Small Cap Value Report (3 Jun 2015) - COG, SPRP, CFYN

3rd Jun '15 by Paul Scott

27 comments 21464 reads

Good morning!

I've had a good response to my new "SCVR Extra" videos on YouTube, so will keep doing those most days, around lunchtime, once I've finished the main written report.

The format is a 10-minute commentary on company announcements that I haven't had time to mention in the main report here. Also it gives me an opportunity to be a little bit more cutting than I would normally be about companies that I don't like, or have a short position on!

Cambridge Cognition Holdings (LON:COG)

Share price: 86p
No. shares: 17.0m
Market Cap: £14.6m

(at the time of writing, I hold a long position in this share)

Investor Teach-In - I attended this event last night, organised by Walbrook PR, and just want to mention how excellent it was. It was well attended, and a really good opportunity to learn about the company, and there was plenty of time to ask questions. We even got to try out the product - tablet-based cognitive reasoning tests with a variety of uses, e.g. to detect early stage dementia, or to prove that drug trials do not impair cognitive functioning.

Sadly I failed the cognitive reasoning test by stage 4, although the scientist from COG made my excuses for me, in that the room was noisy, plus I was on my third beer by that point!

What's interesting about this company is that its academic and clinical trials divisions are already (modestly) profitable & cash generative. The cash generated by those activities are being used to finance a potentially much bigger opportunity in healthcare. The timescales are not immediate, 2-4 years was mentioned, but it's an interesting little company with nice barriers to entry - some patents, but mainly the value of 30-years cumulative data & proof.

It's a difficult company to value, but personally I like to have one or two more speculative shares in my portfolio, and this is potentially interesting in my view. What I particularly like is that the company confirmed they will not need to come back to the market for any more cash for working capital.

The presentation given by the company was well-prepared, and interesting.

I note that the largest shareholder, with 20.2% is Euroblue Investments - an investment vehicle of Nigel Wray (known as Britain's Buffett).

I hope more events like this will be arranged, as it's great to meet companies,…

Unlock with Email

Unlock with Google

Already have an account?
Login here

SingSing

3rd Jun '15

Good video, thanks...

Anyone have any idea what is going on with VLK (vislink) ?

16m shares traded and a steady increase in price over last few days ..

Can't see any news..

bsharman

VLK is one of my longest held shares and still looks reasonable value. I really like the partnership with GoPro and on the morning of that announcement I bought some more. I know that GoPro has just announced a partnership with Google to work on 3D virtual reality based on a 360-degree GoPro camera array. Otherwise I think their technology is hitting a sweet spot - counter terrorism, policing, sports (GoPro) live broadcasting and investors are waking up to the potential market size and scope. Perhaps they will be a takeover target....?

Glaws2

Hi Paul (and extrader)

Re SPRP and the H2 forecasts going backwards. This (from this mornings AGM) is because traditionally results are H2 weighted - historically they have done 40% in H1 and 60% in H2. This year, because of the very high sales into France in H1 they are not expecting this.

Ramridge

Hi Guys -
re. Sprue Aegis (LON:SPRP) I am not totally convinced about the skewing effect on sales due to high H1 sales in France.
The law only took effect in March of this year, so we are talking about 3 months in H1. Also the French are not that great in obeying new laws. I have a holiday flat in Brittany and the syndic has just got round to asking us for extra funds for the purchase and installation of smoke alarms.

If anything I would expect sales in France to be higher in H2 compared to H1 because the French tend to drag their feet when complying with this kind of law.

Just an opinion; I may be wrong.

extrader

Hi guys,

I've now located the comment re potential disruption at SPRP in H2, from note 11 in the 27/4 results RNS

Notification of potential relocation of CICAM's manufacturing activities
In early April 2015, the Board was informed by its supplier, Jarden that the manufacturing activities of Jarden's majority owned smoke alarm manufacturer in China, CICAM - which supplies 100% of the Group's Sprue and BRK smoke alarms and accessories, together with the Group's BRK carbon monoxide ("CO") alarms - may have to be relocated later this year or early next year to make way for a proposed new railway line which the
Chinese government has indicated may run through the site of the current facility. Sprue understands that Jarden is seeking clarification of the potential impact and timing of the proposed new railway line on CICAM.
Sprue further understands that Jarden is in the process of identifying appropriate alternative manufacturing facilities close to the current CICAM facility and developing plans to migrate production from CICAM's current facility. Sprue will work closely with Jarden to take the appropriate steps to build up buffer stocks prior to the potential relocation of the smoke and CO production / assembly lines. Having worked previously with CICAM to move the facility about five years ago, Sprue understands what is required and is now engaging with the appropriate certification bodies to ensure that the facility can be certified by the relevant approval authorities
in a timely manner.
Whilst all possible steps will be taken to ensure that Sprue's 2015 and 2016 sales are not disrupted, there is a residual risk that the relocation of CICAM's activities could potentially
disrupt Sprue's business. To mitigate any potential disruption, Sprue continues to work closely with Jarden and Sprue's own full time manufacturing specialist who is based in China to help project manage the transition to the new facility.

ATB

Rusty2

I think France smoke alarms has some time to run yet, I can see a surge this first Q as stores stock up and then demand will level off. Just read this "After 1992, other countries followed the UK’s lead, with roughly similar regulations – the Republic of Ireland, Holland, Denmark, Finland and Norway, for example – but there are still some countries that have yet to legislate, including Poland, Spain, Italy, Czech Republic and Slovakia."

So if those countries follow France there will be demand. I'm surprised the EU has not legislated on this. They seem to on most other things? So yes France is a boost, going forward sales could be a bit lumpy?

In tonight's evening standard page 4 reporting that Boris has given go ahead for body camera's for the met police within one year. 200000 cameras at a cost of £10 million. This should be coming vislinks way....

I'm surprised we have the money? But yes if they get the contract it will be good news for VLK. Is it 20,000 or 200,000?

I'm waiting for them to be fitted into cricket helmets for test matches.

I think they have been involved in the trials and have an existing relationship with the met (helicopter cameras) it's the ideal fit. Let's see if we hear from £vlk

I came across another company that does police body worn video called Reveal, so not sure Vislink is the supplier.

MichaelFBS

Hi Paul

Thanks for the video SCVR. Excellent. I found the analysis of Globo (LON:GBO) RE helpful and educational in what you look at to raise red flags. Still wished Stocko would let you comment on stocks you are short of thought.

Best

Michael

fifthcolumn

5th Jun '15

Hi Paul,

Am now addicted to your excellent video's on youtube. Very interesting and informative. Thank you.

Nigel

Paul Scott

Indigovision (LON:IND) also launched a body-worn video camera a few months ago, and said they have a good sales pipeline building for it, so I think this kit is becoming fairly widespread.

Vislink (LON:VLK) is a serial disappointer in my experience - the core business reported fairly poor recent results, but the recently acquired software business saved the day. I think the recent rise in share price to about 60p looks fairly spurious, and so is probably a good selling opportunity, in my view.

P.

Thanks Paul. Interesting I thought you were fairly positive in your last articule on VLK. The sp rise seems to be because of the GoPro link with Google. IND seems to produce many profit warnings although it has high StockRatings so maybe its turning the corner.

Re Met police contract it seems to be with Taser as far as I can tell, which is a US company.

I see Pets At Home results were out yesterday, I don't know if thats one you would be interested in?

In my last comments on Vislink (LON:VLK) I pointed out the positives & the negatives, and was a bit lukewarm, pointing out that the core business had gone backwards. Although that was OK when the shares were 48.75p, as the valuation was reasonable. But now they're 60p, then I'm less forgiving. It's all down to valuation, after all.

P.S. You're right that Indigovision (LON:IND) produces lots of profit warnings. In many ways the business has done well in the last few years, under the new CEO. However, they are a complete hostage to large contract wins. Last year they had two in H1, so the figures were good. This year they've had none - so the figures are going to be poor. Although they have several major projects that might be won at any point. So visibility is almost non-existent. Such a pity, as they had the products & the market opportunity to turn that into a seriously big business.

Thanks Paul, yes I understand the valuation on VLK, I see Hawk Inv. has just sold 8m shares so maybe its time to take the profits.

Cambridge Cognition Holdings (LON:COG) is also a recent addition by the Naked Trader ...

AnonymousUser37567

Throw the hat in the ring Solid State supply body worn cameras and they already have MoD and MoJ contracts for other products.

http://www.steatite.co.uk/markets/emergency-services/

"Steatite also supply body worn video camera systems, in service with UK police forces, together with a fully integrated software solution that displays real time video from numerous sources and displays real time GPS positioning to live mapping which can be referenced against captured video."

Thats good to know as I hold Solid State. I saw the Met. trial was with Taser produced BWV so I assume that is who they will choose but it bodes well if other forces decide to use them witn their front line officiers. Pity its not UK companies who are always the providers.

8th Jun '15

Down 10% today.

Small Cap Value Report (3 Jun 2015) - COG, SPRP, CFYN

Cambridge Cognition Holdings (LON:COG)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

27 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...