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Lots of features today.

24/11/2015

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Had to check the calendar today to make sure it wasn't Thursday as there were so many results and announcements. Any way the ones that featured from stocks I have mentioned in the past were - Cineworld, which I trailered yesterday, Rolls Royce and Hill and Smith. While yesterday I caught up with the webcast of the Equity Development meeting with Matchtec and I include a few thoughts on that at the end of today's news.
The Cineworld (CINE) update, while positive was only of the in line with forecasts variety so nothing to get excited or worried about either way. Having said that though the headline revenue growth rate seemed to be slightly behind the forecast growth rate. So presumably they are banking on bumper attendances from Star Wars and the Christmas season to meet the numbers. So probably still worth watching as I see it is off another 2% or so again today, presumably on the back of no upgrades at this stage. If it does continue to drift off into the 450 - 500p support range then it might offer better value and be worth revisiting.

Rolls Royce (RR.) have their new-CEO Warren East’s operational review out today and he seems to be flagging the expected stream lining, cost cutting and making the business more flexible in reaction to changing market conditions. There seems to be a presentation starting at 3.30pm so it will be interesting to see what the analysts make of it in the days and weeks ahead.

Finally today a another boring in line up date from the boring sounding Hill & Smith (HILS) which makes crash barriers and galvanized steel product - what do you mean you're still not excited. Well may be that's a good thing as the famous US investor, Peter Lynch, said that some of his best investments were boring businesses and he got even more interested if they had a boring name too! Now while this one is boring and not the highest quality business in the world, it does appear to be well managed and has churned out steady profits, earnings and dividend growth and thrashed the market over the last few years (see chart below). So maybe there is something in Peter Lynch's saying and as it looks more reasonable value on around 13x with a 3% yield and scores 90 on the Compound Income Scores it might be worth a closer look.
Picture
Finally I mentioned at the start the Web cast for Matchtec (MTEC) - which you can view here if that is of interest. Key points I noted were:
  • They saw Net Fee income conversion into profit progressing from already industry leading low 30% toward mid 30's.
  • Given the strong cash flow they expect to pay down the debt taken on as part of the Networkers deal to be paid down in 2 to 3 years
  • On the dividend the flagged their 2x cover target across the cycle but will sensibly look to build this to 2,2 - 2.3x in the next few years, which should help them to maintain the payout come the next downturn as they did last time in 2009.
Finally somewhat disappointingly I note that estimates for the current year have edged down despite the small beat at the finals. Not disastrous but a bit surprising, but maybe they are just managing expectations again?
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