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Penny Share Review 248

Monday 16 August 2004

The Business (Sunday/Monday) suggested that it might be "about time to consider" CybIT Holdings (CYH), as it brings together technology, business processes and people to create systems for satellite navigation, fleet management and mobile workforce tracking. Company broker KBC Peel Hunt forecasts revenues of £8.3m for the current year and a loss of £700,000, which is largely due to a change by CybIT of its revenue recognition policy. The Company intends to fund a greater proportion of its sales itself, dropping its policy of selling contracts to financing companies, which allowed it to recognise all of a multi-year contract in its first year. It will recognise revenues over the term of the contract, which will have a one-off effect on full-year revenues and profits, but will lead to greater cash generation in the long-term. Forecasts for 2006 estimate pre-tax profits of £100,000, which the newspaper suggests it could be a "while before the share will achieve a meaningful PE rating, but getting in now could reap long-term rewards". The shares were up 0.08p at 1.60p.

Optimism abounds at Datacash (DATA), wrote Monday's Independent. Renewed interest in the Company has been sparked by the post-results tour of the City, which might bring the return of a former institutional shareholder to its register. Datacash has signed up new websites, as well as getting a foothold in interactive TV shopping. The paper reckons that next big moment will be its first contract for its chip and pin technology, which it has partnered with IBM. The shares had moved ahead in trading by 1.50p to stand at 106.50p.

Events surrounding Ennstone (ENN) could cause a big shake-up of the quarry industry over the coming weeks, according to the Mail on Sunday. Not only has Ennstone's bid for Johnston Group been attacked by two shareholders, investment funds North Atlantic Value and Mirabaud, who together hold about 16%, but it may be subject to a bid itself by Aggregate Industries, which has 7.2% stake. Separately, Johnston's 25% shareholder, Tarmac has asked the Office of Fair Trading if it can increase its stake, suggesting, the paper notes that it might bid for Johnston. Ennstone's chairman Vaughan McLeod has it from "reliable sources that someone out their wants to bid for us", while Johnston revealed to the market last week that had been approached by other potential bidders. Broker Arbuthnot noted that Ennstone's bid "could spark sector consolidation". The shares were up by 0.75p at 36.75p.

The appearance of Pershing, the clearing house used by many smaller brokers, on the share register of Fundamental-E Investments (FEI) did little to bolster the share price, wrote the Guardian on Saturday. The near 30% stake has been built up, as Pershing's has been unable to settle trades made through SP Bell, a firm once owned by Simon Eagle, who was until recently also chairman of Fundamental-E. SP Bell was to be acquired by Merchant House, another AIM-listed investment company until talks were terminated last month due to a "substantial and material change" in the financial position of SP Bell. The FSA are also investigating secondary market trading in Fundamental-E before 15 July. Dealers believe Pershing is looking to sell the stake. The shares were unchanged in trading and stood at 2.25p.

Invox's (INX.L) performance of late has been strong enough to attract the attention of "several fund managers" who believe that its shares are "undervalued at 325p". The Company is in the City trying to explain its acquisition of Brightview, which has taken it into the Internet Service Provision world. Invox reckons it can exploit synergies in dealing with phone companies and market Brightview's ISP service to its database of 3.5m names. The Independent thinks that it sounds "tenuous", but with Brightview being cash generative, Invox's 7% yield "just got even more secure". The shares were unchanged in trading and stood at 325p.

Pavilion Insurance Network's (PVL) new insurance policy aimed at the angling world got a mention in Saturday's Times. The paper reckoned that this market is potentially lucrative as there are 3.5m anglers in the UK, who could benefit from a tailored policy covering equipment, personal accident and public liability. The shares were up by 0.25p to stand at 6.00p.

The Independent (Saturday) remains confident about the story at Pipex Communications (PXC.L), as they believe that new buyers of the acquisitive broadband provider "will make money". The shares were unchanged in trading and stood at 8.63p.

The acquisition of Holly Benson, a company which designs exhibition stands and shop displays and works on bigger marketing projects for the likes of NPower and BP, by Real Affinity (RAF) is trailed in Monday's Independent. The cash and paper deal, worth up to £2.3m, is Real Affinity's second this year. The shares were down 0.13p on the news to stand at 1.63p.

According to Saturday's Daily Mail "things are bubbling" at Virotec International (VTI). Not only has the libel dispute with an Australian newspaper been settled, which some have claimed could net the Company £2m, but that hopes are rising for Hydrodec, a new technology that destroys chlorinated hydrocarbons. There is speculation that Virotec's attempts to maximise shareholder value from Hydrodec could see it be "injected into Vert-Eco", a new shell company run by former moneybroker John Gunn. This, the paper adds, "could be worth 5p a share to Virotec". The shares were down 0.25p on the news to stand at 25.75p.

The Sunday Telegraph reckoned that the shares in Zambezi Resources (ZRL) "are a speculative bet". The paper highlighted that it is applying modern exploration techniques and testing for gold in known deposits on the Chongwe copper belt in Zambia, were drilling is due to begin in late September. It has also been backed by a "decent list of institutional backers, including JP Morgan Fleming, Credit Suisse Asset Management, M&G and RAB Capital. The shares were up by 0.25p to stand at 13.00p.

Monday's prices, quoted above, were taken between 12.10pm and 12.20pm on 16 August 2004.

Announcements

The following companies, in which City Equities customers may have an interest, released announcements to the market this morning. These can be found by entering the relevant company name or ticker code in the search box on this site.

Ennstone (ENN) - EGM Requisition.
Galahad Gold (GLA) - Acquisition of further licence in Greenland.
Pavilion Insurance Network (PVL) - Launches Tackleguard.
Real Affinity (RAF) - Acquisition of Holly Benson.
Tandem (TND) - Offer for Preference shares of Casket plc and Kingsley and Forester Group plc.
Virotec International (VTI) - Issue of shares.
Zyzygy (ZYZ) - Final results and re-admission to AIM.

Look out for this week

Monday, 16 August - nothing of note.
Tuesday, 17 August - UK RICS housing market survey (Jul), US CPI (Jul), Housing starts (Jul), Building production Jul.
Wednesday, 18 August - UK BoE MPC minutes, EuroZone CPI inflation (Jul).
Thursday, 19 August - UK Retail sales (Jul), UK BBA lending (Jul).
Friday, 20 August - nothing of note.

The next Penny Share Review will be posted on Monday, 23 August 2004.

Compiled by Andrew McLintock

Penny Shares Online - penny shares research and information service.