Companies: CPIL    CRW    HIT    KURA    LDP    URU   

Only 173 companies have floated on AIM this year, almost one hundred ventures shy of this time last year and suggesting 2007 is shaping up as the slowest year for AIM initial public offerings (IPOs) in a decade. August saw 19 AIM flotations, eight of which pulled in more than £20 million, with two of them topping £100 million. At the time of writing, no fundraising in September has even touched £7 million.

However, advisers hint of floats ‘on pause’ as they wait to see how the current market will unfold. And more publicly, management at financial services software firm SmartStream admits to monitoring market conditions in view of a probable £100 million Full List IPO.

Among those that have made the leap, some have left a trail of disappointed investors in their wake through no fault of their own – Chinese travel specialist Et-china.com has shed 37.4 per cent of its value since floating in August; Leed Petroleum has dropped by 16 per cent in four weeks; and Niger Uranium trades at a 30 per cent discount to its issue price after a matter of weeks.

Prompt premiums
Nevertheless, others have won the market’s affections immediately, including Chinese shopping malls developer Canton Property Investment – up almost two-thirds and with investors lapping up CEO Charlie Lin’s offer of the ‘chance to benefit from both the mainland Chinese commercial property boom and its consumer spending boom’.

Hitchens, chaired by former banker David Wilson, raised £2.3 million at 0.75p on its move to AIM and rocketed almost tenfold in early days trading to 7.37p, though profit-taking has since brought it crashing back to 3.62p. Formerly PLUS-listed shell Azurite Investments, the company bought ten Hitchens-branded discount stores (along with e-commerce site Hot Deals) in a £4.9 million reverse deal. Littlewoods originally owned the stores and holds 27 per cent of the new group.

Craneware gets a lift
Another with lofty prospects is Craneware, which has climbed from a recent AIM placing price of 128p to 142.5p, a respectable 11.3 per cent gain in these torrid markets. Supplying software to US hospitals, the company is benefiting from the powerful legislative drivers forcing American hospitals to adopt its products, which simplify the billing process and prevent errors that can lead to fines or even criminal charges.

Keith Neilson, chief executive of the Scotland-headquartered company, estimates ‘70 per cent of some 5,756 hospitals have not yet moved from a manual to a technical system’. He insists Craneware is the clear leader in this field, being the same size as its competitors put together. Its client base has more than doubled in the last three years, with a towering proportion of recurring revenues and renewal rates averaging 93 per cent.

Institutional investors love revenue visibility, and new shareholders on the register following KBC Peel Hunt’s £5.4 million placing are a testament to this: F&C, Artemis, Fidelity, Framlington, Blackstone and Standard Life. Although KBC’s forecasts place Craneware on a price to earnings (p/e) ratio of 18 for 2009, Neilson claims a number of factors could add ‘upside to the forecasts’ and I think Craneware is worth backing.

Although not as immediately eye-catching, Kura Wood is worth watching. On the back of the success of Accsys, a Dutch-based wood hardening play GCI recommended at a1.19 and now nearer a4, Kura has come to AIM with a patented process to chemically harden softwoods. It uses a completely different process to Accsys and is concentrating on the DIY market as opposed to Accsys’s outdoor focus. Priced at a significant discount to hardwoods such as teak, which are harvested from rainforests, the hardened wood is likewise appealing from an environmental standpoint.

Following a £4.5 million fundraising at 100p, the company joined AIM with a market valuation of £17 million – a tiny fraction of the £400 million valuation which Accsys commands.