Aim's best 45 shares (part 5)

Supercart

Supercart is one of my two (modest) technology selections. The company has developed an all-plastic cart to replace metal supermarket trolleys. There are big advantages: the carts are much lighter, more manoeuvrable and do less damage in car parks. It's also possible to fit them with radio frequency transmitters to keep track of them. Supercart has successfully sold its plastic trolleys in South Africa, but has found it much more difficult to do so elsewhere because different countries have different testing and safety requirements. The 225-litre Hyper Euro trolley, for example, has to be able to carry a staggering 750 lbs of shopping or equivalent. During 2007, carts were tested by a number of retailers and modifications made. There should now be four models available within the next few months. They include a 200-litre trolley for the US market, the Hyper trolley in Europe and a 180-litre trolley for the Australian market. Supercart should become profitable in 2008.

Great Eastern Energy

India has a population of more than 1.1bn people and has achieved economic growth of over 8 per cent in each of the past five years. This means that it increasingly needs energy (the 2001 census reported that 44 per cent of Indian households did not have electricity). It currently imports 70 per cent of its energy requirements, but now wants to develop domestic sources. Step forward Great Eastern Energy which has become a major producer of natural gas from coal-bed methane deposits in West Bengal. Backed by an $88m (£44bn) debt facility from a consortium of Indian banks, Great Eastern wants to establish compressed natural gas dispensers at Indian Oil Company filling stations. Users could range from buses and taxis to auto-rickshaws. Gas production is expected to rise fast, too, from 2.4m cubic ft per day (mcfd) two months ago to 3mcfd by next April and 10mcfd a year later. Great Eastern produces gas from 23 wells and it has a drilling target of three wells a month. A gas-gathering station should be completed shortly.

First Artist

First Artist makes the grade for me because of the way it has bounced back from a no-hope situation. When it joined Aim in 2001, 100 per cent of its income came from its European football agency business. But then the twin failures of ITV Digital and Bertelsmann in Europe cut football clubs' media income, while Fifa’s decision to restrict player transfers to two short time periods knocked the company for six. However, five years and a number of acquisitions later, it's in good health. Its key business is Dewynters, the leading marketing business for UK theatres and cinemas. It provides brochure design, digital media and advertising services. Broker Daniel Stewart expects sales in the year to end-August 2008 to jump from £48.6m to £60m and adjusted profits to rise from £2.8m to £3.6m, putting the shares on a prospective PE ratio of 5 assuming earnings of 17.05p.

Geong

Geong is my second tech winner for 2008. It makes data-management software for Chinese companies big and small. The big ones total 100 and include the top five Chinese banks and a number of motor and insurance companies. They use Geong's PortalAge bespoke package and, in the half-year to end-September 2007, accounted for 92 per cent of sales of $5.88m. But the big future money could come from sales of the junior version, Smartbox, sold to small and medium-sized Chinese firms. It has been translated into English and distributors are being sought in North America and the UK. Broker Seymour Pierce forecasts 12-month sales to end-March 2008 of $17.5m (up from $8.1m) as profits increase by $1m to $2.7m. Tax at 15 per cent produces earnings of over 7c. Future results will be announced in sterling.

Futura Medical

Last year a number of small UK baby-bios seemed to be on the brink of producing some good news, not just more losses. Futura Medical's year started badly when in May 2007 GlaxoSmithKline decided to abandon a collaborative agreement to develop MED2002, a rub-on gel to treat erectile dysfunction. The news sent Futura's shares tumbling by a third, but in September SSL International (maker of Durex condoms) stepped into the breach. SSL is now a potential marketer of a number of Futura products, including the CSD500 condom, which includes a chemical compound designed to help men maintain a full erection during intercourse, and the FLD500, which aims to help female lubrication during intercourse. The key to Futura's share price will be sales growth in 2008.

Medical House

Medical House has done it at last. It has finally disposed of its loss-making Eurocut engineering business, which makes orthopaedic instruments such as bone drills, rasps and saws. It is being sold to its management for up to £3.7m, but most of that money comes back as gradual repayments of a £2.9m inter-company loan. The purchasers also assume £1.4m of debt, which is close to its asset value. As a sub-contractor, Eurocut had suffered from a "somewhat unpredictable order profile" and struggled when the FDA delayed approval of a major customer contract. In the year to end-June 2007, Eurocut reported operating losses of £856,000 and losses have continued even though Eurocut has been developing its own-brand surgical instruments. The move gives Medical the green light to step up development and licensing of its ASI disposable auto-injector drug delivery systems, which in the year to end-June 2007 reported sales up from £645,000 to £1.7m and an operating profit of £503,000 in place of a £308,000 loss. The latest deal also means that, over the past four months, cash received by Medical, combined with debts paid off, total £4.5m.

First Property

All is doom and gloom in UK property at the moment. Yet First Property has not received many congratulations for recognising that the property party was coming to an end two years ago and switching its attention to higher yielding, lower-valued commercial properties in central Europe, notably Poland. It has transformed itself by winning a mandate to buy and manage a £400m property portfolio for the Universities Superannuation Scheme and may soon launch a central European commercial property retail fund for UK investors. First Property's remaining UK interests include a 60 per cent stake in a facilities maintenance business plus property databases and web services for estate agents. In the half-year to end-September 2007, First Property reported profits £1m higher at £1.56m. Broker Arden forecasts full year profits to end-March 2008 of £2.8m and earnings of 2p a share.

Three mining companies

UK institutions have lost their appetite for blue-sky mining or oil propositions but there are plenty of operations producing, or about to produce, good returns as long as commodity prices hold up. My three tips in this sector are:

Bisichi Mining

Bisichi Mining's shares are well below their 2005 high of 425p even though coal demand and prices are buoyant. Bisichi owns 63 per cent of the Black Wattle Colliery in Middelburg, a town half-way between Johannesburg and Cape Town, in South Africa. It produces around 120,000 tonnes of premium low-phosphorus coal a month and sells it to European and Indian power stations as well as to the local ferro-chrome industry. Thanks to a combination of higher prices and improved quality, Bisichi reported bumper half-year figures three months ago - in the half-year to end-June 2007, profits jumped from £233,000 to £1.51m. It ought to be able to double that number in the current six months, which means a single-figure PE ratio - and with little help from one-offs. Importantly, the company has agreed a memorandum of understanding with Barclays Capital to finance the acquisition of other coal reserves under the 'use it or lose it' provisions of a 2004 South African law. [Note that Bisichi is not actually traded on Aim]

Carnegie Minerals

Carnegie Minerals has four dredgers with concentrators working on beach sand dunes along the 45km coastline of Gambia - as well as renewed beach sands exploration licences along the coast of Senegal to the south. The first deposit there is expected to be mined in early 2009. The results of dredging work and the 6 per cent royalty Carnegie will earn as part of a management fee have not yet shown through in the results, but they should from April 2008 onwards. Its partner, Astron, is funding the 50:50 Gambian venture via interest-free loans and the main metal mined, zircon (for abrasive and insulation purposes), is sent to China in empty cargo containers. Carnegie has muddied the waters a little by signing an agreement to acquire an interest in an iron and nickel project in Indonesia, but the company believes that the $1m required to earn a half-share there can come from rising beach sand revenues.

Northern Petroleum

Northern Petroleum used to be a leading light in the search for UK onshore oil. But then it decided (probably rightly) that future discoveries would be small and that it needed to acquire something rather more exciting. And this it did two-and-a-half years ago by buying rights to ageing oil and gas wells, plus untapped prospects, in Holland from a company owned jointly by Shell and ExxonMobil. That move was before the big hike in oil prices last year and won it a suitor early in 2007. Then, a private Dutch company took a 25 per cent stake in a quarter of most of the Dutch interests for €32m (£24m). The upshot is that Northern will have cash to finance exploration this year of its extensive Italian acreage in both the Po Valley, off Sicily, and in the southern Adriatic Sea. Last month, Northern identified six drilling prospects in the latter area. All had previously been identified by Enterprise Oil when oil prices were a lot lower and before Enterprise was taken over by Shell in 2002.

Nigel Bolitho is the Investors Chronicle's longest-serving writer. He has been covering UK companies for over thirty years.