Small Cap Value Report (Fri 21 April 2023) - IBPO, CBOX, FOXT, MTW, MANO, AGL, DPP, TAM

21st Apr '23 by Roland Head

95 comments 10344 reads

Good morning, it's Roland and Graham here with today's report.

The RNS feed is usually quieter on Friday, so we're hoping to look at some backlog items from earlier in the week in addition to today's news.

Today's report is now finished (10.10). Have a great weekend!

Correction at 14.00: Revenue at Angle was £1.0m in 2022, not £1.1bn as I originally mis-typed. I've amended this below.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Graham's section

Cake Box Holdings (LON:CBOX)

Share price: 125p

Market cap: £50m

For my first share from the backlog today, I want to look at the full-year trading update issued by Cake Box on Wednesday.

You may recall that this company had some accounting issues in early 2022, that caused the share price to collapse:

Let’s see where trading is currently. This update relates to FY March 2023:

Full-year revenues +5%, adjusted PBT in line with expectations.
Positive like-for-like sales growth.
Group margins improved due to reduced freight rates.

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davidjhill

21st Apr '23

Usually when a company lists there is a minimum free float of shares that is designed both for liquidity and to stop a single shareholder being over the 75% threshold that allows them more or less free reign. In this case I'm not sure how it was listed with a single 90% holder as I haven't looked at it as a company before.

Certainly whenever assessing a share look at the shareholder register. Anything over 50% would be a red flag to me as the company is really being run for a single shareholder at that point.

Cuddlesticks

I think that's an important point that they left. I suspect they could be called as witnesses should shareholders (e.g. one of the funds) decide to take the existing directors to court.

I assume the same protections afforded to minority interests under UK law don't apply in Guernsey?

Channel Island jurisdiction another 'red flag' to add to the small cap investors check list.

Albm7

Hi planetx,

Have you looked at Accsys Technologies (LON:AXS) as a hardwood substitute?

Paul Scott

Hi Snazzytime,

I think from memory we have more recently flagged that Eurocell (LON:ECEL) indicated it's expecting a more downbeat 2023.

A recent webinar from the mgt was rather uninspiring I thought.

So not madly exciting in the short-term, but I still think it's a very nice business taking a longer-term view.

Regards, Paul. (no position).

cheeky_minnows

Trading Economics palm oil forecast seems to support my suspicions - the EU laws are getting stricter, and this seems to be affecting prices. Not for me, but at least you know what to look out for !

wolfspirit

iEnergizer (LON:IBPO) and Kape Technologies (LON:KAPE) - both the big holders taking the small shareholders money - this kills the idea of AIM in my view. London junior market is becoming a backwater full of sharks.

DWit199

Interesting in the sense that it highlights how useless Bard is in its current form. You cannot rely on Bard for a factual answer to anything. It is worse than ChatGPT for making stuff up. It told me the quote about a 5% stake by Blackrock was fake and that the claim was from a book published in 2009 about the 2008 recession. Complete rubbish.

WarrantStar

Hi Wolfspirit. There is a way to prevent this scenario. For any share that you are looking at buying then check Accounts Major Shareholders on here from the stockreport. If the biggest shareholder has over 33% then don't buy it because they have too much control over the fate of the company.

SaarfLondon

their tech is revolutionary and they may run out of money ...but at this price defo worth a punt- a lot of retail money will be pinging this one about

Albertos

Kape Technologies (LON:KAPE)

To be fair to Mr Sagi he did at least offer a small premium to the prevailing price - he didn't just leave the minority high and dry. I felt aggrieved at the price personally, but looking at what happened at iEnergizer (LON:IBPO) today I feel somewhat lucky in retropect.

A share I've been pondering for a while is Goodwin (LON:GDWN) - makes you wonder.

Harry Hindsight

Acetylated wood is a modified, sustainably grown softwood from New Zealand (not sure about that). The acetylation process increases the amount of acetyl molecules and reduces the amount of hydroxyls in the wood, which improves durability, dimensional stability, insect resistance and the service life of coatings. Acetylated wood is particularly suited to exterior applications where high performance is required. Ok - oak does it for free.

Commercial name Accoya manufactured by Accsys Technologies (LON:AXS)

This is a viable alternative to hardwoods in our damp climate. Oak was once the go to but not the 'green' product (not matured) which I believe latent defect insurers are excluding from their cover due to failures.

Cheaper pressure treated softwood is ok for the factory house builders but needs good design, detailing and ventilation. Only reason to go hardwood is customer demand high end houses - staircases floors etc which is ok in the dry.

For doors and windows a bit more exposed or needs maintenance - remember the old days when redecorated the house every 5 years - lol.

Its a good product but needs to supply a large hungry industry - great having a good product and have sold it to the market but need to deliver - Avon Protection (LON:AVON) first thoughts on that.

Western Red Cedar is an excellent wood - lightweight for cladding etc and very robust so if produced in the East then something new. No strength for structural products though.

Michael Tee

Roland, you chaps who write for SVCR write reports on so many companies, there is bound to be the odd error. I notice so many typos of my own that it's embarrassing! And on some forums such as Twiiter you can't edit them.

Anil Aggarwal is a pretty rich man. I've seen his name on lots company shareholder lists

Anil Agarwal: Take a look at the business journey of Bihar’s richest person; Know about his net worth, family, and more (msn.com)

rhomboid1

22nd Apr '23

As a Goodwin (LON:GDWN) holder I’d argue that as one of the 10 oldest fully listed companies on the LSE founded in 1883 & v much rooted in Stoke onTrent..albeit with operations all over the world with multiple generations (4 of the latest generation are running it currently)of the family involved & just over 50% of shares widely held by Goodwin family members is somewhat different to an Indian outsourcing company listed on AIM & domiciled in Guernsey with one 82% overseas domiciled shareholder..but obviously I’m biased

My weekend podcasts are up here (and on the main podcast platforms).

This week's mystery share is Volex (LON:VLX)

Regards, Paul.

Volex (LON:VLX) - breaks 300p then worth a look. I held then got bored and burnt. So 200 a base but why such draw down from 400p. Debt rising so as the Dragons say - 'I'm out'.

23rd Apr '23

Hi HH,

Actually the debt at Volex (LON:VLX) surprised positively. Singers last note forecast $102m net bank debt, but actual is much lower at $76m - which dropped a substantial $22m just in H2. This is only 1.0x EBITDA leverage, which is quite low. Obviously we would need to see the full accounts to see how other items in working capital have moved, but I don't see debt as being a problem at all.

Ahead of mkt exps for FY 3/2022 hence the strong bounce last week. Valuation is only about 10x PER by my figures, even after the big rise.

Outlook comments sound positive, with strong momentum into the new financial year. Active acquisition pipeline, and bear in mind acquisitions to date seem to have all gone well, so they know what they're doing.

It's demonstrated pricing power, and ability to pass on cost increases. Could now benefit from lower input prices maybe?

There's lots to like with Volex. I think in a recovering stock market, we could see a double benefit here - rising earnings, and a PER that I imagine could rise from 10x to 15x, to better reflect the impressive performance, favourable sector tailwinds (e.g. from data centres and EVs), reshoring of component sourcing nearer to home for European manufacturers.

There's lots to like with Volex, so I find it surprising to hear a negative view on a cheap share that is trading well! Still, always good to hear contrary opinions.

My SCVR Summary spreadsheet is also now up-to-date -

https://docs.google.com/spread...

(not for sharing outside of Stockopedia please, as subscribers here are indirectly paying for me to do the work!)

Small Cap Value Report (Fri 21 April 2023) - IBPO, CBOX, FOXT, MTW, MANO, AGL, DPP, TAM

Graham's section

Cake Box Holdings (LON:CBOX)

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Roland Head

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