I Read The News Today Oh Boy! 24-Oct-2017

24th Oct '17 by matylda

12 comments 6849 reads

Morning All!

161.5p - £121m

Interim Results For The 6 Months To End August 2017 – An in-line update with Revenue up 15% to £72.1m (£62.7m last time). Adjusted PBT up 74% to £2.5m (£1.5m last time). Net cash up 85% to £16.9m (£9.1m last time), Interim dividend up 5%. Stockopedia likes this, StockRank 96 and on a PER of 12.6 and a reasonably well covered 4%+ yield - I am quite liking it too. Just wondering though, how long term this will be - Especially when the Harry Potter cow has finally been completely milked! Perhaps this will never happen and perhaps I am being a little too cautious.

Carpetright (CPR)

180p - £122.1m

Trading Update For The 25 Weeks Ending 21 October 2017 – Basically, Flat Revenues and H1 Profit expected to be below that of the prior year. Expecting a significantly stronger H2 within the current range of market expectations. I am reading, H1 lower than the lower end and H2 likely to be at the lower end, of expectations. Seems like a bit of a Profit Warning to me – It certainly rings “caution”.

International Personal Finance (IPF)

199.5p - £437.8

Q3 Trading Update – Cannot really find much to say about this update – Seems in-line to me. This sort of update (one I cannot make sense of) just makes me want to leave this alone. On a PER of 6.5 it’s either wrongly priced or something is not quite right here – There is some kind of outstanding legal dispute on-going in Poland. Anyway, I just can’t get interested here.

Shoe Zone (SHOE)

155p - £77.5m

Trading Update For The 52 Weeks Ending September 2017 – Revenue will be approximately £158m (£159.8m last time) and “the Board expects to deliver full year PBT broadly in line with expectations”. Not the most positive of updates – To me, even the PER of 9.30 looks generous.

McBride (MCB)

230.75p - £414.7m

AGM Trading Update – This statement kind of sums it up “At this early stage of the year the Board is comfortable that the business remains on track to deliver its full year expectations”. It’s up almost 30%…

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MrContrarian

24th Oct '17

My morning smallcap tweet:

MBL (LON:MUBL), Shoe Zone (LON:SHOE), FBD Holdings (LON:FBH)

"MBL Group (MUBL) Unsuspended - new NED appointed. Both divisions doing poorly. Also ""a number of exceptional costs associated primarily with the sale process. This combined with the performance of Home Entertainment Division has led to a loss at Group level for the year to date. The Directors do not anticipate this position changing materially in the second half of this financial year although it is expected that there will be less costs incurred in connection with the sale process in that period."" Also ""board will work with certain shareholders to look into concerns that they have regarding the dilution of Company assets in recent times, and in particular an allegation regarding a breach of the Group's IT security. The Board has previously investigated this matter and found no evidence of wrongdoing."" Is 'recent times' after Trevor Allan stopped being CEO?
'Dilution of Company assets'? Whatever can they mean?"
Shoe Zone (SHOE) Trading: rev slightly down, pretax broadly in line.
FBD Holdings (FBH) "Despite the impact of Storm Ophelia and other recent weather related claims, we continue to see a steady improvement in our financial performance from both better risk selection and improved price adequacy. Absent further severe weather in 2017, we are now on course to deliver our targeted "low double digit return on equity" earlier than previously indicated. If the remainder of 2017 is reasonably benign in weather terms, we believe this return is achievable in this financial year."

Ramridge

Morning matylda - Victoria (LON:VCP) have made an interesting acquisition, Ceramiche, for £50m. My preliminary analysis says it is a good purchase with low valuation multiples.

Bought an initial holding this morning.

Aislabie

GB (LON:GBG) is currently on a p/e of 30 and therefore cannot afford to disappoint the market. Today's results broadly support that but the 40% growth in revenue and 90% growth in sales are flattered by both acquisition and the effect of a one off 3yr deal where all the revenue was taken up front.
Without these items there would have been a 12% underlying growth rate, but the company does claim a "high visibility" of a growth inline with market expectations.
I hold here and am comfortable with continuing to be in a market with what I believe is a sound long term future but I would not be surprised if the P/e dropped a little

matylda

Morning - Thanks for that - Unlike you I have found in the past I am rubbish at working out if things like acquisitions or newly won contracts are good for the SP or not. Usually I get it wrong so only give it a glance to maybe see if it's completely obvious.

Perhaps you have a quick check reference guide for acquisitions - Sorry to be cheeky! LIke today I see 5.4x EBIDTA seems OK but why did they sell so cheap, can this add to the top line, is so when, etc. I just usually find it too complicated to make a correct judgement - Hence as I say, I usually don't bother trying to.

Wishes of course there with the purchase.

JohnEustace

Looks like Ceramiche are a porcelain tile company. Does this indicate perhaps that Victoria (LON:VCP) have run out of carpet makers to consolidate?

Rusty2

Victoria (LON:VCP) debt was already very high, this acquisition will only increase it, tiles sellers are not doing so well if Topps Tiles (LON:TPT) is anything to go by. If was a holder I would be concerned about any slowdown in the U.K. economy. In fact it maybe one to short if there is a recession.

TangoDoc

While I generally avoid retail and am particularly cautious in these troubled times with the inevitable general poverty that Brexit is about to bring to every household, I do think Shoezone might be worth a second look. Considering what they do- buy cheap shoes in China and sell them from rented shops- when you take the value of sterling into consideration, they have done rather better than I would have expected. The boss has a huge stake in the company, earning vastly more each year from divs than the modest salary he pays himself. If we are headed for a period of real austerity, and that seems daily more likely as Brexit negotiations struggle, cheap shoes may be on all our feet. I believe a hard winter with loads of snow is being predicted, just to add to the mix.

simoan

RE: Shoe Zone (LON:SHOE) "Not the most positive of updates – To me, even the PER of 9.30 looks generous."

I thought the results were pretty good considering the cost headwinds and revenue was expected to be lower due to closing stores. For the year end net cash to be £11.8m after paying 18p (including a special) in dividends throughout the year is a really good performance and shows underlying cash generation is still strong. This has a yield of 6.8% which has been well covered by free cashflow. I know I'm on my own with this one but such is life as a contrarian in the current market...

All the best, Si

Re: SHOE - Not sure you're alone there, it's up 3% today.

Of course your comment is valid and appreciated, assuming you are invested, I of course wish you well with it.

Stockopedia is great in that it's members can have and share balanced Bullish, Bearish and Neutral views.

Well I won't be getting too excited with just over £40k's worth of shares traded as I write! Very unloved company. A proper Ben Graham "cigar butt" type situation so by it's nature unpopular. Value investing is so out of fashion I should be wearing flares...

One problem with Shoe Zone (LON:SHOE) may be the shoes. I am not part of their likely marketplace but out of interest I bought a pair of black sturdy looking shoes for a derisory price. The problem is that they weren't sturdy and despite moulded rubber soles apparently bonded to the faux leather uppers they leaked instantly. When you absolutely have to buy cheap then they will sell, but as soon as you have any choice in the matter I think you would be minded to look for more quality

Yes, I'm not the target market either!! Mainly because I hardly ever buy shoes and they'd go bankrupt if they relied on me :). I read these apocryphal tales every time Show Zone is mentioned and yet they still sell lots of shoes. Many people have no choice but to buy cheap shoes and this is the market they address. And they do it very well even if the shoes are crap. As long as management don't have a Ratner moment I'm happy to collect the dividend stream from the lovely cashflow they generate.

I Read The News Today Oh Boy! 24-Oct-2017

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Matylda

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