Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Velosi start to fly-long overdue in my view

Velosi Group, an oil services new issue in which we participated in August issued a very positive trading update today.

It stated that it expected results for the year to 31 December 2006 to be ahead of expectations with strong demand for its services in Nigeria, the US and Qatar where contracts won during the first half of the year have shown significant growth.

As a result the house broker has increased their earnings forecasts for this year by c10% with a similar increase for 2007. With strong demand and a significant tender pipeline they see room for further upgrades in 2007 and have set a 12 month target price of 130p.

It's always a bit tricky when one only gets the opinion of the house broker but I am inclined to support them here.

Given the underlying strength of the sector in which they operate and the business itself (especially relative to a lot of the rubbish you see on AIM) we have been surprised at the weakness in the share price since floating at 90p.

The interim results to 30th June, announced in September, were also very encouraging with a doubling of pre-tax profit, a more than 100% increase in sales and a very confident Chairman's statement.

The shares have risen c16% today standing at c97p but surely there should be a lot more to come.

Author: Blogger John W | Posted: 7:02 pm  
Interesting article, IC.
I was a bit perturbed by the recent price weakness, which seemed largely fuelled by regular sells of 5000 (sometimes 10000, 15000) shares over the past month.
So was it one holder selling out, or 'someone knows something'.
I hoped for the former, and that would appear to have been the case.
Author: Blogger John W | Posted: 8:48 am  
I believe (unofficially) the FY results will be issued on Monday 26 March.

The company has already indicated (7 Dec) that it will exceed expectations.

Revised forecasts (Charles Stanley, broker, dated 24 Jan) are for PBT of £3.78m, eps of 7p and dps of 0.43p. They say 'BUY' with a target price of 135p.

For 2007, they have £5.84m, 9.1p and 0.71p respectively.
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