Small Cap Value Report (Mon 1 Apr 2019) - DEB, RNWH, INS, LWB

Wednesday, Apr 03 2019 by

Good morning, it's Paul here!

Please see the header for the trading updates & results announcements which have caught my eye so far today.

Debenhams (LON:DEB)

The saga drags on, with yet another announcement today from Sports Direct.

Sports Direct is encouraging other DEB shareholders to write to the DEB Board, using this template, which has been published on the Sports Direct website;


It's all looking rather desperate, and pretty amateurish. Several of the previous SPD announcements have been notable for being poorly written. It just feels like Mike Ashley is thrashing around, trying to salvage something from one of his many very poor investments in other retailers.

There was an interesting article in the Telegraph over the weekend, detailing the extensive, and seemingly haphazard investments he has made, managing to blow £300m in the process.

Genius retailer, or out-of-control egomaniac? You decide.

It looks to me as if the bondholders holding a gun to the heads of DEB's Board, makes it more likely they will succeed. In these situations, bondholders usually win, because debt ranks above equity in distressed situations. But who knows? It's interesting to watch from the sidelines, but definitely not a share I would go near.

Renew Holdings (LON:RNWH)

Share price: 403p (little change today, at 09:22)
No. shares: 75.3m
Market cap: £303.5m

Trading update

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces an update on trading in advance of the interim results for the half year ended 31 March 2019.

Trading - it's an in line update today;

Group trading in the period was ahead of the previous financial year and in-line with forecasts. The Board remains confident in achieving its expectations for the full year.

Trading in the Engineering Services division has been strong whilst Specialist Building activities have reduced, as expected, due to our continued approach to contract selectivity.

Net debt is as expected now, and anticipated to be in line for the year end (end Sept 2019).

Order book - also as expected;

The Group's order book continues to be underpinned by long-term framework positions, including new awards during the first half of the…

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Debenhams plc is a United Kingdom-based company, which is engaged in multi-channel business. The Company’s brand trades through approximately 240 stores in 27 countries. The Company's segments are UK and International. The UK segment consists of stores in the United Kingdom and online sales to the United Kingdom addresses. The International segment consists of international franchise stores, the Company-owned stores in Denmark and the Republic of Ireland, and online sales to addresses outside the United Kingdom. The Company's stores trade under the name of Debenhams other than the Danish stores, which operate under the Magasin du Nord banner. Its stores offer customers a range of services, including restaurants and cafes, personal shopping assistance, hairdressing and beauty treatments, nail bars and wedding or celebration gift services. Its Debenhams Direct ( offers a range of products and services for online customers. more »

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Instem plc is a supplier of information technology (IT) applications to the early development healthcare market delivering solutions for data collection, management and analysis across the research and development continuum. The Company is engaged in Global Life Sciences operations. Its lead product suite, Provantis, is an application in the Early Development Safety Assessment (EDSA) market. The Provantis solution incorporates a suite of modules required for managing and recording EDSA studies, from receipt of the compound through to the automated assembly of statistical analyses and final reports. Its software allows scientific staff to collect, analyze and share data across the organization and externally. It also offers ALPHADAS, an early phase clinical software solution. The Company offers Centrus suite, which provides pre-built applications, as well as the ability to utilize a range of business intelligence and analysis tools. more »

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Low & Bonar PLC is a United Kingdom-based company engaged in international manufacturing and supply of performance materials. The Company's segments include Building & Industrial, Civil Engineering, Coated Technical Textiles, and Interiors & Transportation. The Building & Industrial global business unit (GBU) supplies a range of technical textile solutions for applications in the building, roofing, air and water filtration and agricultural markets. The Civil Engineering GBU supplies woven geotextiles and construction fibers used in infrastructure projects, including road and rail building, land reclamation and coastal defense. The Coated Technical Textiles GBU supplies a range of technical coated fabrics providing aesthetics and design, performance and protection. The Interiors & Transportation GBU supplies technical fabrics used in transportation, interior carpeting, resilient tiles and decorative products. more »

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

13 Comments on this Article show/hide all

MrContrarian 1st Apr 1 of 13

My morning smallcap tweet:

Low & Bonar (LON:LWB), Codemasters Group (LON:CDM), Avingtrans (LON:AVG)

Low & Bonar (LWB) Q1 poor. "Colbond continued to experience lower market demand levels than expected, particularly in automotive and flooring segments, and increased competitive pressure in the lower margin European roofing market."
Codemasters (CDM) guides FY rev c.£71m. Adj EBITDA c.£18.5m, ahead of market expectations.
Avingtrans (AVG) wins $6m order for pumps and spare parts to nuclear reactors in the US and South Korea.

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gus 1065 1st Apr 2 of 13

Apparently Mike Ashley has offered to move into No 10 and take over Brexit negotiations this morning with Tim Martin from Wetherspoons coming into No 11 as Chancellor. A company source said Mr Ashley saw this as excellent an opportunity to take a further step towards global world domination. Must be something to do with the date ...


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rmillaree 1st Apr 3 of 13

Easyjet (LON:EZJ)

Cautious update from Easyjet this morning has resulted in a shareprice decline of approximately 7% - to 1040p. Stockopdeia had EPs of 115p for 2019 (30/9 year end) and 123p for 2020 - i am presuming these numbers will be downgraded somewhat but this behemoth is looking decent value at todays prices IMHO.

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Beginner 1st Apr 4 of 13

For anyone interested, I noticed that the market cap at Carclo (LON:CAR) is now almost the same as the tangible assets (land and buildings) cited in in the 2018 annual report, Thank you Paul, for highlighting the last value.

(I am very disappointed at Low & Bonar (LON:LWB) . It may highlight the danger of small caps paying excessive dividends over an extended period).

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hayashi22 1st Apr 5 of 13

Re Low & Bonar (LON:LWB): ru suggesting the dividend payouts starved the business of investment? Do you think the dividend will be cut ? I don't hold but it has crossed my radar on several occasions. Wonder if it's worth a punt at these levels. Looks to be trading below NAV but maybe writedowns to come. Along with Carclo this has has to be one of the worst manged companies.

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Beginner 1st Apr 6 of 13

In reply to post #464293

Hello h. I think paying the dividends meant debt accelerated faster than it need have, complacency developed in management and investors, and there was probably some under investment. I would not put any more money in here yet, myself. Management is relatively new and needs to prove itself. (But in truth, I am pretty clueless in this game!) Peel Hunt have issued a 20p target price today, down from 25.

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ACounsell 1st Apr 7 of 13

In reply to post #464273

Carclo (LON:CAR) is not alone. Xaar (LON:XAR) price to tangible book value as per 2018 results is 0.91. Appears in two value screens but share price continues to fall (I hold). Unless in terminal decline difficult to understand why someone doesn't buy it even if only to sell of the assets and shut it down! Graham reported on Xaar (LON:XAR) a while back and said something similar I believe. Also there could be even more value if the intangibles in the balance sheet are intellectual property which could be worth something if the ink jet/3D printing technology patents, etc. are leading edge.

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ACounsell 1st Apr 8 of 13

In reply to post #464273

Correction - a Bargain screen and a Quality Screen (R & D Breakthroughs!)

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sharw 1st Apr 9 of 13

A quiet morning for announcements but an Interesting RNS-R from Amino Technologies (LON:AMO) regarding Google Operator Tier Android certification. It sounds technical but according to finnCap:
"25% of estimated new device shipments (c100m across the market, excl China where data is not available) in the next five years are expected to be Android TV. As a result, by 2022 11% of pay TV homes globally are expected to be Android TV".

Enough for the broker to reiterate a target of 185p and a 12% rise in the share price.

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Whitbourne 1st Apr 10 of 13

In reply to post #464273

Thanks to Beginner for highlighting this on Carclo (LON:CAR)

the market cap at Carclo (LON:CAR) is now almost the same as the tangible assets (land and buildings) cited in in the 2018 annual report

What is striking about Carclo is that net debt has risen in every single year covered by the StockReport - from just over £9m in 2013 to £36m now. And free cash flow has been negative in every year but one.

That rules it out for me. The products are impressive and it's clearly a technically capable company, but the markets in which it operates seem to be too difficult and too demanding to allow Carclo (LON:CAR) to produce consistent profits that it can translate into cash and hence dividends. 

I suspect that a buyer looking at the assets would find that their book value did not reflect the closure costs you would incur if you wanted to realise them. In this case the classification of 'value trap' looks about right...

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barnetpeter 1st Apr 11 of 13

Lots of stocks marked well down today. Last week of tax year of course and plenty are having a spring clean of the duds for tax purposes .....including me.

One aim stock I bought years old and was then suspended and so on.....I sold today for below the cost of dealing. £1500 to £4. Only still exists to dilute and pay directors obscene levels of remuneration. Far too many of those around imo.

Thurs / Friday this week could be the days to pick up some bargains perhaps?

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sharmvr 1st Apr 12 of 13

In reply to post #464333

As is the share count and working capital.
In fact the only thing that seems to be decreasing is the cash balance!

There may well be interesting stories to explain, but I see a big writedown in 2015 (not sure what it is as haven't looked), but seems like some sort of exceptional write off.
In the years since, big increases in receivables, with other receivables bigger than trade receivables (again I have not investigated potential reasons), but something suggests that we might expect another exceptional write off, which is pretty much what the P:TB is suggesting.

Agree with Whitbourne and Stocko about value trap and not something I would want to get involved in.

There may well be value there - Duroc and Lakeside seem to think so, who may or may not be related to one another.

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David Harding 3rd Apr 13 of 13

In reply to post #464203

LOL! :)

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

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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