Small Cap Value Report (16 Sep 2019) - Black Gold, ESL, GLE, HAT/RFX, FIF, LTG, ALFA

Monday, Sep 16 2019 by

Good morning,

Timings - I have a lot of other work commitments every day this week, so I plan to write these reports very early - just so you know!

RNS announcements on my radar today (list is growing):

Black Gold

Brent crude was up as much as 19% overnight, with a high around $70 (versus a close of $60 on Friday). It has dropped back as of now to c. $65.50.

Drone strikes on Saudi Aramco knocked out 50% of Saudi Arabia's oil production, or 5% of total daily production, according to an expert quoted by CNBC.

Oil stocks might be fun this morning!

8.15 update: Royal Dutch Shell (LON:RDSB) is up 3%, BP (LON:BP.) is up 4%, Gulf Keystone Petroleum (LON:GKP) is up 6%.

Eddie Stobart Logistics (LON:ESL)

  • Share price: 71p (suspended)
  • No. of shares: 379 million
  • Market cap: £269 million

Company update

This company had a nightmare RNS last month, announcing that its CEO was standing down with immediate effect, that revenue recognition needed to be more prudent in future, and that profitability would therefore be "significantly lower".

On top of all that, the shares were suspended (pending clarification of the company's financials).

Interim Results

In the previous update, the company said that it expected to release interim results in early September.

It hasn't published them yet, and doesn't give a new forecast of when they might be out. Instead, it merely says that it will publish them "following further clarity"!

As far as the H1 results are concerned, ESL says it expects revenue of £450 million and underlying EBIT of £10 million to £11 million.

Context: in…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


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

Do you like this Post?
64 thumbs up
0 thumbs down
Share this post with friends

Eddie Stobart Logistics Plc, formerly Greenwhitestar UK Plc, is engaged in the business of logistics and supply chain. The Company is focused its business on e-commerce, manufacturing, industrial & bulk (MIB), retail and consumer sectors. The Company provides services to MIB customers, which include the movement of raw materials and components used in manufacturing processes, aggregates and cement to construction sites, as well as the delivery of fuel. It provides e-commerce fulfillment and logistics services to a range of retailers. It provides its services to a range of national and international customers. Its operations include warehousing sites, transport hubs and cross-docks, rail terminals, inland ports and truck stops. It offers pay-as-you-go, scale enabled, shared-user network approach where customers only pay for services utilized. The Company operates approximately 2,200 vehicles, 3,800 trailers and over 24 distribution centers throughout the United Kingdom and Europe. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

MJ Gleeson plc, formerly MJ Gleeson Group plc, is a United Kingdom-based company, which is engaged in providing two businesses: house building on brownfield land in the North of England and strategic land trading, primarily in the South of England. The Company operates in two segments, which include Gleeson Homes and Gleeson Strategic Land. The Gleeson Homes segment is engaged in house generation and provides homes for sale to low income people in the areas of industrial decline, and social and economic deprivation in the North of England. The Company's Gleeson Strategic Land segment is engaged in land promotion business by securing residential planning consents for lands and focuses on helping landowners to pay for in the South of England. The Company has operations in various regions, such as Cleveland; County Durham; Derbyshire; Greater Manchester; Lancashire; Merseyside; North Yorkshire; Northumberland; Nottinghamshire; South Yorkshire; Tyne & Wear, and West Yorkshire. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

H&T Group plc is a non-trading holding company. The Company provides a range of simple and accessible financial products tailored for a customer base, which has limited access to, or is excluded from, the traditional banking and finance sector. Its segments include Pawnbroking, which is engaged in providing secured loans against collateral (the pledge); Gold Purchasing, which is involved in buying Jewelry directly from customers through its stores; Retail, which is involved in retail sales of gold and jewelry, and the retail sales are forfeited items from the pawnbroking pledge book or refurbished items from its gold purchasing operations; Pawnbroking Scrap, which comprises various other proceeds from gold scrap sales other than those reported within Gold Purchasing; Personal Loans, which comprises income from its unsecured lending activities, and Other Services, which comprises third party check encashment, buyback, prepaid debit card product and foreign exchange currency services. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

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

31 Comments on this Article show/hide all

MBFP 16th Sep 12 of 31

Morning Graham

Excellent HY update from LTG.
Rev up 85%,recurring rev now 74%, EBIT up 135%.
Surprisingly negative SP action at open but now rising.
Would be interested to hear your thoughts.

I hold


| Link | Share
andrea34l 16th Sep 13 of 31

In reply to post #513421

I would suggest that with the recent slaughtering of the Begbies Traynor (LON:BEG) share price all because of some dubious rant in the Share Prophets publication then every RNS helps!

| Link | Share
Graham Neary 16th Sep 14 of 31

In reply to post #513461


Thanks Graham - I meant to add a section about that. G

| Link | Share
HornBlower 16th Sep 15 of 31

MJ Gleeson (LON:GLE) given their average selling price of £129,000 I would think that when HTB ends there will be some new form of help for low cost buyers whoever is in power at the time

| Link | Share | 1 reply
Gromley 16th Sep 16 of 31

I hold MJ Gleeson (LON:GLE) having taking advantage of the price dip earlier in the year when the CEO left and I surmise sold his entire shareholding.

The results were pretty much as expected I think, reflected in little movement in the shareprice.

Interesting comment on the Strategic Land business :

Following a review of options, we have concluded that retaining Gleeson Strategic Land offers significantly greater long-term value to the Group than selling the business.

I translate this as simply saying, nobody offered enough money. That's probably not too surprising given the level of nervousness in the market, of course there is a risk that in the event of a proper slowdown, the "open market" value would be even lower, but in the longer run the value would recover.

It may seem questionable to sell such a successful part of the business, but in reality the two businesses (Building houses in the North and Trading Strategic Land  in the South) have few synergies as far as I understand it. So I suspect some form of "de-merger" remains a potential for the future.

I have wondered in the past why they do not branch out to add Southern Building & Northern Land trading, but on reflection I think they have probably found the sweet spot in each market.

I am not too concerned about 'execution risk' here at least in the sense that I don't any unique risk to Gleeson here.

The cyclical market risk (we could be at the top of the market for house builders?) remains a concern and makes me a slightly nervous holder.

Help to buy, however, is a little more nuanced and I covered this off elsewhere earlier in the year. 

To summarise me view :

  • Yes I do think HTB will go, it is scheduled to be phased out by 2023.
  • In the meantime this looming deadline might well cause potential buyers to accelerate their buying decisions where they can over the next three years.
  • The primary reason, as I understand it, for phasing out HTB is that it has not been particularly well targeted and large proportion of those benefiting from it did not need the help, but were quite happy to trouser it.
  • I expect then that there will be some form of (more targeted) scheme to replace at least some of the benefits. Glesson's "helped" customers are at the lower (price) end of those who have benefited from the scheme and as a demographic are mostly likely those that would be helped by any replacement scheme.

So I am happy to continue to hold for the moment but continue to look for clouds on the economic horizon.

Just a last thought on the premium to book value; I don't personally regard it as too high - the market is effectively just anticipating the gains that Gleeson will make on it's landbank, the strong ROCE numbers give support to that anticipation. Of course this does make them more vulnerable to economic slowdown and cyclical reductions in land values.

If and when I sell, it will probably be on the macro, rather than company specific.

Edit : @HornBlower - we crossed in the post, but it looks like we agree on that point! :-)

| Link | Share
Gromley 16th Sep 17 of 31

Some slightly tangential thoughts about Albemarle and Bond.

I suspect the reason that clients pawned assets have been removed to "be held securely in our Pawnbroking Centre" is that the situation is at least as messy as it appears.

I except we may very shortly see Landlords 'repossessing' there stores and in this event there would be a risk that the pawned items would be seized (whether legally or not I don't know) or damaged.

So A&B's actions I believe are to secure their clients assets. However, I doubt it is entirely altruistic :

1. If they lost their clients assets, the probably could not enforce the remaining loan, nor could they recovery by selling the asset.

2. If they fail to take good care of the clients assets there could (guessing - I am not a lawyer) be implications possibly exceeding the notional value of the asset and/or the loan.

Some possible implications for H & T (LON:HAT) & Ramsdens Holdings (LON:RFX) ?

If it is this messy, then it probably decreases the likelihood of either (or another player) taking over any stores as going concerns.

A&B have indicated that they will keep the goods for the duration of the relevant loan, and that they can be recovered on repayment of the loan. This will not be a comfortable position for clients (many of whom probably cannot readily find the cash to repay the loan immediately), nor I suspect will it be convenient to A&B's owner's or creditor's .

There has to be the possibility then of these loans and associated assets being sold on to someone remaining in this business, could be HAT or RFX or of course someone else.

This story began to break late on Thursday and there hasn't been a dramatic reaction in either share price. I think there are pro.s & con.s

+ The removal of competition.

+ The possibility of acquiring some new businesss

- All pawnbrokers to be seen (by the market) as risky. [I'm with Graham on this and think in fact we are seeing the differences between 'quality' & 'non-quality' businesses.

- Clients make come to look on Pawnbroking as less safe. They may be more tempted to pay higher interest on an unsecured payday loan, than risk 'the family silver' with a pawnbroker.

This last point largely depends on how this all plays out. At this stage the uncertainty looks like quite a negative, however if this can be managed through without any of the clients losing their goods then it may quickly go away.

On balance I think it is probably a positive and have this morning increased my position in H & T (LON:HAT)

There is not too much to choose between the two - Stocko give both and SR of 97 (and with a similar make up), but I slightly favoured H&T before and had therefore a better feel for the business

| Link | Share
brucepackard 16th Sep 18 of 31

Great spot on £LTG "ahead of expectations" - I've looked at it before and been put off by the valuation.  Now I'm even more cautious because of the way management communicate to shareholders.  #neverjustonecockroach 

| Link | Share
Gromley 16th Sep 19 of 31

In reply to post #513466

RE Griffin Mining (LON:GFM)

Neither Graham nor Paul, routinely report on miners (or oilers) - me neither as I do not really understand them!

However in relation to :

I believe it was a favoured stock of ED's at a conferance in 2018 (may have been Mello not sure)

Griffin Mining (LON:GFM) was a member of Ed's 2018 NAPS portfolio as you can see from the link here

NAPS is a purely factor based portfolio approach that by it's nature produces both winners and losers. This was one of the losers (down c. 25% in 2018 I think). Ed takes a stance of being pretty much deliberately ignorant of anything except for the factors for the purposes of NAPs.

Anyway, whilst I have really no insight into Griffin Mining (LON:GFM) at all, I can see that the StockRank has been picking up recently and is toying with the 70+ ('green') level.  If today's numbers are good (share-price reaction of minus 4%, suggests not that good) it could see the SR rise further.

| Link | Share
rmillaree 16th Sep 20 of 31

Learning Technologies (LON:LTG)
Somewhat strangely there are two adjusted EBIT numbers used in the accounts - so its not as ridiculous a situation as it seems - note the other EBIT figure has come in bang on the money including the % increases used - so it seems like the numbers do add up if the July release related to the other adjusted EBIT.
Its more the confusing presentation used and also the somewhat cheeky/misleading "ahead of expectations" without clarifying that they are actually presumably exactly on the numbers as previously outlined in July - so not ahead of previously announced expectations at all? - perhaps they find the timeline of expectations hard to follow - that would be sorted by a nice stockopedia subscription :)
Adjusted EBIT (pre IFRS16 and SBP adjustments) 20.0 8.9 +125%
Adjusted EBIT 19.4 8.3+134%

| Link | Share
Gromley 16th Sep 21 of 31

In other news, I see that Direct Carrier Billing platform Bango (LON:BGO) are up c. 7% on news that they have signed (yet another) new partner.  (Announcement released intra-day at 12:49)

This looks like a very typical 'story stock announcement' firmly supporting the story, but with no financial whatsoever and some vague numbers which could be (but are probably not) indicative of the size of the prize.

The deal is with AE Tolls in the US and allows users of toll roads to "place road toll charges on their monthly phone bills."

Maybe I am too sceptical here but that suggests to me that it is not available to Pay As You Go mobile customers.  I have to wonder then, how many US mobile phone users who are on a contract do not have access to GooglePay or ApplePay or a contactless card? (I presume that is a thing in the US?)

Now despite the fact that it makes no sense to me, I do agree that this has to be a positive that AE Tolls have chosen to use Bango (although early adopters of tech are often given significant incentives).

We are given though no idea of how big AE Tolls are (so I'm guessing very small), we are however told that  in 2018 the total US electronic Toll market was $21Bn and that $6Bn of that was from 'untagged users' (ie those that don't already have an account with the toll operator).

So the Bango market opportunity here is some fraction of a fraction of $6Bn pa and only that they'll make fractions of a cent on the dollar - doesn't sound too impressive.

However of course it is indicative that the 'story' is still going. More importantly I believe Bango will be releasing their latest results very soon and as they have been telling us for some time that they are now profitable -  it will be interesting to see if that is actually true.

I was previously short Bango, no position at the moment, but still very sceptical. However I might yet be tempted to invest at some stage if I can get more comfort that there IS a sustainable profitable business here.

Edit : In the time it took me to write the post, Bango have retreated most of the days gains and are now showing up only 1.7%!

| Link | Share
MBFP 16th Sep 22 of 31

I read the half year results to confirm the ahead of expectations update of 22 July, rather than that the company was ahead of expectations again.

This is where the confusion regarding the EBIT lies:
Hope this makes the situation clearer.
From the results

H119 H118 Change
Adjusted EBIT (pre IFRS16 and SBP adjustments) 20.0 8.9 +125%
Adjusted EBIT 19.4 8.3 +134%

At the last AGM LTG management were highly impressive and are delivering excellent growth in a dynamic sector.

| Link | Share
peterthegreat 16th Sep 23 of 31

In reply to post #513551

HornBlower has pointed out M J Gleeson's remarkably low average selling price per house of £129,000. I think this must be close to the lowest in the quoted housebuilder sector. These houses almost all end up in the hands of people who need them to live in, rather than buy them for investment, so I would think that this side of the business is therefore more resilient to a cyclical downturn than that of many housebuilders. I notice that Gleeson is the only housebuilder held by highly successful fund manager, Keith Ashworth-Lord, and this is what triggered my interest in the company.

| Link | Share
tomps3 16th Sep 24 of 31

Here's the Trinity Exploration and Production (LON:TRIN) presentation at ShareSoc London Sept 19. 

Jeremy Bridglalsingh, Managing Director & CFO talks through the latest results (half year ending 30th June 2019), released 10th September 2019.

This covers:

Why Trinidad? – 00:18
Who is Trinity? And management shareholdings – 02:49
Asset Summaries – 04:22
2019 Interim results & post period highlights – 05:56
Increasing margins & financial resilience – 11:10
Margin drivers – 12:01
Organic growth path: Reserves & Production – 14:59
Onshore: optimising base production – 16:54
Onshore: growing base production: doing it differently – 19:28
FCF generation – 22:26
Offshore: Further development of Galeota Anticline – 27:39
Modus operandi – 30:02
Summary – 30:39
Q&A: 30:56

| Link | Share
JohnEustace 16th Sep 25 of 31

In reply to post #513661

The take up of contactless cards in the USA has lagged a long way behind  civilisation  but is forecast to accelerate.

Not Invented There syndrome.

| Link | Share | 1 reply
doug2500 16th Sep 26 of 31

I notice £K3C are up 15% on tomorrow's (presumably great) results.

Am I right to have a bad taste in my mouth, or is there an innocent explanation?

P.S. Nice to have something go up for a change.

| Link | Share
JohnEustace 16th Sep 27 of 31

In reply to post #513561

We are rather assuming no Corbyn government in this.

I wouldn’t see them continuing the Help To Buy Builders Yachts scheme.

Nonetheless £GLE look like the lower political risk in the sector and could be beneficiaries.

| Link | Share
Gromley 16th Sep 28 of 31

In reply to post #513711

Thanks John.

In fact I couldn't resist the temptation to look a little further into the Bango (LON:BGO) announcement.

So I google AE Tolls and nothing comes up except their own website and various news stories on today's announcement.

Hmm - crunchbase has a little more and it transpires they were 'founded' in 2015 & received $400m in seed funding in 2017. No evidence that they have any customers whatsoever. (In fact until today I'm pretty sure they didn't even have a product.)

From joining the limited dots, they are not a toll operator at all, they are a start up seemingly specifically targeting sell the Bango technology into the toll market (all of the have worked in tolls previously).

However it is not all bad following their brand website shows that they do actually have a deal.

Anyone  that :

  • Drives on the North Texas Toll Road
  • Does not currently have a Vehicle tag
  • Has their mobile service from Verizon Wireless
  • Has a pay monthly not PAYG tariff.

Can register for an account and pay their tolls via the monthly mobile bill.

And if they are one of the first 500 to sign up (reinforcing my view that this has only launched today)  then tapNpay will cover 10% of their first $100 of tolls.

Now every business has to start somewhere and despite my scepticism this could turn out to be the next big thing.

However, the announcement from Bango gives us no indication whatsoever of how early stage this actually is. The $6Bn addressable market (and that is "End User Spend" not AE T or Bangos potential cut) alluded to in the RNS is so far in the distance as to be unimaginable.

Crazy that the market should have reacted to this at all.

In fact the offering doesn't even seem that attractive to me. If I can understand the tech - it is based on ANPR and if users sign-up to this service then instead of being billed by mail they will be billed directly to their phone bill. It doesn't really seem any more convenient than signing up for an online account for the Dart charge (for those using the Dartford Crossing)

I am probably to cynical, but it seems a bit desperate to me if you have to RNS (to be fair I now note it was RNS REACH - ie news not market sensitive information) something of this scale.

PS - reading back on my comments today I see I have had an atrocious Grammar/Auto Correct day, I hope it didn't irritate folks to much. It irritated me immensely and I am usually quite tolerant of such things. Although I do of to say that there is one particular mangling of the English language that really does annoy me. (Did you see what I did there?)

| Link | Share
Geoffclark 16th Sep 29 of 31

Am loving the random order of posts on the new platform.. NOT

| Link | Share
peterg 17th Sep 30 of 31

In reply to post #513736

It's not quite random. Responses in a thread are attached to that thread, so may appear below older posts on other threads. But I agree - tracking down a lot of recent posts is now so hard it's not worth the effort.

| Link | Share | 1 reply
Nick Ray 17th Sep 31 of 31

In reply to post #513866

If you are going to implement threaded posting you really need an option to jump to the next unread comment. (Always used to be a quick tap of the space-bar back in the Newsgroup (Usenet) days.)

| Link | Share

Please subscribe to submit a comment

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

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 »


Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis