Small Cap Value Report (15 Dec 2014) - MYSL, ENTU, MBH, CHRT

Monday, Dec 15 2014 by
20

Good morning! Plenty of news announcements today, and we also have the ongoing issue of the plummeting oil price, and general market volatility to contend with - the US markets seem to be going a little wobbly again, and that always spills over into UK markets too. The FTSE 100 Futures are indicating an open down 60 points to 6,235. No doubt the heavy weighting of oil & resource stocks distorts the FTSE 100 - personally it's not an index that I find useful, so I tend to follow FTSE Intl-aim All Share Index (FTSE:AXX) and FTSE Smallcap Ex Investment Trusts Index (FTSE:SMXX) more closely, which are much more relevant to small caps.

Small caps indices are rapidly approaching the year's lows, hit in mid-Oct 2014, so not a happy time to be a small caps investor. Still, that's when the buying opportunities crop up!


MySale (LON:MYSL)

Share price: 173p
No. shares: 150.6m
Market Cap: £260.5m

This is a Philip Green -backed fashion company, which has a very interesting business model of doing flash sales online of surplus stock. Another interesting twist on that idea is to swap out of season stock from Australasia to Europe, thus in theory clearing surplus summer stock at the end of one hemisphere's summer, in the other hemisphere's start of summer.

I've kept my distance from this share so far, as the valuation looked far too ambitious for something that isn't really commercially established as consistently profitable yet.

Profit warning - today indicates that sales in the 5-months to 30 Nov 2014 are only up 4% year-on-year. That's terrible for a supposedly fast-growth internet retailer! The problems seems to be Australia, which is the main established market that MySale currently has. Others, such as UK &USA are recent start-ups.

On profits, the company says;

548e9125caac9MYSL.PNG

My opinion - This looks like a bad miss, both in terms of profits, and turnover. Stockopedia shows broker consensus for 47% turnover growth. So that the company has only managed 4% in H1, and is talking about getting into double figures for the full year (so presumably in the teens?), looks pretty bad.

I expect MySale shares are likely to take quite a hefty hit today. Although as we've…

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MySale Group plc is engaged in operating online shopping outlets for consumer goods, such as women, men and children's fashion clothing, accessories, beauty and homeware items. The Company's segments include Australia and New Zealand, South-East Asia and Rest of the world. It operates with flash sales Websites in Australia and New Zealand (ANZ), South-East Asia (SEA) and the United Kingdom. Its Websites host time limited flash sales in each of its territories. These flash sales are focused on fashion, apparel, health, beauty and homeware categories and are undertaken on a consignment inventory basis. Its retail Websites also focuses on these product categories using drop-shipped inventory. Its flash sales brands include OzSale and BuyInvite in Australia, NzSale in New Zealand, SingSale in Singapore, and MySale in Australia, New Zealand, Malaysia, Thailand, the Philippines, the United Kingdom and Hong Kong. more »

LSE Price
107.75p
Change
-0.7%
Mkt Cap (£m)
167.4
P/E (fwd)
65.6
Yield (fwd)
n/a

Entu (UK) PLC is engaged in the sale of replacement windows, double glazing, entrance doors, patio doors and exterior improvement products within the United Kingdom. The Company's segments include Home Improvements, Energy Saving & Insulation, and the Repair and Renewal Service Agreements (RRSA). The Home Improvement segment products, doors, windows, conservatories and roofline, are sold through separate brands. The Energy Saving & Insulation segment products include solar photovoltaic installations, air-to-air heat pumps, voltage regulators, remote heating controls and boilers, as well as cavity wall insulation, external wall insulation and loft insulation. The Company's brands include Astley Facades, ZEST, Zenith, Weatherseal, Penicuik, Europlas, St Andrews, St Helens, Eco Piggy and Job Worth Doing. Astley offer external wall insulations and render systems, lightweight external wall framing, composite and timber cladding, as well as specialist terracotta and aluminum rain screens. more »

LSE Price
1.4p
Change
 
Mkt Cap (£m)
n/a
P/E (fwd)
n/a
Yield (fwd)
n/a

Michelmersh Brick Holdings Plc is a United Kingdom-based company, which is engaged in the manufacture of clay bricks, tiles and pavers. The principal activity of the Company is the management and administration of its subsidiary companies. The Company's segments are Building materials and Landfill. The Company's Building materials segment is engaged in the manufacture of bricks, tiles and building products being principally facing bricks and clay paviors at Blockleys, which is based in Telford, Shropshire; Charnwood, which is based in Shepshed, Leicestershire; Freshfield Lane, which is based in Danehill, West Sussex, and Michelmersh, which is based in Romsey, Hampshire. The Company's Landfill segment is engaged in landfill operations, through New Acres Limited, which is based in Telford, Shropshire. The Company's brands include Blockleys, Charnwood, Freshfield Lane, Michelmersh and Hathern Terra Cotta. Its Blockleys brand manufactures a range of standard special shaped bricks. more »

LSE Price
86.5p
Change
0.6%
Mkt Cap (£m)
70.1
P/E (fwd)
10.8
Yield (fwd)
3.5



  Is MySale fundamentally strong or weak? Find out More »


10 Comments on this Article show/hide all

iwright7 15th Dec '14 1 of 10

Paul,

Interesting comment on FT100 distortion due to the oil price collapse. Has anyone calculated the effect of Oil companies drop on FT100, either in absolute or % terms since mid-summer?

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jimbobjames2002 15th Dec '14 2 of 10
2

Hi Paul, any more of your excellent audiocasts on the way before Christmas? I've found them really useful thus far.

Interesting bear cast from Tom Winnifreth yesterday basically saying that he doesn't think there's going to be a Santa rally this year – any thoughts from anyone?

Thanks

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kenobi 15th Dec '14 3 of 10

The fall in oil price is bad for resource stocks though we've seen it fall to very low levels before, and bounce back. I think the ability to produce large volumes of shale oil in the us will mean that it won't bounce back as high in the future, but I digress. Surely this cut in oil prices will act as a massive stimulus to western economies ? putting money in peoples pockets and lowering the price of everything that you buy ? (or at least the costs thus putting money in the suppliers pockets). So while I can it understand it hitting the resource stocks shouldn't airlines, supermarkets, transport companies etc be booming ? Also I guess we should look at where money goes when people get a bit more expendable income, because I guess there will be some growth there. There seems to be a lot of gloom and doom about at the moment, but the stimulus particularly in the us, where the country is huge and low fuel tax means pump prices fall much more dramatically, should be significant,

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Paul Scott 15th Dec '14 4 of 10
3

In reply to jimbobjames2002, post #2

Hi jimbojames2002,

I'd forgotten about audiocasts! Will get my thinking cap on, and see if we can get one organised before Xmas.

Regards, Paul.

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Sully8786 15th Dec '14 5 of 10

Hi Paul,

I enjoyed the last podcast with WShak - Have you got any thoughts on Optimal Payments (LON:OPAY) currently? I see Mr. W currently has his claws into it at the moment - I wonder if it's best to leave the stuff on his watchlist alone :|

Regards,

Sully.

Company: Dave Sullivan - Talking Stocks
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Mrx9000 15th Dec '14 6 of 10
1

Not sure I would want to invest my money into ENTU when a majority shareholder floats Entu on AIM and just writes off millions to a Rugby Club and various others and is involved in funding the McCanns. Just my opinion.

http://www.mccannfiles.com/id147.html
http://jillhavern.forumotion.net/t2028-that-swine-brian-kennedy
http://gerrymccan-abuseofpower-humanrights.blogspot.co.uk/2010/07/madeleine-mccann-brian-kennedy-quiz.html

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Ramridge 15th Dec '14 7 of 10
2

In reply to Sully8786, post #5

Hi Sully - re. OPAY. I dumped my shares as soon as I read that the CFO was leaving (12/12/14 RNS).
Yes, he has been retained as a consultant for a few months to help with the transition, but usually imho this smells trouble. Tesco's Philip Clarke was made available for 6 months to help with the transition when Dave Lewis came on board. Look at the scale of the kitchen sinking that has happened since. Call me over cautious, but in this market I rather cut my losses and live to fight another day. Please DYOR.

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Sully8786 16th Dec '14 8 of 10
2

In reply to Ramridge, post #7

Hi Ramridge,

Yes, I had that thought too but didn't act on it. They've had to put another one out today with inline trading and telling everyone what a jolly good FD the new chap will be - of course us muggles will never know what's actually gone on.

I think the thing that kept me in (A painful decision) was that I feel the company is actually making money (I'm no forensic accountant mind) as opposed to Quindell (LON:QPP) which has been covered here and elsewhere which, does not.

So, we'll see how it turns out and hopefully TW will look for another victim after Christmas.

Regards,

Sully.

Company: Dave Sullivan - Talking Stocks
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Ramridge 16th Dec '14 9 of 10

In reply to Sully8786, post #8

Hi Sully -
On fundamentals this is a great company. The worry to me is management. Maybe the change of CFO is what happens when a company grows rapidly. Sometimes a manager who is OK when a company is small is no longer competent to handle a much larger group. So you look for a heavy hitter to replace him. Let's hope that is the case.
GL in any case.

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Sully8786 16th Dec '14 10 of 10

In reply to Ramridge, post #9

Cheers Ramridge - something tells me I'll need it :|

Company: Dave Sullivan - Talking Stocks
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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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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