Small Cap Value Report (15 Jun 2015) - LTC, MJW

15th Jun '15 by Paul Scott

9 comments 12039 reads

Greetings from Prague! I grabbed some cheap flights for a long weekend, and soon regretted it - the Easyjet flight was heaving with stag parties - who started off a little noisy but perfectly good natured, but who then proceeded to treat the aircraft like a flying pub, and were soon shouting, singing & pacing about in fancy dress. Being stuck in a confined space with all that nonsense going on is not my idea of fun, so Easyjet to a destination popular with stag parties - never again!

What is wrong with people in the UK? Why can't people just enjoy a drink & a laugh, instead of turning into shouty, sweary, aggressive monsters after a few pints? Whenever I go out in European cities, there's hardly any of that aggression in the air that you find in British towns & cities. Things need to change.

Anyway, I'm flying back to the UK tonight (hopefully the stags went home yesterday, or if not, then at least should tonight be too hungover to disturb me quite as much), and have extended my hotel room until 6pm so that I can write this report at my leisure, potter round Prague a little more after lunch, and then back to good old Blighty.

Latchways (LON:LTC)

Share price: 830p (down 2.6% today)
No. shares: 11.2m
Market Cap: £93.0m

Final results y/e 31 Mar 2015 - I noticed that shares in this specialist safety equipment company were rising last week, as punters anticipated a turnaround at this company, following two profit warnings last year.

The headline bullet points today look reasonable - although turnover and profit are well down on last year, this was already known, so the company seems to have produced results in line with, or slightly above lowered expectations. Note also the strong cash position, and maintained dividend (although not well covered now).

557e9e5a83ef3Screenshot_2015-06-15_at_11

Valuation - at 830p per share, the PER drops out at 21.9 times, which is clearly too high, if current performance is maintained. Therefore the market is pricing in an earnings recovery, so the outlook comments today are probably more important than the actual results.

Outlook - the following comments from the company today sound encouraging, but there's little concrete evidence of a significant turnaround. In particular I don't like the "too early to judge" comments about the new…

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bobo

15th Jun '15

Wine plc businesses don't last, they should be private. This will stumble along while people feel like spending excess income, once over they will crash. I can write the list of those that have. Naked Wines nothing special, brings no valuable USP, just cost too much.

Behaviour under alcohol is completely cultural. Labour instigated 24 hour boozing and few councils dare ban pubs from their licenses, hence the stag parties have learnt their behaviour from Labour's errors. Another T (B)Liar error.

Flackwell

but tbf (and I am as far from a labour voter as they come) - no govt has dealt with that form of behaviour - largely down to kow-towing to the liberal media/voices.

And I can't see 'call-me-Dave' addressing it either

simoan

RE: Majestic. The purchase of Naked Wines was an act of desperation IMHO by the incumbent families that own a large stake and run it. However, in the new CEO they have acquired a man and his team who are exceptionally gifted at marketing which is probably what Majestic need. I'm not sure there is anyone better at selling overpriced wine to consumers who understand very little about the product they are buying but are impotent to the charms of glossy marketing and the need to feel they are doing some good by being an "Angel". I take my hat off, it's a brilliant pitch.

Whether he has enough experience to manage a business with the fixed overhead of shops and a largely disaffected staff (if you believe what you read on Glassdoor) and create the necessary operating efficiencies is another matter, as I believe he has only previously run internet based businesses.

As for the boorish behaviour of Brits abroad. I completely agree and can only sympathise with Paul having had a similar experience on a few flights myself. I don't see how anyone can blame a particular government? Abuse of alcohol and loutish behaviour seems to be deeply ingrained in the psyche of a significant proportion of Brits, it's nothing new but it's getting worse if anything. I think you can go right back to the advent of 18-30 holidays for the start of it.

kenobi

Yes it's rather embarrassing to see how some brits behave after a few beers.

I don't see other countries having a culture of going out to get drunk, they might have a few drinks, and eat too, but the going out to drink and drink is much more widespread in the uk than other countries.

Have a good time by all means but when you hear that the nhs has to set up field hospitals in big towns over christmas to deal with the carnage, or that they have to pass laws in magaluf and other places to combat the behaviour of drunken brits, well it's not exactly a good advert for the country is it?

re majestic, selling wine against the supermarkets is never going to be an easy job is it ? Perhaps they can find niches if the economy is good and there's enough people wanting "different" wines, most people I know pick up whatever's on offer between 5-10 pounds, but then perhaps I'm not representative of their customers !

K

jags

"...and then back to good old Blighty.".... Come on, it was not the Normandy landing.

jpep

As a quick follow up to Bobo's comments I well remember booze culture dating back 30 years, hardly a recent problem. I also think the number of arrests for drunk and disorderly have fallen sharply in the years 2001-2011 in part because of the end of the chucking out time of 11pm or 12am.

John

Fangorn

"As for the boorish behaviour of Brits abroad. I completely agree and can only sympathise with Paul having had a similar experience on a few flights myself"

Best simple solution is avoid the cheap flights,and visit the wonderful cities of Europe at a time outside of these boorish weekend trips. Easy to do given all PP needs is a laptop and internet connection...

"Have a good time by all means but when you hear that the nhs has to set up field hospitals in big towns over christmas to deal with the carnage, or that they have to pass laws in magaluf and other places to combat the behaviour of drunken brits, well it's not exactly a good advert for the country is it?"

The cost to the NHS must be immense.

Again, the solution is fairly straight forward, albeit draconian.

Leave these enebriated individuals where they drop - once it gets round that they'll be left to their own fate it will encourage the others to be more responsible. We don't need any nanny statism - just common sense. People are too confident the state will pick up the tab when they screw up deliberately.

Rusty2

Thats because most are not arrested now as I doubt they would have room for them all. Can't remember this problem 30 years ago, seem to start when nightclubs opened up with longer licensing hours, certainly in my town. Before that most people went a quiet drink in the pub and then went home, very little trouble in those days.

cig

Not quite a new story: http://www.historytoday.com/tim-stanley/sobering-look-boozy-britain

Small Cap Value Report (15 Jun 2015) - LTC, MJW

Latchways (LON:LTC)

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Paul Scott

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