Analyst Evolution Beeson Gregory suggest that these Interim results show a big improvement on 1H04.
Sales and operating margins are improved across most all the divisions whilst
group overheads have been held steady, resulting in a switch from loss to profit. Though the first half performance was weaker than the second. In addition, the year-on-year margin improvement only came through the in 2Q and the slow 1Q
will have an impact on FY forecasts. On top of that the Auctionworld bad-debt
write off has come at an unwelcome time. With earnings coming through more slowly than previously expected, EBG anticipate the shares will be marked lower and then could trade sideways in the near term. Indeed they may temporarily slip back to the 8 pence level (i.e. where they were prior to the announcement of a potential bid in October). As a
consequence, they have moved their recommendation back from a Buy to an Add
and have cut their price target to 10p. That said, as the projected earnings come
through they feel there is scope for the shares to move levels seen earlier in the year.
As I have said a good time to top up. This company has no debt and a ev/sales of 0.16. Anything under 0.5 is very cheap indeed.
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