Best of the boards: Roxi Petroluem, Morrisons and Seeing Machines
12th September 2014 15:38
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In this week's Best of the boards, Interactive Investor takes a look at how users have reacted to some of this week's news on the discussion boards.
AIM-listed tech outfit Seeing Machines confirmed an alliance with Samsung, supermarket chain Morrisons announced its first-half results and oil and gas explorer Roxi Petroleum saw its shares slump.
Seeing Machines
What happened: A week ago, confirmed a hugely significant deal in Japan and the future looks promising. A week earlier we had asked if shares in the AIM-listed technology firm could really double. Well, a new alliance with Samsung seriously increases the chances.
The share price is already up to 7.5p from 6p last week. Broker finnCap reckoned the shares could be worth 12p. It still does.
Certainly that bullish forecast looks more realistic with every deal of this kind. SEE and Samsung Electro-Mechanics Corporation (SEMCo) have agreed to work together on face and eye-tracking technology for the consumer electronics industry, most likely in mobile devices first.
The pair have been working together for a couple of years, but the memorandum of understanding formalises the collaboration which will now accelerate development of the technology and its applications.
What users said: Users on the Interactive Investor discussion board were positive on the news and the consensus was a 'strong buy'.
"Wow, this could be bigger than the Tanaka deal in the long term," said 'theprior', while 'newtothisgame2' added: "It's a great RNS this morning [Monday] and certainly bodes well for the future, I'm still out but now need to reconsider what I see as an achievable re-entry point following this news."
'Escovido' reflected on the stability of the stock: See what I mean about more like a main market share? Any other AIM share would spike 100% on news like this, then drift down to 30% up. This one is steady away. Let's face it, a tiny company in Australia signing an MOU with the world's biggest mobile phone manufacturer has to be worth a lot more than 10% on the share price? I almost never do this but this is a no brainer strong buy."
To which 'suicidal_tendencies' replied, "Don't leave it too long mate. There is a lot going on with this company and more news expected about various things reasonably soon. Yes this is AIM and people seem to invest very irrationally so we could see some ridiculous low prices again, but nothing is for certain."
'10Bob' said despite the deal the company still had a long way to go.
"A great RNS, which is all the better for coming so shortly after the GM news. That's two enormous global, tier 1 partners, in two different industry sectors. That's what we participated in the placing for. But let’s not get carried away. SEE remains on a very high price/earnings and today's MOU suggests we are still some way away from generating actual money. It's a very large jigsaw piece, though."
Roxi Petroleum
What happened: Shares in have surged more than sixfold in just two months after the explorer doubled its oil find in Kazakhstan. Now, the company has confirmed that tests to determine the flow rates at deep well A5 will begin in the middle of the fourth quarter. And drilling of a second deep well at its flagship BNG asset - A6 - has been brought forward to November from early 2015. So why have the shares tumbled?
After the success of the A5 well - where last month the oil-bearing interval eventually doubled to 105 metres - confidence is high. A6 will be drilled just over a mile away and target a total depth of 4,700 metres within four months. Brendan D'Souza, an analyst at WH Ireland, estimates A6 drilling costs of $10 million (£6.2 million) on a turn-key basis, for which Roxi is fully funded.
Roxi shares slumped by 16% to 16.2p on the update and ahead of interim results later this month, most likely driven by profit-takers following an incredible run. Some lucky investors will have paid less than 4p a share for Roxi this summer, and others who bought only a month ago would have doubled their money. Still, D'Souza keeps his 'buy' recommendation with 28p target price.
What users said: Users on the Interactive Investor discussion board thought the update presented an excellent buying opportunity.
"Cannot believe we are at this price again, just wish I had some more money to top up here. What a great opportunity to buy. For Roxi to bring the next drill forward form early next year to November, just shows how confident they are on the result of this drill, said 'TassOil'.
'opulentia' agreed, adding: "Yes unbelievable the way the market has reacted today, though long term this will easily go back up and beyond the 25p hit earlier, managed to add 77,000 shares to my total today, average has gone up a little now to around 13.5p."
'rollthediceagain' believed there would be better opportunities to top-up in the future.
"Market certainly gave Roxi a good kicking and with a few months to 'mid-fourth qaurter' probably better opportunities to top-up still to come. Not a bad situation if you're keen on the share and have funds available."
'dickie3times' was worried about future turbulence in the share price.
"Shame the RNS stated 'flow testing in mid-fourth quarter'. Plenty of time now for the share price to do what it likes. At least three weeks of turbulence in the share price. This will yoyo between 13p and 17p, so plenty of time. Could even break below 12p at some stage.
"I was ready to pile in with some cash that I held back. However, the RNS prevented me from a serious top-up, so in many respects it saved me from being locked into a loss. If the RNS hadn't been released today, I would have paid around 19-20p. Now, the sensible thing to do is sit this out and wait for a seriously low bottom, which I do not believe will come this week.
I will try for two weeks' time...If I’m wrong, so be it...Still got a fairly big holding, so not worried what happens in the next two-three weeks."
Morrisons
What happened: is "back on the front foot". Under-fire boss Dalton Philips, says so. Half-year profits at the supermarket plunged by half, but that was no worse than the City had expected, and sales do appear to be bottoming out. Crucially, the dividend actually increases by 5%, and a three-year plan fleshed out in March has had early successes. Could the turnaround really be underway?
Well, this is certainly more promising stuff. Of course, underlying pre-tax profit of £181 million versus £371 million a year ago, and a 7.4% drop in second-quarter like-for-like sales excluding fuel looks pretty ugly. But, according to Mr Philips, every part of the £1 billion cost-cutting programme is currently on track - £105 million has been achieved already - and the retailer should still generate £2 billion of free cash flow in the three years to 2016/17.
In fact, analysts at Bank of America Merrill Lynch (BoAML) reckon the company is ahead of the game. "We still think Morrisons' recovery plan positions the retailer six to 12 months ahead of its key competitors," says the broker, repeating its 225p price target.
What users said: Users on the Interactive Investor discussion board were again, like Roxi and Seeing Machines' investors, pleased with the results.
These results are very positive for Morrisons - confirmation of the dividend for the year - repositioning as a value retailer (the only sensible strategy possible) - good cashflow," said 'MeanBugger'.
The user later added: "Reading through the full statement what is clear is that Morrisons is returning to its old core values albeit with modern additions like online and the loyalty card. I think Ken's criticism of the board has worked. They have thought hard about strategy and have got it right. Morrisons can only work as a value retailer with an enhanced offer.
"The food retailing industry remains intensely competitive but at least Morrisons is now doing the best it can."
However, 'HOWRAH' said: "Cash flow includes sales from sale of property assets accounted for in these results. With earnings per share halved I cannot see it galloping away soon in this competitive environment."
'Jackdawsson' suggested the half-year results were largely as expected, including confirmation of the board's commitment to increase next year's "excellent dividend".
The user did however, say that it was a "pleasant surprise though with the interim dividend increase" and said larger investors should also be pleased.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.