Biofuel firm is not for the faint hearted

By Graeme Dickson
Updated: 12:37 EDT, 20 April 2011

Keep an eye on Biofutures International (BIP) given its healthy cash balances and its interesting investment in Zurex, a Malaysian biodiesel manufacturer using palm oil.

The company announced in December last year that it had unused cash balance and facility totalling £4 million, while the extra £1 million that it raised at 6.5p, against a market capitalisation of £10 million, crudely valuing the business at just £5 million.

Information about projections for the Zurex business remain scant and we rely on what the company or its advisors have to say.

With its preliminary results scheduled for 29 April, we do not have long to wait to see if this investment by Biofutures will pay off quickly or if this is going to be a slow burn.

Interestingly, Zurex have signed an agreement with two suppliers of crude palm oil to try and help reduce the volatility in the price it pays for crude palm oil.

It also admitted it is considering purchasing its own palm oil plantations to help improve margins/reduce losses.

This is not for the faint hearted as information is limited, but for those who enjoy a highly speculative punt on biodiesel derived from biomass, there probably aren't that many with a valuation as lowly as Biofutures.

Update

Geong (GNG) – suggested to buy at 34p, the shares remained at 34p despite winning yesterday a new contract worth £1.9 million with recurring revenues of £1 million. Continue to retain GTL Resources (GTL) – suggested to buy at 88.5p, the stock closed at 84p yesterday. Keep holding as we await further developments.

Avanti (AVN) – suggested to buy at 454p, the stock closed at 488p. The company won a $7.6 million (£4.7 million) claim against a US company it was contracted with while re-stating its backlog orders to £139 million for HYLAS 1 satellite and £28.4 million for HYLAS 2

Globo (GBO) – suggested as a buy at 17.25p, the stock closed yesterday at 26.25p. Continue to hold after excellent results, placing the stock on a price to earnings ratio of 10.7, far too cheap. Additionally the fundraising earlier in the year should have wiped out the company's debt, thereby saving considerable interest charges.

Optare (OPE) – tipped as a buy at 3p, the stock closed yesterday at 2.625p: hold for now. Rheochem (RHEP) - tipped as a buy at 15.13p the stock closed at 15.625p. The stock will be renamed Lochard Energy Group after gaining approval from its shareholders last Friday. Continue to hold.

Evolution Group (EVG) – tipped as a buy at 78.5p the stock closed yesterday at 71.5p. Keep the stop based on a close below 70p.

OMG (OMG) – tipped as a buy at 43.75p, the stock closed yesterday at 39.5p.The company is likely to release a trading statement next week circa 27 April that should provide us a better insight to its operations and contract progress.

ZincOx (ZOX) – tipped as a buy at 60p, the stock closed at 49.5p. Continue to hold as the company trades at the same level of cash it has in the bank and attributes no value towards its flagship South Korean project.

Pendragon (PDG) - tipped as a buy at 23p - it closed at 23.25p. Continue to hold and keep the stop based on a close below 20p.

Cyan Holdings (CYAN) – suggested to buy at 1.325p, the stock closed at 0.925p. Continue to hold but if it closes below 0.8p, cut the position.

GB Group (GBG) – suggested to buy at 36.75p, the stock closed yesterday at 36p. Watch out for a trading statement that could come at anytime soon. Keep the stop based on a close below 32p

SocialGo (SGO) – suggested to buy at 3.55p, the shares closed yesterday at 2.25p. Sit tight for now.

EMED (EMED) – suggested to buy at 12.25p, the stock closed yesterday at 14.75p. Short-term profits have been available for some time, but after yesterday's announcement that it is likely to take until the end of 2011 before preliminary approvals are gained from all four government departments, it is understandable that for those who bought lower down might wish to take profits on the assumption they can buy cheaper later on. Otherwise sit tight as the profit projections upon gaining the green light, is very compelling.

Active Energy (AEG) – suggested to buy at 6.13p, the stock closed yesterday at 2.625p. The stock has been the worst performance to date. The company has been very tight lipped about what is going on, so we await with interest to see if the management can arrest the share price decline.

Edenville (EDL) – mentioned as a buy at 1.195p, the stock closed yesterday at 1.475p. Having already suggested to sell one's investment stake out at 2.51p, the shares should at some stage start finding traction given the appeal for investing in coal now that uranium as a commodity is firmly out of favour. Continue to hold.

Weatherly International (WTI) – suggested to buy at 8.1p, the shares closed yesterday at 12p. Continue to hold and buy on any significant weakness.

Toumaz Holdings (TMZ) – tipped as a buy at 8.625p, the stock closed at 7.25p. Continue to hold as the company addresses some time and cost saving technology as well as making life much easier for patients with wireless nodules contained in the plasters it provides.

Renewable Holdings (REH) – tipped as a buy idea at 15.25p, it closed yesterday at 15.25p. The stock may ultimately benefit from the recent detractions of nuclear energy while its discount to its Net Asset Value will appeal to investors looking for a safer haven. Hold for now

Bowleven (BLVN) – tipped as a buy at 177.25p, the stock closed at 343p yesterday having already suggesting to sell half the investment after it doubled several months back. Tissue Regenix (TRX) – Suggested as a buy at 16p, the stock has picked up from its lows and is now trading at 11.875p. The shares recorded good volumes of stock traded last Monday. Sit tight for now.

The material for this report comes from Sharescope. The writer does not hold any shares or derivatives in the above mentioned companies except EMED, Globo, SocialGo and Weatherly International. Some clients of Optiva Securities may hold shares in the above named mentioned companies.