Small Cap Value Report (Fri 1 Feb 2019) - SCS, CTO, CML, SAA, COM

1st Feb '19 by Paul Scott

30 comments 10261 reads

Good morning! Graham has passed the controls to me today, it's Paul here!

To get you started today, here are some late comments from yesterday, on SCS (LON:SCS) and T Clarke (LON:CTO) . I put them in yesterday's report at about midnight last night, so most readers won't have seen them. Hence copied below;

SCS (LON:SCS)

Share price: 228p (down 2.6% yesterday, at market close)
No. shares: 40.0m
Market cap: £91.2m

Half year update

ScS, one of the UK's largest retailers of upholstered furniture and floorings, today issues the following trading update ahead of announcing its interim results for the 26 weeks ended 26 January 2019 on 19 March 2019.

Overall, trading has been OK;

The Group has traded in line with the Board's expectations in the first half of the financial year. Whilst we are mindful of the risk from the impending Brexit outcome, we believe the Group's increasing resilience puts the business in a strong position to manage the continued economic uncertainty and take advantage of opportunities.

LFL order intake - growth is still positive for H1, but has slowed down somewhat.

When I last reported on ScS, here on 25 Oct 2018, LFL order intake growth for the first 12 weeks of FY 07/2019 was up 4.5%

Today, the company is saying that LFL order intake growth for the first 26 weeks is up 1.5%. Thi suggests that the later 14 week period must have had flat, to slightly negative LFLs, to have brought down the overall 26 week average from +4.5% to +1.5%. Even so, it's still not a shabby performance, given macro headwinds & deteriorating consumer confidence.

House of Fraser concessions - have now all ceased trading, so we can forget about that issue.

Valuation - remains attractively low, as I've mentioned several times recently.

Low PER, high dividend yield, and a strong balance sheet stuffed with (customers') cash - is a very attractive combination.

My opinion - this sofa retailer has remained resilient in tough market conditions. The share looks attractive, providing we don't see a meltdown in consumer confidence.

StockRank remains exceptionally good;

UPDATE 1 Feb 2019 - a brief RNS today…

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oscar247

1st Feb '19

Personally, I'd rather chew broken glass, than invest or buy anything associated with Mr Ashley!

FREng

Revolution Bars (LON:RBG) at 10.40am

Revolution Bars Group plc, the leading operator of 79 premium bars trading across the UK under the Revolution and Revolucion de Cuba brands, today announces that it has appointed Peel Hunt LLP and finnCap Ltd as joint brokers with immediate effect.

Mercia Technologies (LON:MERC) is up 10% today on unusually high volume. No news that I have seen.

(I hold).

abtan

Re Revolution Bars (LON:RBG)

To the uninitiated, what's the rationale behind the move to appoint a joint broker?

robin66

re Mercia Technologies (LON:MERC) this was tipped in IC today. One of Simon Thompson's "Bargain Shares" for 2019

Gromley

I honestly don't know, but I'm sure that someone will point out that it could be an indication of future M&A interest. I don't think one automatically follows the other however and certainly the market has not shown any excitement over the news.

It must be a sign of the times but a read FREng's quote as far as "Revolution and Revolucion de Cuba brands, today announces that it has appointed" and I thought - Oh my gosh not another one!

Cisk

Agreed. I start smart every time I go into Lillywhites’s. A once great store now piled high with tat.

But his worst foible is using shareholders money as if its his own - sports direct as his own piggy bank to flutter away in whatever ventures appeal to his whim at the time.

Simply put, he just shouldn’t be at the helm of a listed company. Running private companies would suit him far better.

WDWombat

Mercia is a really good company. They presented at the investors' show on Monday, I spoke to one of the investee companies, as I had done in January 2018. Both looked pretty good to me (well, actually, the 2018 VR company blew my mind). I just wonder if this is the right time to be looking at private equity. And I always wonder if the claimed NAVs are valid. And, of course, Mercia is highly illiquid so a little buying goes a long way. But on the surface a very good company.

seadoc

abtan, Revolution Bars (LON:RBG) Sometimes a precursor of raising funds.

Thanks - that explains the movement in Mercia Technologies (LON:MERC) shares.

An IC tip is often a good exit point ...

Silver Moon

eezymunny, wouldn't it be nice if all company cycles coincided with general recessions? But they don't and in its cycles SAA has certainly swayed a lot much more than one percent 6 times in the last five years.

"An IC tip is usually a good exit point ..."

Too true! I did buy Ramsdens Holdings (LON:RFX) today based on the SP rise and increased volume before I realised that it was also one of ST's tips in IC! Hoping this will prove to be an exception.....

Trident

Re: Revolution Bars (LON:RBG)

Can be many and various reasons for getting a joint broker. One of the oft stated is that it gives a wider exposure to other institutions/broker clients for buying purposes. So if a company feels a little bit ignored/unloved by the market, they may feel that another broker doing research and pumping it around their client base, may generate more interest.

Not uncommon for some AIM companies to do this. I would imagine that the Revolution Bars (LON:RBG) feel a little bit vulnerable at the current pricing level.

However, can be like pushing on a piece of string if the fundamentals for interest are not there.

elviron

eezymunny - in the last major recession the share price of SAA went from 160p to 25p. Yes, I'd say that was extremely cyclical wouldn't you?

sharw

What Revolution Bars (LON:RBG) do not state in their announcement is that they have given Numis the boot, which I presume to be the case since Numis are named as their broker on their website and in the last Annual Report.

Threepeat

Mercia presented at the Growth and Innovation forum at Islington on Tuesday

Metatron

I hold shares in T.Clarke partly because I have found the management sympathetic to the concerns of small retail investors.Win or lose trying to pick likeable managements is not a bad idea.Whichever stocks one buys one will have winners and losers

davetparkes

3rd Feb '19

ramsdens are liked by paul scott and graham neary and scsw.

i hold.

Russelldat

This comment has been moderated

Zoiberg

4th Feb '19

I took a look at this some time ago and came to the same conclusion as Beginner. As I remember there were plans to tighten the regulations even more. Stocko loves it - but it's not only a numbers game !

Small Cap Value Report (Fri 1 Feb 2019) - SCS, CTO, CML, SAA, COM

SCS (LON:SCS)

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Paul Scott

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