Small Cap Value Report (18 Dec 2014) - CRAW, INCA, GDWN, CROS

Thursday, Dec 18 2014 by

Good morning!

Crawshaw (LON:CRAW)

Share price: 53.5p
No. shares: 79.6m
Market Cap: £42.6m

CEO appointment - this looks a very impressive announcement. Crawshaw's, a small chain of butchers & fast food, raised the money to do a stores roll-out earlier this year, but the only problem was that they didn't have a CEO to actually do the roll-out!

Anyway, that looks to have been fixed today with a very impressive-looking appointment - of Noel Collett. I don't know him, but his credentials look ideal - having been COO for Lidl's UK business for the last 12 years, during which time Lidl did a store roll-out from 200 to 600 stores. So this appointment really looks quite a coup for Crawshaws. I wonder what sort of package he has been offered to persuade him to take this role?

My opinion - the valuation of Crawshaws looks crazy, if you only base it on the historic, and indeed the next two years' forecasts. However, bulls counter that by pointing out that the company has thrashed forecasts in the last year, and that the company already has cash on hand to roughly double the size of the business.

Therefore, if the store roll-out is successful, and gathers pace, it should become self-funding, and in 5-10 years' time this could be a business that is 10-20 times its current size perhaps. At which point the market cap would probably also be multiples of the current valuation.

So you either buy into the roll-out, and don't mind paying a toppy price for it up-front, or you don't! So far, the bulls have been proven spectacularly correct. Personally I'll be watching from the sidelines, and will see how things progress over the next year or two. Retail roll-outs are far from straightforward.


incadea (LON:INCA)

I've never quite seen the value in this car dealership software company. The shares have traded sideways for the last two years, with the odd blip up & down.

Clearly there must have been more to Incadea than the market realised, as there's a 190p recommended cash offer announced today, from a US outfit called Dealertrack Tech. Inc.. This is a US Listed (NASDAQ: TRAK) company with a $2.2bn market cap.

Just having a quick look at Dealertrack's figures, it seems on a fairly warm rating, so I suppose that means the…

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Crawshaw Group Plc is a United Kingdom-based company, which operates a chain of meat-focused retail food stores. The Company has approximately 40 stores, which are located across Yorkshire, Lincolnshire Nottinghamshire, Derbyshire and the North West. The Company's product range is categorized into approximately two distinct areas, such as Traditional raw meat, and Hot and cold cooked food. Under the Traditional raw meat category, it offers various products sold either loose in a serve over counter for the traditional experience or as multi buy packs on supermarket style multi deck counters, which have all been cut and packaged in store. Under the Hot and cold cooked food category, it offers freshly prepared roast chickens, gammon and pork joints, hot roast sandwiches, shop cooked curries and casseroles, chicken and chips, as well as other traditional deli products. Its stores include Arndale Centre in Arndale; The Arcades in Ashton Under Lyne, and Fresh Meat Factory Shop in Astley. more »

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incadea plc is a holding company which provides software solutions and services to the automotive dealership industry, with products including dealer management, business intelligence and customer and vehicle relationship management systems, which are used by multinational car manufacturers (OEMs) such as BMW Group and VW Group and their dealership networks.incadea’s primary product is its DMS system, incadea.engine, which provides automotive dealers with solutions to integrate departmental functions and business processes with the aim of increasing productivity and efficiency. incadea.cvrm is a Customer Relationship Management (CRM) solution for dealerships covering all customer processes and touch points along the customer lifecycle. The Company has direct presence through its wholly owned subsidiaries in Russia, Greece, Germany, Spain,Portugal, New Zealand, Taiwan, India, China, Hong Kong, Mexico and Japan. more »

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Goodwin PLC is a holding company. The Company operates through two segments: Mechanical Engineering, which is engaged in casting, machining and general engineering, and Refractory Engineering, which is engaged in powder manufacture and mineral processing. The Mechanical Engineering segment produces a range of dual plate and axial nozzle check valves to serve the oil, petrochemical, gas, liquefied natural gas and water markets. Its mechanical engineering markets also include high alloy castings, machining and general engineering products, which form part of construction projects, such as power generation plants, oil refineries, high integrity offshore structural components and bridges. Within the Refractory Engineering segment, through its subsidiary, Goodwin Refractory Services (GRS), it focuses on developing, manufacturing and selling investment casting powders, waxes, silicone rubber and machinery for use in various operations, such as jewelry casting, aerospace and tire molding. more »

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

9 Comments on this Article show/hide all

99figaro 18th Dec '14 1 of 9

'The bulls have been correct so far..' .......not for the last 6 months the share has been in a downtrend.

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johnrosier 18th Dec '14 2 of 9


Stop watching from the side lines; it's no fun. Scramble on board!

It's hardly a "bluesky" story that has been the comeuppance of many investors this year. Valuation is hardly excessive with enterprise value of £26m to revenue in the current year of c.£25m. Eps this year suffer a little from dilution of cash raising in the summer to finance the national roll-out but I bet they meet current expecations. New store payback very fast. Lastly Richard Rose, who has a decent stake in the business has a record second to none of creating shareholder value. I know I would much rather own this stock for the next five years than a lot of "blue sky" stories that are unlikely to deliver. To read everything I have blogged on this stock since buying in November 2013 at 13p click here

Website: JohnsInvestmentChronicle
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RichardK 18th Dec '14 3 of 9

Energy Technique is up about 19% today on the strength of a back to back marketing or franchise deal with a US company. I bought a few weeks ago, probably (but not certainly) after reading your review. If so, thanks. Spread is horrible, but you might take another look.


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nevilleaustin 18th Dec '14 4 of 9

Hi there Paul,

Looking forward to your review of the Ideagen RNS, after your break.

All the best, Neville

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bsharman 18th Dec '14 5 of 9

In reply to post #89024

I like the Ideagen Management. Good organic growth and some bolt on acquisitions. They could increase the dividend though... Have a good Christmas Neville!

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iwright7 18th Dec '14 6 of 9

In reply to post #89020

I believe Energy Technique (LON:ETQ) is a little cracker of a microcap producing energy efficient fan coil air conditioners. Latest ROIC is 53% and it holds a F9 and 93SR. Sales and margins are on the increase and they now have their 1st overseas franchisee. There are no broker forecasts so a trailing PE, which is currently only 12.5. Downside is the huge spread, but this will not matter if they continue to produce sparkling results because the price will rise beyond the spread. A value/growth opportunity I think.

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ridavies 18th Dec '14 7 of 9

In reply to post #89018

Have to agree re Richard Rose. I found his talk at Mello on this subject CRAW - was inspirational. His attitude to taking management and helping them as an exec chairman to think far beyond next year was exciting. His results at Booker have been great; I think he picked them up off the floor after the Icelandic buffoons nearly destroyed it. His performance at Whittards etc was excellent; pity the buyers didnt understand the business and screwed up. However he is also in there with AO World, isnt he? Paul hasnt exactly been complementary there for understandable reasons. I enjoyed the Mello presentation by their CEO too. Not sure the margins are there to succeed.....but Richard Rose is certainly one for recognising a niche and walking through it. I missed out on CRAW but believe they have further to go.

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Sully8786 18th Dec '14 8 of 9

Hi Paul,

Goodwin (LON:GDWN) is a funny one - it's a company located not too far from me and they are always on the radio advertising for employees. It makes you wonder why they would be hiring for these 'Permanent positions' if things were turning downwards?



Company: Dave Sullivan - Talking Stocks
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Metier9 19th Dec '14 9 of 9

In reply to post #89040

They are trying to diversifying out of such a reliance on the Oil&Gas industry.

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 Are LON:CRAW'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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