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

Friday, Feb 01 2019 by

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;


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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ScS Group plc is engaged in the provision of upholstered furniture and flooring, trading under the brand name, ScS. The Company specializes in fabric and leather sofas, and sells a range of branded and ScS branded products sold under registered trademarks, including Endurance and SiSi Italia. The Company also offers a range of third-party brands, including La-Z-Boy, G Plan and Parker Knoll. The Company operates from approximately 100 stores nationwide along with an online sales and also has approximately 10 distribution centers across the United Kingdom. The Company has operations in retail park locations and in House of Fraser stores across the country-as far north as Aberdeen and as far south as Plymouth, offering a range of upholstered furniture and floorcoverings. The Company also runs a made-to-order sofas, furniture and flooring concession within House of Fraser. The concession operates from approximately 30 House of Fraser stores across the United Kingdom and online. more »

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TClarke plc is a United Kingdom-based building services company, which delivers electrical, mechanical, and information and communications technology (ICT) services. The Company provides electrical and mechanical contracting and related services to the construction industry and end users. Its geographical segments include London and South East, Central and South West, the North and Scotland. The Company's businesses include Intelligent Buildings Green Technologies, Facilities Management, Transport, Mission Critical, Manufacturing Services, Residential & Hotels, M&E Contracting and Design & Build. The Company within its M&E contracting business has capabilities in sectors, including commercial offices, retail, education, healthcare, financial services and media. Its Manufacturing Services business includes in-house precision prefabrication and engineering services. Its projects include Beckley Court, Chiswick Park, Kettering Hospital, Project Nova, Mitie Care Home and Rathbone Square. more »

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CML Microsystems Plc designs, manufactures and markets a range of semiconductor products for use in communications and data storage industries. The Company offers semiconductor products for professional applications within the storage, wireless and wireline communications market areas. It operates in the United Kingdom, the United States, Germany, Singapore and Taiwan. The Company offers semiconductor products for storage applications, such as Industrial flash memory cards (CompactFlash, secure digital (SD) card, multi-media card); solid state drives (SSDs), embedded storage and special function cards. It offers semiconductor products for wireless applications, such as professional and industrial analogue/digital radios (voice centric); wireless data products (radio modems, pagers, telemetry and marine safety). It offers semiconductor products for wireline telecom applications, such as security alarm panels, point-of-sale, health monitors, meter reading and telephone exchange. more »

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

30 Comments on this Article show/hide all

oscar247 1st Feb 11 of 30

In reply to post #442898

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

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FREng 1st Feb 12 of 30

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.
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FREng 1st Feb 13 of 30

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

(I hold).

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abtan 1st Feb 14 of 30

In reply to post #442953

Re Revolution Bars (LON:RBG)

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

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robin66 1st Feb 15 of 30

In reply to post #442958

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

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Gromley 1st Feb 16 of 30

In reply to post #442973

Re Revolution Bars (LON:RBG)

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

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!

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Cisk 1st Feb 17 of 30

In reply to post #442923

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.

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WDWombat 1st Feb 18 of 30

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.

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seadoc 1st Feb 19 of 30

In reply to post #442973

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

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FREng 1st Feb 20 of 30

In reply to post #442978

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

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

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Silver Moon 1st Feb 21 of 30

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.

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robin66 1st Feb 22 of 30

In reply to post #443043

"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.....

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Trident 1st Feb 23 of 30

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.

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elviron 1st Feb 24 of 30

In reply to post #442918

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?

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sharw 1st Feb 25 of 30

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.

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Steves cups 1st Feb 26 of 30

In reply to post #442958

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

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Metatron 1st Feb 27 of 30

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

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davetparkes 3rd Feb 28 of 30

In reply to post #443058

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

i hold.

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Russelldat 3rd Feb This post has been moderated
Zoiberg 4th Feb 30 of 30

In reply to post #442768

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 !

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 Are LON:SCS's fundamentals sound as an investment? Find out More »

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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