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.

Pixel Interactive Media - needs to do more to impress

Pixel Interactive Media, which joined AIM last July, issued a positive trading update this week prior to entering its close period, anticipating that pre-tax profits would be ‘slightly ahead’ of broker expectations for the year ending 31st December 2006. As is usual for a company of this size there is only one broker who is expecting anything!

Pixel appears to have made good progress over the course of 2006 although a look at the share price graph and you would be forgiven for thinking that it had issued a profit warning! The shares floated at 32p and rose as high as 51p in August only to trickle back down to the current price of 32p.

This bullish statement from the house broker in reaction to the pre close statement clearly didn’t have the desired effect with the shares dropping further.

Pixel does appear to be making good progress but the suggested valuation, with due regard to the business risk associated with this size of operation, in this rapidly changing space and in this location does merit a substantial discount and, contrary to what the broker suggests, a PER of 17x for the current year doesn’t sound too modest to me.

Understandably it’s also one of those businesses that many investors have a tough job really getting to grips with.

In the absence of sensational updates with the potential of huge returns in short time it is evident that the private investor (which has an influence over stocks of this size) just isn’t interested in a Hong Kong based minnow plodding along in a rather sensible fashion.

It’s all about risk vs. reward and there are plenty of other micro caps to look at that promise much more and are closer to home.

With a lack of sensational advancement and news of ‘substantially exceeding’ expectations (as opposed to merely ‘anticipating’ exceeding), in my humble opinion the current price in the current climate is therefore probably about right.


Investor's Champion is a registered trade mark of Investors Champion Ltd.  Investor’s Champion Limited is a company registered in England and Wales under number 03577867 whose registered office is at Langwood House, 63-81 High Street, Rickmansworth, Herts WD3 1EQ. Investor’s Champion Ltd is associated with Fundamental Asset Limited who is authorised and regulated by the Financial Services Authority.