Shares in Accsys Technologies (LSE: AXS) have had a rocky time, though they’re up around 20% over the past 12 months to 78p. The uncertainty among investors is largely down to the fact that the company is not currently profitable — and the risk is added to by the company’s pioneering technology for producing a durable acetylated timber product.
But interim results released Wednesday make for encouraging reading, with the firm reporting a rise in revenue to €28.3m (against €25.1m in the same period last year).
Demand is apparently growing worldwide, and the company’s Accoya plant is running at full capacity to meet a 13% rise in sales volumes.
There are big questions over when we’ll be seeing first profits and whether Accsys has the liquidity to reach that target, but I’d say the balance is very much on the positive side now. Though debt did rise significantly from €5.7m to €23.1m, cash also grew during the period to €46.9m from €7.9m a year previously, thanks to funds raised for the expansion of the firm’s manufacturing plants.
Capacity expansion
And to that end, the company expects capacity at its Arnhem Accoya plant to grow by 50% early next year, and the construction of a new Tricoya plant is under way in Hull — sales of Tricoya panels are up by 24%.
Chief executive Paul Clegg said: “We continue to see good global demand for both Accoya and Tricoya in an important year for Accsys. We are making transformational changes to our manufacturing capacity to meet this demand, having secured significant support from shareholders and our industrial and financial partners.“
That suggests Accsys really could be close to the point of profitability, and I’m warming to it despite my earlier bearishness.
Engineering startup
Van Elle Holdings (LSE: VANL) is something we don’t see in the UK every day — a startup engineering business.
The company, which floated just over a year ago in October 2016, describes itself as a “geotechnical engineering contractor offering a wide range of ground engineering techniques and services to customers in a variety of UK construction end markets,” and produced a mixed set of results for the year to July 2017.
Though revenue and underlying EBITDA rose by 11.8% and 12.9% respectively, underlying earnings per share (EPS) came in flat with reported EPS down 19%. Operating cash conversion rose impressively from 79.6% to 91.9%, but return on capital employed dropped from 38% to 30.6%.
Yet Wednesday’s trading update gave cause for optimism, telling us that “trading in the first half of the financial year has been positive and the Board expects to report turnover of approximately £53m” — and that’s significantly better than the £43.1m recorded in the first half of 2016. Underlying pre-tax profit is expected to grow by 15%.
Low valuation
Van Elle hasn’t exactly pleased investors with its share price performance so far, but this latest update did give the shares a 9% boost on the day to 86p, and forecasts make the shares look like a bargain to me.
Theres no EPS growth predicted for this year (though I can see that changing now), and the shares are on a lowly P/E of seven — with a 13% boost to EPS on the cards for next year, that would drop to just over six. With dividend yields of 4.1% and 4.7% added to the mix, I’m seeing a long-term buy here.
