Pebble Beach Systems – a world-leading tiddler

I have been following this company for the last couple of decades. It has had its ups and downs over the years, but now I consider that it is beginning to recover its poise and offer investors some very interesting upside.

From its base of the old Silvermines way back in 2000 through to its impressive growth as Vislink, this business in its now renamed persona attracts my attention.

Along the way it has made big profits and big losses. In 2016 it started a ‘roots and branch’ restructuring which has subsequently seen various disposals.

Today the reshaped organisation, Pebble Beach Systems (LON:PEB), is, despite its small size, a world leader in television automation and content management.

The Surrey-based company, which employs 72 people, works closely with broadcasters, systems integrators and technical partners to deliver the best possible solution for each customer.

Through the use of its cloud-based automation and ‘channel in a box’ and content management systems, it supports broadcasters as they adapt to compete with new entrants in the video media space, by providing solutions to support their transition from traditional broadcast infrastructure to more flexible IP based technologies.

Its systems which range from single up to over 150 channels in operation are installed in more than 70 countries.

Its customers are international, national, regional and specialised broadcasters who deliver the full range of TV programming from news and current affairs to live sports broadcasting.

The company which also has offices in the USA, Dubai and Singapore, has an international client base including Fox News and Business channels USA, TV Globo Brazil, IMG London, TV4 Sweden, ZDF Germany, TV2 Denmark, Orbit Showtime Network UAE, SABC South Africa, Viasat UK, Fox Sports Holland, MBC Dubai and AMC Networks Inc. USA.

With 124.6m shares in issue the group is now valued at just £14m. Sizeable holders of the equity include Kestrel Partners (28.1%), Bob Morton (7.89%), Jarvis Investment Management (5.86%), Hargreaves Lansdown (4.50%), Hargreave Hale (4.43%), Standard Life Investments (4.08%), Polar Capital (3.21%), A M Watt (2.77%), and Talos Securities (2.14%).

Jersey-based Bob Morton (77) has been behind this group ever since its Silvermines start. After an initial career in accountancy he branched out into commerce and became an extremely successful businessman and investor in a wide range of AIM and Main Index companies.

This transformation process over the last few years has seen the company switch around from a £0.6m pre-tax loss in 2017, to a £1.2m profit in 2018 and up to a £2.3m pre-tax profit for the year to end December 2019. That was worth 1.8p per share in earnings.

It is too early to make any predictions for this year and next, due to the Covid-19 virus, however as end-user demand for TV booms the group’s customers are benefitting from its automation and remote support.

With its shares trading at only 11.25p each, this little company has very significant upside potential because of its innovative technology and international operation.

I now set an easy one-year Target Price of 15p.