I Read The News Today Oh Boy! 23-May-2018

23rd May '18 by matylda

7 comments 4713 reads

Morning all!

EasyHotel ( easyHotel (LON:EZH) ) – 128p – £128.6m – PER 72.8

Interim Results For The 6 Months To End March 2018 – Revenue up 51.7% with PBT up 52.5%. FY remains in-line.

I can’t get past Neutral here on a PER of 72.8, I must surely be missing a trick here!

Hollywood Bowl ( Hollywood Bowl (LON:BOWL) ) – 223p – £334.5m – PER 17.1

Interim Results For The 6 Months To End March 2018 – LFL Revenue up 9.3% (£63.6m vs £58.2m), PBT up 17.4% (£14.6m vs £12.4m), EPS up 18.1% and the Interim is up 12.8% - Debt down almost 50% (£7.2m). FY expected to be in-line.

This is quite impressive and having moved from to Neutral recently I find myself inclined to at least have this on my Watchlist – 200p if I do not open a position soon.

Sanderson ( Sanderson (LON:SND) ) – 105p – £62.8m – PER 15.8

Interim Results For The 6 Months To End March 2018 – Slightly ahead of management's expectations, Revenue up 34% to £14.61m (2017: £10.90m), Operating Profit up 34% to £2.08m (2017: £1.55m). Confident on FY.

Looking good here, will add it to my Watchlist at 95p.

Stride Gaming ( Stride Gaming (LON:STR) ) – 202p – £153.1m – PER 8.47

Interim Results For The 6 Months To End February 2018 – Revenue up 14% with Profit After Tax up 114%, Adjusted EPS down -7% and Basic Profit up 113% from -£15.3m to £2.0m.

Just way too confusing for me, I remain Neutral.

NAHL ( NAHL (LON:NAH) ) – 123.25p – £56.9m – PER 6.68

AGM Statement – In-line.

Still not interested in investing in this company (mainly due to its primary activity), I am actually going to cease coverage.

Medica ( Medica (LON:MGP) ) – 133.4p – £148.2m – PER 16.4

AGM Statement – Started well, FY in-line with the Board’s expectations.

EPS forecast as +39% in 2018 and +14.1% the year after, ROCE and Operating…

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MrContrarian

23rd May '18

My morning smallcap tweet: Snowflakes at RTN expect FY in-line.

Clear Leisure (LON:CLP), Restaurant (LON:RTN), Sanderson (LON:SND), Frontier Smart Technologies (LON:FST), Mediazest (LON:MDZ), Bagir (LON:BAGR), Catalyst Media (LON:CMX), Best Of The Best (LON:BOTB)

Clear Leisure (CLP) placing to keep the lights on at 0.95p, a 9% discount.
Restaurant Group (RTN) trading. Last 20w LFL -4.3%, but snow-adjusted -3.1%. Guides FY in-line. I'm short.
Sanderson Group (SND) H1 slightly ahead of management's expectations; with rev up 34%, EPS up 44% to 2.3p. Outlook 'confidence'.
Frontier Smart Technology (FST) Trading. "Challenging trading conditions in Q2-2018 are likely to have an adverse impact on the Group's FY-2018 trading performance." Cuts FY sales guidance to $47.7m (£34.9m) and EBITDA of c. $1.0m (£0.8m). Cutting R&D spend by $2.2m and other cost cuts of $1.2m in FY. New revolving credit facility replaces one expiring Sept.
MediaZest (MDZ) guides FY revenue in line with the prior year but profitability marginally behind. £200k of profit from some last-minute orders won have fallen into FY19. Expects 'considerable' YoY improvement in H1.
Bagir Group (BAGR) Shandong Ruyi's aquisition of 54% of the Company's enlarged issued share capital taking longer than expected but both Ruyi and Board confident they will complete the deal.
Catalyst Media Group (CMX) Sports Information Service (in which CMX has 20% holding) will be hit by £2 max bet on FOBT. "The new media rights contracts that SIS has been entering into with UK and Irish racecourses will though partially mitigate the impact of the change on SIS's business, along with other mitigating actions that are being and could be implemented by SIS."
Best Of The Best (BOTB) The HMRC Strikes Back. HMRC has paid £4.5m claim but expenses need to be paid but now claims retrospective Remote Gaming Duty for a period of four years. No figure, is contesting.

Lloyd Garvey

I think the trick you missed on Easy Hotel is just the 'Easy' and bright orange sign.

Perhaps you should rename this to 'I read the Easy news today' may do wonders.....

Mike888

Yes I'm with you on Medica, I've been watching it for months, I just need to see some market confidence before I commit

Vsihv

Thanks Matylda as always - I find this to be one of the best sources of seeing a few companies worth looking into that I may not have come across before.

Hollywood Bowl (LON:BOWL) indeed an impressive set of results for a cash generative business with good growth.
I looked at the results versus Ten Entertainment (LON:TEG) and I get the feeling TEG is the cheaper company, with similar quality.

Without knowing the sector, I think Hollywood Bowl (LON:BOWL) is obviously the market leader but I get the feeling £TEN might have more diversification benefit as an entertainment venue versus pure play bowling.
Both high quality with similar operating metrics and decent balance sheets and cash generative.

Personally I prefer organic to acquisition led growth, but it seems you are paying less for more growth with Ten Entertainment (LON:TEG)
Would value any thoughts from the community.

Medica (LON:MGP)
I hold and recently added - now sitting on 25% loss in stead of 45%. Think I got carried away with the story at initial purchase (even though I was concerned about valuation) mainly because I am idiot!
I think this is a high quality, operationally geared business with the ability to move beyond tele radiology to a number of other fields, with a management team that have the networks to make this happen. (thought it was worth paying for those heavyweights!)
Hopefully, this will happen while making the NHS and by extension the government and tax payers better off.
Shareholders getting a double whammy!
DYOR but at these levels, I think this is a nice opportunity for a quality growing business stock with a fair amount of operational leverage.

Final question - about investing behaviour / education:

I have a stock on my radar / watchlist (recent examples Hollywood Bowl (LON:BOWL) or £BMY), that I intend to buy for the longer term. I don't buy and price moves in the direction I would have wanted it to, had I bought.

Assuming the valuation / business still works - is the market saying that I was correct in my initial views and therefore should be willing to buy (effectively averaging up a la Naked Trader) or do I remain hung up on the price?

I read the art of execution recently - very useful but not clear on what is appropriate in this circumstance, but as per Tommy Burns, averaging up is psychologically (for me at least) very tough

I had forgotten I hold Bagir (LON:BAGR) - one of those deep value plays, where the value keeps getting deeper!

At $16m for 54%, does that not put the business on some $30m (£20 - £25m) versus a current market cap of £5m?

Should I be backing the truck or learning???

matylda

Thanks all as always for your kind words and valuable comment.

I think we all make many mistakes, I personally think the 20% (max) and out is a good rule, I used to be more flexible to 25% but generally now 20% and I am out. That's initial stop and trailing on those moving up. I look at it that if it takes me out at 20% its better than at 80% - And, if it reverses, one can always get in on a new high, for example. Having read Minervini I am now missing less investments (waiting for a pullback) than I was previously - His books are well worth a read.

Everyone of course plays things completely different, I believe it's a case of many years of trial and error to ensure you're able to sleep at night!

Bagir (LON:BAGR) - I personally wouldn't go near it for a number of reasons, it's too small (<£30m), it's latest actuals were a loss, the spread is HUGE and it's clearly in a downtrend.

Yes - I must read a Minervini book or others that place more weight on momentum - since it is very much a bias of mine -
I have lost several waiting for pull backs and I dare say often, it is price anchoring as opposed to analysis stopping me from pushing the button.

You are right - we are all learning and it is what one is comfortable with.
I am a fuddy duddy accountant, so feel I understand balance sheets / accounts / valuation so that is what I err towards, and generally avoid blue sky / high momentum.

Also depends on risk tolerance and objective - I am not sure I would be willing to be as prescriptive as out at certain level - depends on the security.
For example Bagir (LON:BAGR) - I considered deep value and was willing to risk 100% loss - this is before I learned about the travails of believing proactive investors and investing in AIM listed Israeli stocks.
I would add de-listing risk to your reasons of not touching, even if it does trade below cash!
I most definitely will not be adding to the holding!

I Read The News Today Oh Boy! 23-May-2018

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Matylda

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