Updates

Alfa Financial

December 2017

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Berenberg has initiated with a 37 page note and several points are well made. First, Alfa must win three new clients per year and it has two of the three needed this year but is at “stage four” (of six) with four more customers. Alfa historically has a 100% win-rate once at this stage and the wins could create c30% upside to the base case estimates. Second, Alpha charges its clients for development work but retains the IP so Alfa has a rare characteristic for a software business, ie. little capitalised development costs. Third, net cash will get to £150m by 2020. The broker sets a target price of 600p and if the contracts roll in it has a blue sky target of 780p. I remain a buyer. ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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