Companies: ALOG    CGO    JPLH    PTEC   

The figure for January was the lowest haul since February 2004, from which time there has never been fewer than 16 floats in any one month. Though new issues were thin on the ground in January, December was one of the most active months of 2007, with AIM welcoming 30 new entrants, 11 of them from overseas.

One that crept in over the festive period and which continues to keep me interested is new Collins Stewart float AsianLogic (ALOG), a business gunning for a piece of the action in the fast-growing Asian online gaming sector. Management will be hoping the company can attract the same sort of stock market ratings once common among online gaming players, before the fallout from US legislation decimated the sector. Industry analysts claim that the internet casino market in Asia will grow at an average of 28 per cent per annum over the next four years, which is a good start.

ALOG, led by former Coldstream Guard Chris Parker and former Playtech boss Tom Hall, is already profitable and is forecast to double its revenues in 2008. Boasting a balance sheet flush with £44 million of cash with which to complete acquisitions at sensible multiples, its shares have eased off from the 112p issue price to 107p and, while they trade on a lofty multiple of last year’s earnings, the rating falls to nearer ten this year, lending the shares gambler appeal.

New guise for Harrier
Another online-related play is newcomer Conchango, a company cashing in on the ever-increasing need for firms to hone their digital offerings. This consultancy business is actually the new guise of ex-AIM shell Harrier, chaired by formidable and well-followed financier Bob Morton, which was banished to PLUS by ‘unsympathetic’ AIM authorities in December 2006.

Conchango recently reversed into Harrier in a transaction that included a return to AIM. The company has grown rapidly over the past three years, with its digital consultancy and design skills much sought after in consumer-facing industries. Almost half of the group’s sales arise from the retail sector, where three of the largest five UK players are clients, while financial services, natural resources and media account for the rest.

For the nine months to September, sales were £26.5 million and profits £2.3 million, comparing favourably with £15.2 million and £526,000 for calendar year 2004. Conchango is now looking to drive ‘aggressive’ organic growth, use AIM to make acquisitions and develop its own software tools. With digital marketing continuing to fly (see Sector Watch, page 22) Morton could be onto a winner.

Japanese float limps in
A delayed AIM entrance was made by Japan Leisure Hotels, which is attempting to consolidate a peculiar niche. With the population of Japan squeezed into small apartments and often unable to rely on any privacy or space, since parents customarily live with their adult children, a family man’s only chance to fully express his feelings for his wife is to take her to a ‘love hotel’, where rooms can be rented by the hour.

Although there was plenty of interest in the merits of the investment case, that interest was not converted into hard cash as investors sat on their hands in the hope of riding out tortuous markets. Broker Shore Capital’s hoped-for £100 million fundraising limped in three months later with Japan Leisure Hotels bagging but £3.1 million. Its revised plan is to use equity to make acquisitions instead of cash. Whether this will prove popular in current stock market conditions is doubtful, so for now, the shares, issued at 50p, should be given a wide berth until the strategy begins to bear fruit.