Small Cap Value Report (22 Apr 2015) - MCB, SND, PUB, VNET

Wednesday, Apr 22 2015 by

Good morning! Not a huge amount of news today, which is handy, as I still haven't prepared my slides for the two presentations I'm giving at Mello Workshops tomorrow & Friday! So looks like I'll be having a busy afternoon & evening rushing to get those finished. Should be a fun event - David Stredder says there are still a few tickets left, so not too late for anyone who wishes to join us at the last minute.

McBride (LON:MCB)

Share price: 96.25p
No. shares: 182.2m
Market Cap: £175.4m

Trading update - this company describes itself as Europe's leading provider of private label household and personal care products. For anyone not aware, private label means supermarket's own label products, which are cheaper than the big name branded products.

As you can see from the two year chart below, the shares have under-performed the FTSE Small Caps Index, although they put on a partial recovery spurt in Jan-Feb 2015, getting back to where they were about a year ago.


Today's update covers Q3, being the three months to 31 Mar 2015, so we're now getting close to their 30 Jun 2015 year end.


I note that they company only reports sales growth on a constant currency basis above, which is not very satisfactory - companies normally report both constant currency, and reported currency sales growth. Since currencies are volatile at the moment, with the Euro in particular having depreciated heavily, then I think the above reporting is a bit too selective. I imagine that sales in sterling might be down overall, which should have been stated.

Anyway, the key bit is that profit is in line with expectations, so that look alright overall.

Valuation - broker consensus is 7.89p EPS this year, so that puts the shares on a PER of 12.2, which sounds about right, if the company was debt free. Trouble is, it has a heavy debt burden on the balance sheet, last reported at £90m on 5 Jan 2015. That's just over half the market cap in net debt, so the valuation doesn't look appealing at all once you factor that in.

My opinion - the points I made here on 5 Jan 2015 still stand, so for me this is not a share of any interest. It beats me why anyone would be interested…

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McBride plc is a provider of private label household and personal care products. The Company is engaged in developing, producing and supplying its products to retailers across Europe. Its segments include Household and Corporate. The Household segment consists of UK; North, including France, Belgium, Holland and Scandinavia; South, including Italy and Spain, and East, including Germany, Poland, Luxembourg and other Eastern Europe. The Company's brands include Surcare, Clean and Fresh, McBride Direct, Limelite and Ovenpride. Its Surcare product range includes Surcare Sensitive Capsules, Surcare Sensitive Non-Bio Powder, Surcare Sensitive Non-Bio Powder and Surcare Sensitive Fabric Conditioner. The Company operates approximately 18 manufacturing sites in over 12 countries. more »

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Sanderson Group plc is engaged in software and information technology (IT) services business specializing in digital retail technology and enterprise software for businesses operating in the manufacturing, wholesale distribution and logistics sectors. The Company's segments include Digital Retail and Enterprise Software. Its digital retail solutions include in-store technology; back-office systems for processing sales and fulfilling orders, and mobile and e-commerce solutions to underpin online operations. Its systems allow retailers to keep pace with new devices, technologies and channels, driving consumer engagement and retention. It offers Enterprise Resource Planning (ERP) software for manufacturing in general manufacturing, engineering, and food and drink processing businesses. The Company offers industry-specific software and warehouse management systems, delivering sales growth across wholesale distribution, cash and carry, fulfilment and logistics businesses. more »

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Punch Taverns Limited, Formerly Punch Taverns plc, is a United Kingdom-based pub company. The Company is engaged in the operation of public houses under the leased and tenanted model, which involves the granting of leases to tenants operating the pub as their own business, paying rent to the Company, and purchasing beer and other drinks from the Company. The Company's segments include Core and Mercury. It has a portfolio of approximately 2,580 pubs in the Core division and over 690 pubs in the Mercury division. The Company also operates public houses under the retail operating model. The Company has approximately 110 pubs trading under retail contracts. The Company's pub categories include Community Pubs, High Street Pubs and Destination Pubs. Its pubs include Arkwrights, Black Horse, Coach and Horses, Bulls Head, Cedar Inn, Cross Keys, Castle Inn, Saracens Head, Stanley Arms, Travellers Inn, Travellers Rest, Bronte and Blacksmiths Arms, among others. more »

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

2 Comments on this Article show/hide all

stpalm 22nd Apr '15 1 of 2

Hi Paul, any comment on vianet trading update? always value your opinion, you seem to be fine tuned to picking up on what the management don't say as much as what they do say. Keep up the good work. Si

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carmensfella 22nd Apr '15 2 of 2

If any of you have not already got your ticket...

I have five tickets available for tomorrow and nine for Friday sponsored by IG Group who are taking part in the Investor workshops so they are heavily reduced at just £10 entry which is the absolute lowest price available anywhere for this event. If you go to our website and go to the 'Get tickets' section and enter the code IG10 into the box you will get a discounted entry and we will see you there.

The most in demand selected workshops as of yesterday were.....

1.. World according to QARP 60 (delegates attending)
2..Valuation..An art not a science 52
3..Deep Value and special situations 50
3.. When should I sell my shares 50
5.. Hidden Nasties on the balance sheet 48
6..Five Value shares 47
7..Why Balance Sheets matter 45
8..How to find a hidden Gem 43
9..Understanding balance sheets 42
9. Perils of the P/E 42
9...Seven deadly investment sins 42

It is going to be nearly full at every workshop and there are fifty so a theme for everyone to enjoy.


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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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