Small Cap Value Report (Fri 31 Mar 2023) - TGP, TPX, NCC, SWG, EMIS, ECSC, JHD

31st Mar '23 by Paul Scott

79 comments 8383 reads

Good morning from Paul!

Today's report is now finished.

A busy week, with 2 CEO interviews published this Weds & Thurs - a reminder of the links here -

Interview with Dorian Gonsalves, CEO of Belvoir (LON:BLV) - I thought this went really well, lots of interesting points about the property market. I rate this share highly, and despite a recent bounce, it's still attractive value on a PER of about 10, and divis yielding about 4.7%. On top of that, it's paid off all bank debt in recent years, and has self-funded more acquisitions. Management impress me as down-to-earth, experienced, hands-on people. They'll be at Mello Chiswick in May, so you can meet and chat to them, as I did last year. A big thank you also to BLV for making a generous donation to ZANE, my favourite charity providing humanitarian aid to destitute pensioners mainly, and other terrific projects, in Zimbabwe.

Interview with Mike Raybould, CEO of Portmeirion (LON:PMP) - another interesting interview I thought, with more energy than the rather dry presentation on InvestorMeetCompany! The group is performing well, and has a large tailwind this year from freight costs which will be millions lower than last year. High inventories are also likely to normalise, which should wipe out net debt in 2023. Given the decent 2022 figures, and sound outlook for 2023, this share looks obviously under-priced to me. There's also a decent yield too.

The weekend podcast from me will go out early tomorrow, because I'm jetting off to Malta (Gozo) for 4 weeks! I'll be on holiday for 2 of those weeks, so Graham & Roland will be covering things here. Obviously I'll be heckling from the back, in the reader comments, I won't be able to keep away!

Have a lovely weekend everyone! :-)

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…

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JASVFS

31st Mar '23

Made me laugh planetx but I think you've nailed it! My wife is in two book clubs and we watch and enjoy the TV programme Between The Covers, younger family members are also into books. When I mention investing in Quarto or your favourite she'll be on the buy button before I've finished the sentence. Anyway golf takes too long.

Monty9

Ecsc (LON:ECSC) Blast!! I had been waiting for an opportunity to buy in again since listening to new management at the last Mello Chiswick. A quality service in a huge and growing market at a market cap of £2M! I have learned to be cautious over the last two years, perhaps too well.

AOB - have a great break Paul.

planetx

There's a lot to be said for finding a rising tide sector and backing great companies in great sector .

Both Bloomsbury and Quarto tick a lot of boxes and look very solid.

Bloomsbury trades between ranges so I may just wait for it to drop to the bottom of trading range and if it does add there (circa 420).

Quarto feel like its on a spike after few results lets see if it comes back when the market comes under pressure again .

Cant think of too many sectors feeling as warm and lovely right now just got to time Bloomsbury right it moves around quite a bit, though Im already at a pretty full position .

BnB

There's a lot to be said for finding a rising tide sector and backing great companies in great sector

That's my whole investment strategy pretty much summed up - badly thwarted however by the rising tide of interest and discount rates and the correspondingly sinking ERP (equity risk premium).

donQ

Maybe it's a bit late, Belvoir (LON:BLV) sp is flying after their report (over 25% already).

Sharewallah

Have a great holiday Paul. Whenever I see the word Gozo I cannot stop myself thinking of the Muppet character with the beak.

Bouden54

Late spike in Burford Capital (LON:BUR) share price nice to see for a long suffering holder. Appears to be finally some positive developments on their Petersen case.

davidjhill

Agreed - I think historically these were seen as material enough to merit an rns but now the size of the group is big enough that the threshold should go up.

However, useful for me as a holder currently to see these at it tells me how much business momentum the group now has.

Tufferx1

Books get covered a lot in Tik tok. Also think people are realising the enjoy met from reading physical copies rather than on a Kindle.

I hold both Quarto and Bloomsbury and I have done well with them. Their Little People, Big Dreams books are really accessible for kids

illiswilgig

Paul - let me add my thanks for the Portmeirion (LON:PMP) (I hold) inteview with CEO Mike Raybould. Even going over the same ground again helps to add to information - but you managed to draw out insight in some interesting areas. Well done! Thanks largely, I think, to your friendly and knowledgable rather than confrontational approach.

Overall I am a little more confident that they have a plan and are executing it well. At this stage most of the investor discussion has been around margin improvement and share buybacks. No problem. Classic value territory. And probably plays to Mike Raybould as ex-CFO. Though I was pleased to hear him stress his previous operational experience.

I'm slightly more interested in the long term global growth potential of these brands. I note that they took a big charge in H1 largely to restructure all their sales teams and brought Bill Robadee, CEO of Nambe and President of North America onto the main board as global director of sales. I don't think we have any view of what consistent sales growth rate Portmeirion can manage - I think the brands could support a low double digit growth rate, or more with the right sales and product launches. And the odd bolt-on acquisition in time. Which would make this more of a GULP (Growth at Ultra Low Price - yes I know that's not very good, I'm still working on it :-) than a value share - and I'll be looking to see what Mr Robadee can do here.

He seems a little more cautious than last year- but that's hardly surprising, and it's sensible under the circumstances? I don't think it reflects upon the prospects for the business. But then I am a glasshalfull investor by nature. I'd be buying more on any weakness - but I've already checked down the back of the sofa and I don't have any spare cash right now being at the fully invested end of fully invested.

cheers

Mark

rogerh

Yes, an interesting presentation, though I could not make out anything the CFO said. The acquihire concept is novel as is the decentralised nature of the business. At least I think so, not being a games player. They have very good staff loyalty and one of the lowest, if not the lowest, staff turnover rates in the business. I am tempted to invest more but just don't know enough about the sector. I liked the way the CEO started off the presentation by telling a joke, although I didn't understand it...More CEOs should tell jokes in their presentations...

portugull

Bouden54 thanks for your post on Burford Capital (LON:BUR) as like you I am a long suffering holder.

There is a well informed chat on ADVFN going on but I guess you know that. This Share is the share above all others that I will remember for all sorts of reasons. It will be an interesting few days ahead that is for sure.

Paul Scott

GULP - what a lovely term (growth at ultra low price) - I might have to adopt that myself!! ;-)

WarrantStar

NCC (LON:NCC) For me this is very straightforward. The best indicator of future share price movements is the forecast EPS which is charted at the bottom right of the stock report. And the trend is your friend because trends continue until they stop or reverse. So if the forecast EPS trend is downwards then it's a sell, unless recent news is very positive. The converse applies too. And one should always take into account whether the share is cheap or expensive. So if both the share price and the EPS forecast have been going south, then it's an obvious sell. You could buy again after the share price fall.

If you have done a lot of qualitative research (eg quality of the management, quality of the product, competetive moat, etc, )and you still think that you should buy it, then at least wait until the share price has stopped falling, and this will likely prove to be your best entry point.

Spender71

Do tell....

Rusty2

1st Apr '23

NCC (LON:NCC) the shares are already up over 33% off the low, or are you talking about closing prices?

Olly Daney

Hi Paul thanks for these brilliant articles there really helpful to a young investor like me their a great place for me to find some new ideas.

If you get a quite day,Could you have a look into Lords group trading please and Tissue Regenix. Lords is a small cap builders merchant that is 51 percent own by the CEO and has been showing signs of growth. There results are out on the 5/4/23.

Tissue Regenix is a regenitive health care company with some amazing technology that has been improving its whole financial position for a few years now and is now set to really push on.

Thank you for your time Paul

Olly

Hi Rusty re NCC (LON:NCC) . I would wait until the share price was higher than it was compared to a week previously. This would lessen the chance of the share price continuing to fall after you have bought it.

Lucky dip

2nd Apr '23

For those interested in GKP there is an important announcement:

https://twitter.com/rudawengli...

peterg

Deleted apparently! Was it the rumour that oil exports will restart tomorrow? It may take a little longer.

Small Cap Value Report (Fri 31 Mar 2023) - TGP, TPX, NCC, SWG, EMIS, ECSC, JHD

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Paul Scott

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