I Read The News Today Oh Boy! 11-Feb-2019

Monday, Feb 11 2019 by

Morning all!

Avation ( Avation (LON:AVAP) ) – 263p – £170m – PER 9.8

Trading Update For The 6 Months To End December 2018 – Expects H1 Revenue to be $58m ($52.4m last time) with PBT and EPS to be double last year.

This seems impressive and I will be keeping an eye out for Broker notes here, on this ex-holding.

Lok'n Store ( Lok'n Store (LON:LOK) ) – 420p – £124m – PER 32.7

Trading Update For The 6 Months To End January 2019 – A strong H1 with Revenue up 7.7% YoY, EBITDA mentioned, no actuals.

Looks over valued to me.

UP Global Sourcing Holdings ( UP Global Sourcing Holdings (LON:UPGS) ) – 58p – £47.7m – PER 9.5

Trading Update For The 6 Months To End January 2019 – Underlying Revenue up 20.8%, current trading ahead of expectations.

Looks like there could be value here, will be keeping an eye out for Broker notes and revised forecasts.

As always, all comment most welcome!

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Avation PLC is a United Kingdom-based company engaged in leasing of aircraft. The Company is a commercial passenger aircraft leasing group managing a fleet of 47 aircraft, which are leased to airlines globally. The Company's fleet includes Airbus A220, A220-300 A320 and A321 narrow-body jets, Boeing 777-300ER and Airbus A330-300 twin-aisle jets, Boeing 737-800 NG, ATR 72 twin engine turboprop aircraft and five older Fokker 100 jets. It supplies regional, narrow-body and twin-aisle aircraft to the airline industry. It serves the commercial airlines. It owns, through its subsidiaries, a range of commercial passenger jet aircraft, which are leased to various airlines in Europe, Asia and Australia. The Company's subsidiaries include Avation Capital S.A., which is engaged in financing, and Capital Lease Aviation Limited and MSN429 Leaseco Limited, which are engaged in aircraft leasing. more »

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Lok'nStore Group Plc is engaged in providing self-storage serviced and document storage and management services. The Company's segments include self-storage, and serviced archive & records management. It offers self-storage to both household and business customers at its centers. Its personal storage includes storage rooms, student storage, forces and services, and space estimator. Its business storage includes pallet storage, warehouse space, self-storage archiving, flexible office space, multi-site business storage accounts, and eBay and online business. It operates approximately 39 self-storage centers and over two serviced document stores in Southern England. Its personal and household self storage is available at various locations, such as Aldershot, Basingstoke, Bristol, Crawley, Eastbourne, Fareham, Harlow, Swindon and Maidenhead. more »

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UP Global Sourcing Holdings plc is a United Kingdom-based owner, licensee, designer, developer and manager of a series of brands focused on the home. The Company develops, designs, sources and distributes a range of consumer products, focused on six product categories: small domestic appliances (SDA), housewares, audio, laundry, heating and cooling, and luggage. Its owned brands include Beldray, intempo, Constellation and Progress, and its brands under license include Salter and Russell Hobbs. It also offers products under brands, such as American Originals, George Wilkinson, Giles & Posner, Inspire, Portobello, Prolectrix and ZFrame. It products are sold to a cross-section of both national and international multi-channel retailers, as well as other national retail chains. It sells its range of products to over 300 retailers across approximately 40 countries. The Company caters to retailers, supermarkets, general retailers and online retailers. more »

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  Is LON:AVAP fundamentally strong or weak? Find out More »

4 Posts on this Thread show/hide all

MrContrarian 11th Feb 1 of 4

My morning smallcap tweet: No wonder Windar was wilting

Connect (LON:CNCT), UP Global Sourcing Holdings (LON:UPGS), Windar Photonics (LON:WPHO), DCD Media (LON:DCD), Stride Gaming (LON:STR)

Connect Group (CNCT) new contract with Reach from October 2019 to 2024 to distribute Daily Mirror etc. Worth £220m PA.
UP Global Sourcing (UPGS) H1 trading: rev up 20.8%. Guides FY EBITDA above market expectations.
Windar Photonics (WPHO) FY18 trading: rev up 59% to £3.5m (prev guided €4 - 4.5m), EBITDA loss €0.36m (€1.22m). Order book only €1.0m (€3.9m). Component shortages hit H2 prodn, some orders deferred. Why has it taken months to warn?
DCD Media (DCD) guides FY rev only £7.3m (£10.2m) and £0.1m pretax. Current Q1 strong, Q1, with sales that were expected to fall into last year falling into the current year.
Stride Gaming (STR) confirms press reports that it is reviewing all strategic options including sale of group. Denies it was fined twice by the Gambling Commission last year, only once.

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andrea34l 11th Feb 2 of 4

I am put off for the moment with UP Global Sourcing Holdings (LON:UPGS) by the huge blip last year, wondering if their performance will be a bit inconsistent. I'd be waiting to see the results, because I'm figuring that they won't show much if any improvement on 2017.

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mojomogoz 11th Feb 3 of 4

In reply to post #445818

Hi Andrea.

I like UP Global Sourcing Holdings (LON:UPGS) as can be seen by notes I've written. Assuming that FY2019 trading goes as forecast then I think new EBITDA from Equity Development note is a low ball. Margin will likely be a little bit lower than 2017 simply as they have invested for growth.

I think part of the way to look at the blip is to look through from 2014 to today and smooth the trajectory. 2017 spike up was a result of a sort of inadvertent channel stuff in that their key customer B&M European Value Retail SA (LON:BME) were expanding rapidly and opening stores. New stores need to be filled so creates growth for UPGS product and effectively pulls forward some demand. So there was always likely to be a bit of cool off as the channel stuff unwinds and then there was the general retail hiatus that developed to throw on top.

As they grow and diversify customers a bit more the lumps should be less. However, their business model will always create some revenue volatility. They do not have forward agreements with their customers. Primark, Asda, BME, Action, small independents, etc order what they need when they need it. That puts UPGS on the front line of ups and downs of consumer sentiment and resulting retailer responses. I don't know what the multiplier is but UPGS likely to experience an exaggerated response particularly to down swings. This short term uncertainty is managed through tight control of SGA expense.

The positive side of the relationship UPGS has with customers is that they are not sucked into being part of the tight margins of general retailers. If they had agreed predictable demand from customers then they would also need to pass on a decent bit of margin. Whereas the more arms length supplier relationship protects UPGS's margin. SGA as a percentage of gross profit (the way to look at them from a profit and cost management perspective) provides decent fat. They look like they can be a 10% net margin business over time IMO.

I believe they have a valuable and good business model and that the stock is too lowly rated. It will take them a while to earn a decent multiple and it will take growth and diversification to smooth out some revenue and so profit volatility. However, based on where they are today I think a very round 100p is visible. Upside surprise can come from customer wins either through existing relationships for new product ranges or new relationships.

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Beginner 11th Feb 4 of 4

In reply to post #445818

Ultimately UP Global Sourcing Holdings (LON:UPGS) are so tightly allied with the value retailers that it is impossible to differentiate their fortunes. If you would not be happy investing in one, I would avoid the other. UP Global Sourcing Holdings (LON:UPGS) seems priced about right for me now on a PER of about 10.

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