Companies: COR    HET    IDM    IVL    MLG    PGH    SHG    SUG    TNO    URM   

Recent research by investment club lobby group Proshare revealed that around 76 per cent of private investors are still committed to the market for the long term, while only 21 per cent are expressing reservations.

Considering the shocks of the past few months, the size of the majority still keen on the investment scene might seem surprising – until you realise that, despite the share price slump (and general economic sluggishness), many business are actually performing according to plan.

A perfect example is Inventive Leisure, the club and bars venture we recommended in January this year at 172.5p. Since then the shares have eased back to 147.5p, a curious state of affairs in the face of the business' performance.

In the 53 weeks to June the group, which operates Revolution, a rapidly-growing chain of vodka bars, hoisted pre-tax profits 36 per cent to £3 million, on turnover up a sparkling 49 per cent to £27.9 million. Fully-diluted earnings per share rose 31 per cent to 9.5p.

Some ten Revolutions were opened during the year, increasing Inventive's estate to 37 licensed premises. This year the plan is to open ten more, with five expected to be up-and-running by the end of December, all in provincial towns.

With trading buoyant in the first ten weeks of this year, analysts expect upwards of £4 million full-year pre-tax profits. If you bought this stock on our advice, keep holding.

Inditherm is another firm whose business has progressed as planned, while its shares have sagged. The energy-efficient heating technology firm made a loss of £274,000 in the six months to June, on sales up 270 per cent to £417,000.

Operational advances in this period included the receipt of an exclusivity fee from distribution company Pegasus (a subsidiary of leading worldwide healthcare supplier Getinge) and a build up in demand for its operating theatre mattresses and recovery room blankets.

The firm is expected to end the year in the red. But house broker Collins Stewart predicts it will break into profit next year, to the tune of £1 million pre-tax. Stewart's confidence is due to the fact that Inditherm's polymer-based technology has a multitude of applications, from pizza boxes and confectionary manufacture to the transportation of pharmaceuticals.

Since June, Indeitherm has dipped from 258p to 188p. At this level, we are not sellers. Keep holding.

Two other recommendations blazing a business trail but treading water in the market – Systems Union and Home Entertainment – are also deserving of attention.

Bob Morton's Systems Union, flagged-up as a buy at 60.5p in these pages in April 2001, now trades at 58.5p, having been as high as 78p.

Its interim results, released at the start of the summer, were encouraging, and new product releases and contract wins should ensure this year's £8.5 million profit target is met. The company is valued at £55 million, has net assets of £21 million (of which £16 million is cash) and trades off a forward p/e of just 7.5. Buy/Hold.

Home Entertainment, the UK's second largest video rental firm, unveiled strong maiden preliminary figures to 1 June. Profits, before £639,000 of flotation costs and tax, perked up 9.4 per cent to £5.4 million. Turnover was buoyed 23.5 per cent to £103 million, as strong demand for games consoles, software and DVDs continued.

During the year, the Choices Video chain opened 18 rental stores, taking the year-end total to 187. Meanwhile total sales at its Video Box Office arm, which serves UK convenience stores and other retailers, were lifted by 15.6 per cent.

Chairman Iain Muspratt says trading in the first eight weeks of the current year was satisfactory, given the negative effect of the World Cup on home entertainment demand, with sales ahead 16.9 per cent at £14.1 million.

Current year DVD rental and sell-thru growth will be bolstered by titles such as A Beautiful Mind, Ocean's 11and the Minority Reportstarring Hollywood hotshot Tom Cruise.

Since its recommendation in Growth Company Investorat 240p, the market downturn has pushed the shares back to 217.5p. This is not an expensive price for a company with an excellent market position. Buy/Hold.

Tenon finally turns

Tenon, the Ian Buckley-headed venture that has built (via acquisitions) a substantial accountancy services business, seems to have finally turned the corner. We recommended the company at the end of 2000, at 148p, on the back of Buckley's predictions that he would be chief executive of a profitable business with sales of £100 million by the end of 2002.

This target began to look particularly blue-sky and beyond reach during 2001, as Tenon's acquisition's took longer to bed-down than Buckley envisaged. Moreover, the integration of each of its purchases was more expensive than originally forecast, while fee-earnings from employees did not meet initial predictions.

These problems hurt the share price, which had fallen far below our 20 per cent stop-loss by the end of 2001.

At the current 60p level, however, it is worth giving Tenon another look. Its business is beginning to look very attractive for the first time since flotation.

At the interim stage to June, Buckley (never a man to shy away from a bullish prediction) claimed he had finally built a strongly profitable and sustainable business. As evidence, he reported that sales had reached £49.6 million and profits, after amortisation, had hit £1.7 million.

For the full year, the group is now expected to post profits in the region of £6.6 million, while sales should match the original £100 million target. In 2003, £13.5 million could show up on the pre-tax line, delivering earnings per share of 6.10p.

With a 2003 forward p/e of under 10, Tenon looks undervalued in relation to its prospects.

Swan Hill's interim joy

Commercial property firm-turned-house-builder Swan Hill is starting to reveal the fruits of its change of direction.

Results for the six months to June showed pre-tax profits (before last year's exceptionals) up 35 per cent to £3.7 million. Turnover was roughly stable at £39.7 million, as commercial property revenues fell to £800,000 (£17.7 million) and housing sales increased from £21.4 million to £39 million.

Swan Hill reports that the southern counties market, where its operations are based, 'moved ahead strongly'. The firm benefited from selling from 12 principal sites, compared with seven in the comparable period last year. Some 148 units were sold, against 111 last year, with the average price moving from £192,000 to £246,000.

Finance director Colin Archer reports having seen some 'cooling' of the market, but adds: 'This is what we are hoping for.'

Competition for land is strong and the land-bank at the end of June stood at 698 plots, all with planning consent (about two years' supply). NAV remains well above the company's share price – a rarity in the house-building sector.

Forecasts from house broker Brewin Dolphin suggest pre-tax profits of £7.5 million this year, and EPS at 9.4p.

Tipped at 80.5p in July, the shares now trade at 82.5p. Hold.

Personal and MacLellan deliver again

Personal Group, the niche underwriting venture that provides a range of employee benefits and related services to a variety of corporate clients, has been a consistent Company Watch performer. The company has risen from our recommendation price of 90p to 110.5p and, following a strong bout of trading, looks set to go further.

In his interim statement (pre-tax profits of £2.65 million on underwriting income of £5.97 million), chief executive Christopher Johnston said he fully expected the company to hit its full-year profit forecast of £4.7 million.

Johnston said the group has enjoyed a 'successful' trading period, launching employee programmes for the likes of Eaton Automotive and Lloyds Pharmacy. Since June, Personal has launched 'further employee programmes' for other groups, including GAP, Tetley Tea and United Biscuits.

After tax and dividend payments (a first interim dividend of 1.8p was declared), the group was able to add £1.24 million to its reserves. This means shareholders' funds now stand at a healthy £13.5 million, of which cash represents over £5 million (£6 million last time), in addition to net treasury loan stock of £4.2 million.

At the current price Personal is valued at only £30.5 million and trades on a p/e ratio of just over 5. It remains a 'Strong Buy'.

Facilities management play MacLellan is not quite as cheap (it trades on 16 times expected 2002 earnings), but there seems little reason to offload this stock just yet.

Like Personal, its interims to June were strong, with profits before goodwill and tax lifted 50 per cent to £1.5 million on a 37 per cent improvement in sales to £60.2 million.

The company recently won contracts in the commercial and retail market sectors and remains on the look-out for suitable acquisitions.

Full-year profits should hit £4.3 million, buoyed by a busy second half and a contribution from May acquisition Broadreach, a cleaning and support services business.

Recommended at 71.5p in September last year, the shares currently trade at 84.5p. Hold.

Chorion/Urbium – patience required

The division of Chorion into an intellectual property group and a bars and clubs outfit has not, as yet, produced the desired result. The IP operation – still called Chorion – disappointed the market with a less-than-exciting interim statement that sent the shares crashing 25 per cent on the day.

The figures showed a 46 per cent increase in pre-tax profits to £1.2 million because of much-reduced interest charges. Turnover was up 14 per cent to £4.1 million.

But it was the outlook statement that caused jitters. It led house broker Old Mutual analyst Tina Sexton 'to jump up and down' in annoyance and downgrade pre-tax profit forecasts (including exceptionals and goodwill amortisation) from £5.2 million to £4.7 million, and EPS from 0.66p to 0.53p.

It seems the firm is experiencing delays in securing commissions for a new series of Agatha Christie's Poirotfor ITV.

For 2003, it is assumed turnover from the Noddy portfolio will double, and that two PoirotTV films will be made – something that Sexton is quite confident about.

She forecasts £6.1 million pre-tax and EPS of 0.67p for that year. If it can hit both these targets, the current price will soon look very cheap. Hold.

Over at Urbium, there was similar disquiet at the halfway point. Excluding interest, Urbium's interim profits rose 25 per cent to £3 million, before exceptional demerger costs of £3.9 million and £540,000 were levied.

But, accounting complexities aside, the group has put the chill up a few investors by flagging 'more challenging' markets' in its central London reporting heartland.

Despite this caution, turnover rose 46 per cent to £24.9 million, and the company is upbeat about current prospects. House broker Old Mutual is holding its full-year forecast of £9.2 million pre-tax.

This puts the shares at 9.25p, on a prospective p/e of 7.8, falling to 6 for 2003. Hold for the recovery.