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28 Jun | Sepura 2013 – Onward and Upward

Regular readers may remember a time last year when I began to get all holier-than-thou about my new investment philosophy. It was certainly the future of investment as far as I was concerned. I’d shown the door to my past strategies of following the bulletin board masses into what must surely be AIM’s next triple-bagger, or lapping up the utopian vision of smooth-talking CEOs. Any potential new investment now had to pass muster with my new stock screening system. It was to be a major turning point in my see-sawing investing career. No more calling Dad for a chat and an international bank transfer to cover rent.

Sure, I still held Range Resources and Berkeley Mineral Resources, but their day will come. Oh yes, their day will come.

One of the first companies I took a close look at following on from my investment epiphany was Sepura.

For those not in the know:

Sepura is a global leader in the design, manufacture and supply of TETRA (TErrestrial Trunked RAdio) digital communication solutions, which are used predominantly by the emergency services around the world and in the transport, utilities and other commercial sectors.

That’s right, walkie talkies. You got a problem with that?

Sepura nailed 11 out of 11 of my stock screening criteria back in October 2012. It also had the most compelling long term chart I’d seen for a while – especially now that I was coming to appreciate the simple beauty in a slowly but consistently increasing price line rather than one that tracked a path like a line on a relief map of the Himalaya.

sepura

Sepura 5 year chart, October 2012 – courtesy of SharePrice.co.uk

Sepura was a savvy company on the move – did I mention they have their own Youtube channel. They were expanding globally into new markets with healthy, long-term growth prospects. They had a reassuring stash of cash in the bank. Heck, there was even a recurring component to their revenue model. And unlike many of the companies that had taken a share of my money in the past, Sepura had a product in demand, they weren’t searching for minerals in the sand.

And so last week Sepura delivered their final accounts for 2013, and with it, an early test of my new stock screening system. Could it be that I’d made a strong investment decision on the back of diligently studying a company’s fundamentals and closely looking at the direction management was taking it?

Well, yes is the answer, but let’s not get carried away here. If someone had shown you that chart above and asked, “in eight months time, up or down“, you’re going with up aren’t you?

So here’s where we sit now, up from 88 pence last October to 122.50 today.

sepura-new-five-years

Sepura 5 year chart, June 2013 – courtesy of SharePrice.co.uk

That five year chart just gets better by the day, huh! And yet again they’re pushing 12 month highs on the back of the these highlights from their 2013 Annual Report:

  • Revenues up 26% to €104.8 million
  • Adjusted operating profit 1 up 34% to €10.5 million
  • Operating cash conversion of 119% (2012: 82%)
  • Closing net cash of €6.6 million (2012: €6.6 million)
  • Full year dividend increased by 15%

For the full 92 page pdf whack, click here.

Believe it or not, I’m secretly delighted that at no point since we came on board with Sepura has the price even looked like doubling in the short term. Who needs the volatility? The old me perhaps, the new me, no thanks.

Thanks again for dropping by.

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Paul
rsvp@investorsoiree.co.uk