Small Cap Value Report (Fri 20 Sep 2019) - CLP, EVE, SOG, FCRM

20th Sep '19 by Graham Neary

16 comments 5722 reads

Good morning!

I'm in an airport restaurant, hoping that nobody notices I haven't ordered anything. There's only a few minutes until I have to go to the departure gate - let's see how much I can cover.

Clear Leisure (LON:CLP)
eve Sleep (LON:EVE)
StatPro (LON:SOG)

Clear Leisure (LON:CLP)

Interim Results

This name has been knocking around for a long time. It's now an investment company with NAV of just E1.5 million (denominated in Euros because of its investments in Italy). It's highly leveraged, borrowings on today's balance sheet of over E6 million.

Unless it raises a lot of new money, I don't see how it can stay listed for that much longer. The Board has the authority to issue shares with nominal value of up to £500k, but the share price as of last night is trading below nominal value (0.25p). Doesn't that make issuing new shares sort of tricky?

eve Sleep (LON:EVE)

Share price: 4.9p (pre-market)
No. of shares: 261 million
Market cap: £13 million

Cessation of merger talks, trading update and lifting of suspension

This company sells mattresses online. It has a strong track record of unprofitability.

Merger - abandoning merger talks, and its shares can trade again.

Trading update- it says brand awareness has improved by 50%, from 10%. So I guess that means we are at 15% now.

Then it gives us the bad news:

...overall trading has been more challenging than previously anticipated owing to the uncertain economic outlook and continuing low levels of consumer confidence. This economic backdrop combined with heavy discounting and promotional activity from our competitors has led the board to conclude that 2019 revenues are now likely to be in the range of £25m-£27m.

According to the StockReport, 2019 revenues were supposed to be £35.3 million (up from £34.8 million in 2018). If that is the most recent forecast, this is a savage sales miss.

Through cost-cutting, the company still hopes to make a reduced loss this year, compared to 2018.

CEO comment:

The opportunity to create a leading sleep wellness brand remains undiminished and I am confident that eve's rebuild strategy, centred around a differentiated brand…

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MrContrarian

20th Sep '19

My morning smallcap tweet: EVE crashes out of bed with merger partner

eve Sleep (LON:EVE), ULS Technology (LON:ULS), Thomas Cook (LON:TCG)

Eve Sleep (EVE) guides FY rev only £25m-£27m. F/C is £35.3m. Blames everything but themselves. Still expects smaller FY EBITDA loss. Merger is off, unsuspended.
ULS Technology (ULS) a contract is no renewed, will cut £0.4-0.5m off FY21 pretax. Only minor hit this FY.
Thomas Cook Group (TCG) confirms bailout inc to £1.1bn as it needs £200m seasonal standby facility. Recap "expected to result in existing shareholders' interests being significantly diluted, with significant risk of no recovery." I'm short.

Mark Tughan

Good Morning,

Slightly complicated but reasonably good results from £FCRM this morning. SP well down following earlier PW's. - beginning to look good on quality and value metrics, notwithstanding cyclicality? Would appreciate a look Graham if you have time?

greenhat2

Can you take a look at £FCRM Fulcrum Utility Services?

Long delay in posting results which are now out today.

ezlifeme

Disciplined time management of the best order Graham - AND some interesting comments!

"So many deals happening recently - the combination of weak GBP and low small-cap valuations, in my view."

I agree with your final comment - which one(s) to pick?

Nothingventured

Any time to look at Fulcrum? Been waiting for the delayed results for ages.

The accounts have been restated but detail in the report makes the historic adjustments seem minor - but I'm not an accountant. Although profitability is treading water underlying turnover in many of the company's business devisions seems to be climbing rapidy.

My take is that the shares are cheap.

DMG2305

Hi Graham,

It would be great to hear your thoughts on APGN's interim results. Huge growth led by acquisition and fueled by debt. You did a great analysis of SDI's ROCE and I've attempted to do the same with APGN but it's difficult to calculate when they are making so many acquisitions so quickly. Share price is only up 2% and has been sliding all year. I suspect net profit is not growing quickly enough for Mr Market and the large debt is likely a worry too.

Best

Albertos

Fulcrum Utility Services (LON:FCRM)

The house broker Cenkos has issued a note which is available on ResearchTree. It is forecasting a reduction in adjusted EPS from 3.6p to 1.5p in 2020, although back up to 2.7p in 2021.

Phil

AlanJenkins2

Off-topic apols,but where is the search feature for this column on the new site ? [all I can find is the general stock search].

AnonymousUser192020

Interesting comment this morning from FCA saying MiFID II rules have saved investors £70m.
I thought some here were sceptical about the pricing out of much small company research.
https://uk.reuters.com/article/uk-britain-markets-research/uk-markets-watchdog-says-research-rules-saved-investors-70-million-pounds-idUKKBN1W4114

FREng

You could go to the stock reort for the company you want to find and then click on "discussions". That will find any SCVRs that mention it in the heading.

Bonitabeach

ALUMASC LON:ALU

It's a slow news day so this caught my eye: Directorate Change. Did he jump or was he pushed? I don't think it matters too much: ALUMASC is finding it tough and I think this is a sign things will get worse before they get better.

I have made money on this one in the past but I think it needs to be around 70p before I feel seriously tempted again.

LeoInvestorUK

eve Sleep (LON:EVE)

"strong track record of unprofitability", "despite being backed by a well-known fund manager" - I love the deadpan humour!

Woodford isn't somebody I'd want to get into bed with and even if the shares might be due a bounce, I don't think I'd be able to sleep at night. Some would say investors were caught napping and this was never my idea of a dream investment, but...(wait for it)...

...holders must be foaming at the mouth!

A_Private_Investor

Graham & others,

Just to say Carillion was easy to understand - as in don't go anywhere near it !

I did part of a webinar on it if anybody is interested - go to https://www.youtube.com/watch?v=t523lhvRJPM&t=45s with the financial analysis starting at about minute 24 and going onto about minute 45. I use Stockopedia as my main source of financial analysis (with their permission).

jombaston

I hope none of you have £SOG......its a Momentum Trap according to Stockopedia!

Is it time to bin these ridiculous categories?

Surely the idea is to provide info so we can make our own minds up

hayashi22

Well another one set to go...Low and Bonar. (£LWB) After hours cash offer from a German private company. May suggest its worth hanging onto some poor performers in the hope of a bid. Currency situation stacks up well for approaches to UK companies

Jeffvshepherd

cut the pillow talk please.

Small Cap Value Report (Fri 20 Sep 2019) - CLP, EVE, SOG, FCRM

Clear Leisure (LON:CLP)

eve Sleep (LON:EVE)

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Graham Neary

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