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TechMARK Report
Virtually whatever index or share price graph one looks at now paints the same picture – namely, the steady, incremental declines to March, then a period of virtual stasis as the war in Iraq played itself out, followed by sharp rises up to the present day. Such a performance hasn't been seen since the strong recovery after the initial panic of 11 September, but most commentators reckon that this one is much more sustainable. As an indication the FTSE 100 is trading in the 4,100 to 4,200 range, compared to the post-11 September low of 4,400. So the charts at least suggest that there is further to go, even though many of the old bear market worries remain with us.
Technology stocks have been prominent amongst the prime beneficiaries of the recovery, with the techMARK 100 index having risen 38 per cent (to 811 points) since its low on 31 March, against the FTSE 100's 15 per cent improvement.
Among individual stocks there have been some stellar performances, with Ultima Networks (up 200 per cent to 2.5p), Redbus Interhouse (doubled to 6p) and BATM Advanced Communications (up 52 per cent to 18.25p) all shining.
Redstone revival
Meanwhile, telecommunication services group Redstone kept up the strong run it embarked upon in March (it has more than doubled in price), helped by a set of final results showing that it broke into profit at the EBITDA level in the six months to March. Annual pre-tax losses reduced from £20.8 million to £2.6 million.
Like others in the business services sector (notably Project Telecom), the company admitted that 'market conditions remain very challenging' and didn't offer much guidance for the current year. Cash reserves were £12 million at the year-end though, so the company is somewhat better positioned than it was almost exactly two years ago, when a £25 million fundraising staved off the threat of bankruptcy.
Amstrad has been impressing investors, rising 36 per cent to 83p since the beginning of the month, mostly due to a trading statement in which it said that profits for the year to 30
June were going to be 'significantly ahead' of market expectations, pointing to
good sales of its much-criticised (and now-discounted)
e-m@iler telephone.
KBC the latest target
Bid news and rumours continue to swirl, with oil refinery improvement software firm KBC Advanced Technologies amongst the latest to report interest from third parties, though cautioning that talks are at 'a preliminary stage'. The shares shot up to 42.5p, a gain of 44 per cent.
Pan-European online travel agency ebookers impressed its growing band of admirers once more with a trading statement in which chief executive Dinesh Dhamija said that 'we are very encouraged by the rebound in the market and expect a strong performance for the remainder of the year'. It surged 17 per cent to 462.5p.
Local authority and housing association software supplier Comino caught a few eyes by reporting a £1.6 million profit for the year to March, compared to the previous year's loss of £277,000. The shares were up 17 per cent to 199.5p, with house broker Williams de Broë forecasting £2.3 million of pre-tax profits this year, and £3.3 million in 2004-5.
Anite figures due soon
Worldwide IT solutions and services provider Anite has been having a tough time of late, as forthcoming figures for the year to April will show. At the end of May the company released a trading statement saying that profits would be at the lower end of expectations and that chief executive John Hawkins had followed his former finance director by handing in his resignation. The company also said that 'markets remain very tough with no immediate signs of improvement.'
Added to the fact that there will be £100 million of goodwill impairment costs, £16 million of losses on the disposal of subsidiaries and £10 million of exceptional items relating to group restructuring (with more to come in the current year) in the results, the picture does not look rosy.
Nevertheless, WestLB Panmure and UBS Warburg have both slapped 'buy' recommendations on the company lately, although since then the shares have risen past the latter's target price of 34p. Nevertheless, Baird's Ian Spence says 'outperform', commenting that 'we still see upside on a 12-month view'. He expects the company to report pre-tax profits of £18.5 million for the year just passed and £19.4 million for 2003-4, giving earnings per share of 4.1p in both years and putting the shares on a prospective p/e of 8.6.
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