Small Cap Value Report (Fri 7 Dec 2018) - GAW, SUS, AJB, GLE

Friday, Dec 07 2018 by

Morning all, 

The FTSE closed at 6700 yesterday, down over 200 points.

I am not expecting many updates today from shares within my coverage universe but in the meanwhile, feel free to comment on the stories you're focusing on.

Games Workshop (LON:GAW)

  • Share price: 3140p (+5%)
  • No. of shares: 32.5 million
  • Market cap: £1,020 million

Half year trading update and dividend

This miniatures company jumps back over the £1bn valuation mark after an update that is in line with expectations.

The share price had suffered in October following a cryptic (but typical for the company, I understand) update in which it said "there are some uncertainties in the trading periods ahead" (!).

Numbers today show that H1 sales have improved to £124 million (FY 2018: £109 million) and operating profit has improved to £41 million (FY 2018: £38 million).

The October trading update said that profits were running at "a similar level" to the prior year. The improvement which has actually been achieved in H1 will have come as a pleasant surprise to holders.

It's unorthodox but I find this company's reporting style quite refreshing. It seems as if the CEO isn't terribly interested in providing guidance in terms of financial forecasts, or in predicting the future, full stop.

Forecasts very often turn out to be wrong, anyway - so maybe there is no harm in having a CEO who admits that the future is uncertain and he doesn't really know what the numbers are going to look like a year from now.

Operationally, everything is fine:

These results show the Warhammer Hobby is in great shape in our core markets.  We have built on the progress we made last year and the results are considerable given the backdrop of major projects; increasing factory capacity and ERP system implementation.

The StockRanks love it:


And it passes three screens for Momentum, Income and Growth:


Here's an example of a product displayed prominently on its website today. It's 6 inches tall in real life. Can you guess how much it costs?


£65 for this creature, which is assembled and painted by the customer rather than by Games Workshop!

It's kind of fascinating when you think about it - Warhammer hobbyists enjoy the…

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All my own views. I am not regulated by the FSA. No advice.

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MJ Gleeson plc, formerly MJ Gleeson Group plc, is a United Kingdom-based company, which is engaged in providing two businesses: house building on brownfield land in the North of England and strategic land trading, primarily in the South of England. The Company operates in two segments, which include Gleeson Homes and Gleeson Strategic Land. The Gleeson Homes segment is engaged in house generation and provides homes for sale to low income people in the areas of industrial decline, and social and economic deprivation in the North of England. The Company's Gleeson Strategic Land segment is engaged in land promotion business by securing residential planning consents for lands and focuses on helping landowners to pay for in the South of England. The Company has operations in various regions, such as Cleveland; County Durham; Derbyshire; Greater Manchester; Lancashire; Merseyside; North Yorkshire; Northumberland; Nottinghamshire; South Yorkshire; Tyne & Wear, and West Yorkshire. more »

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Games Workshop Group PLC designs, manufactures and sells fantasy miniatures and related products. The Company's segments include Sales channels, Product and supply, Central costs, Service centre costs and Royalties. The Sales channels segment includes Trade, which sells to independent retailers and includes magazine newsstand business and distributor sales from its publishing business (Black Library); Retail, which includes sales through retail stores, its visitor center and global exhibitions, and Mail order, which includes sales through its Web stores and digital sales. The Product and supply segment designs and manufactures products and incorporates production facility in the United Kingdom. The Central costs segment includes its overheads, head office site costs and costs of running Games Workshop Academy. The Service centre costs segment provides support services and undertakes strategic projects. The Royalties segment includes royalty income earned from third-party licensees. more »

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S&U plc is a United Kingdom-based company engaged in providing motor finance and specialist lending service. The Company is focused on the specialist motor finance market. The Company's subsidiary, Advantage Finance Limited (Advantage Finance), is engaged in the motor finance business. Advantage Finance offers motor finance to over 100,000 customers in the United Kingdom. more »

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  Is LON:GLE fundamentally strong or weak? Find out More »

34 Comments on this Article show/hide all

JohnEustace 7th Dec '18 15 of 34

I think The Onion has as good a grasp on the markets as anyone at the moment:
NEW YORK—Reminding investors that 800-point swings are completely normal, financial experts confirmed Thursday that the stock market constantly plunging before climbing to record highs was the leading indicator of a healthy economy. “A highly volatile market that reaches a record high one day before suddenly wiping out weeks’ worth of gains the next is a defining characteristic of a robust economy,” said Standard & Poor’s chief global economist, Paul Gruenwald, who urged investors to remain calm and continue buying up stocks before dumping everything the instant the Dow dropped.....

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Gromley 7th Dec '18 16 of 34

In reply to post #425598

"So keen are the people who play these games that if you put the shop 100ft under the ground in an old coal mine, they would still find them".

I was amused by that comment on Games Workshop (LON:GAW) at the time. He clearly doesn't quite 'get' the clientele; as someone that played this kind of games in my youth I have to say that the opportunity to play these games in a mine (Moria anyone?) would have been something I would have paid good money for. An opportunity for Games Workshop maybe?

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sharmvr 7th Dec '18 17 of 34

Hi Graham and all,
Given a slow news day, if MJ Gleeson is covered, is it possible to do a housebuilder special?
The sector is starting to look very cheap with some ridiculous yields. Personally I think Barratts, persimmon and Taylor wimpey are looking good as debt free, particularly Barratts at 1*book, 1.3*the, which I would suggest is the right measure for such asset intensive companies, and regionally diversified / biggest.
Of course there is an elephant in the parliament!

Many thanks in advance

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Graham Neary 7th Dec '18 18 of 34

Thanks for the requests - Games Workshop (LON:GAW) is now done, including a bonus picture of an Adeptus Titanicus Warlord Battle Titan With Plasma Annihilator and Power Claw.

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cafcash49 7th Dec '18 19 of 34

In reply to post #425633

I did my own little investigation into Housebuilders a couple of days ago and I plumped for Redrow as my best bet. I think the majority are undervalued and unloved at the moment and there must be a correction soon. The 4th Quarter used to be known for Builders to perform but not so much this year.

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Snoo 7th Dec '18 20 of 34

I am really keen on Games Workshop (LON:GAW) too.... I think it's a great business.

My only reservation is the valuation, which is pricing in growth. It has been niche, and I think it always will be niche. Pandering to the mainstream in search of acquiring more customers might see it lose the advantages that it has gained, and something else might then fill the gap.

The creator of Warhammer (Rick Priestley) left in 2010 citing that the balance had tipped.. would much of the advantage they have be in its people?

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shanklin100 7th Dec '18 21 of 34


I guess this figure outside Games Workshop (LON:GAW) HQ would take quite a while to paint.

Cheers, Martin

P.S. Not sure if this one is still there.


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sharmvr 7th Dec '18 22 of 34

In reply to post #425643

Redrow looks good and yield level doesn't imply a cut. From my perspective I'd prefer reduced London exposure since I am personally exposed to the region.

Same reason I would prefer Gleeson over an Inland.
Was looking at ETFs to buy the sector but underlying holdings tend to be more REITS than housebuilders (which is also cheap especially among the over leveraged!)

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gbjbaanb 7th Dec '18 23 of 34

In reply to post #425638

That's "Mister" Adeptus Titanicus Warlord Battle Titan With Plasma Annihilator and Power Claw to you, sir.

GW is a great company, no fannying around with irrelevant stuff, just knows its product, market and audience and continues to deliver to them. I don't think they are a takeover target though, all the other mainstream games companies sell more "family friendly" stuff, and plasma annihilator inquisitors are just that bit off from their audiences. It'd be a bit like Disney buying Ann Summers.

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Graham Neary 7th Dec '18 24 of 34

In reply to post #425558

Good suggestion to look at AJB - Done. G

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Graham Neary 7th Dec '18 25 of 34

In reply to post #425553

re: MJ Gleeson (LON:GLE)

Done, appreciate the suggestion even though it's not my sector. G

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cidunn 7th Dec '18 26 of 34

In reply to post #425543

Games Workshop (LON:GAW) > " it is difficult to see Games Workshop (LON:GAW) annual sales being less than £260m versus the forecast £234m."

If you model up H1 last year to this years with same % growth forecast for H2 is closer to £250m - still a beat.

All the best,

Disclosure I hold and thinking about more

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Cockerhoop 7th Dec '18 27 of 34

Just a quick anecdote from my visit last night to a store to demonstrate the commitment of a Games Workshop (LON:GAW) customer. There's a recent Age of Sigmar spin-off collector card game produced by PlayFusion (under licence) and sold in both GAW and Independent stores. Due to unspecified distribution issues stock was briefly delayed by a couple of days in the local store, the customer I was chatting to formed a posse and drove across the Pennines to an independent store and purchased over £500 of stock immediately rather than wait a couple of days.

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shanklin100 7th Dec '18 28 of 34

In reply to post #425693


"Games Workshop (LON:GAW) > " it is difficult to see Games Workshop (LON:GAW) annual sales being less than £260m versus the forecast £234m."

"If you model up H1 last year to this years with same % growth forecast for H2 is closer to £250m - still a beat.

All the best,

Disclosure I hold and thinking about more

FYI, last year was exceptional in terms of the H1/H2 sales split because of the H1 40k release. To get to £260m I assumed H2 to be 10% ahead of H1 which is relatively conservative based on past history.

Cheers, Martin

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davetparkes 7th Dec '18 29 of 34

In reply to post #425698

it is astonishing that clients spend hundreds on the game , then more on the paint , and more on scenery , which they then paint themselves.

ive looked in several shops and been impressed by the staff.

the shares were available under £10 less than 2 years ago . i bought .

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Edinburgh Investor 7th Dec '18 30 of 34

Ted Baker (LON:TED) RNS 3 mins before market closed!!!??? I just hit sell all at that point for a decent loss. Will buy back in at some point if things turn for the better.

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Snoo 7th Dec '18 31 of 34

Rather naughty from Ted Baker (LON:TED).

Why release the RNS before the market close? It's not as if anyone is going to forget about it on Monday morning.

I feel sure this will be the end for Kelvin, taking a similar way out like Sorrell did ... a quiet departure in exchange for the investigation somehow running into a dead end.

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JohnEustace 7th Dec '18 32 of 34

In reply to post #425743

I'm guessing there will be some stories in the Sunday papers about Ted Baker (LON:TED) so they decided to act before they are published.

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luckym 7th Dec '18 33 of 34

In reply to post #425563

The way I read this was that if an investor wishes to protect their investment and give the Quadrise Fuels International (LON:QFI) board some more time to follow through with their current strategy then they will subscribe to the offer. I guess some may have even sold some shares to free up cash to do this. This is a 'jam tomorrow' share but the potential pot of jam is enormous.

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skinner66 8th Dec '18 34 of 34

In reply to post #425513

for the thumps down this was posted Fri 3:06am, before markets opened,, i was close, and made a killing on shorting and going long, so if have something to say do it rather than give a lame thumbs down,,this post was below grahams before he posted  his companies,, so get facts right

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 Are LON:GLE's fundamentals sound as an investment? Find out More »

About Graham Neary

Graham Neary

Full-time investor and independent analyst. Prior to this, I spent seven years in the financial markets as an analyst and institutional fund manager. I'm CFA-qualified, also holding the Investment Management Certificate and the STA Diploma in Technical Analysis.Away from finance, my main interests are recreational poker and everything to do with China, especially Mandarin Chinese. more »


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