Small Cap Value Report (28 Apr 2014) - CRAW, TSTL, RIC, ABDP, MCGN, BRY

Monday, Apr 28 2014 by

Good morning! We say goodbye to Stamp Duty on AIM shares as from today, which is further good news for the junior market.




Crawshaw (LON:CRAW)

This is a small, Northern chain of about 21 butchers/hot food outlets. There is a useful explanatory video about the company here on their website. Results for the year ended 31 Jan 2014 have been issued this morning, and look very good. This comes on the back of a series of very strong trading updates, so is not unexpected.

Sales are up nearly 12% to £21.0m, and profit before tax has shot up from £0.3m to £1.0m. From what I can gather, this seems to have been driven by shrewd buying of meat from surplus available stock, and developing a range of hot food for takeaway, e.g. casseroles, curries, etc, on top of their traditional butchers products, such as home made sausages, and deals on multi-packs of meat. Aversion to supermarkets after the horsemeat scandal gave things a boost last year.

EPS of 1.42p puts the shares (currently 37p, up 3p on the day) on a very rich PER of 26 times. Yikes! However, with current trading also strong, broker forecast for the new year is EPS rising further to 1.8p, which puts them on 20.6 times. That looks an aggressive valuation to me, so the market is signalling that it sees further upside surprises on profits in the pipeline, which would be necessary to support this valuation, in my opinion.

With two new stores in the pipeline, there is roll-out potential, although that seems at too slow a pace to justify a hefty price premium. The Balance Sheet is OK - although there is small deficit on working capital, with current assets at 97% of current liabilities, that's a perfectly satisfactory position for a retailer, because retailers sell for cash, so there is not usually a debtor book. Hence less working capital is needed. I've seen retailers function perfectly fine with a ratio as low as 50% on that measure.

The final dividend has been more than doubled to 0.43p, giving 0.52p for the full year, so that's a 1.4% yield at 37p per share.

Current trading is very strong, with the first 12 weeks of the new year showing LFL sales up 19%, and gross margins…

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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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Tristel Plc is a United Kingdom-based manufacturer of infection prevention and contamination control products. The Company's technology is a chlorine dioxide formulation. The Company operates through three segments: Human Healthcare, Animal Healthcare and Contamination Control. The Human Healthcare segment is engaged in the manufacture, development and sale of infection control and hygiene products, which include products that are used primarily for infection control in hospitals. The segments products are marketed under the brand, Tristel. The Animal Healthcare segment relates to manufacture and sale of disinfection and cleaning products into veterinary and animal welfare sectors. The segments products are marketed under the brand, Anistel. The Contamination Control segment addresses the pharmaceutical and personal care product manufacturing industries. The segments products are marketed under the brand, Crystel. Its manufacturing facility is located in Newmarket, Cambridgeshire. more »

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Richoux Group plc is a restaurant company. The Company operates over 20 restaurants in the areas of central London under the brand names, including Richoux, Dean's Diner and Villagio. The Company's business segments include Richoux, Dean's Diner and Villagio. The Company has approximately eight Dean's Diner restaurants in Chatham, Port Solent, Braintree, Fareham, Bicester, Trowbridge and Hempstead Valley. The Company has over seven Villagio restaurants in Andover, Basildon, Hammersmith, Chislehurst, Chatham, the rebranded restaurant in Port Solent and a restaurant in High Wycombe. The Company also has an Italian restaurant trading as Zippers Bar, Restaurant and Grill in Chatham. It has over five Richoux restaurants in Knightsbridge, Mayfair, Piccadilly and St John's Wood and a restaurant in Gloucester Arcade off Gloucester Road in London. Dean's Diner is a classic American diner, which offers burgers, shakes and fries. more »

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

2 Comments on this Article show/hide all

Beginner 28th Apr '14 1 of 2

Hi Paul
I am not sure if you may look at H C Slingsby (LON:SLNG) but this is just to say, as the company itself says, competition in their key areas is now fiercer than it has ever been. Formerly H C Slingsby (LON:SLNG) almost had a monopoly, but now companies such as Keylite produce components and assemblies that are just as good quality and at a MUCH lower price. The company will continue to trade on its name, and the undoubted quality of its products, but there are very difficult years ahead I am afraid.

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Paul Scott 28th Apr '14 2 of 2

In reply to post #82961


H C Slingsby (LON:SLNG) is only £4m mkt cap, so below my minimum.

Regards, Paul.

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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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