Small Cap Report (30 Jan) - ZZZ, TRCS, HRN, GBG, SPE, RNWH

Wednesday, Jan 30 2013 by

Regular readers of my Blog might recall that I did a write up on Snoozebox Holdings (LON:ZZZ) last summer. The concept intrigued me (they convert standard shipping containers into comfortable temporary hotels, or staff accommodation), although the valuation became pretty stretched, and I sold my small personal shareholding later last year.

I'm thinking about buying back in, after a decent trading statement today. Results for calendar 2012 are expected to be announced in early April, with revenues ahead of, and profit in line with expectations.

So what are expectations? The only forecasts I can find suggest a small loss for 2012, but a £2m profit for 2013 (which translates into 3p EPS for 2013). So the share price of 69p looks very warm, on a PER of 23 times 2013 anticipated EPS, but the market looks ahead and prices in growth, so good growth companies are rarely cheap.

There is encouraging contract news in the trading statement today, which makes it clear that the concept is taking off, so it's really just a roll-out now. The temporary nature of most installations is a bit of a worry, so there might yet be bumps in the road in future, if e.g. they have a period of under-utilisation of the units. The longer-term installations are what really matter, as that generates consistent cashflow, without the costs of repeatedly erecting & dismantling a Snoozebox mobile hotel. Thorpe Park is a good example of where it's working, plus numerous other sites, such as Silverstone.

So it's a great concept, that seems to be working. Roll-out potential could be huge (especially if they achieve global growth), but the valuation does concern me, as a fair bit of growth is already factored in.


Tracsis (LON:TRCS) is a very interesting little company. I was one of around 85 investors who met the CEO, John McArthur at a recent investor forum arranged by Equity Development - clicking on this link takes you to the page on their website where the presentation slides from the companies at the meeting can be viewed - the other two companies presenting were Regenersis and VP Group.

Tracsis specialise in scheduling software which pretty much the whole UK rail industry uses to plan which trains & crews go where,…

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Snoozebox Holdings plc is engaged in investing in the development of accommodation solutions for existing and new vertical markets. This includes investment in developing prototypes of new V1 type accommodation, V2 second generation accommodation together with developments for the medical and social housing markets. The Company's segments are Events and Semi-Permanent. The Events segment includes all activities providing short-term hotel accommodation at events and festivals. The Semi-Permanent segment includes all activities in relation to the provision of long-term managed hotel solutions. Its geographical segments include United Kingdom, Other European countries and Rest of the World - South Atlantic. It has possession of and access to approximately 570 V1 containerized rooms and over 18 V2 rooms on trailers for deployment to generate Semi-Permanent revenues. more »

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Tracsis plc is a holding company. The Company is engaged in the business of software development and consultancy for the rail industry. Its segments include Rail Technology and Services, and Traffic & Data Services. The Rail Technology and Services segment includes its Software, Consultancy and Remote Condition Monitoring Technology, and also includes Ontrac Limited and Ontrac Technology Limited (together being Ontrac). The Traffic & Data Services segment includes data capture, analysis and interpretation of traffic and pedestrian data to aid with the planning, investment and ultimate operations of a transport environment and it also includes SEP Limited (SEP). It provides software products, consultancy services and delivers customized projects to solve a range of problems within the transport and traffic sector. It specializes in solving a range of data capture, reporting and resource optimization problems along with the provision of a range of associated professional services. more »

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Hornby Plc is a holding company. The Company is engaged in developing, designing, sourcing and distribution of hobby and interactive products. The Company distributes its products through a network of specialists through its online activities and various retailers throughout the United Kingdom and overseas. The Company has operations in the United Kingdom, the United States, Spain, Italy and the rest of Europe. The Company offers its products under various brands, such as Hornby, Scalextric, Airfix, Humbrol and Corgi. Its subsidiary, Hornby Hobbies Limited, offers products under various categories, which include Train Sets, Locomotives, Train Packs, Tracks and Extras, Wagons and Coaches, and Spares and Accessories. Its subsidiaries include Hornby Espana S.A., which is engaged in the development, design, sourcing and distribution of models, and Hornby America Inc., Hornby Italia s.r.l, Hornby France S.A.S and Hornby Deutschland GmbH, which are distributors of models. more »

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  Is Snoozebox Holdings fundamentally strong or weak? Find out More »

6 Comments on this Article show/hide all

Matthuntmba 30th Jan '13 1 of 6

Thanks for writing these, I check them out every day. Can I just ask a question about top-slicing? Do you have any rules, i.e once you hit a percentage gain sell some? Or do you just judge each case on its own merit? I am always afraid of cutting my winners.

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Paul Scott 30th Jan '13 2 of 6

In reply to Matthuntmba, post #1


Personally I look at each case individually. If a share has done a particularly rapid move up, then I feel it's usually sensible to lock in some gains, by maybe selling 10-20% (as you can always buy them back).

But it depends on the valuation of the share itself. If it still looks decent value, then I run the gains.
Things that are hitting a PER of 20 about now seem like ideal candidates to lock in some gains.
A market correction could easily take 20% off the price of highly rated stuff, and would then provide a buying opportunity.

It's always tricky to decide when to sell, but I feel top-slicing is a nice strategy as it frees up cash for other things, and you feel satisfied whatever happens to the share price afterwards - if it goes down then you've locked in profit at a higher price. If it keeps going up, then you still benefit from most of the upside.

Cheers, Paul.

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carmensfella 30th Jan '13 3 of 6


The blog just gets better and better..

I do really think you should warm to Renew ! The directors presented at Mello about six months ago and were impressively going about re-engineering the business which is actually a pun ! They are vastly increasing the engineering projects and moving away from standard construction and therefore improving margins. The order book is growing too....increasing revenues and margins are a nice concoction and generally make for healthy growth in profits so I think there is lots of scope for under promise/over deliver here.

RNWH is now my 9th largest holding and I think it could move up the order. Here is the latest WH Ireland broker update this morning


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Paul Scott 30th Jan '13 4 of 6

In reply to carmensfella, post #3

Hi Dave,

Thanks for your comments & the broker note.
I thought you'd mentioned Renew to me before, and I can see why you like it now.

I'm fully invested on other things right now, but if there was any spare dosh around, I'd be picking up some at 92p. By my calcs, a price of 120-130p looks justified, providing there are no mishaps. Plus reasonable divi income whilst you wait.

Cheers, Paul.

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ericb 30th Jan '13 5 of 6

Hi Paul great to see the blog has elevated to stocko !

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Death by Donut 31st Jan '13 6 of 6

Wonder if ZZZ have a spare 8 x 10 container knocking about , could do with it on the site I'm currently working on. :0)
Like the new site Paul.


DbD :0)

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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