Small Cap Report (28 Mar) - HRN, RGS, LOQ, EPO, ALY, FCRM, TET

28th Mar '13 by Paul Scott

8 comments 22564 reads

Pre 8 a.m. comments

Today should be interesting, as the Cyprus banks apparently re-open, with capital controls. Given that bank deposits are no longer safe, there is no logical reason for anyone to leave money in any Cyprus bank, therefore surely a bank run is not avoidable, it's inevitable?

The only question is whether it spreads to other southern European countries. If I had money in a Spanish or Italian bank, I would have withdrawn it by now. If they can plunder bank accounts once, then they can do it again, and surely this is a dangerous development that seriously undermines the whole concept of banking - i.e. that deposits are safe? Anyway, I remain long of Gold, and am very surprised it has only traded sideways in the last couple of weeks.

Toy train company Hornby (LON:HRN) had problems with its supply chain (over reliance on one supplier who messed up production) about six months ago. They today issue an in line with company expectations trading statement, which isn't a lot of use because there don't seem to be any market forecasts for the current year ending 31 Mar 2013. Although it does suggest that things aren't getting any worse.

They also mention broadening of the supply chain, new products, and management succession planning. Without any forecasts I can't value it, so will have to wait for the results to be issued before I can comment further. The trend of profits has been steadily declining since 2008, so it looks like a turnaround plan is needed. These performance & valuation charts don't inspire me at a £30m market cap, plus about £6m in net debt:

I see that Regenersis (LON:RGS) has announced a Placing to raise £6.9m of fresh cash, at a respectable price of 209p, so clear Institutional demand there for the shares since there is no discount to the current share price, which has been very strong - more than doubling in the last six months.

Existing holders are also Placing 893,070 shares on top of the new shares being issued. There is not much dilution for existing holders, as the new shares only comprise 6.6% of the enlarged share capital, so nothing to worry about. The cash raised is for working…

Unlock with Email

Unlock with Google

Already have an account?
Login here

shanklin100

28th Mar '13

Hi Paul

AIUI, HRN have had years of production problems which are always going to be sorted out tomorrow.

More recently they have had problems selling their products and, whatever they do, have so far been able to grow sales to a generation that prefers computer games

I'm not sure we are seeing anything new in today's RNS especially in the absence of any broker forecasts.

All IMHO. Cheers, Martin

kenobi

Re Cyprus,
It doesn't look good at all to me. There seems to be a view that it's all agreed done and dusted. But, how will people react ? how long is it credible to have these controls to stop people moving money ? what about people who have bills to pay ? businesses will start taking only cash and people will be desperate for cash. I heard on the radio that riot police were being sent to banks. Hum, me thinks there aren't enough police to go to every branch.

the markets seem calm this morning, I'm thinking, anything I want to sell in case things look a lot worse later in the day ?

Given how the markets reacted to the coments about cyprus being a template for future bailouts, I think world markets could be heading for a drop if things don't go smoothly today,

K

"More recently they have had problems selling their products and, whatever they do, have so far been able to grow sales to a generation that prefers computer games"

FWLIW I meant "unable" rather than "able" in the above sentence from my earlier post.

Cheers, Martin

Randval

Hi Paul,
TRT is 'blue sky' technology company with no yield.
Some crossed wires??
Transense's patent-protected Surface Acoustic Wave (SAW), wireless, battery-less, sensor systems offer significant advantages over legacy wireless sensor systems
Regards,
Randval

SevenPillars

I do wonder about companies like Hornby and where exactly their future markets are. It seems to me that they are in a niche market which cannot rely on future generations of buyers simply because children do not have the same interest in their products that older generations have had. How many children these days want a train set for Christmas? Where are the future customers going to come from?

SteveM

Hi Paul, I think you probably mean Treatt rather than Transense Technologies, when you refer to the small cap maker of perfumes and essences above. As you say, a reassuring trading update, and an interesting situation in that the family of significant shareholders want to sell out.

Cheers,
Steve.

Paul Scott

Hi Randval,

Arrrgghhhh!! You're right, sorry I mis-typed the ticker. I meant Treatt (LON:TET), apologies for this mistake, and thank you for flagging it up. I have now corrected the article.
Thanks also to Steve M below who also spotted the mistake & correctly identified that I meant TET.

I'll proof read more carefully in future, sorry this one slipped through the net.

Cheers, Paul.

johnrosier

29th Mar '13

Hi Paul, I'm a little more positive on Laura Ashley Holdings (LON:ALY). I think it is performing well operatinally and management are doing all the right things. Doesn't look too expensive either. I have increased to 3% and may well add should the share price move into the 30's. John

Small Cap Report (28 Mar) - HRN, RGS, LOQ, EPO, ALY, FCRM, TET

Pre 8 a.m. comments

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

8 comments

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

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