Small Cap Value Report (Mon 11 April 2022) - AMGO, MANO

11th Apr '22 by Paul Scott

12 comments 6738 reads

Good morning, it's Paul & Jack here, with the SCVR for Monday.

Agenda -

Paul's Section:

Amigo Holdings (LON:AMGO) - FCA prefers the amended restructuring plan, but it looks like the existing equity is probably worth little to nothing, so best to steer well clear, in my opinion.

Jack's section:

Manolete Partners (LON:MANO) - profit warning as government support measures impact business more than anticipated. These measures have been fully removed now, and the group says FY23 trading has been encouraging. A large case settlement goes some way to underpinning forecasts, and there could be a catch up in insolvency cases over the next year or so, but it’s not one for me.

Mello Monday - is tonight at 5pm. Details here.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Paul's Section:

Amigo Holdings (LON:AMGO)

4.6p (Friday’s close)

Market cap £22m

Update on the Schemes of Arrangement

I’m keeping well clear of this complicated situation, because there have been previous signs that the existing equity might be worth nothing, or next to nothing, after big dilution.

Today’s update re the FCA seems positive, but these last two sentences sound ominous -

These confirmations are positive steps towards delivering the best outcome possible, given the circumstances, for our customers, creditors and other stakeholders. There remain significant obstacles to overcome, including the need for a significantly dilutive equity issue, to recapitalise the ongoing…

Unlock with Email

Unlock with Google

Already have an account?
Login here

MrContrarian

11th Apr '22

My morning smallcap tweet: 18 summaries today.

Lamprell (LON:LAM) Immotion (LON:IMMO) Arden Partners (LON:ARDN) Cellular Goods (LON:CBX) Cordel (LON:CRDL) Harland & Wolff Group (LON:HARL) Nightcap (LON:NGHT) Wandisco (LON:WAND) Marks Electrical (LON:MRK) Manolete Partners (LON:MANO) React (LON:REAT) Induction Healthcare (LON:INHC) Stm (LON:STM) Duke Royalty (LON:DUKE) Audioboom (LON:BOOM) Avingtrans (LON:AVG) Mothercare (LON:MTC), Treatt (LON:TET)

◄Lamprell (LAM)► MoU with NOV, a leading energy services company, to support its delivery of three 1 gigawatt offshore floating wind farms. No £££. [SP=25.27 Cap=104m]

◄Immotion (IMMO)► Q1 rev £2m (£0.8m). Guides FY(Dec) rev £9.4m and EBITDA c.£0.9m [SP=4.7 Cap=19m]

◄Arden Partners (ARDN)► Ince waives nomad condition of its takeover. [SP=13 Cap=4m]

◄Cellular Goods (CBX)► responds to FSA not having its ingestibles products on its new approved list of CBD products. It "is not necessary in order for the products to remain on the market. The Company fulfils FSA guidance as this is not a 'new product' to market and all the FSA required details are clearly stated on the labelling such as product name (Pureis), legal address, product code and supplier which is the same as that of the validated CMH products featured on the FSA list." [SP=3.2 Cap=16m]

◄Cordel (CRDL)► Q3 rev up 114%. "Our third quarter saw a return to the growth trajectory anticipated in our plan, as revenue from major contracts began to flow. We have confidence in a continued strong performance during the remainder of the year and beyond." The RNS wrongly gives the ticker as MNO which changed in Nov. [SP=9.7 Cap=16m]

◄Harland & Wolff (HARL)► contract win from P&O Cruises and Cunard for dry docking two cruise vessels. 33 days total. No £££. [SP=21.67 Cap=35m]

◄Nightcap (NGHT)► tp open a Tonight Josephine brand bar in Liverpool later this year. Didn't Napoleon say "Not tonight Josephone"? I guess she didn't take him to a cocktail bar. [SP=19 Cap=36m]

◄WANdisco (WAND)► Q1 bookings $5.8m( $1.1m). "The high visibility of WANdisco's near term business pipeline underpins confidence in continued strong trading in 2022." [SP=288 Cap=173m]

◄Marks Electrical (MRK)► Q4 rev up 19%. In line? Expects FY adj EBITDA margin target 9%, in line with market expectations. [SP=94.9 Cap=100m]

◄Manolete (MANO)► guides FY(Mar) EBIT £5-6m, below mkt expectations. Blames covid. "There is expected to be an insolvency 'catch up' effect over the next 12 months and beyond which will provide Manolete with significantly increased opportunities. Just completed one of its larger case investments for £9.5m yielding c.£5.6m for MANO. [SP=230 Cap=99m]

◄React (REAT)► wins 3 yr £0.7m regular facilities maintenance cleaning contract. [SP=1.72 Cap=9m]

◄Induction Healthcare (INHC)► NHS England contract renewals secure £6.6m ARR. Retention rate significantly above management expectations. [SP=42.4 Cap=40m]

◄STM (STM)► its appeal in the long-standing Adams v Carey case has been declined. This "does not directly impact STM's exposure in this case, but it will have implications for the Financial Services industry more broadly." [SP=29 Cap=17m]

◄Duke Royalty (DUKE)► guides Q1 FY23 normalised cash revenue £5m, up £0.3m QoQ. [SP=40.5 Cap=143m]

◄Audioboom (BOOM)► Q1 revenue $19.7m, up 107%. Adj EBITDA $0.9m ($0.03). [SP=2000 Cap=324m]

◄Avingtrans (AVG)► two new nuclear contracts in S Korea, worth $7m total, to be completed before June 2023. [SP=451.11 Cap=149m]

◄Mothercare (MTC)► guides FY(Mar) rev £385m. Adj EBITDA £11.5-12m, ahead of analysts’ expectations. Pension deficit £66m (March 2020: £124.6m). Outlook: cost-cutting by partners "likely to mean that the return to pre pandemic levels of trading may take longer and in some cases we may directly contribute to achieve that recovery." [SP=10.1 Cap=61m]

In line: TET

ctoman

Hi Paul be good if you could look at Tortilla Tortilla Mexican Grill (LON:MEX) who have what looks to me like great results out today. I wonder if there is a read across from Fulham Shore £FUL who also had good results recently indicating that the casual dining space is in good shape

TamzinPiworld

Property Franchise (LON:TPFG) FY21 presentation from last week following their results. An excellent presentation, a great company (IMO!) Revenue +118%. Operating margin +40%. PTP+35%. Adj EPS+61%. Divi+33%. Highly cash generative, which enabled the debt from the Hunters acquisition to be bought right down. Outlook: they've forecast sales slowing by 20% (the housing sales market has been bonkers) but no evidence of that yet, even so they forecast a small growth from rental, financial services, EweMove, (so obviously the management services fee from these) and who knows they could do another acquisition. Video & podcast.

Howard Adams

Audioboom (LON:BOOM) Q1 TU (I don't hold, but have been watching for a while).

Highlights section extraction ...

Financial and operating highlights

· Record Q1 revenue of US$19.7 million, up 107% on Q1 2021 (US$9.5 million)

· Record Q1 adjusted EBITDA⁽¹⁾ profit of US$0.9 million (Q1 2021: US$0.03 million)

· Average global monthly downloads increased for the ninth successive quarter to 126.2 million, up 45% on Q1 2021 (87.1 million). Global downloads in March 2022 reached a record 131.0 million

· Average brand advertiser count of 379, up 26% on Q1 2021 (301)

· Average global revenue per 1,000 downloads (eCPM) increased to US$50.48, up 25% (Q1 2021: US$40.55)

· Group cash of US$3.3 million (31 December 2021: US$3.0 million)

· The Company continues to manage its balance sheet efficiently and utilise its working capital very effectively. As a reference it has collected US$2.9 million to date in April

· The Company has contracted revenue in excess of US$60.5 million for 2022 through advance advertising bookings, surpassing total full year 2021 revenue (US$60.2 million)

RNS here ...

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

I liked Audioboom (LON:BOOM) when I first researched it, but held off (sadly, missed out on quite a nice gain), as I thought that although they presented well and seemed to be growing I concluded that it was a crowded market with strong players such as Spotify and other US players. It is great to see a UK company taking a strong role is this space. I'll keep an eye on it.

It's down over -6% as I type. I suspect the EBITDA is a bit of a concern on US$19.7m revenue, perhaps investors were expecting a strong profit. Are they spending heavily to gain market share?

Any comments welcome.

Regards

Howard

Denzil Morgan

Anybody there?

Pool Watcher

I am wondering the same thing about Mothercare (LON:MTC), it seems to me that todays news is that the turnaround story needs more time and money. Does Mother Care have enough of both?

yellowdog

On the twin subjects of litigation financing and director buying the Chairman of LIT has just bought £250k of shares in it which follows some previous large buys by him and other directors in the last few weeks.

Simon Rowan

(LON:MANO) Interesting that (LON:BEG) has fallen a lot more than MANO on their profit warning. BEG actually updated in February with 'inline trading and well ahead of last year.' MANO also say they expect a lot of catch up in insolvency held up by government support in the pandemic. The growth and value figures are not that dissimilar, but Beg is nearly twice the market cap and nearly four times the revenue.

Berksbee

My thoughts exactly, can only believe LON:BEG is a safe bet at the current price.

Quilleron

The two Manolete Partners (LON:MANO) (I hold) and Begbies Traynor (LON:BEG) (held briefly after fundraise) are very different businesses. Manolete Partners (LON:MANO) deals exclusively with recovering monies from insolvencies and are very formulaic in their approach. They pick only the cases where there's a good chance of recovery and they turn them around very quickly. Their pipeline is strong and about to grow very rapidly and the cash returns are going to be building going forward.

Interview by Paul Hill (who holds) is worth watching if you want to understand how the business works: https://www.voxmarkets.co.uk/a...

Thanks Quilleron. RE (LON:MANO) Useful interview. I would have thought that what is good for the goose is good for the gander here . Quite a spread on Mano 2.20 -2.30

Harry Hindsight

I'm thinking covid pills, defence contractors, energy inc renewables, PGM's, food, gold and bitcoin (the applications behind the catchy names).

Litigation finance and 'cigar butt' loan companies are not on it.

Small Cap Value Report (Mon 11 April 2022) - AMGO, MANO

Paul's Section:

Amigo Holdings (LON:AMGO)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

12 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...