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

[Lizard]

Hey, sorry AA. I was really just adding it for completeness of a list and didn't look at liquidity. There are very few on this thread that have much liquidity going for them anyway - that's the territory.

I have an interest in illiquid small caps - despite the boredom of nothing happening for a long time. However, I'm not the expert Steve is and I'm still figuring out the precise mix of secret ingredients needed to get them to rise.

[Lizard]

IAW result out today - maybe doesn't quite deserve a market cap under $10m... but the aggregation programme doesn't exactly seem to be adding value yet either. Jury still out on this legal services firm and perhaps short term value here, but I'd lean towards the view they may be heading off the rails in the medium term...though shows promise for eventual reform and possible success.

[steve fleming]

http://www.eurekareport.com.au/artic...-take-out-gold

An interesting read given we are mid way through the reporting season.

Once the season is over, will be an interesting exercise looking at the top ranked EPS performers.

I saw ADQ report a 141% increase in EPS, BOL has reported a 246% trading NPAT increase

[steve fleming]

http://www.eurekareport.com.au/artic...-take-out-gold

An interesting read given we are mid way through the reporting season.

Once the season is over, will be an interesting exercise looking at the top ranked EPS performers.

These companies recorded the largest increases in EPS between FY11 and FY12 (under 100m market cap)

First column is EPS growth (greater than 50% increase), second column is current market cap

Company Name Diluted EPS before Extra, 1 Yr Growth % [LTM] (%) Market Capitalization [Latest] (AUDmm, Historical rate)
Brierty Limited (ASX:BYL) 10,625.0 36.9
Noni B Limited (ASX:NBL) 1,094.0 25.5
Empired Limited (ASX:EPD) 531.1 16.1
Hughes Drilling Pty Limited (ASX:HDX) 529.4 51.1
Gage Roads Brewing Co Limited (ASX:GRB) 275.0 23.2
Mayne Pharma Group Limited (ASX:MYX) 265.5 59.3
Corum Group Limited (ASX:COO) 256.1 36.3
Carbon Conscious Ltd. (ASX:CCF) 241.2 7.14
Cryosite Limited (ASX:CTE) 210.0 14.0
My Net Fone Limited (ASX:MNF) 204.4 39.0
Konekt Limited (ASX:KKT) 191.5 4.53
Glg Corp Limited (ASX:GLE) 178.1 20.4
Maxsec Group Limited (ASX:MSP) 159.3 1.87
Bisalloy Steel Group Limited (ASX:BIS) 158.2 58.4
Saunders International Limited (ASX:SND) 137.5 41.7
BigAir Group Limited (ASX:BGL) 131.5 80.5
ITL Ltd. (ASX:ITD) 130.5 20.5
Swick Mining Services Limited (ASX:SWK) 127.6 60.4
ISS Group Limited (ASX:ISS) 122.0 25.2
MGM Wireless Ltd. (ASX:MWR) 117.6 4.0
Capitol Health Ltd. (ASX:CAJ) 117.3 23.4
Logicamms Limited (ASX:LCM) 109.3 72.1
Allmine Group Limited (ASX:AZG) 93.9 32.2
E&A Limited (ASX:EAL) 76.3 26.4
Pulse Health Limited (ASX:PHG) 71.5 22.8
Royalco Resources Limited (ASX:RCO) 70.7 24.8
SDI Ltd. (ASX:SDI) 70.0 25.6
ADG Global Supply Limited (ASX:ADQ) 67.3 11.8
Beyond International Limited (ASX:BYI) 65.9 50.3
Brisbane Broncos Limited (ASX:BBL) 61.2 22.5
Objective Corporation Limited (ASX:OCL) 60.6 50.4
Joyce Corp. Ltd. (ASX:JYC) 53.6 10.1

[Joshuatree]

Cheers Steve ; Im in to Brierty, Corum, and Capital Health all up nicely. How bout you?

[steve fleming]

Cheers Steve ; Im in to Brierty, Corum, and Capital Health all up nicely. How bout you?

Of those listed, MYX MNF CAJ & ADQ

Kicking myself I didn't pick up SDI at 10c in July (had a buy order that was n''t hit - now 24c)

Am looking at CTE

[OneUp]

Thanks for the list Steve Fleming.

EPD looks interesting - trading on a prospective PER of 6.5x post the recent acquisition, even assuming no improvement in the core business. That is, $17m market cap / $2.6m NPAT in FY13 (i.e. $1.3m NPAT from core business + ~$1.3m NPAT from Conducive based on stated $2m EBIT less 30% tax and assuming 6% interest on the first $3.2m tranche). If you assume some improvement in the core business (they delivered 500% NPAT growth in FY12 over FY11, albeit off a low base) then it could be on ~5x PER.

Listed peers aren't on very high multiples, so maybe a reasonable PER is 10x, although could argue these guys have stronger organic growth prospects. Plus consolidation opportunities of boutique IT service firms.

Impressive customer list of major resource companies as well as senior management (many of whom have jumped from the much larger ASG).

Looking back over ASG's history, they grew from an obscure small cap IT services firm to a much larger business within five years through organic growth and acquisition. Share price also rallied from 20c to $1.90 at their peak. (Obviously ASG well off those highs now....do hope EPD avoid making the mistakes ASG has).

Disclosure: stock acquired recently.

[mamos]

Mayne Pharma no longer under $100m MC now. Mayne Pharma to acquire Metrics, Inc. for US$105m plus up to US$15m in earn-out payments.

Mayne Pharma will fund the acquisition via a new US$48.5m2 debt facility (with an additional uncommitted US$15m accordion facility) and a A$65m equity raising

[steve fleming]

Many companies on the list did really well. It would be interesting to see if the screening tool can be refined to lock in on what made those companies successful compared to the dogs. Or perhaps a technical signal that would have green lit the price. We can't kiss all the girls, but some way to sort the pretty ones from the ugly ones would be great :-)

2012 has definitely been good for a number of small caps.

I haven't done any real analysis on this, but pretty sure the key driver of the successful companies versus the dogs is strong eps growth....and the one thing small caps can do well is deliver large eps growth as they scale up and leverage their fixed cost base.

[steve fleming]

So perhaps one of the screening factors should be % eps growth over 6 months, 12 months etc - then rank them by that?

OK, Filter is market cap less than $100m and CAGR EPS over last 2 years of + 20%. I found 2 years strong EPS growth to be the filter that best co-incides with strong share price appreciation. i.e. the market re-rates once strong sustainable growtth can be demonstrated

This filter picks up all the goodies (26 companies in total (out of 1800 odd less than $100m in m/c))....includes EPD, MNF, BGL, JIN, CAJ, COO, DDR, OCL

Company Name Exchange:Ticker Market Capitalization [Latest] (AUDmm, Historical rate) Diluted EPS before Extra, 2 Yr CAGR % [LTM] (%)
Cryosite Limited (ASX:CTE) ASX:CTE 13.1 1,388.0
Bisalloy Steel Group Limited (ASX:BIS) ASX:BIS 53.7 1,350.4
Empired Limited (ASX:EPD) ASX:EPD 27.2 424.6
Sietel Ltd. (ASX:SSL) ASX:SSL 24.8 229.4
Carbon Conscious Limited (ASX:CCF) ASX:CCF 6.9 162.9
Oriental Technologies Investment (ASX:OTI) ASX:OTI 5.05 153.5
Corum Group Limited (ASX:COO) ASX:COO 41.1 131.3
Brisbane Broncos Limited (ASX:BBL) ASX:BBL 23.5 105.1
Scantech Ltd. (ASX:SCD) ASX:SCD 7.02 96.2
Medical Developments International Limited (ASX:MVP) ASX:MVP 98.1 72.5
Runge Limited (ASX:RUL) ASX:RUL 55.2 66.7
Capitol Health Ltd. (ASX:CAJ) ASX:CAJ 36.2 65.5
Allmine Group Limited (ASX:AZG) ASX:AZG 49.9 56.8
Objective Corporation Limited (ASX:OCL) ASX:OCL 53.4 56.7
Resource Development Group Limited (ASX:RDG) ASX:RDG 16.9 47.1
Jumbo Interactive Limited (ASX:JIN) ASX:JIN 94.3 44.9
Merchant House International Ltd. (ASX:MHI) ASX:MHI 15.1 43.9
Supply Network Limited (ASX:SNL) ASX:SNL 42.1 39.8
Brierty Limited (ASX:BYL) ASX:BYL 35.2 37.5
Brand New Vintage Limited (ASX:BNV) ASX:BNV 3.17 36.3
CI Resources Limited (ASX:CII) ASX:CII 38.6 32.7
Dicker Data Limited (ASXDR) ASXDR 64.5 31.1
Beyond International Limited (ASX:BYI) ASX:BYI 61.0 30.9
BigAir Group Limited (ASX:BGL) ASX:BGL 93.6 27.8
Korvest Ltd. (ASX:KOV) ASX:KOV 60.7 24.4
My Net Fone Limited (ASX:MNF) ASX:MNF 59.9 20.8