I Read The News Today Oh Boy! 17-May-2018

Thursday, May 17 2018 by

Morning all!

Elecosoft ( Elecosoft (LON:ELCO) ) – 71.5p – £56.1m – PER 26.9

Trading Update For The 4 Months To End April 2018 – Revenue up 7%, PBT significantly higher and in-line with market expectations – Net Cash of £2.4m.

Was on my Watchlist at 40p and probably missed out here, I will move this up to 60p to keep an eye on it.

Eservglobal ( Eservglobal (LON:ESG) ) – 9.25p – £80.6m – PER n/a

AGM Statement – Excited about prospects.

What a rubbish statement, I will remain Neutral while waiting to see some actual numbers.

Kape Technologies ( Kape Technologies (LON:KAPE) ) – 118.5p – £168.8m – PER 39.2

AGM Statement – Strong start to 2018.

I’m Neutral here whilst waiting to see the actuals.

Portmeirion ( Portmeirion (LON:PMP) ) – 1117.5p – £122.1m – PER 15.2

AGM Statement – Sales up 15% for the 4 months to end April 2018 (20% in CC) – FY PBT to be in-line with market expectations.

Still quite like this but based on this statement and forecasts it now seems fairly priced here. I’m going to remove this from my Watchlist and go Neutral for now.

Future ( Future (LON:FUTR) ) – 460p – £211.8m – PER 19.7

Results For The 6 Months To End March 2018 – Revenue up 25% to £51.1m (2017: £40.9m) with Adjusted EPS up 45% to 13.5p (2017: 9.3p).

This was on my Watchlist at 320p – Having clearly missed out I am raising that to 400p now, at least to keep an eye out.

Wincanton ( Wincanton (LON:WIN) ) – 266p – £330.7m – PER 8.80

Preliminary Results For The 12 Months To End March 2018 – Looks slightly better than forecast.

I’m not going to change my Neutral stance here.

North Midland Construction ( North Midland Construction (LON:NMD) ) – 340p – £32.7m – PER 79.5

AGM Statement – A little strange and lengthy statement.…

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Churchill China plc is a United Kingdom-based manufacturer and distributor of tabletop products to the hospitality and retail sectors across the world. The Company's customers include pub, restaurant and hotel chains, sports and conference venues, health and education establishments, and contract caterers. The Company's segments include Hospitality and Retail. The Company primarily offers ceramic tableware. The Company also manufactures and sources product sold through Retail customers for consumer use in the home, in various markets across the world. The Company offers Churchill branded manufactured products. The Company offers various types of products, such as accessories, beverage pots, bowls and dishes, cake stands, cookware, cups, mugs, cutlery, dip pots and sauce dishes, glassware, jugs, melamine items, plate towers, plates, saucers and wooden items. Its collections include Alchemy Fine China, Churchill Super Vitrified, Art de Cuisine, Sola Cutlery and Lucaris Glassware. more »

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Elecosoft plc is a United Kingdom-based company. The Company is focused on providing software and related services to the architectural, engineering, construction and digital marketing industries. The Company’s software programs cover project management, construction site management, estimating, timber engineering, 3D design and visualization, and cloud-based digital marketing solutions. more »

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eServGlobal Limited is a provider of mobile financial technology, offering mobile money solutions. The Company covers a spectrum of mobile financial services, including mobile wallet, mobile commerce, analytics, advanced recharge, promotions and agent management. The Company is engaged in the provision of telecommunications software solutions to mobile and financial service providers on a global basis. The Company's solutions include Mobile Money, Remittance and Recharge. The Company's PayMobile platform is an end-to-end solution for mobile money and mobile financial services. PayMobile is a recharge solution, which includes a featured prepaid account recharge solution. The Company's Remittance solution allows sending money. The PayMobile interfaces with the HomeSend global payments hub. The HomeSend is a solution, which enables cross-border transfer between mobile money accounts, payment cards, bank accounts or cash outlets. more »

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9 Posts on this Thread show/hide all

MrContrarian 17th May '18 1 of 9

My morning smallcap tweet:

Byotrol (LON:BYOT), North Midland Construction (LON:NMD), WH Ireland (LON:WHI), Mothercare (LON:MTC), Foxtons (LON:FOXT)

Byotrol (BYOT) first mass market retail trial in the US, for its 24-hour germ-kill surface sanitizer 'Byotrol24'. Trial will last 10-12 weeks in 10% of Target's stores.
North Midland Construction (NMD) In a long AGM stmt the chmn says "Group revenue increased by 19.8% to £74.55m and profitability by 11.0% to £0.64m. The net margin declined to 0.86%, which the Board continues to consider to be an unsatisfactory return." Generally good tone.
W.H. Ireland Group (WHI) FY trading gloomy but sees better 2019 FY. "As has already been widely reported by others in the sector, after a positive 2017 the Corporate and Institutional Broking division saw much reduced levels of transaction based fee income in the final few months of this reporting period...[2019] Board anticipates that the combination of lower costs in the Private Wealth Management division together with more normalised levels of transaction revenue from the Corporate and Institutional Broking division will lead to strong progress in the Group's profitability."
Mothercare (MTC) Comprehensive debt and equity refinancing of the Company: £28m equity raise, £67.5m new debt facility, £8m shareholder loans and £10m trade finance. Conditional on CVA Proposals leading to 50 stores to be closed, and material rent reductions on a further 21. But what level will it get the placing away at?
Foxtons Group (FOXT) AGM stmt. Q1 rev £24.5m (£28.7m). Lettings had a slow start to January and the timing of Easter. Sales lower. Both now improving.

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iwright7 17th May '18 2 of 9


Re Elecosoft (LON:ELCO) Was on my Watchlist at 40p and probably missed out here, I will move this up to 60p to keep an eye on it.

I am not so sure that you have missed out, but you probably will if your target price is only 60p. I have learnt the hard way that for high stockrank growth companies it pays to bite the bullet and let the market take care of the price, ( I have an initial holding, brought 3 weeks ago). 

Broker comment: Even after its recent appreciation, the stock is still not expensive. Trading on EV/sales and PEG ratios of 2.5x (vs peers on 5x) and 1.0x (1.6x) respectively, whilst being 15% below our 85p/share valuation.

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andrea34l 17th May '18 3 of 9

Fevertree Drinks (LON:FEVR) - a very wishy-washy in-line AGM statement devoid of numbers, share down nearly 8%:

"The first four months of 2018 has seen further positive progress, most notably in the UK where, as market leader, pioneering approach to flavours and formats... means we are increasingly well positioned. The transition to our wholly owned operations in the US is continuing to plan.... with the Fever-Tree US team now in place ahead of taking direct management of  distribution/marketing on 1st June 2018. The Group's performance in the year to date has been encouraging and at this early stage we are trading in line with market expectations for the year ending 31 December 2018."

Based on lacklustre results last year, I am no more than neutral on Staffline (LON:STAF) until I see actual numbers.

Just (LON:JUST) are up 10% after announcing Q1 business up 41%; no mention of profit numbers. Looking at the last prelim results (wading through a shopping list of items in the income statement), 2017 didn't look such a great year although it seems distorted a lot by pro-forma figures and they claim 'pro-forma, adjusted' operating profit +35% with a big increase in margins. They look to be on a PER below 10.

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RustySpanner 17th May '18 4 of 9

I'm new to this and still finding my way around Stockopedia. Re Portmerion, it's overvalued against the valuation methods i.e.

Discounted Cashflow
Ben Graham Rule of Thumb
Relative to Sector
Earnings Power Value
Net Current Asset Value
Net Net Working Capital
Tangible Book Value

It also has a low margin of safety.  So as a value investor I'd avoid based on that data.

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TheWatchmaker 17th May '18 5 of 9

In reply to post #364809

Agreed - Elecosoft still under price for the growth rate (c. 20%). Has some price momentum so I don't see it falling back very far, much more likely to push on upwards towards/through the 85p broker target.
And cash pile growing, so acquisitions also a possibility.

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JamesrWilson1989 17th May '18 6 of 9

In reply to post #364824

Hi Rusty,

Welcome to Stockopedia. I'm invested in Portmeirion (LON:PMP) so thought I'd counter your points as to the reasons why I'd invest. Always keen on debating my holdings with people as it allows me to question my own judgements.

Portmeirion (LON:PMP) has a Marketcap of £121M // PE Ratio of 15.

The reason why I'm invested here is because I think its a quality business and like everything else in life, if you buy quality, don't expect to get it on the cheap. For your purchase, you get:

- No Debt. All profits can be paid to investors and reinvested into the business. Growing dividends as a result.
- Margain's of above 10% - they can hold prices against competitors due to strength of the brands. Seem like this year will be the 10th year of successive record revenue. Growing revenue whilst keeping strong margins ensures that the growth isn't down to simply reducing prices. Customers happy to pay a premium for the brand.
- No one reliance on a single market. UK - 34% // USA - 30% // ROW - 28% // S.Korea - 8%.
- Average of 8% Revenue Growth YoY according to Stockopedia. Todays results would indicate that growth is actually accelerating.

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timarr 17th May '18 7 of 9

In reply to post #365079

I'd agree, but it's GARP rather than Value, so I understood RS's point.

But for a reasonable price you get a collection of valuable brands which provide the company with some competitive advantage and control over pricing. Clearly much of what Portmeirion (LON:PMP) provide can be substituted at a lower price, but the point is that they're able to maintain margins and ROC/ROI anyway, which shows that the brands are desirable.

On top of that capex is relatively low so that most of the operating cash flow drops through into FCF. Oh, and management's capital allocation is admirable - the share count hasn't moved in 5 years, so it's unlikely you'll get diluted.

Basically you have an international company with recognised and valuable brands, a strong balance sheet and decent management throwing off lots of cash. You wouldn't expect that to be available as a Value stock, to be honest.  The Stockrank reflects that view.

My view is that the brands provide a far stronger margin of safety than you can get from pure quantitative analysis of the numbers.  But there are many ways to come at investing, and there are far worse ways to start out than as a Ben Graham style seeker of value.

Anyway, I like it, I hold a few.


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RustySpanner 17th May '18 8 of 9

Thanks for the comments gents, I'm here to learn. And Portmerion have been around for a long time with a strong brand (got some of their stuff in the cupboard).  Just looking at their share price now and I see it's spiked up!

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sharmvr 17th May '18 9 of 9

In reply to post #365109

Concur also a holder of Portmeirion (LON:PMP) and have been waiting for a pull back to add. Not happened yet other than when it was down to 900 and I thought I will wait till 880 like an idiot! (Prices not precise)
I have spoken to mgt and they are unbelievably nice to shareholders, literally will take a call at no notice - I spoke to the commercial director and they clearly know how to and are focused gemerating profit and cash as much as growth.
If there was a small cap to tuck away ad infinitum to let the divi compound, I'd say it is right hear.
Mega caps that offer this are on > 20x, with less growth and weaker balance sheets

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