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[purple] 23/11/2006 15:00

CHEMISTRY COMMUNICATIONS GROUP PLC

Chemistry Communications Group plc floated on OFEX in January 2001.

Chemistry Communications is a marketing communications group that specialises
in Customer Relationship Management (CRM). Our multi-disciplinary approach
focuses on the customer at every communication point and uses a number of core
skills to enter into dialogue through the most appropriate channel to enable us
to provide sophisticated customer communication programmes to our clients.


NEWS PAGE.


let me know your thoughts?

[purple] 23/11/2006 14:49

Chemistry Communications, corporate web site:



Company has stated that operating profits for the year end November 2006 will exceed £1.3 million with EPS of around 3p.

2007 could see profits around £2 million which is quite interesting for a company with a market capitalisation of only £4.5 million.

[spaceparallax] 23/11/2006 14:20

Purple,

Thanks for that - they look quite interesting.

[purple] 23/11/2006 14:08

Anybody interested in the small cap marketing services should have a look at Chemistry Communications who are traded on Plus Markets.

Share price is 13p, company has stated it expect to have EPS of around 3p this year.


This puts the company on a PE of 4.5.


The stock has been rated at buy by Unquoted Analysts:

"Chemistry Communicates pre-Christmas Cheer

PLUS traded Chemistry Communications certainly used an otherwise mundane EGM to useful effect. The company confirmed that the integration of its most recent acquisition, Worth Communications, was progressing well and that the group as a whole had continued to perform strongly during the second half of the current financial year.

Chemistry Communications floated on the market, formerly known as Ofex, in January 2001. The group is essentially a marketing agency, though Chemistry chooses to describe itself as a marketing communications group that specialises in Customer Relationship Management. Whatever way you look at it, whether its CRM or a bog standard marketing outfit, this is a company at the top of its game, representing some of the biggest companies in the World. Consistently profitable, Chemistry has delivered somewhat of a resurgence in growth in recent months, aiding a partial recovery of its share price. Though there remains much to do if it is to recapture its former mantle as one of the market's wonderstocks.

The latest revelations saw the group intimate that underlying operating profits for the second half would exceed the strong results achieved in the first half of the year. This may well reasonably imply that numbers for the full year will reveal earnings in excess of 2.75p per share. With the group comforting investors with the news that cash flows remained sufficient to meet payments associated with its current debt structure, it reassured the market that there were no plans to raise funds through the issue of new shares. With solid earnings prospects for the current year, this marketing outfit is well set for solid share price growth. At 13p, the shares trade on a prospective current year earnings multiple of under 5. This stock is cheap. Buy."

Chemistry Communications information can be found on the thread below:

[spaceparallax] 22/11/2006 09:26

Well, give kelvin credit, he certainly does vote with his wallet.

[peteh1] 18/11/2006 22:05

Tipped in the Mail today as a recommended buy.

[addas99] 17/11/2006 11:49

QS9..I acknowledged gross debt in post 414.

[qs9] 17/11/2006 11:13

have I at any time "bashed" MSQ? No!

Merely pointed out facts as I saw them (happy to be wrong, no-one is perfect) and asked for responses at no point have I said anything negative.

KE deal I agreed was a corker....just follow this with interest.....now back on to other threads...good luck everyone.

PS By the way addas99 you miss the gross debt in your mail, one needs to think of that as well....but yes the cash increase from the cracking deal will boost short-term cash amounts and provide flexibility.

[spaceparallax] 17/11/2006 09:58

I'm beginning to suspect that QS9 and Markie are a tandem bashing team - I would of course be delighted to be proved wrong!

[addas99] 17/11/2006 09:58

Markie7, don't disagree but have faith in MSQs approach to debt and their abilities to manage responsibly.

[markie7] 17/11/2006 09:25

addas 99 - banking covenants - there is ususally a EBIT to debt ratio in the facility agreement (could be 4 or 5 times EBITDA - something like that) - HBOS won't let them borrow £58m if EBIT is too low - so therefore with these profit warnings, the debt level comes into focus much more.

[addas99] 17/11/2006 09:13

Let's get the facts straight QS9. Cash at hand 15.6M, KES sale 3.5M
Secured facilities with HBOS 58M to achieve full integration of which over half remains undrawn.
'needs to generate cash quickly to keep banks happy'?
I hardly think it's the problem you're making out.

[qs9] 17/11/2006 07:19

Agreed Markie7....be interesting to see if any further downgrades....

Net debt almost £30m...no profits for year so any further slippage will mean an increase in net debt IMO...needs to generate cash quickly to keep banks happy IMO...Karen Earl sale cracking/awesome price agreed, but how many good bits will have to be sold to get the debt at manageable levels?

Bottom line: EV is about £85-90m and the EBIT is "not a lot" this year....lots of hope/trust riding on Feb 2008 figures....

[markie7] 17/11/2006 03:16

I read it as much more bearish on the second half than the profit warning a few weeks back.

thought the outlook statement was a complete car crash, except for the non-Europe bits, and Advertising.

So much talk about disposals must basically mean that 17p is pricing that in - so what is it worth without disposal speculation? Karen Earl though - fair play, excellent price.

[maty] 16/11/2006 19:42

Good post, I think it is a strong management statement, saying things are going to be sorted, I quite like the management, jam either way, thye get bought out or they make their promises happen! I like it, all in my opinion.

[spaceparallax] 16/11/2006 10:20

Interesting, although not surprising, to see the rather mixed responses to the interims. So far the Market seems to view these as above expectations following the earlier profit-warning.

IMHO, the interims are sound - highlight figures are satisfactory and should hopefully be strengthened by H2. As always, I find the whole report refreshingly frank, with recognition of problem areas and positive outlook where appropriate.

What we must not lose sight of is the scale of the undertaking that is only part complete. To acquire a business the size of that divested by Huntsworth was always going to present significant challenges (hate the word), particularly bearing in mind that Huntsworth would not be disposing of it if all was rosy. Investors must recognise this, but at the same time be heartened by the fact that the man at the helm has a track record of magicianship when turning around ailing concerns to become flourishing businesses (as witness the original MSQ). Clearly there remain many issues to be addressed, although much is going well - surely, this is what investment is all about i.e. placing ones faith and cash in the hands of people whose abilities have been demonstrated capable of providing a sound return.

I'll be sitting tight and taking any further opportunities to accumulate at the dips should investors panic.

[addas99] 16/11/2006 09:30

Good to see Bridgewell a damn sight more positive than T&G....

Iain Daly of Bridgewell retains his 'buy' stance on the stock in the short
term. He pointed out that a significant improvement in underlying margins is
required in order to make his numbers for the full year (net revenue of 109.4
mln stg and EBIT of 7.9 mln). His immediate sense, however, is that should be
achievable, given improvements in a number of the operating units.
The current valuation (calendar 2007 P/E of 7.9 times) should be pretty
forgiving of the short term margin pressures and does not fully capture the
upside from potential corporate activity and likely margin recovery, the analyst concluded.

[peteh1] 16/11/2006 09:16

Got to be a bid for this now I am afraid.

[dalcon01] 16/11/2006 08:22

maty,
How do you work that out?

[addas99] 16/11/2006 08:17

Debt has risen 10m and cash reduced by 7m in the six months but should be taken in the context of the considerable and ongoing changes being made.
These are far from completed although benefits in some areas clearly starting to come through. Hoping for more selected disposals in the near future to reduce debt. Meanwhile the sum of the parts fall short of the whole and we could well see more bid action over the coming months imo.

[spooky] 16/11/2006 07:58

All i can say is what a mess,the results are shocking.But forgetting that for now it is a question of what is in the price and whether you have faith in the company to perform in the future.I think i can work out the answer to the first part of the question,the second part presents a few more problems.

[maty] 16/11/2006 07:53

looks like v good results to me...

[spaceparallax] 14/11/2006 10:34

Addas,

A good post.

Interesting to see the results and the Market reaction - if there's a sharp dip I will top-up.

[addas99] 14/11/2006 08:37

The interims announcement could send this stock either way.
Since the trading update six weeks ago we've had an unhelpful broker note followed by a useful disposal (and now a small acquisition). The share price dived to reflect the profit warning and of course partially revived on bid interest and there's an element of this still in the price.

Five analysts cover MSQ's fortunes and it's worth noting that T&G by their own admission state their estimates are the lowest in a wide consensus range. They have reduced their FY 06/07 revenues to 103m (106m), forecasting H1 to bring in 47m. More critically they've reduced PBT by 58% to 4.7%
and re-adjusted EPS to 1.09p (2.41p). Reasons for profit slippage were cited as contracts shifting from H1 to H2, the direct mktg division performing below management expectations and problems at just one of the mktg services businesses. But as said they're out on a limb with other opinions and forecasts.

Much will now depend on the stated outlook and it's encouraging to note their comment that the second half, the stronger half, had started in the right vein with new contracts in the pipeline for H2.
It will be the right words rather than figures that the market will be looking for imo.

[spaceparallax] 13/11/2006 13:27

Very quiet trading today - surprising after the substantial volumes of last week. Seems to be firming up in advance of Thursday's results.