Small Cap Value Report (21 Dec 2016) - PTD, CBUY, AVS, WATR, WSG

Wednesday, Dec 21 2016 by

Good afternoon!

This year certainly seems to be drawing to a close with a flourish - the SMXX benchmark which I follow is hitting new all time highs. This does seem surprising, given all the uncertainty over Brexit, and various other problematic geopolitical issues globally.

There are only 3 or 4 trading updates I'm going to comment on today, so this report should be finished by about 3pm.

Pittards (LON:PTD)

Share price: 78.3p (down 10.3% today)
No. shares: 13.9m
Market cap: £10.9m

Situation in Ethiopia and trading update- the title of this RNS sounds ominous, and the 10.3% share price confirms that, before I've even read it.

Problems in Ethopia have affected production;

Although the state of emergency is still in place, the Foreign and Commonwealth Office has lifted its advisory travel restriction.

Operations at the Company's tannery in East Shewa were affected by the disruption; some production was lost and levels have not yet returned to the levels pre-disruption.

The effect has to some extent been mitigated by undertaking production in the UK but there will nevertheless be an impact on the results for the second half of the year.

So it's an H2 profit warning, and presumably a full year warning too.

Demand is depressed too;

The prolonged depressed demand for leather has culminated in disappointing sales volumes in the last few months of the year. Together with the disruption in Ethiopia, the overall performance for the full year ending 31 December 2016 is likely to be lower than our expectations at the time of the half year results.

Yes, there we are - it is a full year warning, but no indication is given of how much lower profits are expected to be.

What are they doing to remedy things?

The new management team is now in place and further progress has been made in the second half to simplify the Group to better position it for growth.

Valuation - it's difficult to value on a PER basis, as it looks as if this year is likely to be minimal profit.

There is a large discount to NTAV, but that's because the company has extremely inefficient, high levels of inventories.

My opinion - I do sometimes wonder why I bother following this company, as it seems to continuously disappoint.

A few years ago this business was nicely profitable. So I would need to better understand why…

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Pittards plc is a United Kingdom-based company engaged in the design, production and procurement of leather for sale to manufacturers and distributors of shoes, gloves, leather goods and sports equipment, and the retail of leather, leathergoods and leather garments. The Company's segments include UK Leather, UK Consumer, Ethiopian Leather and Ethiopian Consumer. The Company offers products for women and men. The Company offers products for the industries, including aviation, fashion, interiors, military and services, motorcycling, equestrian, sports, consumer electronics and outdoor performance. The Company's subsidiaries are Pittard Garnar Services Limited, which provides consultancy and other related services; Pittards Global Sourcing Private Limited Company, which produces leather garments; Ethiopia Tannery Share Company, which is engaged in leather production, and Pittards Products Manufacturing, which produces leather gloves and leather goods. more »

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cloudBuy plc is a provider of an integrated software platform for e-procurement and e-commerce for the trading of goods and services between purchasers, such as public sector bodies and their suppliers, along with the analysis and coding of spend and product data. The Company's operating segments include Company Formation Services, Web and ecommerce services and Coding International Limited. It also provides services to new businesses, including incorporation, company secretary services and filing annual returns, using its software platform. Its solutions include e-commerce Marketplaces, e-commerce Websites, Purchasing Portals, SpendInsight and Company formations. SpendInsight service provides regular analysis of any company's historical spend data. It offers a range of Website packages from templated solutions to Intranets and global business-to-business (B2B) e-commerce sites. The cloudBuy platform enables rapid extension of its solutions and development of new applications. more »

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

3 Comments on this Article show/hide all

simonty 21st Dec '16 1 of 3

Paul, Westminster must remain on yr barge pole list. They remain dramatically unprofitable, and bleed cash. The fundraising was the TWENTIETH in six years, totally £21m, all wasted. The last fundraising with Darwin death spiral financing drove the price down from 35p to 5p. They dangle the prospect of contracts, but the East Africa MOU was signed five years ago. The MiddlemEast contract had an MOU at the start of the year, then a "Letter of Understanding" (whatever that is) in July, but still no contract. The ferry has started with a replacement boat ( the first has not been heard of for six months) and is irrelevant. On this newest Darwin financing the shares fell from 25p to 12p and there is no reason for the bounce today. This is a gravy train for the four ( think it is still four) Fowler family members

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Crusty 21st Dec '16 2 of 3

WATR is the sort of company I like. It is small but profitable. It provides a valuable service to customers. Its earnings are hugely biased away from sterling. It is expanding both in it's leak detection field, and now waste-water services following the takeover of small UK company NRW. Not for widows or orphans maybe, but it is not like many blue-sky companies with new products to get to market. I hold.

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muckshifter 22nd Dec '16 3 of 3

The Westminster update mysterious bit about "certain anticipated post contract spend" made me smile, as it gave me a cartoon like vision of two men with a brown envelope scratching their heads about having nothing to fill it with!

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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 on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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