A few of my holdings have delivered updates to the markets so far this week and suffice to say, I have been happy with the content on offer.
Whilst I speak regularly with these companies, I have only spoken with one of those this time round, but will catch up with the others again in due course.
First up with news was CONCURRENT TECHNOLOGIES (CNC), which is looking in great shape across a sector that has an extensive runway, particularly on the back of ongoing defence spend.
I have written a fair bit on the company here on the blog, for anyone unfamiliar and it has thus far been a highly rewarding investment.
CNC announced yesterday that revenue increased 38% to £16.8m for the period concerned, that being the first six months relating to full year 2024, which has also delivered a record profit of £2m.
Everything appears to be firing well at the company led by Miles Adcock and the outlook remains extremely positive which is why I am sitting tight having invested at much lower levels as previously mentioned here.
The shares nudged back up yesterday to £1.04p and whilst there may not be too much on offer for short term investors, those of us with patience and a longer-term horizon should hopefully be further rewarded.
Given that we are halfway through the 2024 financial year, it is perhaps worth focusing on the forecast numbers for 2026, which provides for a real feel of the growth traction on offer and potential for further notable share price appreciation.
This sees Cavendish anticipating revenue of £46.4m returning a pre-tax profit of £7.1m giving EPS of 7.1p.
On that basis the stock is trading on a forward PER of 14, which whilst it may look priced about right in one context, it is worth noting that with an expected net cash pile of £23.4m along with further upgrade potential, the shares look very good value to me.
Next up was BANGO (BGO) which had blotted its copybook at the beginning of this year, which sees me a little under water, there appears to be a gradual rebuilding of investor confidence, where it is on track to meet current market expectations.
In its update, sales growth of 19% was recorded for the first half of the year, taking it to $24.1m, whilst importantly ARR continues to scale up significantly.
Having previously warned and missed guidance which subsequently resulted in a significant downgrade, one would assume that lessons have been learnt and that this time, they are on the ball.
Broker Singer is expecting full year 2024 revenue of $53.5m and an adjusted pre-tax profit of $5.7m giving adjusted EPS of 7.3p, which if delivered, should result in the shares standing at a more elevated level.
As it stands, the shares have recovered a fair bit from the lows recorded earlier this year and do now stand at a healthier looking £1.40p.
On a forward PE of 19, I remain of the view that BGO will see further share price recovery if it does deliver as anticipated, given the ongoing potential of its DVM offering and what should be the inevitable tipping point of notable cash generation and increasing profits.
Last but certainly not least is WINDWARD (WNWD), which has been building some notable trading momentum.
I am posting a link here to my piece from last August, when the shares were circa 47p against this morning’s price of £1.05p for interest, as it remains one very much under the radar. https://martinflitton1.wixsite.com/privatepunter/post/could-windward-be-ready-to-set-sail-21-08-23
Although the shares have enjoyed a great run, this is another one I am sitting tight and sticking with, as I believe the runway here is extensive.
As with all pre-profitable businesses it takes something of a leap of faith to invest, but with such prospects, as the story unfolds and gathers pace then the risk/reward can shift quickly.
In the case of WNWD, an update to the market this morning on the first six months of the year, demonstrates continued and impressive organic growth which importantly sees a break into profit clearly on the horizon.
I have spoken with the CEO Ami Daniel a number of times now and caught up again with him this morning, where he sounded upbeat along with a cautiously optimistic tone.
For the first six months of the full year 2024, WNWD has seen a marked increase in revenue to $17.6m against the corresponding period's $12.8m.
That looks an excellent result and highlights the potential moving forward, which sees Daniel pointing out that as revenue grows alongside a stable level of investment, the numbers are only going to go one way.
With some excellent and increasing Logos signed up, a strong level of retention and blue-chip channel partners such as The London Stock Exchange, it is not surprising to hear Daniel reaffirm his confidence of delivery.
This sees the company on track to achieve an EBITDA break-even run rate during FY24, where with revenue tracking slightly ahead of expectations, positions the company well for the all-important move into recognisable and sustainable profits.
The company is highly active and disruptive across the space it serves which is focused on an AI-based risk management SaaS platform for the global shipping, energy and related maritime logistics and trade finance ecosystems.
The software allows customers to monitor, assess & predict trade vessel compliance with sanctions and track individual sea cargo containers in real-time and predict ETA and delays.
That makes it highly attractive and scalable, where it already secured an early run in a sector that historically has been slow to embrace and adopt change.
Looking ahead, Daniel sees the market and opportunities expanding and in that context, it is perhaps worth focusing on a comment from last month's note released by Broker Panmure.
“Quality emerging data businesses are rare, and we think investors should be buying now before a large re-rating commences” Looking further ahead to the medium term the Broker added, “Looking further out we have said we expect WNWD to be benchmarked against best in class peers (RELX and GlobalData which tend to trade around an average of 7x prospective EV/Revenue) as it becomes more obvious what the LT margin potential is post breakeven being achieved.
On May 20th we said if we were to value the stock on this basis and with no discount for 2025 the implied value would be 283p and for 2026 326p. We also noted that if based on Global best in class peers (Verisk, S&P and Moodys) the 2025 and 2026 implied values would be 433p and 496p respectively. We have also flagged the recent transaction in the UK data market involving GlobalData selling a minority stake in a subsidiary for 11.1x revenues underlines the valuation potential of quality data assets.”
Whilst such comments and assumptions should, in my view, always be treated with a degree of caution, there is clearly a potentially exciting and highly rewarding story in play here and the comments are worthy of taking on board.
Not without risks of course, but the previous more speculative nature of the investment case is now being superseded by a real growth prospect which is underpinned by a healthy net cash position that is expected to end the year at circa $16m.
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