This is a new section fairly much in development within which I intend to offer some views on RNS ‘s covering shares I hold and maybe the odd comment on ones that I don’t currently hold. Being a new section it’s all a bit fluid but let’s see how it goes.
Week commencing Monday 10th July was expected to a be a busy week for the portfolio with trading statements and results scheduled in for a number of holdings. Rather than just simply tweet a few thoughts which I will continue to do, I will now also when time permits, post a periodic review maybe weekly, maybe monthly of my thoughts on shares either that I own or are worth a few lines of aimless whittering of my thoughts. Of course, as ever, nothing I write about should be taken as a recommendation to either buy or sell a share within your own portfolio, I merely write comments as I see things.
A few thoughts about shares I own that have issued an RNS in the last few days:
11/07/17: Amino Technologies: AMO: Interim Results: I think these read rather well. The revenue growth shows an impressive 21% rise although it has if course benefited from a currency aid which is mentioned in the report. The operating profit is up an impressive 64% and the cash flow looking very healthy.
If we add in an encouraging outlook then the shares retain an attraction for me.
Outlook: Having delivered a strong performance in the first half, we expect to continue our progress in the remainder of the year and beyond. Our sales pipeline is robust and we are confident that we will deliver full year profits in line with market expectations.
My thoughts: the numbers continue to look very attractive to me with a decent return on capital, a reasonable and increasing dividend. I note the brokers have edged up their earnings estimates for 2017 & 2018.
My Action: AMO will continue to reside within the folio but as ever with small companies, not without risk.
11/07/2017: Galliford Try: GFRD Trading Update well, of course, most holders would have felt a degree of trepidation following that dreadful trading update from Carillion a mere 24 hours earlier; hells bells that CLLN one was dreadful! Well thankfully the GFRD trading update was very reassuring and gave me no reason to hit the sell button:
Overview from GFRD TU
· A strong underlying financial and operating performance across all three businesses for FY 2017, with profits towards the upper end of the analysts' range
· Linden Homes and Partnerships & Regeneration expected to deliver increased revenue and improved operating margins, while newer contracts in Construction are performing well
· No movement in the £98m non-recurring costs in Construction, as announced on 3 May 2017
· Modest net cash at 30 June 2017 (2016: net debt £9m)
· Expect to pay dividend in line with previous guidance
· Well positioned to deliver against 2021 strategic targets
The Outlook was also fine: The Group's outlook for FY 2018 is unchanged. Linden Homes is expected to deliver further volume growth and improvement in the operating margin. Partnerships & Regeneration continues to enhance its position to benefit from the demand for affordable housing, while Construction's margin is expected to increase as we close out legacy positions.
My Action: All good stuff: no action taken and GFRD retained in the portfolio and dividends reinvested.
Waterman: WTM: just digging around in my iWEB and my Waterman shares have now been replaced with cash following the takeover. That gives me a very comfortable total return of 68% in about a year; I am happy with that.
12/07/17: Fulham Shore: FUL: Year End Results: Now firstly I should say that I only have a relatively small holding in FUL in terms of a percentage of my portfolio due to my perception of risk within the crowded hospitality sector. I have tested the product and can confidently say it’s both good in quality and value and is definitely something a touch special compared to the tired offering of traditionally accepted major pizza outlets. Nevertheless, the end of year results made quite reassuring reading:
Revenues for the year ended 26 March 2017 of £41,274,000 (2016: £29,251,000)
• Headline EBITDA for the year ended 26 March 2017 of £7,118,000 (2016: £5,232,000)
• Headline Operating Profit for the year ended 26 March 2017 of £4,670,000 (2016: £3,280,000)
• Operating Profit for the year ended 26 March 2017 of £1,278,000 (2016: £507,000)
• Profit after taxation for the year ended 26 March 2017 of £969,000 (2016: £76,000)
• Net debt as at 26 March 2017 of £5,909,000 (27 March 2016: £3,283,000)
• Opened 13 new Franco Manca pizzeria and 3 new The Real Greek during the year ended 26 March 2017 (2016: 7 Franco Manca pizzeria and 1 The Real Greek)
• Launched click and collect takeaway service in both Franco Manca and The Real Greek
• Since the year end:
The view on the UK restaurant market contained in the report is really well worth a read, here is an extract:
Restaurant supply and demand often have a fractious relationship and, however quickly demand for eating out grows, there will always be a risk that restaurant supply may sometimes grow faster, either nationally or locally. In addition, we are entering a difficult forecasting period due to Brexit. Against this backdrop, some restaurant businesses will make the grade and others will not. We believe that operators with "me-too" offerings, over-rented sites, tails of unprofitable sites, dated menus, too much debt, poor concepts and unincentivised staff (or all of the above) will struggle.
However, I am confident that Fulham Shore is well placed as a dynamic operator with strong brands and a good portfolio of sites. We believe that our businesses have significant growth potential across the UK underpinned, first and foremost, by the quality and value of their customer offerings. As a result, and despite the challenging backdrop, we are confident that the Group will continue to perform well in the fast-growing casual dining market.
My Action: I will simply keep holding and visit their establishment soon on a visit to our busy capital.
13/07/2017: Dart Group: DTG: it’s year end results came in pretty much in line with brokers consensus. It was expected that profits would be less due to the investment at Birmingham & Stansted airports; so no great shock there. The narrative also stated that the company expects to meet market expectations for the year ending 21st March 2018. Punters, many of whom expect far too much far too soon, seemed to feel that DTG had lost its immediate sex appeal. That coupled with the dreaded Brexit fears in the narrative caused an immediate ripple in the market. Now for my part although I have owned DTG since 2013, I decided to sell 60% of my holding for 633p shortly after the open: my usual unemotional approach to my holdings. Now I feel that DTG is a very decent company and will do well over the next few years but it was simply time for me to reduce my exposure on this one: brilliant run since 2013 and once the turbulence settles I may buy some back.
My Action: I sold 60% of my holding at 633p shortly after the opening bell. Just as well I moved my distance swim back to 6:30am on a planned RNS day!
Telford Homes: TEF: AGM Trading update: another very reassuring update from this class act, an extract:
Our confidence in delivering continued growth remains unchanged, supported by the chronic need for new homes in London. The Group is on track to exceed £40 million of profit before tax for the year to 31 March 2018 and £50 million in the year to 31 March 2019 having already secured over 80 per cent of the anticipated gross profit for 2018 and over 60 per cent for 2019. As was the case in the year to 31 March 2017, whilst all of our developments are being delivered on programme, the timing of their completion is not evenly spread across the current financial year. We expect less than a quarter of the forecast open market handovers for the year to occur in the first six months and as a result full year profits will be significantly weighted towards the second half.
Ok, we have a fair weighting to the second half of the year but this is a company I respect and trust with good management in charge of the business.
My Action: I will continue to hold and reinvest the dividend in more shares.
NewRiver REIT: NRR: brief RNS first quarter update which looks encouraging enough. As expected a very healthy yield at about 6% and modest but acceptable capital growth.
My Action: I will continue to hold and reinvest the dividend in more NRR shares.
Comment on news for one which thankfully I don’t own:
Carillion: CLLN: well glad that one was not in my universe. Due to its incredibly high yield, it did attract my attention for a quick look but was immediately excluded from further interest due to its inability to cover dividend payments from FCF in two of the last three years. I always ask myself where is the money coming from to pay the dividends and should I feel the slightest bit unhappy, I move on.
Next week promises to be a very quiet week in terms of scheduled RNSs for the shares within my portfolios; as yet I can’t see any in the diary. So bearing in mind that with investing the next profits warning may be just around the corner, a boring quiet week will do just fine.