Regenersis - 45.5p

Regenersis is an interesting player in what should be a growth market, but the company has seen its share price drift to historic lows.

At the current share price, the market capitalisation is under £13 million, which is somewhat surprising given the level of profits already achieved and current forecasts.

Borrowings are also well under control, with net debt of £3.4m at the end of December compared with loan and overdraft facilities of £15m.

However, recent turmoil in the stock market means that there are potentially bargains to be found. Regenersis is by no means the only company to have seen its share price tumble despite continuing to perform reasonably well.

The company provides outsourced after-sales product support services including warranty repair, refurbishing and recycling services. These are provided for products including mobile phones, laptop computers, set top boxes, satellite navigation systems, MP3 players and other similar items.

It is reassuring to see that most of the company’s clients are blue chip brands such as Nokia, Apple, Samsung and Tom Tom.

Activities can broadly be split into two areas; technical services and environmental services. Those with an interest in the latter may be pleased to hear that Regenersis established the market for end-of-life recovery of Waste Electrical and Electronic Equipment (WEEE). In recent years competitors have entered that market. However, the exposure of malpractice in the collection and treatment of WEEE has been growing. The company itself notes that there are regular reports of WEEE being dumped in emerging and third world economies and there have been concerns of personal identity and data theft as a consequence of waste streams being mismanaged. These risks should allow Regenersis to demonstrate the added-value of its offering.

There should be good opportunities ahead and following a restructuring programme which began in 2007 the business is well placed to exploit areas of potential growth. Results for the year ended June 30, 2008 will be difficult to match in the near term.

A profit before tax of £5.12m before exceptional items was recorded for that period. A dip of around 10 per cent is expected for the year just ended, but that still leaves the shares looking too cheap. Those looking for a good value smaller company to invest in could do well by taking a punt at the current price.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek professional advice as to the suitability of the investments.