Small Cap Value Report (24 Dec 2014) - NXR, DEMG, MYSL
Good morning! I believe the market will only be open until lunchtime today, due to it being Christmas Eve. Worth knowing, as last year it was only about half an hour after the market had closed, that I realised it had closed - and stopped wondering why no prices were changing!
There are no results of interest published today, but a couple of bits have caught my eye;
Deltex Medical (LON:DEMG)
Share price: 5.0p (down 29% today)
No. shares: 213.0m
Market Cap: £10.7m
Trading update - the company reports today that it has secured its largest ever order, for 60 machines, from the NHS central purchasing body. However, the market seems to be ignoring that, and instead concentrating on a likely shortfall in sales (and hence profit) for calendar 2014;
So a rather convoluted way of saying that they're likely to fall short of expectations for sales by about £1.3m. Therefore, as sales were £7.2m last year, it looks as if the company is likely to deliver about £6m sales this year (against £7.9m forecast), so a miss of about a quarter of forecast sales. Not good.
My opinion - this company just doesn't seem able to gain traction, with sales stuck at around £6-7m p.a. for the last five years, and a fairly regular £2m loss most years.
So this share is really only for eternal optimists, who don't mind losing money.
Perhaps the company should merge with another medical devices company, to reduce overheads? It looks to me as if this company isn't really viable on a standalone basis.
Norcros (LON:NXR)
Share price: 17.75p
No. shares: 594.9m
Market Cap: 105.6m
Property disposal - This electric showers, tiles, and bathroom fittings group today announces that it has sold all surplus freehold property in one transaction, for £6.5m in cash. That sounds positive to me, and it will help reduce net debt - it's about 6% of the market cap, so very worthwhile.
Although perhaps less positive is that the sale is at £1.5m less than book value. However, the company is still pursuing a legal claim against Morrissons for breach of contract on the aborted sale to them of one site.
It remains a mystery to me why Norcros shares have sold off this year, since there has been no fundamental reason for that - the company has reported in line results. It remains one of the my favourite value shares.
It's worth noting that the company has more freeholds on the Balance Sheet, but they are in use.
MySale (LON:MYSL)
Share price: 77.75p
No. shares: 150.6m
Market Cap: £117.1m
Large Director purchase - I tend to sit up and take note when a Director of a small cap buys a £6-figure amount of stock in the open market. However, today MySale has announced that its CEO has bought a £7-figure amount of stock! The CEO has bought £3m of stock at a whisker under 80p per share.
That is one helluva vote of confidence in the company. Clearly he must be a wealthy man, but must also strongly believe in the future prospects for MySale.
I reported negatively on the profit warning from this company eight days ago here. However, the CEO buying £3m of stock makes me feel a lot more positive about the company's potential. I'm tempted to follow him in buying a few.
That's it for today.
It just remains for me to say that wherever you are, and whatever you're doing, I hope you have a lovely break over Xmas. I'll be publishing reports here on every day that the market is open over the festive season.
Best wishes, Paul.
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29 comments
Hi Paul,
Keep up the great work. On NXR, any ideas why two of the directors sold a lot of stock in H2 2014?
Merry Christmas Paul! Your page is one of the first I open every morning along with Investegate, ADVFN etc.
I really appreciate the hard work you put into the blog!
Great stuff everyday helping to educate the small cap punter Paul c'mon when;s a book coming out it worked for Naked Trader and your rich's to rags and back to rich's will be an interesting tale to tell.
I'd echo all of the above and more. Merry Christmas, Paul, and many thanks for your invaluable comments, insights, analysis and sense of perspective! I am an infinitely more successful investor as a result of your reading your column.
Paul,
Could I add my best wishes and seasons greetings to for your insightful daily small cap blog. Have a good few days off and lets hope for a good New Year. Ian
Hi Paul,
Many thanks for your excellent small cap report throughout the year. You are a first rate guy who is very willing to share your knowledge and views with others in an educational way.
I hope you have a very restful Xmas and wish you a very prosperous but above all happy 2015.
Merry Christmas Paul, and hopefully a better 2015 for small caps!! Have a good one...
Paul,
Very best wishes for Chrismas and a happy, healthy and prosperous 2015. I really appreciate your daily report - it's pointed me in the direction of some great ideas and saved me from myself on more than one occasion! Enjoy a well deserved festive break.
Smashing comments, thanks everyone, much appreciated! :-)
P.
I also wanted to add my appreciation ... a hearty thanks to Paul for all his hard work this year. It is a breath of fresh air. I had the pleasure of meeting him as well and he was delightful company :-)
Have a lovely christmas all
A very happy Christmas to everyone and best wishes for a decent and satisfactory return on your investments in 2015 whatever it is you wish for. Relax away from the markets and enjoy a few days with friends and family.
I will just mention that in the course of a year I meet hundreds of PR, brokers and advisers and even company internal IR who ask what investors feel about certain issues and discuss different items of news release. Without a doubt the one website they go to and mention for small cap news and analysis is what they call the 'Paul Scott Blog'...it is the first place they go in the mornings too.
They want to know what Paul is writing about the companies they are involved in. Paul has his finger on the pulse of small caps...I am really pleased to have been there at the very start of this when Paul pushed to get it off the ground and the link with Stockopedia gives it added strength and user features. Nearly 5000 readers every day says it all and I wish you further success in 2015. I will continue to do the audiocasts alongside you whenever I can.
I wish you all a lovely chilled festive break and a bumper exciting Mello new year for 2015.
David
Twitter @carmensfella
Thanks for the festive thoughts David. I hope that you and your family are planning to enjoy a very chilled Christmas together. You all certainly deserve it after your "pull out all the stops" effort with Mello 2014! A tour de force.
Best wishes,
Damian
Paul,
Many thanks for your consistent high-quality SC reports throughout the year.
Best wishes, Martin
P.S. With NXR, one hopes the rest of the B/S assets are not similarly over-valued.
Merry Christmas Paul, much appreciated your blog over the last year , it always provides lively incisive commentary on a colourful cross section of companies.
Happy Christmas and a very prosperous new year to all!
Cheers!
Paul,
Wishing you a Merry Christmas. Looking forward to the new year and your advise, wish I had found out about you sooner.
Herbie
Merry Christmas Paul and all the best for the New Year. Your comments and analysis are very much appreciated. Your blogs have added greatly to my understanding of what to look out for in Small cap investing.
Just to add my thanks and appreciation to the many others for your insightful commentaries.
Best wishes for a happy, healthy 2015
John
Have a great break. Season's greetings and blessings.
Thanks Paul from me too. I agree - your reports add a major new dimension to the site - as do the comments. So thanks everyone and have a great Christmas. I've learned a lot this year!!
Andy
Merry Christmas Paul - Thanks for all your posts this year. Your analysis and insights are invaluable.
Best wishes
Geoff
Paul
You put NXR in the header, but it's not (yet) in your blog. I assume this is about the property disposal RNS today. Do you plan to post something later?
Have a good break - and very best wishes for 2015.
FREng
Thanks from me too, Paul.
Have a great Christmas and a successful 2015.
Steve
Hi Paul
Just want to echo other Stockopedia users comments about how useful your daily blog is and how it helps private investors with their investing strategies. All the best to you and other Stockopedia users for 2015.
Imran
Hi Paul - apologies was there any commentry on NXR disposal at all - I see it in the title but not in the body of the report.
I would also like to reiterate everyone's comments above. Thank you for doing such a great job and wishing you all the best for Xmas and 2015.
Cheers
Greg
Paul you have done a sterling job this year and a big reason why I come to the site so often - hope you have a smashing xmas
Pete
Absolutely. Have a great Christmas in the wilds of Cheshire Paul. Thanks for some insightful and amusing commentary over the past year. It's been a heck of a ride hasn't it?
Hic!
Damian
Me too! Have a great Christmas Paul.
Thanks for an ongoing education.
Andy
Posting a value report on Christmas eve. Now, that's what I call work above & beyond the call of duty!
Thanks for all your excellent work and your super podcasts over the course of the year, Paul. Have a very merry Christmas and wishing you every success in 2015!
Cheese!
Mark
I'd also like to add my thanks for your fantastic work and wish you a very merry xmas.
Best wishes, Ram