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AIMprospector

Event Review AIM Investor Focus ran for the eighth time on October 15th at the offices of finnCap. Four AIM companies were present on the day. AIM Prospector heard from all four.

Keywords Studios Keywords Studios began life in 1998 as a one-woman translation service in Dublin. The company is now an international leader in the provision of outsourced technical services to the $90bn global video gaming industry. The company’s IPO on AIM in 2013 raised €10m for an ambitious acquisition-led expansion. Strong organic growth in core services (localisation), key timely acquisitions (in customer care), and horizontal expansion (in art production) have contributed to Keywords Studios’ spectacular growth in both sales (+500%) and pre-tax profits (+600%) between 2010 and 2014. The market is expecting further strong results for FY2015 with sales and pre-tax profits rising to €55m (+48%) and €8m (+45%) respectively. The fragmented market for technical services in the video games sector is growing at 8%pa. This has enabled the Keywords to win and retain new business without resorting to pricing tactics. Keywords Studios shares have enjoyed a revaluation as more investors have become aware of the potential of the group’s significant outsourcing presence in the global video games industry. The biggest shareholder, the founding family, is now a passive investor with 24.8% of the equity while institutions hold over 40%. Watch this space!

Keywords Studios plc (LON:KWS) Market cap

NWF Group NWF is a support services conglomerate operating mainly in England. Its historic North West cooperative agricultural roots are represented by its ruminant feed business which at the end of last year (31 May 2015) accounted for under 30% of sales. Company management runs a portfolio of value-adding support services for the farming, supermarket, and fuel oil distribution sectors. Outperformance in one division can offset tougher market conditions in another. This is reflected in the shares’ modest PE rating. Despite faltering sales in the last three years, NWF remains a cash generative mature enterprise that continues to deliver dividend growth to shareholders. NWF continues to build value adding services within each of the group’s three divisions. Efficiency gains have further assisted the steady decline in net debt over the past 10 years. The most likely employment of the company’s strong financial position will be in strengthening the largest divisions of feed and fuel. Acquisition opportunities here are being constantly evaluated. One recent example, New Breed, an agricultural advisory business, was acquired in June. This business is expected to make a contribution of some £400k of sales to the feed division for FY 2016. The share price has had a good run since the company’s 31 May year end, hitting new highs. NWF’s defensive qualities have likely found it in favour with buyers during the recent uncertain financial markets. NWF (LON:NWF)

£103m

Market cap

£80m

Price (p)

215p

Price (p)

170p

P/E (forecast)

23.9

P/E (forecast)

12.5

Yield (forecast)

8

0.5%

Yield (forecast)

3.4%

www.aimprospector.co.uk

November 2015 AIM Prospector  
November 2015 AIM Prospector  

Featuring NINE AIM companies: ASOS, Cello, Craneware, Fulham Shore, Keywords Studios, MartinCo, Miton Group, NWF, The Mission Marketing Grou...