The investment team at Aim-traded activist fund manager Crystal Amber (CRS:228p) has been working its magic, justifying my call to include the shares, at 207p, in my 2018 Bargain Shares Portfolio. I reckon that Crystal Amber’s spot net asset value (NAV) per share is around 264p, up from 230.75p at the end of May, and 39 per cent higher than at the start of 2018.
Two-thirds of my NAV estimate is accounted for by four holdings: Hurricane Energy (HUR), an oil explorer that has a huge resource base in a strategically important part of the North Sea; foreign currency payment services provider FairFX (FFX); media group STV (STVG); and van hire company Northgate (NTG). Newsflow has been very positive.
|Crystal Amber Investment Portfolio 9 July 2018|
|10 largest shareholdings||Pence per share||Percentage of investee equity held|
|De La Ru||17.3||3.2%|
|Leaf Clean Energy (includes capital distribution July 2018)||7.8||29.9%|
|Total of 10 largest shareholdings||228.5|
|Cash and accruals||-0.2|
For example, FairFX’s first-half trading update revealed that total transactions processed for clients through its e-banking and foreign exchange services platforms surged by 146 per cent to £1.1bn, or by 22 per cent on a like-for-like basis once acquisitions are stripped out. If anything house broker Cenkos Securities may be conservative in its forecasts which point to an eight-fold rise in full-year pre-tax profit to £7.7m on revenue up from £15.5m to £28.7m. Moreover, with the business operationally geared, if FairFx can maintain its heady progress and lift revenues by half to £43.4m next year, then pre-tax profit could more than double to £16.2m. This implies the shares trade on a 2019 forward PE ratio of 14 and a PEG ratio of less than 0.2, so the growth potential is hardly being overvalued. Indeed, if FairFx delivers on forecasts then the share price could easily rise by half again, or more, which makes Crystal Amber a smart way of playing the upside.
Investors have also been warming to the merits of Hurricane Energy, undoubtedly excited by prospects of first oil – initial daily production of 17,000 barrels of oil is being targeted – coming on stream in the first half of 2019 from its Lancaster field which has 2P Reserves and 2C Contingent Resources of 523m barrels of oil equivalent (boe). Hurricane’s shares trade on a hefty discount to Edison’s risked NAV estimate of 81p a share based on a sensible long-term oil price of $70 a barrel.
|2018 Bargain shares portfolio performance|
|Company name||TIDM||Opening offer price on 2.02.18 (p)||Latest bid price on 10.07.18 (p)||Dividends (p)||Total return (%)|
|Deutsche Bank FTSE All-Share tracker (XASX)||427.3||428.95||16.54||4.3|
|Source: London Stock Exchange share prices.|
On a 14 per cent share price discount to my spot NAV estimate the market has yet to cotton onto the investment gains Crystal Amber has been racking up. It will. Buy.
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