Profitable Micro-caps (Revenue greater than $10m)

[steve fleming]

Some might find this list interesting / uesful

Criteria=

1. market cap less than $20m
2. Revenue greater than $10m
3. PE of between 0 and 10


(sorry, tried posting all the financial information, but it turns out a real mess.
The tickers are sorted from lowest m/c to highest)


Ticker
Short Name
P/E
Market Cap
Revenue T12M
Price-1
Total Return YTD
EPS T12M


SKS AU Equity
RLA AU Equity
CLQ AU Equity
EFG AU Equity
RZR AU Equity
COM AU Equity
NLG AU Equity
COO AU Equity
MBD AU Equity
PTB AU Equity
TPC AU Equity
EPY AU Equity
REF AU Equity
KKT AU Equity
FRM AU Equity
HYO AU Equity
PHG AU Equity
CAJ AU Equity
EMB AU Equity
MNF AU Equity
TQH AU Equity
EBT AU Equity
OEC AU Equity
MHI AU Equity
VSC AU Equity
SNL AU Equity
WWM AU Equity
AXI AU Equity
CHR AU Equity
ELX AU Equity
AMB AU Equity
SOO AU Equity
GLE AU Equity

[shasta]

Steve

I see CLQ has announced a new project today, extracting uranium from water? Anyways i started a thread on them ages ago, interesting company

[Lizard]

Hi Steve,

I just wrote you a long reply and something happened to the thread while I was doing it, so it went into cyber-space and I couldn't locate it again!

I love this micro-cap zone. I used to use a $20m market cap as a benchmark for a growing company turning a first profit, but these post-GFC days there are some solid profitable stocks there at well below. Many of them just became so illiquid that they were sold to ridiculous lows and buyers have never found the courage to push them back to a price where liquidity could emerge again.

I've looked at 75% of these shares in the past 12 months. One I liked best was MBD. I'd also be happy enough to own EMB or SNL, but I can't see them doing a fast multibag. I have a mental note to re-look at CLQ, particularly after todays announcement and price action. GLE is in my net-net portfolio. RZR will do well if they can even announce one new sale - but the longer they drag on, the less likely that is looking! SOO interests me, but I've never bought - seems an uncertain area. PTB made it as far as my watchlist, but I haven't watched it very closely...

Otherwise, I'd squeeze in HIT if I could (cos I'm biased since I got them at 2.5cps and might want to sell them again one day!) - revenue is under $10m though. AMO (also a net-net) just squeezed under your $10m market cap on todays price too - and the buyback might keep it from falling much lower.

[buns]

Flemo - Is it hard to add another filter, removing dividend paying companies?

That is something I don't want from my micro caps.

[Lizard]

Flemo - Is it hard to add another filter, removing dividend paying companies?

That is something I don't want from my micro caps.

Why not? I would have thought that sometimes a dividend is the only thing that will get a neglected and illiquid share on the radar.

[Corporate]

Thanks for the list Steve. I'm up to NLG which looks interesting...

[buns]

KW/Liz - I understand where you are coming from, but right now only have a hole in my portfolio for a short/medium term bagger. In my mind, I don't see big div paying micro caps producing that. But very keen to have other stocks (and knowledge) in the bank when the time comes

In my experience, both investing and working I worry about small companies paying large dividends. The big thing is the strong hint from management towards maturity/unable to find NPV+ projects. Also, in many cases companies like this restricting their growth (by giving it back to shareholders), also restricts themselves building that economic moat, or competitive advantage. Because in time, (I think) these small companies will either get chipped away at or totally swallowed by a major (CLQ from China?) who have the advantage of more resources and scale.

This is quite theoretical thinking however. I need to follow more of these companies to see what can pan out. And also understand the shareholder bases of these companies to get an understanding on what they think of dividends.

[Lizard]

PEH not on the list yet, but maybe one to make it in the next 12 months.

Listed 2008 at 50cps and acquired environmental consultancy and software type businesses. Got themselves into financial difficulty, particularly after one acquisition supposed to double the size of the business, suddenly ended up in VA a few months later (during the GFC).

Have historically produced about $7m revenue and losses, but HY revenue up 20% to $4.6m, so may see them getting $9-$10m revenue this year. Also maiden HY profit of $154k, but would have been about $465k if litigation costs (associated with failed business) and share based payments were excluded. Market cap $10m at 10cps. Balance sheet now strengthened with support of major shareholders, leaving net debt of $1m at last tally.

Overall, can't decide if they are poor operators or just caught some bad-luck in timing their listing and acquisitions. They seem to employ a lot of bright staff and they should be in a good area with specialist emissions consulting. The bump up in first half profit could be interesting if momentum is maintained in second half.

[Lizard]

PEH not on the list yet, but maybe one to make it in the next 12 months.

Listed 2008 at 50cps and acquired environmental consultancy and software type businesses. Got themselves into financial difficulty, particularly after one acquisition supposed to double the size of the business, suddenly ended up in VA a few months later (during the GFC).

Have historically produced about $7m revenue and losses, but HY revenue up 20% to $4.6m, so may see them getting $9-$10m revenue this year. Also maiden HY profit of $154k, but would have been about $465k if litigation costs (associated with failed business) and share based payments were excluded. Market cap $10m at 10cps. Balance sheet now strengthened with support of major shareholders, leaving net debt of $1m at last tally.

Overall, can't decide if they are poor operators or just caught some bad-luck in timing their listing and acquisitions. They seem to employ a lot of bright staff and they should be in a good area with specialist emissions consulting. The bump up in first half profit could be interesting if momentum is maintained in second half.

The third quarter report wasn't too encouraging for PEH, with staff costs increasing and revenues down over the quiet holiday period. Has been barely traded, although someone sold a few recently at 4cps (market cap $3.9m). However, it is now well bid up to 6.2cps, with few sellers in sight. Today's announcement outlines the potential for the business to benefit from the implementation of a new carbon tax in Australia, where they are ideally placed.

Having said that, it is so illiquid that not likely to be of interest to most investors.

[Lizard]

PEH not on the list yet, but maybe one to make it in the next 12 months.

Have historically produced about $7m revenue and losses, but HY revenue up 20% to $4.6m, so may see them getting $9-$10m revenue this year. Also maiden HY profit of $154k, but would have been about $465k if litigation costs (associated with failed business) and share based payments were excluded.

PEH have just confirmed revenue at $9.35m for FY and EBITDA (excluding abnormals) of $900k, so looks like recovery is on track and should make the $10m revenue for this list over coming 12 months. Meanwhile, share price and market cap have fallen - last traded at 7.5cps, although not much on the sell for now. Still relatively expensive on an EV/EBITDA basis at around 9.9 though, so value reliant on continuing to achieve revenue growth from here.