Small Cap Value Report (Fri 7 May 2021) - NUM, KITW

7th May '21 by Paul Scott

57 comments 9477 reads

Good morning! It's Paul here with Friday's SCVR.

Timing - today's report is now finished, there's hardly any relevant news, and a lunch opportunity has just arisen, so I'll down tools for the week. Have a smashing weekend!

My recent article on Boohoo (LON:BOO) (I hold) results wasn't quite finished, so this is just to flag up that I spent some time yesterday afternoon typing up the rest of my notes from the company's webinar. So here's the link for the completed report.

It's quiet for news today, but I won't short change you! I might look at a new float instead.

Agenda -

Numis (LON:NUM) - stunningly good interim results. Cyclical business of course, but everything seems to be booming at the moment.

Kitwave Group - a new listing on AIM, in the pipeline. I've started to look at it, and see enough positives to make me want to dig a bit deeper.

Numis (LON:NUM)

418p (up 7% at 08:33) - mkt cap £450m

Numis is a leading independent investment banking group offering a full range of research, execution, corporate broking and advisory services to companies in the UK and their investors. Numis is listed on AIM, and employs approximately 290 staff in London and New York.

I last looked at this listed broker here in July 2020, when it issued a positive trading update, with upbeat outlook comments. Last year, there were bumper fees from many fundraisings, whereas this year M&A and IPOs are surging. Even Wh Ireland (LON:WHI) managed to report a profit recently, so market conditions must be outstanding.

Half Year Results

For the six months to 31 March 2021.

Take a look at these figures, which are stunningly good, albeit against soft H1 comparatives. H2 last year was much stronger -

dFzzXXejQasrtjHUG1RvobuL60un9Zwr2hgsFhyxkW25wO2QzFqXpOwRSS4dZ0J0ntXc363umFW9DONv0f-egShYav6IbBRy7uFcDOPYgJJKzs6YqnxMzNfL3coBkLftP9Rdrjgx

Share repurchases of £11.5m done, which should enhance EPS. Or some people see share buybacks as a way to disguise dilution from share options, if you’re more cynical.

Picking a few interesting points of wider interest, from the commentary (these are all copy/pasted, with nothing added by me) -

As markets exhibited signs of a sustained recovery, volatility subsided, and corporate confidence returned, the environment for capital markets activity improved significantly
IPO volumes over the…

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jonno

7th May '21

You never know he may have had a makeover, but his younger alter ego is a columnist for Investors Chronicle and Sharescope! Although I am sure that young Phil would have owned a pair of Doc Martens in his early days.

Helvellyn

Paul,

That info re the search box is brilliant, thank you. There are so much data and stats on Stockopedia and short cuts to accessing them that us mere mortals know nothing about. Maybe someone needs to produce an instruction manual.

Richard

dmdefurey

No, the Human League lead singer is Phil Oakey, not Phil Oakley.

WarrenTMiller

Except that was Phil Oakey.

mepfish

remember that they own 17.8% of current sharesin issue , post the proposed placing the % will fall , hence I used 17.1m shares to work out my calculation

gus 1065

Must be the day for retro 1980’s pop stars making a comeback on the London markets as I see the CEO of IPO candidate Kitwave is a certain ........ Paul Young.

Gus.

Silver Moon

I realise I'm going off-piste but after my experience with Numis (LON:NUM) i worry about the following companies I hold. Amino Technologies (LON:AMO) Plus500 (LON:PLUS) Rightmove and (LON:S32 are buying back their own shares, I sincerely hope they will not cause a dividend famine and thus lose shareholder confidence if they go mad in handing out share options to their directors.

Silver

ken mitchell

Cenkos Securities (LON:CNKS) is an alternative to Numis worth considering. Their results on 22nd March were covered in the SCVR then. Cenkos are not winning as many IPO’s etc as Numis but the valuation reflects that. Also Cenkos goes ex a useful 2.5p dividend next Thursday. Share price is up 4p to 84p today, probably in reaction to Numis’s results.

To add flesh to the bones, on the £6000 invested over the 4 years £617 was returned in dividends which is 2.57% annually before tax. Better than bank interest but one does need to ask where the bought-back shares ended up and why.

Paul Scott

Paul, if time time permits you might be able to to give us a quick summary of your top 20 holdings?

Oh crumbs, I know this has been hanging around on the to do list for ages, and it feels like a chore at the moment, as there's so much else going on all the time. Best thing is, just leave it with me, and I'll do it when it's enjoyable to do & I don't feel under pressure.

Thanks, Paul.

Richard Goodwin

Yes, I own Frenkel Topping (LON:FEN) they are doing very well. Despite being relatively market neutral in terms of the nature of their business the shares fell a lot in March 20 then just chased ahead of my limit buy orders through the early 20 pences until I gave up. Now 53p grrr!

Brookeda

This is what first alerted me to the opportunity.

I bought in two lots at an average of 11.6p so I am pretty happy so far.

Wherever he leaves his hat...

...... that’s his home”

Gus

BClegg

Hi Paul,

I really appreciate the fantastic work you do in producing the SCV reports. They are very interesting and readable and are great for the likes of me who's eyes tend to glaze over while reading most financial stuff. I also find many of the subscribers' postings very helpful, and I often wish I had a bit of knowledge myself so I could contribute now and again.

On the subject of your own personal portfolio, I would rather manage by not knowing what it comprises. Your reports already have a very user friendly personal touch, it's more than enough.

simoan

One of the more interesting upcoming IPO's I'm aware of is Alphawave IP. However, it's not yet clear whether it will be available to the retail market. I suspect it will be kept for institutions only given the small free float.

The company has only existed for 4 years so the IPO looks a little opportunistic to me, however it is already a highly profitable company. They license semiconductor IP (so a bit like ARM) for high-speed interconnections both internal and external to chips. So very much in vogue with booming AI, Data Center etc. sectors.

More details here: https://www.cityindex.co.uk/ma...

A suggested $4.5bn valuation looks very rich but I guess we'd expect that in a hot market, particularly given the fantastic early stage growth and profitability metrics to December 2020.

All the best, Si

Tortoise investor

Paul, of new IPOs I quite like the look of Moonpig (LON:MOON) - the online greetings card and gifting company. Capital light, good organic growth, and clear market leader. I buy their products regularly and think the range of cards and personalisation offered is fantastic. However, the share price looks punchy trading on 40x estimated FY22 so I think this is one to return to when H1 FY22 results come out in the autumn and when strong comparatives (stellar lockdown performance with card shops shut) might soften the price and create a more attractive entry point. It's on my watchlist.

Zipmanpeter

9th May '21

Re Moonpig (LON:MOON) - interesting discussion on whether it is market leader or not!!

It may be online leader but even after a year of lock down, I suspect that Card Factory (LON:CARD) will be clear overall card market leader again by calendar 2022 - and thus still good value despite its large debt large reduction in footfall if it can finally i) sort out its borrowing and ii) medium term, generate enough cash to invest in Marketing to win its fair share online (and in doing so drive its retail operations). These 2 major "ifs" but offsetting potential explain its current share price. Will be fascinating to see how things look as Covid retreats and shops re-open. My guess is a lot of well attended summer birthday parties, with physical cards! Disc. Card Factory (LON:CARD) holder).

avirtualglobe

10th May '21

Samarkand...I am surprised to hear that you couldn't add to your position. I added via HL into ISA about 3 weeks ago. You may have to execute via phone though. Pleased I did it though because there appears to be some good momentum.

I probably wasn’t trying hard enough. As you say, telephone orders only at the moment (via my Charles Stanley Direct account at least) and I was put off by the wide spread quoted at the time.

On the subject of Samarkand (OFEX:SMK) , slightly odd announcement this morning that they’re placing about 2.7m shares (c.5% of shares in issue) with big (£32 billion market cap) Chinese distributor United Win Asia this morning.

https://www.investegate.co.uk/....

Nice to have a big strategic partner and all that but the placement is being done at the initial IPO price of 115p compared to the current share price of about 172p , about a 33% discount. Not sure if this was built into the original IPO terms as otherwise it seems a generous/dilutive move. Given the two principal founders still hold 29% of the equity, I guess they must think it’s a good idea (unless UWA made them a Godfather like “offer they couldn’t refuse”!)

Small Cap Value Report (Fri 7 May 2021) - NUM, KITW

Numis (LON:NUM)

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Paul Scott

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