6th Nov '20 by Paul Scott

76 comments 18655 reads

Good morning, it's Paul & Jack here, with Friday's SCVR.

To start you off today, here is the link to yesterday's SCVR, which I finished late last night, with 11 companies in total:

ZOE, SDRY, D4T4, JOUL, WRKS, PCIP, BWNG, DFS, ZTF, HEAD, WIN

Lots of interesting companies there, so it's a pleasure to dig into those (Jack wrote the first section, as I was initially in bed with a hangover, after helping the De Beauvoir Arms (N1) minimise their lockdown 2.0 inventories write-offs, and singing "We'll Meet Again" with the staff just before closing time, which they convincingly pretended to enjoy!).

Anyway, let's see what Friday brings. Hopefully nothing too stressful.

Agenda - a quiet news day, so I’ll cover a few items left over from earlier this week;

Premier Foods (LON:PFD) - Disposal (Jack, done)

H & T (LON:HAT) - Business update, from 5 Nov (Paul, done)

Mears (LON:MER) - Disposal & trading update (Paul, done)

Urban&civic (LON:UANC) - Agreed bid (Paul, done)

Watkin Jones (LON:WJG) - Trading update (Paul, done)

Senior (LON:SNR) - Q3 trading update from 3 Nov (Paul, done)

Tasty (LON:TAST) - Restaurant closures (Paul, done)

Timings - at 14:08 - I'm stopping for some lunch and a power nap, so will return later this afternoon to finish off.
Update at 17:00 - today's report is now finished.

** This section written by Jack **

Premier Foods (LON:PFD)

Share price: 105.4p

Shares in issue: 852,385,190

Market cap: £898.4m

(Jack writing - I hold)

The market cap’s too big here for the SCVR, strictly speaking - but Premier Foods (LON:PFD) was a small cap as recently as April before a dramatic rerating, and it looks to be a quiet news day so far so let’s expand the remit a little.

Premier Foods operates in the ambient food sector which continues to be the largest sector within the total UK grocery market. See its brands below.

-mlAKtY7VI9ytZne6QC6dU7i-YlZILOvqWAVHy7P7nNzdM8W2cq5LW4t_gSsEV9P4Sm4AOlV6o9-n-iydwX7di_whNKqyX_2XNjpIf1ZGv91q4mIOOEpjjD3b0QMxM0zFTykUPIT

Source: company website

For years, PFD was rightly regarded as a ‘zombie’ company, just about generating enough cash flow to satisfy its debt and pension obligations. The group is approaching an inflection point though, helped by…

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Andy Astbury

6th Nov '20

They are saying profit before tax not less than £80m for 1H, which makes current broker forecast look under stated to me. Obviously the person who issues the RNS must have slept in :)

jonno

Not sure how the activities of £UANDC relate to those of U And I (LON:UAI), which is a land developer and regeneration specialist that usually works in partnership with other parties, local authorities for example. U And I (LON:UAI) price has been battered. The price is about 55p versus Liberum's estimated NAV of 229p for the year to March 2021, a discount of about 75%. Directors have sizeable holdings especially Richard Upton, CEO who holds close to 3.6 million shares, many bought at significantly higher prices. Also recent newsflow has been positive, I added at around 65p after the AGM statement on 10th September.

I have held the shares throughout the pandemic and remain much the poorer for it, but too my mind they continue to represent very good value. We will know more shortly as the interims are due next week.

Just my view I am now off to read up on £UANDC.

All the best.

Bouden54

In terms of how to value this, the company forward sells a lot of its property and has a capital light business model, so price to book arguably less relevant than traditional property companies. I think premium to book can be justified as you're paying for intangible things such as expertise, track record and strong relationships with institutional investors who provide the funding.

greensiax

Hi am11nn,

Thank you :)

The big movers is not a Stockopedia screen (though it might be possible to achieve?).

What I do is to maintain a 20d EMA (Exponential Moving Average) of the ATR (Average True /Trading Range) of each Instrument and then I can look for Instruments moving more today than the 20d average daily movement.

Cheers,

Greensiax

Fishcake

Offer just announced for Codemasters Group (LON:CDM) which is a nice start to the weekend:

"The Board of Codemasters has received a non-binding proposal from Take-Two Interactive Software, Inc ("Take-Two Interactive") to acquire the entire issued share capital of Codemasters at a price of 485 pence per share (the "Possible Offer"), comprising 120 pence per share in cash and 365 pence per share payable in Take-Two Interactive shares. The Possible Offer remains conditional on, amongst other things, the completion of confirmatory due diligence by Take-Two Interactive and the recommendation of the Board of Codemasters. Take-Two Interactive reserves the right to waive any of these requirements."

Nick Hewett

Premium is small (approx 8%). I wonder whether it will kick off a bidding war? Not sure who would be interested but Microsoft have just come back to gaming with their latest Flight Simulator offering so potentially could be moving back into gaming........

wildshot

Darn it, Codemasters Group (LON:CDM) has been on my watchlist and I hadn't bought in yet. Mind you the premium on the price doesn't seem that high and maybe a steal by Take-Two. Could shareholders turn this down thinking there is long term value outside of cashing in their chips now?

SlickMongoose

Very low bid, i'm disappointed.

ckidcurrie23

Paul posted this comment on the Urban&civic (LON:UANC) report. I am afraid I seem to struggle to be able to do / find this " I know its just me" but could someone please advise. I am on the new site if I click on the sector it just gives me an explanation?

Many Thanks

"t’s quick and easy to dig into any sector on Stockopedia. I just clicked on the sector shown on the StockReport for UANC, which brought up all the companies in the Real Estate Operations sector. Then you can click on “value” view, and sort the companies by P/TBV."

Edinburgh Investor

Isn't it a bit odd the board recommending it at such a low premium? I can't imagine it will be backed by the largely institutional holders? Slater being the largest at 10%.

Antehelion

Microsoft just bought Bethesda in September, I guess they could be building a stable up, though I think with the diversity already available in Bethesda, I expect they wouldn't have huge need of a driving game company as well.

https://www.bbc.co.uk/news/542...

mevans6890

Extremely poor offer for a company that has been exceeding expectations - v hard to understand why the management are recommending this. Surely shareholders will not accept this. With the release of new games and new consoles, with Xmas coming this must be a prime candidate for a bidding war.

Paul Scott

Gentlemen....

What about the ladies?!!! (and non-binaries!)

nathantrader

I hold and added early this week on a spread bet, in my opinion offer is far to low, dont see why the Board have recommended the offer, my intention was a long term hold.

Marcus Deva

Hi ckcurrie23,

Not sure where you are clicking but if you look down the stock report page you'll see Sector Industry "Real Estate Operations" in blue just under the list of directors . If you click on this it take you to a comprehemsive list of companies in that sector industry. If you then click down on the Table View box and select "Value" this brings up the value details of the stock, after which you can sort by clicking on the P/TB column heading. Trust this works your end!

Regards, Mark

Would be disappointed in that premium, given Codemasters Group (LON:CDM) prospects, the premium driving gaming products, and their conservative amortisation of the development costs, compared to their competitors. Be interested in Jack's view given he has covered before. I hold.

Trident

And any Aliens tuning in!?

Dave_17

I don't see it as odd. I have no knowledge of Codemaster so this is just my opinion on what could be happening. Company directors receive offer, see a chance to crystallise LTIP and share options, negotiate very good 12/24 month contract post merger to ease transit/integration (which they don't see out but get paid), then ride off into the sunset. If sensible they would have steered enough institutional holders to support it so shareholders don't spoil the party and job done. Literally

Chriskay

8th Nov '20

Re pawn broker regulation raised by Paul as a potential issue with H & T (LON:HAT) (I hold) here is a link to the FCA review on the sector https://www.fca.org.uk/publica...

In summary pawn brokers are ‘not a priority area in terms of potential risk or harm to consumers’ and they do not appear to be singled out for any special concern or regulation, but this is of course no guarantee that such regulation is not being considered.

A number of positives are noted, including; strong customer focus, quality service, robust controls and strong relationships with the local community.

Some concerns are raised, but not any more than with other customer facing sectors. These included:

Potential issues and inconsistency with surplus not being returned to customers and the inconsistent way expenses are charged to customers
Need for improved approach to criminality and money laundering
Important for firms to have clear policies on what items they can loan on and which services meet specific customer needs
Firms must ensure systems and record keeping is accessible and as required

290 firms were identified in this sector with 7 firms accounting for 80% of the market, so plenty of small brokers which could be acquired as indeed H&T have already done recently.

I hope this is helpful but as always DYOR

john652

9th Nov '20

hi Dave_17

Re Codemasters Group (LON:CDM) i think you are absolutely right, the management cash out all share options and then get a whole new set against targets they negotiate as part of the offer, directors minted, shareholders screwed.

I think this is a big, less talked about, risk with small caps. I’ve had this numerous times.

Lets hope shareholders reject this, i cant imagine slater and buffetology agreeing to this.

Small Cap Value Report (Fri 6 Nov 2020) - PFD, HAT, MER, UANC, WJG, SNR, TAST

ZOE, SDRY, D4T4, JOUL, WRKS, PCIP, BWNG, DFS, ZTF, HEAD, WIN

Premier Foods (LON:PFD)

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Paul Scott

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