Small Cap Value Report (19 Aug 2015) - HAT, RBN, INSE, UTW

19th Aug '15 by Paul Scott

18 comments 19028 reads

Good morning!

For anyone interested, I had a second wind yesterday evening, and added two more sections into yesterday's report - on APC Technology (LON:APC) and John Menzies (LON:MNZS) .

Also, on discussing H & T (LON:HAT) in more detail with readers here, in yesterday's comments section, I'm becoming a bit more relaxed about the ethics of pawnbroking, which seems less bad than some of the alternative lending sources. I read somewhere today that 80% of H&T's customers do actually redeem their loan & get their stuff back, so there does seem a valid place for emergency lending where people are stuck. Incidentally, I've always enjoyed the TV show, Posh Pawn, where people pawn some amazing items of jewellery, Ferraris, helicopters, even a mini submarine! So HAT has crept on to my possible purchases list at 199p per share.

I spotted an interesting article yesterday, but annoyingly can't now find the link, it might have been on Seeking Alpha, Zero Hedge, or MarketWatch websites, which said that 23 countries were currently already experiencing stock market crashes! It then provided links to the charts of each country's main stock market index. Suitably alarmed, I then discovered that these were all emerging market countries, and their markets were giving back some or all of the gains which had been made in the previous six to twelve months. So in most cases, the recent falls look a fairly normal reversal of a previous exaggerated move upwards. Apparently this is at least partly caused by the dollar's strength, so that people who borrowed dollars to speculate in emerging markets are now forced sellers, as their dollar loans have swollen in local currency terms.

So does any of this matter to me? I don't think so. Emerging market wobbles, and carry trades unwinding, are fairly normal events. I can't see why that would affect the value of Spaceandpeople (LON:SAL) or affect the amount of clothes bought by Boohoo.Com (LON:BOO) customers. In fact, the strong pound will be good for BooHoo's gross margins.

There are always macro worries. The main thing for me, is that the key UK and US economies now appear to be in a good, self-sustaining…

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imranawan

19th Aug '15

Hi Paul

What diary do you use to see when company's are due to report?

Best wishes,
Imran.

MGinvestor

Hi Paul,

since its quiet for news could you please pay a revisit to Inspired Energy (LON:INSE) ? Their interims are out and the headline figures look very interesting. I'm keen on it and I believe Slater also has a holding. Excerpt from a post elsewhere:

"Shore Capital, which acts for Inspired, said the results were “strong” and ahead of expectations.
Analyst Robin Speakman said Shore Capital upgraded its forecasts for the current year and beyond.
“We would stress that we believe that further upgrade potential remains strong for FY2015F should operating performance be sustained,” Speakman said."

thank you

buz

For a market wide list of near term reports try this:
http://www.investegate.co.uk/News/company-events---month-ahead-events/619763/

PaulB

00mrmark00

Hi Paul, have you managed to get your hands on any revised broker research/forecast for UTW post update. Cheers, Mark

FREng

Paul

You last reported on Jelf (LON:JLF) last October 21st, when they closed at 124p. You said they could be worth a look. Today they RNSed that they were in early takeover talks and the price has risen to 231p. Do you have any opinion on what a reasonable exit price would be? I looked at them following your report of a Mello Central event a couple of years ago and bought some.

Also, Stockopedia still isn't showing the RNS, even though it has been on ADVFN since 9 am. Do you know if this is a temporary bug or whether the Stockopedia system is often very late reporting news?

Welshborderer

Air Partner Air Partner (LON:AIR) is proving to be an acquisitive company having bought Cabot Aviation in May, it has now announced the purchase of Baines Simmons who appear to be a relatively small company packing a large technical clout embracing military and civilian aviation safety consultancy.

These appear to be astute purchases but are they in any way game changing? I do not feel the company is stretching itself financially and there does appear to be sense in extending the reach of Baines Simmons, but what synergies will be derived by Air?

Fegger

With Robinson Ive never been able to get past seeing a company presentation at a Mello event. The CE gave an example of what he thought was a good innovation to bring to customers of a tamper resistant finish. I knew that similar had been introduced by Johnson and Johnson about 23 years earlier.

Paul Scott

20th Aug '15

Hi Imran,

I use the diary function in Stockopedia, as it integrates into my Google Calendar. This flags up results due for companies that I closely monitor.

To set it up, all you do is create a watchlist in "Folios" from the main menu. Once that is set up, click on "Events" within the Folio, and it will show you a calendar of upcoming results, divis, etc, for those stocks. Then click on the "Subscribe in your calendar" link on the top RHS of the calendar, and bingo! it will then come up within Google or Apple calendars, on your other devices. Really nifty.

Then for more general advance news of results, there are lots of things out there, I use the weekly email alert service from DigitalLook (hope I don't get my wrists slapped for mentioning another website here lol!)

Regards, Paul.

Hi FREng,

Sorry, I'm not up to speed on Jelf (LON:JLF) but good to hear the shares have done well.

RNSs on Stockopedia are delayed by 24 hrs, and always have been. It's a cost issue apparently.
So for up-to-date news it's best to use investegate, but Stockopedia is fine for a news archive. I think this will be improved as the site grows.

Regards, Paul.

Hi Chillax,

Sure, I've taken a look at Inspired Energy (LON:INSE) and have added a (big) section to the report above.

Looks very similar to Utilitywise (LON:UTW) but with different accounting policies by the looks of it.

Regards, Paul.

Thanks Paul, much appreciated.

Thank you Paul.

Excellent comparison and analysis as always

Big Ralph

Hi Paul

Organisations such as INSE and UTW are paid 'commission' directly by the Energy Suppliers but this is ultimately paid for by the end-user (ie the business customer) as it's passed-on to them via their energy bills. It's referred to as an up-lift and is added to their unit rates. So the Energy Suppliers don't actually any costs (other than marginal admin' costs). Typically, these kick-in once the energy contracts actually go live, hence the accruals. A business could sign-up to a new energy contract via INSE or UTW today, but the actual contract may not go live for several months (ie because their existing contract hasn't yet come to an end). Different Energy Suppliers have different payment terms. Some will pay all of the commission the onth after the contracts go live. Others will pay in tranches (eg 80% the month after go live, with the balance of commission paid over the lifetime of the contract).

Sorry for long-winded post but hope this helps?

Big Ralph

MGerard

Hi Paul, apologies for troubling you twice in one week but is there any reason Gem Diamonds interim was not included in the report yesterday? This seems to trade very cheap relative to FCF. Interested in your thoughts on this stock. Thanks.

brucepackard

Thanks for the tip on the diary function in stockopedia. I hadn't seen that.

Also, just to note that Stockopedia screen also gives Inspired Energy a high earnings manipulation risk score. Otherwise looks interesting, and I will also try to spend some time on understanding it.

Splode

(Paul does not comment on resource stocks.)

Stegrego

INSE CEO slays off UTW rev rec policy:
http://www.sharesmagazine.co.uk/news/utilitywises-aggressive-accounting#.VdR5ype2rOU

Hi Stegrego,

Excellent, thanks for that article - it confirms my thoughts above that the accounting at UTW looks more aggressive than at INSE.

Although the relative valuations seem to already discount a big difference in accounting policies - INSE looks much more expensive (which could be justified, since its accounts are more prudently prepared).

The only question really is how much of the bad news is already in UTW's share price, given that it has already plunged heavily? A lot of people (including me) have been questioning UTW's accounting policies for a long time now, so none of this is new information. It's just that a light is being shone on old information, and that can unnerve investors. Often that triggers some panic selling, which can be a great time to buy. Tricky one.

Regards, Paul. (long of UTW)

Small Cap Value Report (19 Aug 2015) - HAT, RBN, INSE, UTW

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Paul Scott

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