Small Cap Report (8 May) - FCCN, GVC, QPP, RGO

Wednesday, May 08 2013 by

Pre 8 a.m. comments

French Connection (LON:FCCN) have appointed Adam Castleton as their new Finance Director. Coming so quickly after the unexpected departure of the old FD, this suggests that it was probably being arranged before the previous FD left. I stumbled across this article about the old FD's departure, which suggests that trading is still poor at FCCN. They've got time to turn it around, due to the big cash pile, but I'm not as confident as I was about the odds of a turnaround being successful, so I've trimmed back on my personal holding in the company, which is now only small. I've usually found that an FD leaving any company can be a sign of trouble, but we'll have to see what their next trading update says.


GVC Holdings (LON:GVC) has issued an AGM trading update, saying they are in line with market expectations, and are busy integrating the Sportingbet brand, which they acquired in March. GVC shares have doubled in the last year, but at 289p they still look good value against broker forecasts.

I can't find any forecasts on Stockopedia, but on Morningstar they show EPS of 37.4p for 2013 and 54.6p for 2014, which is a PER of 7.8 and 5.3 respectively. Although I would need to double-check that those forecasts have been converted from Euros (the company's reporting currency) into sterling.

The company has historically paid generous dividends, and the forecast yield is 7.6%, rising to 10.2%, again those figures would need to be checked, as they look unusually high, so as always please do your own research. But if those PER and yield figures are correct, then it certainly seems good value.

I think we might have one or two GVC shareholders amongst members who read these reports, if so please feel free to comment in the comments below.


Post 8 a.m. comments

Going back to GVC Holdings (LON:GVC), I've had a couple of chats & emails with friends who have kindly provided me with useful information on the company.

Broker forecasts for calendar 2013 and 2014 are for E44.1c and E64.3c respectively. Converting those into sterling…

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French Connection Group PLC designs and supplies branded fashion clothing and accessories for men and women. The Company operates retail stores and concessions in the United Kingdom, Europe, the United States and Canada and also operates e-commerce businesses in each of those territories. Its principal brand is French Connection, which designs, produces and distributes branded fashion clothing, accessories, such as toiletries and fragrances, shoes, watches, jewelry, eyewear, furniture and homeware through its distribution channels: retail stores, e-commerce, wholesale and licensing. Its other brands include, Great Plains and YMC. The Company operates in approximately 50 countries around the world. The Company's subsidiaries include French Connection Limited, French Connection UK Limited, French Connection (London) Limited, Contracts Limited, French Connection Group Inc., French Connection (Hong Kong) Limited, French Connection (Canada) Limited and YMC Limited. more »

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GVC Holdings PLC is a United Kingdom-based sports betting and gaming company. The Company offer sports betting, casino, poker and bingo gaming solutions via its technology platform. The Company operates in five operating segments: Online, UK Retail, European Retail, Corporate and Other segment. Its Online segment comprises betting and gaming activities from online and mobile operations. Its sports brands include bwin, Coral, Crystalbet, Eurobet, Ladbrokes and Sportingbet; and gaming brands include CasinoClub, Foxy Bingo, Gala, Gioco Digitale, partypoker and PartyCasino. Its UK Retail segment comprises betting activities in the shop estate in Great Britain, Northern Ireland and Jersey; European Retail segment comprises of all retail activities connected with the Republic of Ireland, Belgium, Italy and Spain shop estates; Other segments: includes activities primarily related to telephone betting, Stadia, Betdaq, on course pitches and Intertrader. more »

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Watchstone Group plc offers technology solutions to the insurance, automotive and healthcare industries. Its segments include Hubio, Healthcare (pt Health and InnoCare), and ingenie. Hubio provides integrated solutions to help organizations in the insurance and automotive sectors to build customer engagement and enable usage-based personalization. Healthcare includes ptHealth, a national healthcare company that owns and operates physical rehabilitation clinics across Canada, and InnoCare, a clinic management software platform and call center and customer service operation based in Canada. Its ingenie is an insurance broker. Using telematics technology, ingenie gives its community feedback, advice and discounts to help young drivers improve their driving skills. more »

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

8 Comments on this Article show/hide all

cig 9th May '13 2 of 8

You say poker is about people, but what about robots? There are independent poker bots operators, and a site could also have in house bots to avoid looking too empty.

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Paul Scott 9th May '13 3 of 8

In reply to post #73143

Fair point cig. Although a lot of users also like the chat banter, so it's immediately obvious if the other player doesn't respond to trash talk, that they are a bot. I don't think bots can be used at higher levels either, as good players will quickly work out their programming by testing their responses, and then take them to the cleaners. Unless the whole site is completely rigged (i.e. the cards are NOT random), which has crossed my mind a few times when using some sites, and the most unfeasible card combinations just keep happening so often that you think to yourself that this is a rigged site, and you stop using it.

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mpat89 13th May '13 4 of 8

I'm stuck in FCCN having bought at 40-45p thinking I was making a 'value' investment. I immediately lost the dividend yield and 30-40% of my investment. In hindsight, I would stick to companies with a solid track record that are already performing well. My position in FCCN is now essentially a gamble on the financial results improving before the company runs out of £££.

Professional Services: Web hosting
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PhilH 13th May '13 5 of 8

In reply to post #73144

Poker sites pay some players to sit at tables and play in order to keep tables open and to create games. These players have a reduced rake and the majority of sites operate this strategy.

Also the repeated moans of rigged cards are frequent at online sites.  Let's face it,  it's not in the poker sites interests to run a bent game. On online sites you play many more hands than you'd ever play at a live table and you're more likely to remember 'nightmare' hands rather than hands which play out as per the odds. Bear in mind I've seen AA beat AA with only 3 players remaining on the final table of a live tournament,  plus I've been on the wrong end of a straight flush against another nut flush.  It happens! 

With respect to not responding to trash talk ... Many serious per players will play many tables at once, e.g.  I used to play 4+ single table tournaments together. When playing like that I'm not interested in chat but it doesnt mean I'm a bot.

Professional Services: Sunflower Counselling
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iwright7 10th Jul '13 6 of 8

GVC Holdings (LON:GVC) have issued a July update which has encouraged me to take a small holding. The Chairman has updated the Sportingbet acquisition position... "By the end of 2013, the Sportingbet cost base should have reduced by close to 40%" Astonishing in spite of this Sportingbet sales are up year on year so this combination should have a very +ve effect on profitability. On a PER of just 6.7 GVC Holdings (LON:GVC) looks like great value and worthy of further investigation.

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Maddox 23rd Aug '13 7 of 8

The GVC update revealed a fantastic performance by the management team - they'd taken on an ambitious task in integrating SBT non-Oz divisions and delivered it spectacularly well. Typically when a business undergoes this scale of transformation the trading results suffer, but not in this case. Rapid transformation and improved trading results. This is a clear endorsement of their vision, strategy and ability to deliver.

Really looking forward to the next set of figures.

Maddox (long GVC)

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jjis 25th Nov '13 8 of 8

Coming a bit late to this one - it has come up recently on a few screens I run because of cheap valuation 6.5x P/E , 9% yield (!?) upgrades, what's not to like - oh yes its involved in the on line gambling market. Any way looks like it had a pretty poor trajectory of performance from 2007 - 2011 but seems to have been transformed by Sportingbet acquisition in the last year - the integration of which seems to be going remarkably well and they are flagging possible benefits from World Cup next year.

Also Non Exec Chair has just bought 10,000 shares & I see the US is looking to expand on line gambling:

& I like the Companies commitment to paying dividends as indicated by this from the r3ecent announcement:
GVC is financially focused on generating cash and returning a high proportion of this to shareholders by way of dividends. From 2007, GVC has declared over €85 million or £2.00 per share via dividends to its shareholders.

Just thinking this may be worth a punt given it has gone sideways after the big jump since the result in the summer. But seem to remember Sportingbet was pretty controversial - so does any one else have any more views on it now?

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 Are LON:FCCN's fundamentals sound as an investment? Find out More »

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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