Inspicio Share Discussion Threads

[jonwig] 19/12/2006 08:55

Hi Honiton.

ITRK put out a Trading Statement on 13 Dec, fairly cautious but growth continuing:




According to Hoodless Brennan's roundup yesterday:

Credit Suisse has assumed coverage of Intertek appending an outperform recommendation and raising the price target to 930p from 755p

INP seems to have suffered a bit from what appears to be a big sell. (X-trade of 231,800 @ 145p on 15/12. If it had been an O-trade, the price would have suffered badly.)

EDIT: just noticed in this morning's Telegraph market comment:

Among the second-liners, Intertek Group was strong, rallying 25 to 820½p after Credit Suisse initiated coverage of the testing and certification company with an outperform rating and 930p price target.

"Intertek remains one of the strongest secular growth stories in the sector in our view," it explained. "There is also a chance that Intertek could be an attractive acquisition candidate, given the scope for consolidation in the sector".

[honiton] 18/12/2006 19:58

Intertek results??

[robsy2] 05/12/2006 16:01

jonwig I don't know but the chart looks good!

[jonwig] 29/11/2006 12:53

I wonder if the two large (~250,000) trades today (150p), which show as sells are actually late-reported buys from yesterday, when the spread was 145-148?

[robsy2] 29/11/2006 12:30

Congratulations everyone . We have hit an all time high!

[yobnhoj] 13/11/2006 12:15

check this legend out!!!

[honiton] 13/11/2006 12:15

Vindon

Zeus capital own 40%. Don't know whether that is good or bad. Vindon FD is Zeus capital guy and they have non-exec(s)?? - no surpise therre then.#

Vondon bus. model looks good but don't know how it would transfer outside UK?

Wait for overseas expansion news??

Could be easier fish to fry??

[robsy2] 13/11/2006 10:44

Thanks
Peter Temple seems like a smart cookie!
It was a bit annoying to read about Noble . I was seriously thinking of getting a few of those a while back as a way of getting some exposure to the alternative investment boom but was put off because the company seemed a bit small.I went for SGI instead which in fairness has also done pretty well.
Vinden looks interesting as well.Any views on that one?

best regards

R

[honiton] 12/11/2006 10:39

jonwig

A couple more which are interesting are CRM and CIV. Schroders alsow worth a punt.

[jonwig] 12/11/2006 10:37

Robsy.
Here is the bit which refers to INP.
The article isn't subscriber-only, I'm surprised to find:

Inspicio started out as a turnround story for the core business, Inspectorate. Inspectorate is an industrial testing business. But management at Inspicio knew the business well prior to acquisition. The team has delivered its objectives for improving margins. The other plank in the strategy has been a "buy and build" approach to broaden the base of the company into other testing areas, including environmental testing. It now also has a stake in a drug and alcohol testing company.

The acquisition strategy has worked well, but it involved the issue of substantial amounts of equity. Until recently this had held back the progress of the share price. Management has made it clear to institutional shareholders that this phase in the company's development is now over, and the focus now is going to be on building margins. The result has been a marked revival in the share price. I now have a useful profit on the shares and look forward to it growing even more.

[robsy2] 11/11/2006 18:10

Hi Fellas
Can you post up the FT article?
Thanks
R

[jonwig] 11/11/2006 17:08

Hi, Honiton.

Yes, I read it - Peter Temple is a fan of INP.
The drugs and alcohol testing firm he refers to is Concateno [COT] - see my thread on that if you're interested.

[honiton] 11/11/2006 16:25

nice write up in today's ft

[jonwig] 02/11/2006 12:06

Shares Mag article today:

The market has yet to factor in impressive interim results and clearer
prospects at oil testing specialist Inspicio (INP:AIM), according to
Bridgwell Securities. Inspicio's clients include BP (BP.) and the
shares are trading at around 142p, but half-year figures prompted
nominated adviser Bridgewell to up its fair value on the stock to
between 150p and 175p.
Analyst Nick Spoliar says Inspicio's results underscored the firm's
strong growth potential. Turnover was £67.7 million, from nil the year
before, resulting in pre-tax profit climbing to £900,000 against loses
£110,000.
This was no surprise to Shares (7 September), which flagged the
strong interim performance on the basis of new US rules for
monitoring sulphur content in diesel driving up sales.
Rival Intertek (ITRK) had earlier benefited from the tightening US
regulation.
Meanwhile, in upgrading his valuation, Spoliar says Inspicio has
improved margins and pricing. All its divisions are experiencing
growth, the oil and petroleum unit providing 75% of profits. The
turnaround of the Inspectorate unit is progressing well with a total
of £4.5 million of cost savings identified, which are being
introduced.
Spoliar predicts Inspicio's 2008-year EPS will be 12.1p on pre-tax
profits of £18.8 million, putting the PE at just 11. That, claims
Spoliar, is a 'significant' discount to its peer group, with Intertek
trading on a PE of 14 for the equivalent period.

[jonwig] 27/10/2006 11:20

Inspicio plc, the UK and international inspection and testing company, announces
that it is investing £1.2 million for a 5 per cent. share holding in Concateno
plc ('Concateno'). At the time of completion of Inspicio's investment,
Concateno's sole asset will be Medscreen Holdings Limited ('Medscreen'), a
global provider of drug and alcohol testing services.

More:



And more on Concateno [COT] and Medscreen:



COT escaped my notice altogether - cash shell led by Keith Tozzi, charman of INP.
Certainly well worth watching progress of COT - who knows, another acquisition for INP?

EDIT: thread started on COT, just out of interest at present.

[mr hangman] 23/10/2006 10:46

On the second line, Intertek Group shares were 8 pence firmer at 811 after Merrill Lynch upgraded to 'buy' from 'neutral' following the group's upbeat investor day and as it sees further sector consolidation.

Merrill Lynch said it has upgraded its earnings estimates by 2 to 3 pct on the back of the stronger margin improvement prospects, while pointing out that the group's balance sheet looks under leveraged, which opens opportunities to make earnings accretive acquisitions in a consolidating sector, as well as double-digit dividend growth.

Regarding valuation, the broker highlighted the stock trades at a 20 to 30 pct discount to nearest rival SGS, and said Intertek looks "too cheap".

[robsy2] 16/10/2006 10:45

Nice post. The word is getting out on this stock. The article makes the case for INP very well. he is eloquent about how well INP is positioned to take advantage of some pretty compelling trends.It is the postioning of INP that I like. It is able to get a lot of business in a lot of ways feeding on the back of global trade,tighter legislation and organic growth plus they can do all this more effieciently ie profitably.
It all adds up to a stock that one can hold long-term and not worry about.

[jonwig] 11/10/2006 20:16

Cambridge Evening News article (10 Oct) 'Private Punter':

Private punter

Growth stocks come in various shapes and sizes and are spread across a broad range of sectors; but finding a company that can deliver rapid and sustainable growth over a period of years can be somewhat elusive to say the least.

Having said that, I believe this week's subject is very well-placed to deliver some excellent returns for its share holders and certainly appeals to me.

Inspicio, based in London, has positioned itself in a market that has grown substantially in recent years and should continue to do so for the longer term. This is environmental control in relation to everyday commodities - food, drugs, chemicals -- traded across the globe.

As we live in an ever more health- conscious society fuelled by high profile scare stories, so too, has environmental legislation become ever more stringent. While this may not be welcomed with enthusiasm by some, it is certainly good news for this company which has positioned itself at the forefront of the field.

Inspicio has under its umbrella three distinct divisions, Inspectorate, Environmental Services and Eclipse Scientific Group.

Inspectorate covers a massive area, providing services such as testing, analysis, and the authorisation of legal certificates for overseas trade. This includes food safety but takes in commodities such as metals, minerals and even oil and gas. Inspectorate is also heavily involved in marine and shipping and provides full-time operational teams in over a hundred key world ports overseeing safety issues and potential hazards.

Environmental Services, which employs around 800 staff operating from 17 offices, works closely with construction companies, providing a number of services such as testing on soil samples where there may be environmental and geological issues.

The third arm of the group, Eclipse, is one of Europe's leading analytical testing businesses boasting 10 labs across the UK.

This division performs and conducts various tests for blue chip clients in relation to safety on products such as vitamins, additives, minerals and milk.

Turnover for the whole group for the six months to June came in at £67m, and broker Teather and Greenwood is forecasting pre- tax profits this year of £6.3m.

However, with organic growth forecast to rise 20% year on year and other acquisitions anticipated, it's not surprising to see the 2007 forecast rising to a £13m profit. That puts the shares on a forward PER of 15.

Although this suggests that the shares at £1.35 are priced fairly, the growth rate looks impressive and on a mid-term basis I admit I certainly like the look of them.

10 October 2006



'Private Punter' is a serious and reliable writer.

[jonwig] 08/10/2006 19:08

Honiton - am away for a few days, but will look later.

Another share in the testing/inspection/quality control sector is Velosi [VELO], new issue on AiM.
See my thread, if you have a minute.

[honiton] 08/10/2006 18:50

jonwig

if you like inp you may like to take a look at Civica and Carrs Milling.

I was in Chesnara but sold out. Their market looks a bit competitive?? Chesnara may be a target for Resolution.

Please let me know what you think about Civ and CRM.

[jonwig] 07/10/2006 12:41

Honiton.
Yes, the rumour is here, too:



I came to INP simply because I felt I'd missed the boat with ITRK, which may still have a fair bit of upside, reading the above article.
Surprising that there's pretty well zero interest in ITRK on this site at the moment.

[robsy2] 06/10/2006 13:03

Always nice to be endorsed by IC. Usually creates a bit of upside as well.
Nice weekend

R

[honiton] 06/10/2006 12:16

ft - rumour of sgs interested in intertek.

[jonwig] 06/10/2006 09:52

IC today, 'buy':

133p - Aim: support services - Inspicio floated AS A CASH SHELL in April 2005, and then acquired Inspectorate, the metals, oil and agri-commodities testing business, in October 2005. And if that name sounds familiar, it won't be the only one. Inspicio chief executive Mark Silver and chairman Keith Tozzi had previously acquired, and then run, the same business between 1998 and 2000, while managing BSI. Reunited with the company last year, they found it in a sorry, but not irrecoverable, state. Now, though, they have an expansion plan that could deliver exceptional profit growth.

They have already eliminated some costs from Inspectorate, and given more autonomy to local managers in the 125 countries where it operates. Last month's half-year figures suggest that this is beginning to pay off. On a pro-forma basis, Inspectorate's turnover grew 20 per cent in the period, and the cash profit (Ebita) margin hit 3 per cent, compared with a loss in 2005. What's more, management is confident of hitting its 8 per cent margin target by the second half of 2007. There is also every hope that margins could advance further as, according to broker Kepler Teather & Greenwood, Inspectorate's peers generate margins of 10-18 per cent.

But turning Inspectorate around is only part of Inspicio's longer-term growth story. Management plans to use Inspectorate's global presence to exploit high-margin growth areas and, since the spring, Inspicio has made two acquisitions to this end. It bought Environmental Services Group (ESG) in May for £16m - a move that took the group into UK land-testing. It's experiencing strong demand, due to growing environmental awareness and the government's focus on regeneration - it could also benefit from the 2012 Olympics. There are opportunities internationally, too, that can be exploited by using Inspectorate's global infrastructure - in Dubai's booming construction market, for example. Management also plans to boost ESG's cash profit margins from 4 per cent to over 10 per cent by 2010.

Potentially more exciting, though, is food-testing business Eclipse Scientific, acquired for £47m in August this year. It operates in the UK and Ireland, but has the capacity to take advantage of international markets, initially in the Americas. The international food-testing market is now growing fast, reflecting legislation, increased outsourcing by food companies, and rising international food trading. Indeed, stringent food-testing requirements have helped deliver an impressive 20 per cent cash margin at Eclipse Scientific, and Inspicio thinks that it can do better still. Management aims to boost this margin to 25 per cent, and achieve 20 per cent sales growth a year.

There are plenty more consolidation opportunities, so management would like to acquire operations in two further areas. Likely targets are life sciences and consumer goods-testing companies, which would probably be funded through share issues. Admittedly, Inspicio's spate of deal-doing leaves it with plenty to do to successfully bed-down its acquisitions, and that process is not without risk. But management plans to take a breather from further deal-doing expressly to integrate existing acquisitions, and this should assuage concerns about the recent rate of acquisition.

In addition, management has been strongly incentivised with share options - as has the group's adviser, Marwyn, which holds 1m warrants, exercisable at 100p from October 2008. Half of those have performance criteria attached, so that could mean some dilution for shareholders if Inspicio's goals are achieved.

No dividends are expected for years to come so, trading on 32 times 2006's expected earning, the shares certainly don't look too cheap at present. However, the rating falls to a mere 11 times based on 2008's forecast earnings, compared with about 15 times 2008's expected earnings for rival Intetek. Add that to the fact that Inspicio's strategy has received a big boost following the acquisition of Eclipse Scientific and ESG, and our advice in April, that the shares were fairly priced, now looks dated. It's time to buy.

Year to TurnoverPre-tax Earnings per
31 Dec (£m) profit (£m) share (p)
2005 109 -0.9 nil
2006* 160 5.4 4.1
2007* 198 13.2 8.4
2008* 213 18.8 12.1


*Bridgewell estimates

Last IC view: Fairly priced, 125p, 13 Apr 2006

BULL POINTS

* Recovery under way at Inspectorate

* Acquisitions being made in high-margin, high-growth areas

* Strong opportunities for international expansion

* Management strongly incentivised with share options


BEAR POINTS

* No dividends expected

* Several big acquisitions being bedded down simultaneously

[jonwig] 19/9/2006 15:20

Today:

Bridgewell says buy Inspicio (INP.L) (raising the target to 175p from 150p)