Small Cap Value Report (Fri 23 April 2021) - FUL, PHTM, BOOM, REC

23rd Apr '21 by Paul Scott

42 comments 9354 reads

Good morning, it's Paul and Jack here with the final SCVR for this week.

Timing - today's report is now finished.

Agenda -

Paul's section:

Fulham Shore (LON:FUL) - strong trading in first week of re-opening. Upbeat about the future. I like it, but it's looking fully or over-priced.

Photo-me International (LON:PHTM) - a big rise in profit guidance, thanks to a surge in activity in Japan, driven by Govt action. Looks worthy of a closer look, but I still find it impossible to value, due to uncertain long-term outlook for photobooths, and lack of divisional breakdown of other activities.

Audioboom (LON:BOOM) - good revenue growth, but it's only just reached breakeven. >£100m market cap is factoring in a lot more growth. Definitely not my type of investment, but I bounce around ideas as to why it might appeal to speculators in a bull market.

Jack's section:

Record (LON:REC) - ongoing fee pressure in core Passive Hedging product but growth in (smaller) higher margin products and good inflow momentum from this outsourced currency manager.

Paul's Section

Fulham Shore (LON:FUL)

16.0p (pre market open) - mkt cap £99m

As with so many shares at the moment, I’m very surprised the valuation of FUL has run so high, before it’s even properly re-opened. Yes, it’s likely that the company and other hospitality companies are on the cusp of a bonanza, as newly freed customers want to enjoy eating & drinking socially again. But does that really justify the price now being c.50% higher than before covid? Maybe people think it does, I’m just asking the question, and can’t see it being reasonable myself.

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I have to laugh, as less than a year ago, I remember quibbling over buying at c.6.5p, thinking it was too expensive! If only I’d had a crystal ball back then.

Re-opening step 2 - for hospitality this meant outside spaces only, happened on 12 April, only 11 days ago. Therefore, FUL giving us an update today, suggests they’ve traded really well - companies are usually eager to get good news out fast, whereas bad news takes longer.

So I’m pretty sure this update is going to be good, without even having read it yet!

Trading Update

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slopsjon

23rd Apr '21

Happy St George's Day. Find a beer garden and have a pint of English Ale.

Metatron

The largest shareholder had been buying significant amount of shares over the last 9 months .

greenfield122

$SAM:NYSE Agreed. The figures are really impressive – growth in revenue, eps, no debt, cash etc. I got into this last year through the screeners on Stockopedia. “There are lots of hidden gems in the US market..” Not only the US but the rest of Europe.

Mick Flynn

Would love it if you could look at Sheffield Insulations (LON:SIG). I appreciate it is a mid cap and may not qualify for your attentions.

abtan

Thanks Ragusa

I completely agree on your comment on gems listed abroad, so I will certainly check out Boston Beer Company.

On a similar note on foreign-listed firms, I wonder whether anyone would be kind enough to educate me on the various listings of Apple. Please see the below screenshot from Degiro.

My preference is actually to buy in EUR. Is there any risk buying Apple shares listed on XET (Germany) as opposed to the Nasdaq listed shares?

And why is there a listing in Frankfurt too (also Germany)?

Any insight would be much appreciated,

Thanks

Boon

Comparisons to 2019: alarm bells went off in my head that it wasn't a like for like comparison. And you're right, they have more branches open now.

Also, the comparison week in 2019, looks like it was Easter week? Or maybe not (hard to tell, they weren't specific in their statement!). So that could have influenced.

In addition, we all know last week was exceptional - many other chains reported as such. So it would have been more surprising if they haven't traded robustly last week.

It would have been easy for Fulham Shore (LON:FUL) management to offer a LfL comparison with 2019, looking at revenues for stores that were open back then and now. But they chose not to. Usually, it is what is left unsaid that tells the story.

Fascinating share price action today on Photo-me International (LON:PHTM)

Initially jumped higher, almost 10% I think I saw in the morning, before drifting steadily back down throughout the day, and ending just negative.

One thing to watch is the chairman - he likes to buy after announcements, and has been steadily accumulating. His buys over the past year is quite impressive.

Or.... he's doing going to be doing a poor job of being CEO at Escape Hunt (LON:ESC)

Take your pick!

Dojosan

@ dahokolomoki - Why did the SP have such a reaction? Rather strange given the positive news...or was the news already anticipated by the market?

Rusty2

A few people on here invest in the US markets but this thread is for U.K. small caps.

It’s probably best if you start a new thread about US shares, as it’s probably going to be lost on here.

Ragusa

My broker advised me that if one buys a US equity on a European Exchange that it might not be as liquid and sometimes one cannot get a price quote. The broker recommended generally to buy on US Exchanges.

Sorry did not understand this and not sure how to set up separate thread. Maybe Stockopedia would designate one.

24th Apr '21

Just go to Discussion Home then create New Post, top right of the screen.

rmillaree

Fulham Shore (LON:FUL)
It would have been easy for Fulham Shore (LON:FUL) management to offer a LfL comparison with 2019, looking at revenues for stores that were open back then and now. But they chose not to. Usually, it is what is left unsaid that tells the story.

IMHO these comments are a bit harsh they have only been open 1 week - to me its plainly obvious that the first week will be an outlier in all respects and its not really fair comparing lfl's when presumably over 50% of the seating capacity is not available that would probably be as unfair a lfl as you could get - the numbers speak for themselves plainly enough to me - that this week was a good week - it doesn't really say any more or any less. The number of stores open now and then is well known fact , so anyone who is lazy enough not to do the maths - well that is their problem.

Are they pimping things up here by showing glass rammed full ? possibly ? is that bad for shareholders probably not if shareprice is bouyant with the good vibes ?- to me the company looks perfect candidate to be bought out by a bigger player - or someone with the cash to roll out epansion quicker or someone who simply wnast to gobble up their brand formats that seem to work. I would say at current prices though the stock doesn't interest me.

25th Apr '21

Open letter from 22 eminent scientists telling the government that we are reaching the point where covid related restrictions should now be ended or if not now in the very near future.

https://www.dailymail.co.uk/news/article-9507449/Scientists-say-vaccines-cut-deaths-98-call-end-restrictions.html

If the unbelievable stat that only 32 of the people who have been hospitalised with covid have been vaccinated (3 week point after first dose) is true then it looks clear cut that the level of danger now posed by covid is orders of magnitude less than it was a few months ago ago. As the vaccine rollout continues this risk should further diminish. Certainly one of the main reasons for lockdown/restrictions that hospitals were overloaded is thankfully at present not the problem it was.

No certainty that this good position will last but it does seem over the top to continue excessive measures beyond the end of may if there is no scientific justification for doing so. I guess the fact the roadmap back to normality - one step at a time doesnt have long to play out means there is little incentive to speed things up.

Hopefully in the meantime as we quietly continue vaccinating people covid issues will continur to trend downward.

After that lets hope that they concentrate on planning for whatever may need to be done to keep the newfly found protection at a level is sufficient to avoid similar problems next winter.

timarr

Open letter from 22 eminent scientists telling the government that we are reaching the point where covid related restrictions should now be ended or if not now in the very near future.

There's a notable overlap between these eminent scientists and the people behind the farcical Great Barrington Declaration, who were demanding full reopening last summer and last November. Oddly the Mail article fails to mention their history of failed predictions.

Take India - apparently safe a few weeks ago. Now health services have collapsed and their hospitals are full of under 50's. Funeral pyres in car parks, people dying for want of oyygen ... Watching that, and after all we've been through, why would we risk anything for a few extra weeks of relative freedom?

Quite how we safely open up to overseas travel is another question, the safer it is at home the more problematic that becomes.

timarr

Yes the vaccine program seems to have been highly effective in the UK but in other countries which also have been vaccinated to a similar extent are still having problems, look what happened in Chile. USA is still having high numbers of deaths, despite their effective vaccines. Lockdown is ending in the UK soon anyway, pubs and restaurants will probably fully be reopen in May. I think one step at a time is the sensible approach, as then we can see if there is a spike up in cases, what is cause. So far so good but no point in rushing things. No one wants another lockdown.

You may be right that this group of scientists has a biased viewpoint with how we should proceed, as long as the science is presented factually it does at least open the debate. It should obviously be expected that scientists pro lockdown ending previously would remain in the same camp.

If we take the viewpoint that only 32 people who have been vaccinated have ended up in hospital , or even if the number is anything like this total. I think then scientifically speaking this is a complete game changer with regard to where we are at. Mentions about things going wrong last winter appear to be changing the subject completely and harking back to a time we are not at now ! - i see you make no refernce to this positive stat and all your comments are directed at items that could go wrong from here!

I am in no particular hurry to reopen quicker and save a couple of weeks - all i was doing is pointing out the good success we seem to have had and that the future seems positive.I think your viewpoint that India was safe a few weeks ago is completely different from my viewpoint that any country without close to 50%+increasing vaccination rates is simply not safe - thankfully the uk is not in the same position as india. So you say india was safe - i say india was reasonably likely to suffer a similar fate as we suferred when the new uk variant took hold here.

At some stage we will have to make a decision to either worry about what might happen but is not happening or not worry over worry about these possibilibilites - there are many things that could go badly wrong in the next 6 months but hoepfully none of them will go wrong . If we take the viewpoint that there is no evidence the india variant is more dangerous than other strains to vaccinated people is this reason enough to continue to keep the country under excessive lockdown in the near future ? there will likely be another similar new variant next month AND the month after that and the month after that.

There is a middle ground here that we can open up the uk and try and keep these new variants out - caution is great but i suspect its impossible to keep the genie out the bottle anyway in that regard . So perhaps quickly closing direct travel when new variants emerge (as we did not do!!) and then seeing how the mop flops at least gives us more time before any new variants show up in large numbers. The good news is based on the 32 number and similar data from israel the vaccine seems to be doing a better job than we would ever have hoped for and i have seen no evidence that the new variants are likely to change this position soon - i would say ref india variant we have not had enough time for any meaningful data to come through so the lack of bad news in that regard isnt exactly great news.

It should obviously be expected that scientists pro lockdown ending previously would remain in the same camp.

That suggests to me that these people can't be trusted. Their previous judgements have been flawed and the fact that they repeatedly re-present the same viewpoint without acknowledging their past errors - which would have led to many more deaths had they been acted on (and, indeed, may have been a factor in Johnson not taking action sooner last autumn) - suggests that their viewpoint is primarily ideological rather than scientific.

In terms of the positive data - yes, I agree it's very positive indeed. I'm very optimistic. However, we have two examples of countries that are ahead of us in vaccine deployment that we can use as a partial template.

Israel has taken a careful, data led, approach to re-opening that has included measures to encourage younger people to get vaccinated and now includes vaccine passports if anyone wants to re-enter normal life. The results have been stunningly successful and show that it is possible to move back to something close to normal society on the back of a vaccination program, albeit with border restrictions.

Chile has been rather more cavalier, reopening before their vaccination program had been fully rolled out. Despite that fact that the majority of the supposed at-risk population has been vaccinated at least once they now have a full-blown crisis, with healthcare stretched to its limits and another lockdown required.

Because this is a new disease and we're learning all the time there's always going to be some uncertainty about how to proceed. However, the successful Israeli template is the one we're most closely following while the eminent scientists quoted earlier want something closer to the failed Chilean approach.

Under the circumstances I think both our politicians and their advisors - the real scientists making life and death decisions - can be forgiven for being cautious.

simoan

Amen to that, Tim. You just saved me writing the same paragraph :) These people are like a stopped clock, eventually they may be right but up to now they have been proven totally wrong by real-world events. Like many experts, they can't handle being proven so plainly wrong and their opinions completely discredited.

All the best, Si

Small Cap Value Report (Fri 23 April 2021) - FUL, PHTM, BOOM, REC

Paul's Section

Fulham Shore (LON:FUL)

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Paul Scott

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