Small Cap Value Report (Fri 11 May 2018) - ZPG/RMV, CPR, IRV, THAL, CEPS

Friday, May 11 2018 by

Good morning! A couple of interesting bits of news today:


  • Share price: 489.4p (+30%)
  • No. of shares: 438 million
  • Market cap: £2,145 million

Recommended cash acquisition of ZPG Plc

After just four years on the market, it looks like Zoopla will be returning to private hands. The ZPG Board recommend voting in favour, and 31% of the votes have already been promised (30% from Daily Mail and General Trust P L C (LON:DMGT) and 1% from the ZPG Directors).

It's a large transaction, even for SilverLake, which calls itself "the global leader in technology investing." GIC (Singapore's sovereign wealth fund) and a Canadian pension fund will also be participating.

With the bid priced at 490p, today's share price says that there is little doubt it will be voted through.

SilverLake promises to actively improve ZPG's performance:

In addition to its in-house value creation team, Silver Lake has a strong network of portfolio companies and contacts in the sector which can bring value to ZPG's operations through operational improvements

But the existing management team, brand and culture will be preserved:

Bidco expects the existing personnel of ZPG to continue to contribute to the success of ZPG following completion of the Acquisition, and does not intend to initiate any material headcount reductions within the current ZPG organisation as a result of the Acquisition.

No "material" headcount reductions - an important proviso. It's still possible that there could be some redundancies.

Brokers were forecasting EPS of c. 17.6p this year, so the bid is at a hefty 28x earnings.

The read-across to Rightmove (LON:RMV) is very positive. Rightmove is forecast to make EPS of 179p this year, and a similar earnings multiple applied to it would result in a share price of c. 5015p.

I would argue Rightmove deserves a higher multiple than ZPG. It's up nearly 7%…

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All my own views. I am not regulated by the FSA. No advice.

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ZPG PLC, formerly Zoopla Property Group Plc, is a provider of digital media and lead generation platform that owns and operates digital consumer brands, including Zoopla, uSwitch and PrimeLocation. it has two divisions: Property Services and Comparison Services. The Property Services division includes the United Kingdom (UK) Agency, which represents property advertising services provided to estate agents and lettings agents; New Homes, which represents property advertising services provided to new home developers, and Other Property Services, which represents overseas property advertising services, display advertising and data services. The Comparison Services division includes Energy, which represents gas and electricity switching services; Communications represents mobile, broadband, pay television (TV) and home phone switching services, and Other Comparison Services, which represents financial services switching, boiler cover, business energy and data insight services. more »

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Rightmove plc is a United Kingdom-based company, which operates as a property portal. The Company's principal business is the operation of the Website. The Company's Website and mobile platforms provide online property search. The Company's segments include Agency, New Homes and Other. The Agency segment provides resale and lettings property advertising services on The New Homes segment provides property advertising services to new home developers and housing associations on The Other segment consists of overseas and commercial property advertising services and non-property advertising services, which include its third-party and consumer services, as well as data and valuation services. The Company offers its services through estate agents, lettings agents, new homes developers and overseas homes agents offering properties outside the United Kingdom but interested in advertising to the United Kingdom-based home hunters. more »

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Carpetright plc is engaged in providing floor coverings and beds. The Company operates through two segments: UK and Rest of Europe (comprising Belgium, the Netherlands and Republic of Ireland). The Company trades from approximately 440 stores and concessions in the United Kingdom, as well as over 140 stores across Holland, Belgium and the Republic of Ireland. The Company offers free home estimating services. The Company's product range includes carpets, mattresses, headboards, laminate flooring, engineered wood flooring, rugs, vinyl flooring, luxury vinyl tiles and flooring accessories. Its luxury vinyl tiles are available in a range of designs, including tile, oak, pine and stone. It offers a range of beds and bed products, including divan beds, roll up mattresses, bed frames and others. It offers a range of options from memory foam mattresses to open coil and pocket spring mattresses. Its brands include Kosset, Essential Value, Storeys, Carpetright Clearance and Carpetright. more »

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

16 Comments on this Article show/hide all

MrContrarian 11th May '18 1 of 16

My morning smallcap tweet: Carpetshite fitted up.

Crawshaw (LON:CRAW), Carpetright (LON:CPR), Interserve (LON:IRV)

Crawshaw Group (CRAW) new CEO & CFO. CEO was Head of the Fresh Meat Department at ASDA but there is a slight whiff about him: "His departure from ASDA was referenced in an article by The Grocer citing his dismissal for gross misconduct in connection with breaches of Walmart's expenses policies." Kudos to CRAW's Nomad for putting that in.
Carpetshite (CPR) gets loan-shark type crisis loan from shareholder of £17.25m which includes a £2.25m arrangement fee. Also 18% int rate. Still plans £60m fundraise in a week or so.
Interserve (IRV) has received a formal notice that it has been referred to FCA for investigation of handling of inside information and its market disclosures re its exited energy from waste business, from 15 July 2016 to 20 February 2017.

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tomps3 11th May '18 2 of 16

The fourth presentation recorded by Tim and I at the Redleaf Electric Vehicles event.

Here, Impax Environmental Markets discuss how they choose the right investments for the future world of transportation. This is a really good overview of the opportunities and challenges for the investor.

4. The Future of Transportation – choosing the right investments
By Jon Forster, Co-Manager, Impax Environmental Markets

Jon talks about the EV space, and outlines the key criteria Impax seek, identifying investment opportunities in the environmental space. Impax Environmental Markets is a fund specialising in environmental markets for cleaner or more efficient delivery of basic services: energy, water & waste.

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jimbob2 11th May '18 3 of 16

Morning, Probably too small (and illiquid) to look at but CEPS (LON: CEPS) looks to be making progress at last, masked by a goodwill write off. Similiar in ways to Volvere, though has not proved itself yet. Operating profit on just one subsidiary (Friedmans) has grown to £1.2 million.

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Howard Adams 11th May '18 4 of 16


For those holding Purplebricks (LON:PURP) (well above SCVR level now I know), this from Sky Business News might interest you if you have not already seen it.

'Online estate agents eMoov and Tepilo in £100m merger talks'


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ed_miller 11th May '18 5 of 16

In reply to post #362927

Re Ceps (LON:CEPS) note final comments from the Outlook section:

"Trading in the current year is marginally behind the Board's expectations. However, we expect the Group to make progress as the year unfolds."

(No position.)

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Graham Neary 11th May '18 6 of 16

In reply to post #362927

Thanks for the suggestion, I will look at Ceps (LON:CEPS).

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andrea34l 11th May '18 7 of 16

Am kicking myself for not moving ZPG (LON:ZPG) from my watchlist to buy :-(

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Andrew L 11th May '18 8 of 16

Any read across from ZPG (LON:ZPG) to Gocompare.Com (LON:GOCO) might be interesting. Private equity group buying ZPG (LON:ZPG) might be interested in buying Gocompare.Com (LON:GOCO) to put the two together. ZPG (LON:ZPG) previously offered 110p in cash for Gocompare.Com (LON:GOCO) twice in 2017 but was rejected on both occasions.

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Graham Neary 11th May '18 9 of 16

In reply to post #363007

Good point.... I was thinking purely in Rightmove (LON:RMV) terms but there is also a Gocompare.Com (LON:GOCO) story here.

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Trident 11th May '18 10 of 16

For those that are interested I note a steady rally in the PayPoint (LON:PAY) share price.

Results are due out towards end of month.

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apjacko 11th May '18 11 of 16

Graham, what do you think of Paul's thoughts last August , that Rightmove was a short at 4070

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WDWombat 11th May '18 12 of 16

The fact hat Thalassa has any NAV at all may be related to the very large fundraising from five years (roughly) ago. It appears to be run for the benefit of one investor/manager's whims. Would not touch with proverbial pole.

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Graham Fraser 11th May '18 13 of 16

In reply to post #363159

Of course as you point out Graham. The big question is what he does with the money. As you say he shows little intention of handing the money back.

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Paul Scott 12th May '18 14 of 16

In reply to post #363039

Hi Graham,

As regards ZPG (LON:ZPG) - this one shocked me, so I've closed my short on Rightmove (LON:RMV) - just shows.

Memo to self: we're in a bull market, so it's not wise to short anything just because it appears over-valued.

Regards, Paul.

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Paul Scott 12th May '18 15 of 16

In reply to post #363155

Hi apjacko,

Just to clarify, I've admitted defeat & closed my short on Rightmove (LON:RMV) today, after being scared sh@tless by the bid for Zoopla!

Regards, Paul.

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apjacko 12th May '18 16 of 16

In reply to post #363211


Many thanks for your honesty, it did make sense, though as we know not everything that makes sense will come right !!

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

About Graham Neary

Graham Neary

Full-time investor and independent analyst. Editor at Cube.Investments, small-cap writer at Stockopedia. Previously a fixed income analyst in the City and institutional fund manager. I'm a CFA charterholder and have the Investment Management Certificate and STA Diploma in Technical Analysis for good measure. When I'm not talking about finance, I enjoy recreational poker, chess and Mandarin Chinese. more »


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