Small Cap Value Report (Fri 5 Oct 2018) - MOTR, CALL, PLA, QUIZ
Good afternoon,
Drat, I forgot to put up the placeholder last night, my apologies. I blame Emily Thornberry, who worked me up into a lather, with her bullying of Isabel Oakshott on Question Time. She's a nasty piece of work if you ask me.
Anyway, it looks as if there's little for me to cover today. I'll be updating this article throughout the afternoon.
Motorpoint (LON:MOTR)
Share price: 211p (up 3.9% today, at 12:44)
No. shares: 97.6m
Market cap: £205.9m
Motorpoint Group PLC, the UK's largest independent vehicle retailer, is pleased to announce the following trading update ahead of its Interim Results for the half year ended 30 September 2018.
- H1 revenues expected to be up c.9%
- Operating margin similar to last year
- Pleased with quality & mix of current vehicles in stock
- 12th site, in Sheffield, is performing well
- Pipeline of new sites under review
Outlook - sounds alright;
The Board continues to closely monitor customer confidence in light of the ongoing economic and political uncertainty. However, the Board is encouraged with the recent trading performance and remains confident that Motorpoint's independent and flexible model leaves it well placed to increase market share.
My opinion - it's striking how some companies are blaming Brexit uncertainty, the weather, football, etc, for poor performances. Whilst other companies are just getting on with things, and doing well. Motorpoint seems to be in the latter category.
The valuation looks attractive to me - see below - for a company with a proven formula, which is opening new sites. Could be worth a closer look, and adding to my watchlist for things to buy on any panic sell-off. The return on capital & equity look very good. It doesn't seem to need much capex. Just a piece of land with a few large sheds on it.
Flogging good quality secondhand cars to the public, at bargain prices, won't ever go out of fashion. So this is a good business.
Cloudcall (LON:CALL)
Share price: 103.5p (up 9% today)
No. shares: 24.2m
Market cap: £25.0m
(at the time of writing, I hold a long position in this share)
Large trades
There's no announcement as yet,…
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Motorpoint Group plc is an independent vehicle retailer in the United Kingdom. The Company's principal business is the sale of vehicles, of which are approximately two years old and which have covered over 15,000 miles. The Company sells vehicles from brands representing vehicle sales in the United Kingdom, with models from Ford, Vauxhall, Volkswagen, Nissan, Hyundai, Audi and BMW. The Company operates from over 10 retail sites across the United Kingdom. The Company has a national contact-center dealing with online enquiries. In addition to sales of vehicles, the Company operates Auction4Cars.com, a business to business online auction platform for vehicles. The Company also offers ancillary products to customers, including customer finance packages, vehicle guarantees, insurance products and vehicle protection treatments. more »
LSE Price
Cloudcall Group plc is a United Kingdom-based holding company. The Company and its subsidiaries are engaged in software and unified communications business. The Company provides a suite of cloud-based integrated software and telephony products and services under the name cloud. The Company is a full-service communication provider. The Company designs, develops and operates integrated communication services for customer relationship management (CRM) systems. The Company's CloudCall portal enables to manage organization’s call profiles, configures all settings and manages user and service accounts and access real time activity reports and call recordings. Its automatic call distribution (ACD) feature routes the callers directly to available team members in the organization. The Company’s subsidiaries include Cloudcall Ltd, Cloudcall BY. LLC and Cloudcall, Inc. more »
LSE Price
Plastics Capital plc is a holding company. The Company is principally engaged in the manufacture of plastic products focused on products for various markets exporting to over 80 countries across the world. Its segments include Industrial, which consists of hydraulic hose consumables, packaging consumables and plastic rotating parts, and Films, which includes high strength film packaging. Its operations are based on the six operating businesses: BNL (UK) Limited, which makes plastics rotating parts; Palagan Limited, which makes high strength film packaging; C&T Matrix Limited, which makes the packaging consumable of creasing matrix; Bell Plastics Limited, which makes hydraulic hose consumables; Beijing Higher Shengli Printing Science and Technology Co Ltd, which also makes creasing matrix, and Flexipol Packaging Limited, which makes high strength film packaging and bags. It has over five factories in the United Kingdom, approximately two in China and over one in Thailand more »
LSE Price
12 Comments on this Article show/hide all
Any views on the LTIP at Indigovision (LON:IND) ?
https://www.moodys.com/research/Moodys-assigns-Ba2-CFR-to-Playtech-PLC-stable-outlook--PR_389601
For those interested, Moody's report on Playtech (LON:PTEC). Seems mildly positive.
I'm intrigued by companies like Motorpoint (LON:MOTR) (and Computacenter (LON:CCC) is another one) which look like great quality companies with good ROCE etc. but have tiny margins which I normally take to be a sign of a poor company.
I can never quite reconcile the two things in my head and tend to shy away from them. I'm always too worried that with thin margins profitability can disappear too quickly.
Hi Paul, interested if you have a view on Gfinity. Interesting RNS about them running an eSports competition for the Premier League. Problem is the cash burn is so high.
Thanks
Andrew
I would also welcome your views on the Indigovision (LON:IND) scheme. My back of envelope calculation is that they would get the maximum (20% of capital) at eps $1, currently 77p. Taking the p/e of 14 of rival Synectics (LON:SNX) as a guide that would give a share price of 1078p which would delight those currently holding at 106.5p!
In reply to post #404914
Hi Andrew,
As it's a quiet news day, I've had a quick look at Gfinity (LON:GFIN)
The last interim results were absolutely dire! £1.8m revenues and a £7.7m loss before tax, in just 6 months!
So it's likely to need regular fundraisings.
Personally, I wouldn't go near anything trading this badly, burning through cash so fast, and in a sector that I don't really understand. So definitely not for me!
I think Nigel Wray is involved in this, and he tends to back management that he rates highly.
Regards, Paul.
Stop press! Profit warning from QUIZ (LON:QUIZ)
I'll add a section on this once I've finished lunch.
I follow QUIZ (LON:QUIZ) closely so here's my take on their mid-afternoon RNS. I sold out a few weeks ago over the concerns about Debenhams (LON:DEB) future as QUIZ (LON:QUIZ) is heavily exposed. See here for my take on that: https://www.stockopedia.com/co...
Today they say revenues for H1 18/19 are up 19% overall and 44% online. They warn that there is flat revenue from third party websites. As you can see from previous statements, their growth is slowing:
Total revenue growth
H1 17/18
Xmas 17
H2 17/18
FY 18
H1 18/19
35.2%
31.9%
24.8%
30%
19%
Online revenue growth
H1 17/18
Xmas 17
H2 17/18
FY 18
H1 18/19
204.6%
119%
127%
158%
44%
They helpfully provide some numbers on full-year expectations, although referencing EBITDA is a bit annoying. Expected full-year revenue was £152m (and 7.95p adjusted EPS) and they are now saying it will be £138m.
"The Board anticipates that, as a result of lower than expected sales through third-party online partners in the second quarter of the financial year, the performance of our UK stores and concessions during September and the provision against the outstanding House of Fraser debt, EBITDA for H1 2019 will be not less than £5.5m, being £1.5m lower than its previous expectations. In addition, the Board has taken the prudent assumption that should the trend in online third-party sales continue during the second half of the financial year, Group revenue for the full year to 31 March 2019 would be lower than current market expectations at approximately £138m (FY 2018: £116.4m) and the Group's EBITDA for FY 2019 would to be in the region of £11.5m."
Not a disaster. But presumably EPS will now be closer to say 7p? (if one ignores the House of Fraser provision). The trouble is I am still concerned by the Debenhams exposure so I probably would still want a slightly cheaper entry point than this.
Separately I am intrigued by this: "the Group experienced a lower sales performance across its stores and concessions during September reflecting less footfall." Could this be because September has been warmer than most so maybe people aren't needing to rush out and buy new clothes? That could affect other clothing retailers too obviously.
Bit naughty of QUIZ (LON:QUIZ) releasing that update midway through a Friday afternoon.
I don't hold any of these but I take comfort from their own website on-line sales progress as a read across to Boohoo (LON:BOO) and Sosandar (LON:SOS) where I do hold (a lot).
In reply to post #404944
Re Gfinity,
Thanks Paul, that’s really helpful, I appreciate you taking a look. I guess it will be very difficult to build shareholder value near-term with those sort of losses.
The trades on Cloudcall (I hold) are intriguing- I hadn’t spotted what was going on. Be very interesting to see who the buyer or buyers are. I’m a bit surprised/worried though about likely several institutions throwing in the towel. I personally think the drivers for stronger growth going forwards are probably there and current levels of growth are decent enough.
Regards
Andrew
In reply to post #404914
Gfinity (LON:GFIN) is another of my large array of very small shorts, so the 17% share price rise yesterday was not especially welcome. But the beauty of these positions being individually so small is that a single move like that barely moves the needle.
I'm fighting a loosing battle to remain strategically ignorant about the companies in my short folio, so I am having to settle for being strategically indifferent .
Yesterday's announcement seemed pretty impressive
Good and impressive stuff, could it be a game changer for the company?
I really don't know, it seems like a pretty cool badge of honour, but unfortunately they left out the part of the RNS that would have told us whether they will actually make any money out of this.
I'm quite happy therefore to keep my short open and ride this out. (The share price has already given back 1/3rd of yesterday's gains).
Had a look at cars at Motorpoint (LON:MOTR) I thought they were quite expensive and little choice, I looked on Autotrader and found one at a dealer not far from me for far less money, low mileage and in the colour I wanted, they also gave me a good trade in price. I think there is quite a bit of competition. In a recession people don't change their cars so much, so it's not one for me.