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

Friday, Dec 07 2018 by
68

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:

5c0a54090bff8GAW_20181207.PNG

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

5c0a54548747aGAW_20181207_screen.PNG

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?

5c0a55d53e5beGAW_pic.PNG

£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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Disclaimer:  

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 »

LSE Price
638p
Change
4.6%
Mkt Cap (£m)
333
P/E (fwd)
9.7
Yield (fwd)
5.6

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 »

LSE Price
3055p
Change
-0.2%
Mkt Cap (£m)
994.4
P/E (fwd)
17.7
Yield (fwd)
4.1

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 »

LSE Price
2180p
Change
2.6%
Mkt Cap (£m)
255.2
P/E (fwd)
8.2
Yield (fwd)
6.2



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


34 Comments on this Article show/hide all

skinner66 7th Dec 1 of 34
9

ftse now 6800 was it over panick

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MrContrarian 7th Dec 2 of 34
10

My morning smallcap tweet: MySQUAR shitshow update.

Quadrise Fuels International (LON:QFI), EMIS (LON:EMIS), AJ Bell (LON:AJB), Porvair (LON:PRV), S&U (LON:SUS), Mysquare (LON:MYSQ), Inspiration Healthcare (LON:IHC)

Quadrise Fuels (QFI) £2.15m one for ten open offer at 2.5p, a 21% discount.
EMIS Group (EMIS) settles with NHS Digital with regards to the service level reporting issues announced in January, within the £11.2m provision.
AJ Bell (AJB) will IPO at 160p, in middle of mooted range.
Porvair (PRV) guides FY earnings ahead of management's expectations. Rev up 10%.
S & U (SUS) guides FY broadly in line with expectations (whose?). YTD new loan agreements down 7% due to "slight reduction in the record level of loan applications seen in July, Advantage's prudently tightened under-writing and some recent increase in competitive pressure".
MySQUAR (MYSQ) to preserve cash the Company has temporarily shut down one division and part of another. Directors and senior staff have not been paid for between two and three months. So that predates the Oct placing! A creditor who had previously indicated it was prepared to provide a working capital facility has completed its due diligence and MYSQ awaits the result. Discussing sale of subsidiaries. Shares will delist on 10 Dec since it has no nomad.
Inspiration Healthcare (IHC) IPO of NeuroproteXeon will not complete in 2018 as expected.

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Reacher 7th Dec 3 of 34
1

Games Workshop (LON:GAW) release more details about 1H results: revenue expected to be in the region of £124m & operating profit at £41m with overall results in line with “expectations”. Considerably more details than their October update.

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shanklin100 7th Dec 4 of 34
2

Given the usual H2 weighting, it is difficult to see Games Workshop (LON:GAW) annual sales being less than £260m versus the forecast £234m.

| Link | Share | 1 reply
jonno 7th Dec 5 of 34
2

Morning Graham
Given that it is relatively quiet today any chance you might revisit yesterday's trading update from MJ Gleeson (LON:GLE).

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FREng 7th Dec 6 of 34

Does anyone here have a view on AJ Bell at the announced IPO price?

| Link | Share | 3 replies
dgold 7th Dec 7 of 34
3

WIth Quadrise Fuels International (LON:QFI) I note the offer isn't underwritten and with the price now below the offer price of 2.5p I am worried that there is no incentive to accept the offer given that it is cheaper to buy in the market. But to buy in the market is risky because the company might not raise the funds it needs, due to the offer not being underwritten. So it seems the only way the offer could succeed is if the price first goes above 2.5p and this will only happen if people think that the offer will be successful and thus buy in the market at below 2.5p thus pushing the price up. But for that to happen they must believe that other people will also buy because they think the same way (I.e. that the price will go above 2.5p), so it's sounding very circular and risky, unless I'm missing something.

| Link | Share | 1 reply
drvodkaquickstep 7th Dec 8 of 34
2

Morning Graham - another shout out for Games Workshop (LON:GAW) please. Looks like things are going very well (ahead of forecasts). A keen favourite of Keith Ashworth-Lord!

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simoan 7th Dec 9 of 34
1

In reply to post #425558

Hi FREng,

FWIW I took part in the IPO and only got 43% of the shares I applied for. So it was pretty popular!

All the best, Si

| Link | Share | 1 reply
iwright7 7th Dec 10 of 34
3

In reply to post #425568

Yes KAL is keen on the Games Workshop (LON:GAW) Moat and said at Mello London..... "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".

| Link | Share | 1 reply
ACounsell 7th Dec 11 of 34

In reply to post #425573

Same here re AJ Bell - share price currently up 33% so clearly heavily oversubscribed!

| Link | Share | 1 reply
bluecurve 7th Dec 12 of 34

In reply to post #425603

I bought some shares in the AJ Bell (LON:AJB) IPO but was scaled back by 57%. Clearly high demand.

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skinner66 7th Dec 13 of 34

In reply to post #425558

got off internet... Investment platform AJ Bell is set to float on the stock exchange with a value of £651m on Friday morning having priced ordinary shares at £1.60 per share in a “heavily oversubscribed” initial public offering.14 hours ago
AJ Bell valued at £651m after unveiling final IPO price | Financial Times
https://www.ft.com/content/f6cff776-f982-11e8-af46-2022a0b02a6c

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InvestedGeordie 7th Dec 14 of 34
1

Good Morning Graham,

I'd be keen to hear your thoughts on Games Workshop (LON:GAW) given their update today.

Thanks,

IG

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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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