for more information about stanelco click on the links.

driver's research page link
http://www.moneyam.com/InvestorsRoom/posts.php?tid=7681#lastread
website link
http://www.stanelco.co.uk/index.htm

LOL bosley

EWR - I do not deramp - just posting info and opinion.

Distorted info and self-opinionated!

bos: well done for managing to post those charts. RSI looks good! Could you manage the volumes and momentum indicators?

Eric

That's a good point bosley, as boring as this person is, the sp moves forward the more he posts..JB..

doesn't bore me anymore, jb, it's filtered bliss!! i highly recommend it. i really don't think i am missing anything. will do, eric.

Buy Stanelco
Argues Rob Cullum, editor of Trendwatch.co.uk
The share I'm about to recommend is a company pioneering several potentially highly successful new technologies that look as though they are on the verge of acceptance in the marketplace on both sides of the Atlantic. It's also a company with falling turnover, operating in difficult market conditions; currently making losses; and fighting a legal battle over a patent, which looks set to run for some time yet and may not have a favourable outcome. So I would categorise this as a high risk but potentially very high reward share.

The company is Stanelco.

Stanelco is a world leader in the development of radio frequency (RF) heating technologies - sophisticated and powerful but not so different in principle from your domestic microwave oven.

Its current core business is the manufacture of optical fibre RF furnaces that heat materials quickly and to the high degree of accuracy necessary for the production of fibre optic cable.

However, optical fibre equipment is now a highly competitive market. Consequently, Stanelco decided to cast around to see if it could capitalise on its RF expertise to develop different but related products.

Perhaps rather surprisingly, it decided to take on the packaging industry.

Its leading development is a new packaging system called Greenseal that could revolutionise the global cooked and raw meat, fish, salad and dairy packaging industries. Recall that, when you buy your meat from a supermarket, it generally comes in lidded plastic trays covered with a clear plastic film to seal it. Stanelco utilises its radio frequency (RF) sealing technology in conjunction with conventional plastics so that the lidded trays require no laminated or coated plastics for sealing.

Greenseal offers major environmental and cost saving benefits for the end user. By doing away with the sealing layers and specialist sealing coatings that current sealing films require, waste film can be recycled in the food tray manufacturing process instead of being scrapped. Total adoption of this technology in the UK would result in the saving of over 10,000 tons of scrap plastic going to landfill each year. This alone produces at least a 20% saving. Additionally, the RF process is significantly more energy-efficient, saving up to 70% of the power used by the packaging machines. And, not least, the integrity of the seal is higher.

Stanelco reckons this translates into an average cost saving per packaging machine of more than 0.1 m pounds a year.

A couple of months ago, following successful trials, Stanelco signed a binding contract with ASDA, under which ASDA will exclusively use Greenseal in the UK and Ireland for 12 months. Stanelco will retrofit several hundred packaging machines used by ASDA's suppliers. The cost of retrofitting is in the order of 40,000 pounds per machine, borne by the end-user. Thereafter, the user will be charged an annual licence fee of around 35,000 pounds per unit. There are currently more than 400 machines within the UK and over 2,000 machines in Europe.

The costs associated with conversion will be greatly outweighed by the financial and other benefits. The agreement with ASDA will generate a revenue stream for Stanelco of over 5 m pounds in the first year alone.

If you shop at ASDA, you may have noticed that the new packaging first appeared on ASDA's shelves from 1 March. Already, ASDA has found that customer sales of salmon in the new packs is up 21%, mainly because the Greenseal packaging looks more attractive and has virtually eliminated leakage. Independent microbiological analysis also indicates that the salmon's shelf life could be extended by one day. All of these factors exceeded ASDA's expectations. The two companies are already looking at all sorts of other ways to exploit the technology.

ASDA is, of course, owned by Wal-mart, the world's biggest retailer. The hope is that Wal-mart itself will come on board in due course.

Even if it doesn't, Stanelco has already gained a foothold in North America for Greenseal. It announced just a few days ago that it has entered into a binding agreement with Premier Technology Inc., a leading US engineering and support company, which will enable rapid roll out and adoption of Greenseal in a number of markets in the US, Canada and Mexico. This avoids the expense of Stanelco building its own marketing infrastructure in North America.

We also understand that Stanelco is in talks with many other potential customers here in the UK.

Other new, patented packaging products being developed include:

FrogPack, a lightweight, highly impact resistant, lower cost and greener replacement for padded envelopes and boxes with polystyrene inserts. The product has the added advantage of being tamper-evident. FrogPack is intended for to protecting items such as electronic components, car parts and compact discs. Tests have proved that even champagne glasses packed in FrogPack suffered no damage when dropped from 200ft. A Stanelco subsidiary, Aquasol Ltd, has signed its first two distributors for the FrogPack product, which is being manufactured under licence. An aggressive North American rollout is now under way.

Water-soluble tape. The tape substrate is coated with a unique pressure sensitive adhesive that is 100% water-soluble and 100% biodegradable. It can be made in a variety of grades from cold-water-soluble to hot-water-soluble. The face material can also be top coated to provide splash resistance if required. Potential applications include protecting highly polished surfaces against abrasion and corrosion, masking tape for the automotive industry, tamper-evident tape and wash-off labels for reusable food trays, crockery & glass.

Biodegradable containers, initially targeted at the food industry, made from starch foam by using RF technology. Stanelco has demonstrated that it can mould these containers ten times faster than using conventional heating technologies. Sainsbury is taking a close interest.

Water-soluble polymers for use in fine tolerance injection moulded applications. The primary application here is drug capsules manufactured by injection moulding from the water-soluble polymers. The capsule has unique features which provide improved control over the release of drugs

This last technology is the one that his given Stanelco its biggest problem. AIM-listed BioProgress is disputing one family of patents. It won the first round, but Stanelco has been granted leave to appeal. Knowing as we do the unpredictability of M'lud's pontifications, we wouldn't wish to comment further on that.

Apart from the legal spat, the main risk for Stanelco is that its new products won't catch on. That risk appears to be diminishing fast, now that ASDA has signed up for Greenseal. In any case, Stanelco isn't a one-product company - it's developing a whole portfolio of packaging products.

You might find it a little disconcerting that Stanelco's share price has already risen substantially. Have you missed the boat? Probably not. It generally isn't wise to invest right at the bottom. Better to wait until some of the fog has cleared, which it's now starting to do.

Admittedly the shares do look highly rated at present, on an eye-watering forward P/E of about 80. However, if the new products are as successful as Evolution Securities believes it will be, there should be plenty more upside to come. The broker reckons that sales will grow from 1.86 m pounds to 4.8m this year, and will then soar to 34.2 m pounds in 2006. By that time, it should have moved from a loss to a profit of 11.2 m pounds. At the current share price, that brings its present sky-high forward P/E down to earth with a bump. BUY.

Key Data

EPIC: SEO
NMS: 50,000
Spread: 21.25p - 21.75p
Market Cap: 187.4 million pounds

Forest,
What date was this posted ?

great post , forest. i would say that just about sums up everything. it's fair, points out the negatives and the positives and says, quite rightly, that investing in seo has it's risks , but also has potentially great rewards.

It was e-mailed to me today 12.59pm by uk analyst, saturdays tip. Sorry for the long delay have been on another BB.

Trendwatch first looked at SEO on 19-1-05 when they expressed doubts. The recent one was on 13-4-05. Trendwatch have had their successes but they have also had some ghastly failures and I would urge readers to treat their recommendations with caution.
sd.

bos
I am leaving the pro anti stuff alone it just gets me into trouble.

eric
Have they got windmills in Israel.

Don Q 1
Can you post a bit less stuff I fall asleep after the first sentence, I do have to get up at 4 you know.

An excellent post by Forest, if I had to pick one sentence from it, "Stanelco isn't a one-product company - it's developing a whole portfolio of packaging products". Even though it is the RF sealing that has generated the main interest so far there is so much going on, I am so pleased I've been in from the start. Believe me, as more and more folk in packaging with technical minds get to see the benefits in performance of RF Sealing there will be many more doors opened for Stanelco. Exponential growth is on the cards here.
Of course there are risks, nobody has ever said there isn't but the potential far outweighs the risks.
Squidd, show me someone or an analyst who has never made a mistake and it will be someone who has never bought a share. SEO is not a miner, oil explorer or drug developer that is high cash-burn, high risk potential. SEO has developed its products, it now needs to bring them to market and as Asda have shown, the market is there because its not technology for the sake of it, it has benefits that sells itself. One month till I get some more decent dosh, hmm, SEO top-up me thinks becuase IMO there is still nothing else with so much potential reward.

Andysmith: I appreciate your wise counsel. Have read most earlier posts and know that you are an expert in packaging - I suspect you are an authority, so it's you I have to thank mainly for the cash pile I've made out of SEO. But I'm a bottom fisher by nature so I'm now mainly in cash and bombed-out stocks like ELA. As for Trendwatch they need someone to restore their credibility and I hope its SEO. I will keep watching.
sd.

Those last posts are the best iv'e read yet giving the negatives as well as the positives,and these are the shares i like, there is risk but also great upside,i kicked myself for selling this at 16.5p,,but im very happy to be back in..JB..

jimmy b
You like a bit of risk then jimmy.

Bos
You been a bit technical with those graphs, you been going to evening classes.

Yes driver when there's potential upside like this i do, i wont be wanting your second hand Ferrari,next year,ill be looking for a new one !

I'm bullish on this SEO, successful ASDA deal will bring greenseal to world leaders , walmart? also, other products are rolling out, should break new record share price soon.

A couple of interesting points from the Trendwatch analysis. First, the mention of 400 machines in the UK and 1000 on the continent. These are clearly machines dedicated, probably, to ASDA supply. Its worth noting that ASDA effectively twists the suppliers arm to use the recommended technology by sharing the savings. This means that they reduce the amount paid to the supplier on the assumption that is making savings by using the technology. Not much choice there! Second, the reference to the fact that goods are probably being used by customers: whilst the machines have been doing trials, the machines have been retro-fitted so will go on using R/F even though an order has not been placed. Clever tactics in my view because the SEO must be to get their technology used as standard.

Reference has been made to the trials with Oscar Meyer which were announced in October. My reading is that these have been overtaken by the ASDA exclusivity deal. It was a good first step but ASDA was obviously far better. The Reiser arrangement in the US was discussed in the February prelim report and I suspect that it was this relationship which led to the deals with Premier and Advanced, rather than the more speculative, at that stage, prospects with Wal-Mart. Are these interpretations agreed?

Squidd. Obviously we all have our own strategies and bottom fishing is fine - I have just, I believe, achieved this with ASC. But SEO, I am convinced, is a classical case of running your profits. We really are still in very early days. Two prominent tipsters have recommended the share this week, one looking for 50p, on top of the 30p looked for by Evolution and the buy recommendation of the house broker, KBC Peel Hunt. When I look at the cap. of 200m I react, why 200m? It could be ahead of itself, like PDX for instance. It may not move much further until the news is harder, i.e. the ASDA potential is quantified more clearly. But we are still looking at a 5-bagger from here when you take a 'most likely' view rather than a pessimsitic one. Look at it as a ledge waiting for the next stage of the ascent. Personally, I have never felt more comfortable with an investment, even when it is overweight to 50% of my portfolio.

bos: thanks for improving the graphs. Clever boy!

Eric

You cannot argue with the financial ratios - from KBCPeel report :

A SEO 2003 (Prelim 2004) Sales 1.9M Reported Pre Tax Loss 0.6M PER x -339.5
A SEO 2004 (Prelim 2005) Sales 1.3M Reported Pre Tax Loss 2.8M PER x -67.3
E SEO 2005 (Prelim 2006) Sales 3.8M Reported Pre Tax Loss 0.4M PER x -566.3
E SEO 2006 (Prelim 2007) Sales 15.4M Reported Pre Tax Prof 5.6M PER x 50

So even in 2007 - at todays price - if they get all their orders - the price of 22p in 2007 at prelims would give a PER of x 50.

Take the PER down to a very high (but lower than terrible 50) of x 20 and what reduction to the share price of 22p do you have to give a PER of 20 ?

They can spin all they like for now - but they cannot spin for 2 more years - its just a matter of time - the spinners will keep holding whilst it keeps rising - once the spin and hype and tip is not taking the price higher anymore - they will all leave for better gains elsewhere - yes its been a great ride from 4p to 22p - but do you honestly think that spin - hype - ramp - tip will keep this going up - already Asda and Walmart are in the price - there is only room for disappointement in future.

So - you have the next 3 years already in the price - fundamentals cannot and will not be forgotten - the price has risen against RSI.

(on the other company Rampelco spin roadmap - notice how Toadpak is being brought forward a little - they have been exposed and now have to spin and hype more in the coming 2 months - Rampelco want to do a dilution soon - issue more shares to raise money - got to feed the frenzy - keep that SP high - offload another load of shares to raise money IMO)

Anyway - Good night - see you in the morning.

And good morning too -

I should get back to providing research links and stop thinking about these fictitious companies Rampelco + Welsmart - for those with an interest in the biodegradable envelopes padded mailing bags just in case you think its something new -

http://www.globalsources.com/si/6008801434161/ProductDetail/Envelope-letter/product_id-8828725898/action-GetProduct.htm

http://www.ecoproducts.com/Business/packaging/packaging_index.htm

http://www.packexpo.com/ve/35078/main.html

http://www.auspackaging.com.au/products/prtctive.html

http://www.geami.com/

http://news.thomasnet.com/fullstory/451873

http://www.swboxmachine.com/

http://www.pro-pac.com.au/enviro.html

http://www.ecoproducts.com/Business/packaging/packaging_mailers.htm

http://www.npscorp.com/pages/Versa_pak.html

http://www.alibaba.com/trade/company/goto/10055115.html

http://www.xpander.com/corporat.html

http://www.packagingunlimited.com/store/dept.asp?dept_id=18

http://www.altapak.com/aboutus.html


Before someone spouts on about the Bio Pouches (do not think they will as its old news but might be attempted for a new spin and jam tomorrow product) see the link below

http://www.cortecvci.com/whats_new/announcements/CRT_EcoSol.pdf


And the biodegradable trays cannot ramp that as Sharp Interpak do it already

http://www.sharpak.co.uk/news.html


For the more cautious watcher the sudden jump on Toadpack is either someone has blown the spin roadmap open so go early or there is trouble with Welsmart (do not forget with Welsmart that Rampelco themselves have made no comment no promise and therefore do not have to say anything on this if it does not happen its only the rumour makers who have put this into the equation to keep interest there over the rest of this year to try and support the SP) if they see that Welsmart is not going to happen they need to replace it with something else this jump on Toads (poor Toads) may be a sign that Welsmart is not coming off. (Rampelco Welsmart Toadpack are all fictitious companies and any reference made implied or otherwise to real companies is to quote Howey misunderstanding and not my problem or liability)