50% of the company’s revenue.
Although the Thorpe board is not exactly renowned for beating the drum, things appear to be continuing to move in the right direction, in what is a well run operation consisting of a number of different divisions.
The company also announced an increase in the full year dividend to 3.25p, along with the proposal of a one off additional dividend of 1.5p, which looks pretty handy.
While the shares, at the current £1.35p mid price trade on a PER of 15,
The decent yield, solid balance sheet and ongoing prospects for further delivery continue to appeal to me.
Down in the market basement and real speculative territory there has been a distinct absence of good news for shareholders in CLEAN AIR POWER.
The company, which I took a look at on a speculative basis last year, is focused on Dual- Fuel combustion technology and had seemingly been making some progress.
Sadly, things appear to have gone the other way here with a recent run of bad news continuing, the shares having now slumped to just 3p each.
On Friday 19 September, the company announced that it is facing harsh trading conditions which should result in its full year numbers falling significantly below market expectations.
There was also a distinct absence of any crumbs of comfort too, as the company added that technical delays in gaining certification on its Genesis-EDGE Dual Fuel product had played its part in the warning.
Visibility is also clearly lacking, so any share purchase now would surely take a very huge leap of faith.
Back in June the company raised £1m at 4p per share in a heavily discounted placing, which had a smack of desperation about it.
It is a real pity though, as Clean Air did appear to be making progress, particularly as revenue last year had increased to close to £10m and while earlier this year the company announced a development tie up with Ricardo.
That relationship does appear to remain intact though, with the project now moving on to the next stage of the development and commercialisation process.