Small Cap Value Report (12 Aug 2016) - RTN, ROL, CBUY, SDY, PHD, PTSG, SIV

12th Aug '16 by Paul Scott

23 comments 18913 reads

Good morning!

I walked into Brighton last night (from Hove) to check out the Caxton Arms - the venue for forthcoming ShareSoc monthly meetings. It's a very nice, quite small pub, with excellent food, and friendly locals/staff. The downstairs function room is quite small, but will serve our purposes for the presentations.

I sampled the various lagers on offer, and concluded that the San Miguel was the best. Then walking home, the lager made its presence felt, so I had to pop into The Connaught to use the facilities, and ended up spending the rest of the evening there, chatting to a lovely couple at the bar. I've hopefully roped them in to come along to the ShareSoc event, on Tue 13 Sept 2016 - to book your place (limited numbers, so early booking advised) please click here.

It amazes me how many pub operators miss the obvious factor for success - putting friendly & sociable people behind the bar, to create a nice atmosphere. Both the Caxton and the Connaught excel on this front. Elsewhere though, all too often one is served by a sullen minimum wager, who looks at you as if you're mad or dangerous if you try to strike up a conversation. Isn't that the whole point of pubs?

There are hardly any relevant results out today, which is handy, as I have a backlog from yesterday to catch up on. Yesterday's report spluttered to a premature halt, in a cloud of smoke, and shattered piston rings, unfortunately. So hopefully I can do better today!

Today I intend report on:

Restaurant (LON:RTN) - new CEO
Rotala (LON:ROL) - Interim results
Cloudbuy (LON:CBUY) (this one should be good for a laugh) Interim results
Speedy Hire (LON:SDY) - the plot thickens re EGM

also, from yesterday:

Proactis Holdings (LON:PHD)
ST Ives (LON:SIV)
Produce Investments (LON:PIL)
Premier Technical Services (LON:PTSG) - trading update

Restaurant (LON:RTN)

Appointment of new CEO - this is much larger than my usual level of mkt cap for these reports. However, it was one of my…

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Gostevie

12th Aug '16

Indeed, great call on Restaurant (LON:RTN), Paul. I bought some on 19th May after reading one of these SCVRs when you flagged it up (not 'tipped it') and sold this morning at a 23% profit. Not too shabby all for three months.

Thanks! A pint is owed - in a decent pub with good beer and staff of course. :-)

Ramridge

Re Restaurant (LON:RTN) It is always worth looking at a new CEO's background to make sure he is up to the job.
In my opinion, Andy McCue passes the test with flying colours. He built up an excellent reputation at (now) PaddyPower Betfair in moving the business into profitable areas and crafting the merger with Betfair.
Before that he was a Strategy Consultant with Andersens.
He will need these skills in spades.

I took a long position at the bell before the rise.

Rusty2

San Migel, Philippine lager also known as diesel, was dirt cheap in Philippines now not so cheap. I'm not a lager fan although some of the Czech and German ones are ok. Yes I agree a decent pub should have decent well kept (cask) beers and be friendly, most are now just over-priced food outlets.

Andrew niven

As was San Miguel when my father would buy it in Majorca in the 60s for 2 peseta a bottle and he got one back on the bottle !!!

Caxtons Arms is a Shepherd Neame pub so it will have some real beer although the choice maybe limited.

JohnEustace

I'm guessing you mean Robert rather than Roberta Sella?
I appreciate these things are more fluid down in Brighton but not in Hove actually.

I'm guessing you mean Robert rather than Roberta Sella?

It is Roberto Sella. Paul seems to have inadvertently given him a sex-change - ironic, given that he must have balls the size of a planet to invest in something like Cloudbuy! :-)

Paul Scott

LOL very amusing comments from John & Gostevie above!
I apologise to Mr Sella for inadvertently altering his gender. Article now corrected!

P.

brileen

Paul

Just sold my holding of RTN 424p (bought at 273p).

I am also a very happy holder of both BOO (bought @ mid 20's ) and MYSL (bought @ high 40's).

So a big thankyou for pointing me in the right direction. These are shares that I would not have considered as all had fallen very substantially prior to my buying.

Great articles every day.

bobo

Bus conpanies best avoided. I did a comparison of them a few years back and decided that working that hard for so little margin and with so much debt who would bother. It has the worst of all worlds, high capital cost, regulations up to here, no barriers to entry and a limited expansion possibilities.

Depends when you buy them, Stagecoach (LON:SGC) I remember being about 10p, now its over 200p not a bad return, divi is over 5% also. Go-Ahead (LON:GOG) has 10 bagged is the last 21 years, also divi is currently over 5%, no debt. They are not just bus companies they also run trains.

Brigra

Herbie,

So you waited ages for a bus company to invest in, then two came along at once?

Always the way...

Trident

I would be interested in Paul's overview of the Proactis (PHD) trading statement. Solid, but not exciting at present, is my superficial analysis.

The thing I am interested in is the 'transformational' possibilities they infer regarding their involvement with clients like Screwfix. As part of the Screwfix/Proactis procurement platform they allow electronic trading with their client, as well as the opportunity to access invoice discount facilities. Proactis offer this facility at £50 per supplier. Given the vast supplier base, even this small fee could in principle generate significant bottom line profit if its widely adopted.

They are into the first stages with Screwfix and income from this source has been described as nominal for 2015/16. If PHD share price is to move materially, apart being acquired, it is probably down to developing this aspect of the business.

Maybe something for Paul to focus on if he speaks to the management team again.

Yes but probably too late now, wish I had bought some Stagecoach (LON:SGC) at 10p.

Fangorn

Not really a beer drinker myself but partial to an Asahi Super Dry...failing that a Singha, or Cobra, at a push.Failing that a Tiger. Can't stand the European stuff generally or the American efforts...not a frequent pub goer so rarely try the bitters - some deliocious local brews in that department however.

Decents pubs abound - and concur with Gostevie vis two mandatory requirements.

Food is where the margins are, hence the noticeable push by all into the cordon bleu offerings. Eg Marstons. at least they're far better offeringsthese days that the stodge they used to dish up!!

grumpy5

Paul, I love your ShareSoc recruiting style! Do please carry on.

gsbmba99

13th Aug '16

Regarding Proactis Holdings (LON:PHD) I wonder if there is a discrepancy somewhere on the earnings estimates. Another website is showing 5.7p for Jul-16 and 6.7p for Jul-17. The Jul-17 number used to be 8.2p (which is consistent with the number you quoted) but appears to have been lowered in the last three months.

I didn't recall a trading update from the company indicating they would be materially below estimates so I went back to the company announcements and, indeed, there haven't been any updates between the interim results announced in April ("I am confident that the Group will deliver against its ambitious plans") and the most recent trading update. I'm wondering how and why the Jul-17 EPS estimate was lowered by nearly 20% in the absence of a trading update from the company.

Maybe I'm working off the wrong figures.

PJ0077

15th Aug '16

Which data provider is providing your Proactis Holdings (LON:PHD) estimates? And are they estimates of eps (normalised) or eps (GAAP)?

Thomson Reuters currently showing 6.7p for Jul-16 and 8.2p for Jul-17.

Bloomberg currently showing 6.4p for Jul-16 and 7.5p for Jul-17:

Thanks for the response.

I was looking at Digital Look at the time. Weirdly, it's back to 8.2p for Jul-17 as of today. This would imply that it's only picking up the Finncap adj EPS number. But doesn't explain why it was a different number on Friday or over the weekend.

The Progressive Equity Research number emanates from an initiation note that was just published on Friday (and is, incidentally, freely available through registration). Thomson Reuters appears not to have picked that one up yet (or it doesn't form part of their universe) which explains the discrepancy between Bloomberg and Thomson Reuters.

The publication of the Progressive note and the inclusion of the forecasts in the Bloomberg mean estimate has lowered "market expectations" by 3.3% for Jul-16 and 7.7% for Jul-17.

Cheers for that, I hadn't seen any research from Progressive Equity before, will read with interest

Small Cap Value Report (12 Aug 2016) - RTN, ROL, CBUY, SDY, PHD, PTSG, SIV

Restaurant (LON:RTN)

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Paul Scott

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