Small Cap Value Report (12 June 2019) - TAP, PARK, RFX, CGS, NXR

Wednesday, Jun 12 2019 by
62

Good morning folks,

I only belatedly noticed this horrible RNS from Taptica International (LON:TAP). It says that Uber has filed a complainst against two Taptica companies, along with dozens of other companies, alleging "fraudulent concealment, negligence and unfair competition".

While there may be limits to any potential damage, given the US-centric nature of the complaint, this adds a risk that is difficult to quantify to a share which already lay outside my investable universe. 

I would remind readers that Taptica insiders sold 10.6% of the company at 140p, when the P/E multiple was 5x.

Taptica International (LON:TAP)

  • Share price: 99p (+19%)
  • No. of shares: 127.6 million
  • Market cap: £126 million

Update re Uber lawsuit and Proposed Share Buy Back

This sounds like it's in response to angry calls from shareholders, looking for more clarity. Why not provide this detail with the original RNS?

What it says: In 2014, Taptica was retained by another company, "Fetch", to run a campaign for Uber.

The revenue to Taptica from this campaign is not "a material portion of Taptica's revenue". So perhaps the associated liability is not too large? (I am not a laywer.)

Taptica then points out that Uber and Fetch have had a troubled relationship. See here for prior coverage of the $40 million lawsuit filed by Uber against Fetch. I think the implication is that the situation turned ugly for multiple parties and that Taptica might be an innocent scapegoat.

Buy-backs: Taptica is "actively considering" another buyback programme. With the shares trading at an EV/EBITDA multiple of 2x at last night's close (Stocko date), that is a relief.

My view: It is beyond my ability to analyse this company's investment merits, but I am fascinated to see how it works out. The ValueRank is 97. Good luck to all holders.


Other stories today (this list is final):


Park (LON:PARK)

  • Share price: 68.1p (-0.6%)
  • No. of shares: 186 million
  • Market cap: £127 million

Final Results

(Please note that I have a long position in PARK.)

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Disclaimer:  

All my own views. I am not regulated by the FSA. No advice.

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Taptica International Ltd offers data-focused marketing solutions that drive execution and brand insight in mobile, leveraging video, native, and display to reach the users for every application, service, and brand. The Company’s technology is based on artificial intelligence and machine learning at big data scale. The Company works with more than 450 advertisers, including Amazon, Disney, Facebook, Twitter, OpenTable, Expedia, and Zynga, and more than 50,000 supply and publishing partners worldwide. more »

LSE Price
155p
Change
1.6%
Mkt Cap (£m)
186.4
P/E (fwd)
4.1
Yield (fwd)
n/a

Park Group plc is a multi-retailer gift voucher and prepaid gift card business, which is engaged in delivering rewards and prepaid products to the consumers and corporates in the United Kingdom. The Company focuses on consumer prepayments and corporate reward and incentive programs. The Company's segments include consumer and corporate. The consumer segment includes the Company's sales to consumers, utilizing its Christmas savings offering. The corporate includes the Company's sales to businesses, offering primarily sales of the Love2shop voucher, flexecash cards and other retailer vouchers to businesses for use as staff rewards/incentives, marketing aids and prizes and all online sales. Love2shop is the multi-retailer gift voucher and prepaid gift card, accepted at over 140 retailers with approximately 20,000 stores in the United Kingdom. It offers flexecash, which is its information technology infrastructure. Its Park Christmas Savings Club operates through a network of agents. more »

LSE Price
55p
Change
 
Mkt Cap (£m)
102.5
P/E (fwd)
10.2
Yield (fwd)
6.0

Ramsdens Holdings PLC (Ramsdens) is a financial services provider and retailer. The Company operates through four segments: Foreign Currency Exchange, Pawnbroking, Purchases of precious metals and Jewellery Retail. The Foreign Currency Exchange segment consists of primarily, the sale and purchase of foreign currency notes with prepaid travel cards and international bank to bank payments. The Pawnbroking segment is a form of asset backed lending where an item of value is given to the pawnbroker in exchange for a cash loan. Through its precious metals buying and selling service, Ramsdens offers to buy unwanted jewelry, gold and other precious metals from customers for cash. The Company is engaged in refurbishing items bought from customers and retailing them through its store network. The Company also provides ancillary services, including franchise fees, western union, sale and buy back of electronics, and credit broking. It has a portfolio of over 130 stores. more »

LSE Price
189p
Change
1.1%
Mkt Cap (£m)
57.7
P/E (fwd)
9.3
Yield (fwd)
4.1



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


53 Comments on this Article show/hide all

tomps3 12th Jun 1 of 53
4

Park (LON:PARK) results today. Here an overview by CEO, Ian O'Doherty: operational performance and a bit of colour on implementation of the strategy.

https://www.piworld.co.uk/2019/06/12/park-group-park-final-results-to-31-march-2019/

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Brookeda 12th Jun 2 of 53
37

I would like to express my thanks for yesterdays report which was not only covering many companies but also detailed in its analysis. Great commentaries from everyone else also. Thanks

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MrContrarian 12th Jun 3 of 53
14

My morning smallcap tweet: Paragon of incompetence.

Paragon Entertainment (LON:PEL), PCI- PAL (LON:PCIP), H C Slingsby (LON:SLNG), Anexo (LON:ANX)

Paragon Entertainmnt (PEL) reverse ferret on FY rev and profit guidance due to not understanding FRS15. Pretax now -£3m, was £2.5m to £2.7m. This is the second time it's done exactly yhe same thing! In March it increased the guided loss from £2.4m.
PCI Pal (PCIP) signs global extension to UK reseller contract with leading CCaaS and UCaaS vendor, 8x8 Inc). Also extended its existing partner relationship with a leading telecommunications company in Canada.
Slingsby (SLNG) AGM stmt. Five month rev up 3.5% "reflecting the lower level of growth seen during April and May 2019." Blames unwinding of Brexit stockpiling. Cautious regarding H1.
Anexo (ANX) AGM stmt. Strong trading, guides pretax ahead of current market expectations of £18.1m.

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Graham Neary 12th Jun 4 of 53
2

In reply to post #483086

Hear, hear!

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Mh101 12th Jun 5 of 53
1

Castings (LON:CGS) please Graham - really good results (revenue and EBITDA beats), company actually has a pension fund in 45% surplus, and around £40m cash on balance sheet (25% of mkt cap). Trades under 10x earnings and yielding near 7%. Looking quite exciting

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doublelutz 12th Jun 6 of 53
6

Results this morning from Norcros (LON:NXR) show 10 years of continuous growth. Profits up, dividend up, debt down, pension deficit down, very low PE but seems to have difficulty in being appreciated.

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timarr 12th Jun 7 of 53
5

On Taptica International (LON:TAP) I noticed the other day the UK Data Protection Commissioner stating that her office is taking a deep dive into how the ad tech industry is managing GDPR:

Now, she said, her office is taking a closer look at the ad tech industry, specifically looking at transparency and fairness, as well as the legal basis for consent.

https://iapp.org/news/a/dixon-...

Whether that leads to anything or not is an open question but with potential fines of up to 4% of global revenue it'll be another overhang on the price for a while, given that these investigations grind exceeding slow ...

timarr

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mercury61 12th Jun 8 of 53
3

Taptica International (LON:TAP)
REG – Taptica Int. Ltd – Update re Uber lawsuit and Proposed Share Buy Back
07:33
For best results when printing this announcement, please click on link below:
http://pdf.reuters.com/htmlnews/htmlnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20190612:nRSL9315Ba

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Laughton 12th Jun 9 of 53
3

Boohoo (LON:BOO) - I appreciate that this is no longer a "small cap" but I know that many on here own or follow it from the days when it was and originally flagged up by Paul.

Really strong Trading Update for the first quarter today. A bit better than I was expecting and still a lot more to play for here in my opinion.

But what do I know? Share price down almost 6% at the open (everyone else was obviously expecting something better).

If Paul's around today perhaps he'd like to give his thoughts.


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johnsmith68 12th Jun 10 of 53
7

In reply to post #483086

Well said Brookeda. I wanted to add my appreciation for a tremendous effort from both Graham and Paul yesterday as well as all the below the line commentary. Kudos to all. Thanks for keeping this such an indispensable, informed and fascinating resource.

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fredericktug 12th Jun 11 of 53
2

Good Morning Graham,

Can I make a request for a look at Ramsdens Holdings (LON:RFX) and Elektron Technology (LON:EKT) today, if you have time?

ATB!

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InvestorJohn 12th Jun 12 of 53
2

I would be interested to hear views on Eckoh (LON:ECK) looking at the results which are in line I still cant really understand why I hold with not much to get excited about really...

As far as I can make out the Margins are wafer thin?

Gross profit of 16,527 in the UK with (14,140) of Administrative expenses and in the US profit of 7,578 with (8,771) of expenses...

The Impact of adoption of IRFS 15 has muddied the waters too although the restated comparisons are in the results

Diluted Earnings per share are 0.36 this year against 0.52 so down 31%

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jonno 12th Jun 13 of 53
1

Another vote for Ramsdens Holdings (LON:RFX) please Graham. Would also b interested in your views on Norcros (LON:NXR), time permitting.

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About Graham Neary

Graham Neary

Full-time investor and independent analyst. Editor at Cube.Investments, small-cap writer at Stockopedia. Previously a fixed income analyst in the City and institutional fund manager. I'm a CFA charterholder and have the Investment Management Certificate and STA Diploma in Technical Analysis for good measure. When I'm not talking about finance, I enjoy recreational poker, chess and Mandarin Chinese. more »

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