Three small cap trading updates came out late Friday last week and, actually, they were all quite positive.

Manufacturing and mining chemicals and support services group, A E C I Ltd (AFE), indicated that its FY 11 EPS are expected to be 27% to 32% higher than last year. HEPS will also be up between 22% and 27% on last year.

AECI earns over half its revenues from specialty chemicals and just under half it revenues from mining services. The Group sells into the mining sector (explosives and related services by AEL, found here) and in the specialty chemicals cluster it has 18 business units supply specialty chemical raw materials and related services for industrial use across a broad spectrum of customers, seemingly mostly also mining and manufacturing in South Africa and southern Africa.

What is interesting about AECI is that it historically has held a large amount of land on its balance sheet. Why? Well, dynamite needs space (lots of it) to manufacture and test... But there are other legacy reasons for the non-core land holdings. Thus, the Group initiated a project to realize these real estate assets a number of years ago and the Group is going about slowly turning over the property portfolio or developing it and leasing it out.

For this reason AECI's profits are distorted by period where a large or a couple large property sales go through and those when nothing do. But, unfortunately, my understand is that as the property segment's business is that of, well, property, IFRS dictates that its profits (and losses) cannot be excluded from Headline Earnings. Thus, HEPS is also distorted by these property activities.

So, basically, while AECI's trading statement is positive, bear in mind the distortion by the property segment. Still, if AECI's previous reporting period is anything to go by, the core mining services and chemicals businesses in the Group must be doing quite well.

Also glancing at a fairly cyclical stock, Onelogix (OLG), released a trading statement indicating that H1:12 profits, EPS and HEPS should be up between 15% and 20%. See my previous article on OLG here: RGT, MOR, OLG & DCT.

While Onelogix has PostNet in its stable, the Group's swings in profits (upside and downside) really come from its VDS and CVDS subsidiaries that deliver new vehicles all over southern Africa. VDS and CVDS have a large slice of this new vehicles delivery market.

New vehicles are delivered to dealers and various other businesses, thus deliveries of VDS and CVDS is a leading indicator of new vehicles sales.

New vehicles sales is a leading indicator of the general economy.

So, (assuming the above new is relating to VDS and CVDS and it is based on a growth in revenues of these businesses) Onelogix's trading statement is probably quite a nice positive for South Africa and the broader stocks that are highly exposed to our local economy.

Finally, Blue Financial Services (BFS), released a trading statement indicating that it is reasonably certain that it will earn between 0.35cps and 1.12cps EPS for FY 12 (ending 29 February 2012).

See an earlier article Blue Financial Services here: BFS & ADW Trading Updates & Comparison and a slightly earlier thought over here: Is Blue Financial Services Turnaround Working?.

Blue's trading statement goes into a couple of reasons for the turnaround in profits, but most importantly is mentions that H2:12 saw continued momentum in its objectives of cost-savings and collections of debt. The coming financial year will be a key on in whether Blue can shift its focus from internal cost-savings to external loan book growth and whether it can achieve this profitably, net of bad debts and back office cost-escalation.

We will see...

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