Small Cap Report (4 Feb) - WGB, CRE, MUR, EGS, SAA, KBC, NXR, IND

Monday, Feb 04 2013 by

I'll start with two companies whose shares I hold. Firstly, Walker Greenbank (LON:WGB) which is an up-market wall coverings & furnishings group, which had a market cap of £46.7m last night. The shares are up 8% to 86p this morning, on a very good trading update.

Incidentally, it's worth pointing out that most websites update key information (such as market cap) overnight, so often that won't reflect a sudden increase or decrease in share price during the day. So it's always worth finding the number of shares in issue (which is situated near the bottom left of the StockReport on Stockopedia) and multiplying that by the current share price, to be sure that you are using the very latest market cap after a big move in share price.

Also, if a recent Placing or Rights Issue has taken place, then you should always double-check that the number of shares in issue is correct. If you find an error (which is very rare, but can happen), then flag it up by raising a "green ticket" using the help & feedback button on the right hand side of the page. I recently found a glitch in the data on DP Poland (due to a large recent Placing), flaggged it, and Stockopedia had corrected it, via Reuters who supply the data, within 24 hours.

The key phrase in the WGB trading update (for the year ended 31 Jan 2013) is that, "pre-tax profits will be ahead of the top end of analyst forecasts". This is where the guesswork starts, as of course most investors don't have access to the full range of broker notes. So the only figure I have to work on is the market consensus, which is shown as 8.77p, so perhaps we might be looking at c.9p EPS? That's a big improvement on last yea's 6.7p EPS, so a share price of 87p, giving a PER just under 10, seems pretty reasonable to me. I shall therefore continue to hold these shares, and expect them to continue rising. A price under about 110p looks good value to me. Results are due to be released on 15 April.

Buying into reasonably priced companies which are trading well, is an excellent investing theme at any time, but especially at the moment, where value is becoming harder to find. The market seems to (sometimes)…

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Walker Greenbank PLC is an international luxury interior furnishing company. The principal activities of the Company are design, manufacture, marketing and distribution of wall coverings, furnishing fabrics and associated products for the consumer market. It operates through two segments: Brands and Manufacturing. The Brands segment is engaged in the design, marketing, sales and distribution, and licensing activities of Sanderson, Morris & Co, Harlequin, Zoffany, Anthology and Scion brands operated from the United Kingdom and its foreign subsidiaries in the United States and France. The Manufacturing segment is engaged in the wall covering and printed fabric manufacturing businesses operated by Anstey and Standfast. It sells in approximately 80 international markets. It operates through its subsidiaries in the United States and France, and its own sales operations in Holland and Dubai. The Company has showrooms in London, New York, Paris and Dubai. more »

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Murgitroyd Group PLC is a United Kingdom-based company, which is engaged in providing a range of intellectual property (IP) advisory services through its trading subsidiaries, Murgitroyd & Company Limited, Murgitroyd SARL and Murgitroyd LLC, which are European patent and trade mark attorneys. The Company offers a range of services, such as patents, trademarks, designs, utility models, global IP filing, renewals, searching, oppositions and appeals, copyright, domain names, European patent validations, translation, licensing, monetization, IP audits, litigation support, due diligence, patent drawings, the United Kingdom patent box and Italian patent box. The Company caters to a range of sectors, such as high-tech and software; life science, chemistry and pharmaceuticals; engineering; energy; consumer goods; business and financial services, and creative industries. It has approximately 10 offices across Europe, in the United Kingdom, Finland, France, Germany, Ireland and Switzerland. more »

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  Is LON:WGB fundamentally strong or weak? Find out More »

4 Comments on this Article show/hide all

Boros10 4th Feb '13 1 of 4

Another great piece Paul.

I agree with your comments on e.g solutions. The Company has been treading water for some years now. Profits have been tiny. Also around £1m of software development has been capitalised. Had this been expensed as incurred we might have been seeing small losses. Before today's announcement the valuation at over £15m was just too high given less than £5m of revenues, no growth and little or no earnings.

The strategic partnership with Aspect might be the catalyst for the business to move forward in the US and Asia. It is an important step in the right direction and makes a bit more sense of the valuation. I'd want earnings potential of £1.5m in the next couple of years to justify an investment here but I can't judge whether the Aspect deal will be able to deliver this kind of punch.

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madmix 5th Feb '13 2 of 4

Of the shares in my own portfolio, which can be found on the relevant page on my Blog, the ones that are still in buying range for me, are KBC Advanced Technologies (LON:KBC) (big contract win, reasonable valuation against forecast earnings)

Another contract win was mentioned on their website last week :

(31 January 2013) – KBC Advanced Technologies plc ("KBC"), a global provider of software and consulting solutions, today announces that it has signed a contract with TonenGeneral Sekiyu K.K. ("TonenGeneral").

Under this multi-million US dollar contract, KBC will provide a five-year licence for Petro-SIM™, selected SIM models and software services to TonenGeneral. The contract will include initial software implementation services.

FWIW, I bought some on the day of the trading update, and have added more since.

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PhilH 12th Apr '13 3 of 4

Walker Greenbank (LON:WGB) appears to be making some strong moves in the run up to the preliminaries next week.
I've held them since Aug 2011 & I've done well off them doubling up. I've recently sold 50% banking my profit and I'm letting the rest run for now. Be interesting to see how the preliminaries go down!

Professional Services: Sunflower Counselling
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Paul Scott 12th Apr '13 4 of 4

Hi Phil,

I know, am kicking myself for selling my WGB too soon. Was just over-stretched & needed to cut back on a few things. It's a very good company I think, that has traded well in difficult times, so likely to do very well in better economic times.


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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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