Tuesday, Jan 08 2013 by

The year-end trading statements are starting to flow now, with about 16 issued this morning. So I will review 4 or 5 that look the most interesting to me, with a small cap and retailing leaning.

Allocate Software (LON:ALL)

Allocate Software (ALL) has an unusual 31 May year-end, so their H1 trading update this morning relates to the 6m to 30 Nov 2012. They say that H1 is in line with expectations, but split between a slow Q1 and a "much stronger" Q2. The outlook statement is pretty upbeat, so might be worth a closer look? Although with 5.5p EPS forecast for 2012/13, a share price of 78p prices it on a PER of 14.2, which doesn't excite me. As a value investor I'm looking for decent growth and a PER well below 10.

Majestic Wine (LON:MJW)

Majestic Wine (MJW) shares have done very well, rising 4-fold in the last 4 years. Their Xmas trading statement is pretty solid - total sales up 5.1%, with like-for-like ("LFL") sales up 1.1% for UK stores.


(Explanation of "Like-for-like" (LFL) sales - this is a method of reporting sales, used particularly by retailers, which shows the underlying performance of the business. So it strips out any newly opened or closed stores, and only reports on the stores which have been open for the full period both this year, and last year. Therefore the total % LFL change in sales gives the most meaningful figure to judge performance on. So in the example above, Majestic Wine achieved +1.1% LFL sales in their shops which were open both last year and this year. However, total sales for the whole business rose 5.1%. This indicates that they have opened new stores equating to 4% additional sales (so 1.1% LFL + 4% new stores = 5.1% total sales growth).

There is no reference to profit vs expectations, but given that Xmas trading was slightly ahead of the year-to-date (they report 0.8% LFL sales growth for the 39  weeks to 31 Dec), then one assumes they are in line with expectations. But this should have been made clearer from the RNS.

Interestingly, Majestic do note that many shoppers left purchases to the last minute, an increasing worry for shops at Xmas time. This behaviour may be explained by the fact that shops rarely run out of things these days, so by being good at logistics, in a way they've shot themselves in the foot?

Domino's Pizza (LON:DOM)

Dominos Pizza (DOM) trading updates are always a pleasure to read, and yet again they've delivered good growth, and say that profits are in line with expectations. The shares are certainly not cheap, with a fwd PER over 20, but what a great business.

Interesting also that they flag good overseas growth, particularly in Germany. This might have some read-across to long-suffering shareholders in DP Poland (DPP), the separately Listed franchisee for the new Domino's stores in Poland, which recently completed a fund-raising to continue its expansion.

Vianet (LON:VIA)

I was pleased to see the overhang from seller New Solera finally cleared in Vianet (VNET) yesterday, with the stock popping up 15% to 117p. Market makers are doing their best to inhibit trading though, with a ludicrous 5p spread. I wish we could move to a SETS order book on every stock, where anybody can effectively become a market maker, and spreads narrow. I highlighted the great value (low PER, high divi yield) and strong growth prospects thrown in for free with Vianet shares here on my Small Cap Value website back in Nov, where the stock overhang gave many of us the chance to buy as many shares as we wanted, without moving the price. So I tend to view a stock overhang (where a large holder is gradually liquidating their position in the market) as an opportunity, rather than a problem.

Another of my stocks coming alive in the last few days, is STV Group (STVG), although I haven't seen any news, or reason for the rise. If anyone knows why it is rising strongly, please let us know on the comments section of this post. I value interesting reader feedback, and do my best to respond to most feedback, if time permits.

Debenhams (DEB) had a very good Xmas by the looks of it - LFL sales up a whopping 5% in the busiest 5 weeks to 5 Jan 2013. Very impressive. I hope that has some read-across for French Connection (FCCN), a potential turnaround share which I hold.

Topps Tiles (TPT) Q1 IMS looks OK, with LFL sales up 1.6% (although that is against soft comparatives of down 4.2% the prior year).

Dunelm (DNLM) has also had a good Xmas, with H1 LFL sales to 29 Dec 2012 up 2.2%, against a 1.1% rise the prior year. Although they do note that strong H2 comparatives will be tough to match.

There are a few more, but that's as many as I can cope with before my first cup of tea of the day! Just a quick word of thanks also to the many generous donations made yesterday to my 2 charitable causes (see box on top right hand side of this page). It is hugely appreciated, and spurred me on to do another 5 mile training run last night after the markets closed. They are definitely getting easier the more often I do them.

Regards, Paul.

(of the shares mentioned today, Paul holds VNET, FCCN, and STVG only)

Filed Under: Smallcaps,


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Allocate Software PLC (Allocate) is a United Kingdom-based company engaged in software and services business. The Company operates in the healthcare and defense sectors. The Company is a provider of specialist workforce optimization and assurance software and services as well as provides workforce optimization and compliance software applications. The Company’s client base includes healthcare, defense and maritime offshore oil and gas companies. The Company’s license revenue represents revenue from the sale of non-cancellable software license agreements. The Company’s subscription revenue is derived from the sale of software’s as a service product, allocate cloud and hosting revenues. The Company’s support and service revenue represents revenue from the provision of installation, consulting, training and product support. The Company’s subsidiaries include Time Care AB, Time Care Sverige AB, Allocate Software Inc, Allocate Software PTY Limited and Allocate Software Sendrian Berhad. more »

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Majestic Wine PLC is a United Kingdom-based holding company, which is engaged in retailing of wines, beers and spirits. The Company's segments include Majestic Wine Warehouses, Lay & Wheeler and Majestic Wine Calais. Majestic Wine Warehouses is a wine specialist in the United Kingdom selling wine by the mixed case. Lay & Wheeler is a fine wine merchant engaged in en primeur sales, cellarage and broking of customer reserves. Majestic Wine Calais is a retailer-based in Calais selling to the United Kingdom consumers on lower rate of alcohol duty in France. It offers around 82 types of wines to commercial customers. The Company operates around 212 stores in the United Kingdom. The Company's subsidiaries include Majestic Wine Warehouses Limited, Les Celliers de Calais S.A.S., Majestic Wine Employee Share Ownership Trust Limited, Vinotheque Holdings Limited, WBI Holdco Limited and Lay & Wheeler Limited. more »

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Domino's Pizza Group plc is a United Kingdom-based pizza delivery company. The Company operates in four geographical business segments, which include United Kingdom, Ireland, Germany and Switzerland. The Company operates approximately 894 stores across its four markets, of which 813 are in United Kingdom; 48 in Republic of Ireland; 22 in Germany, and 11 in Switzerland. Revenue included in each geographical segment includes all sales (royalties, Supply Chain Centre sales, rental income and finance lease income) made to franchise stores and by corporate stores located in that segment. The Ireland segment includes both the Republic of Ireland and Northern Ireland as both of these territories are served by the same Supply Chain Centre. The Company operates two Supply Chain Centers. more »

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  Is Allocate Software fundamentally strong or weak? Find out More »

1 Comment on this Article show/hide all

marben100 8th Jan '13 1 of 1

I'd like to add one more smallcap update to your list today, Paul: Redstone (LON:RED) , who announced a useful contract win this morning: 


I "inherited" some Redstone shares when Maxima Holdings (LON:MXM) was taken over a few months ago. This contract win demonstrates the synergies between the two businesses. Both companies shares have been well and truly hammered over the last few years. But ISTM that there is "recovery play" potential here (I''ve already seen some recovery in the value of my former Maxima stake, since the takeover). The new combined business seems well focussed in the area of managed network services, which offers growing opportunities and Redstone can offer some economies of scale that may offer a barrier to smaller competitors.

After several years of losses, a return to profitability is expected in the current FY to March 31st. The net profit f/c of £3.5m for FY12/13 translates to an EPS of 0.080p, putting the shares on a CY P/E of 14. Corresponding figures for FY13/14 are £4.2m, 0.096p and 12.

I intend to continue holding, for the time being, and see how this business progresses.



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About Paul Scott

Paul Scott

Paul trained as an accountant, then spent 8 years as FD for a ladieswear retail chain.He became a professional small caps investor in 2002 to date.Paul writes a small caps report for on weekday mornings. He joined Fundamental Asset Management Ltd as a research associate in 2014, as part of their Small Cap Value Portfolio team. more »


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