Small Cap Value Report (Mon 11 Dec 2017) - SOS, OnTheMarket, PHTM, BOWL, MRL

Monday, Dec 11 2017 by

Good morning,

Thanks for the comments, I'm planning to cover at least the following:

Will then assess what to cover after that, possibly Marlowe (LON:MRL).



Sosandar (LON:SOS)

  • Share price: 18.4p (-3%)
  • No. of shares: 107 million
  • Market cap: £20 million

Trading Update

This is an online womenswear brand which recently (last month) reversed into a shell on AIM. Adam Reynolds, who has been involved in similar deals to bring shells back to life, was Chair of the shell prior to the deal.

There are some great comments on this in the thread below, including one by Paul. So on the basis that Stockopedia is a "hive mind" of sorts, producing far more intelligence than any one individual could ever produce, I strongly recommend that you check out the comment thread!

Today's update is brief:

Sosandar plc (AIM: SOS.L), the online women's fashion retailer, is pleased to announce that trading since 31 August 2017 to the end of November has exceeded management expectations.  The new funds raised at the time of the reverse takeover on 2 November 2017 are enabling the business to acquire larger and wider ranges of product and has also enabled the business to accelerate its media and marketing activities.  Investment in new marketing channels has yielded strong results and will be further expanded in order to drive new customer acquisition.

I've taken a quick look at the Admission Document on the company's website. Sales for the five months ended August 2017 were c. £240k with cost of sales £123k.

Given how early-stage it is, this is almost purely a bet on the management team. The joint-CEOs are the founder and former editor of Look magazine. You can imagine how their experiences at Look might be very helpful and give them a fresh approach to online retail.

It's a bit too early-stage for my portfolio, but it's probably worth taking a look at this for anyone interested in ASOS (LON:ASC), Boohoo.Com (LON:BOO), etc, as another competitor in the space.


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

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Sosandar PLC, formerly Orogen PLC, is a United Kingdom-based company that operates an online women’s wear platform. The Company’s clothing categories include dresses, jackets and coats, knitwear, shirts and blouses, tops, skirts, trousers, jeans, leggings, footwear, leather and suede, occasion wear, work wear, autumn trends, velvet and holiday shop. Its footwear products include Pewter Metallic Chelsea Boot, Red Leather Ankle Boot, Velvet Cylinder Heel Ankle Boot, Black Leather Stud Detail Ankle Boot, Black Suede Closed Toe Mule, Grey Velvet Court Shoe With Jeweled Brooch, Black Suede And Pewter Metallic Court Shoe, Black Leather Front Zip Ankle Boot, Leopard Print Leather Chelsea Boot, Steel Blue Leather Snake Print Ankle Boot And Black Suede Knee Boot. It also offers latest edit of day-to-night dresses, on-trend separates, luxe leather and outfit-topping shoes through its platform. more »

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Photo-Me International plc is engaged in the operation of sale and servicing of a range of instant-service equipment. The Company operates coin-operated automatic photobooths for identification and fun purposes, and a range of vending equipment, including digital photo kiosks, amusement machines, business service equipment and laundry machines. The Company reports its segments on a geographical basis, such as Asia; Continental Europe, and United Kingdom and Ireland. Its products include digital prints, photobooks, posters and collage posters, calendars and photo-cards. It offers children's rides, such as carousels, generic rides, character licensed rides, simulators and interactive rides. It operates approximately 27,000 photobooths, over 6,000 children's rides and approximately 4,700 digital kiosks in areas, such as shopping centers, supermarkets and rail stations. Its subsidiaries include Fowler UK.Com Limited, Prontophot Austria G.m.b.H. and Photomatico (Singapore) Pte Limited. more »

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Hollywood Bowl Group plc is a bowling entertainment operator in the United Kingdom. The Company is engaged in the operation of ten-pin bowling centers, as well as the development of new centers and other associated activities. It has a portfolio of approximately 50 centers operating across the United Kingdom. The Company's centers are located in multi-use leisure parks, and each center offers approximately 20 bowling lanes, on-site dining, licensed bars and family games arcades. Its brands include Hollywood Bowl, Bowlplex and AMF Bowling. Its Hollywood Bowl brand has over 30 centers situated in prime locations at leisure parks. Its Bowlplex brand has approximately 10 centers in prime locations at leisure parks. Its AMF Bowling has over 10 centers in non-prime locations. The Company's family-focused arcades offer games, such as air hockey and basketball hoops, games with prizes and video games. The Company's licensed bars offer a range of soft and alcoholic drinks. more »

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

54 Comments on this Article show/hide all

Graham Neary 11th Dec '17 35 of 54

In reply to post #251953

Two out of three! Thanks for the suggestions. G

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Graham Neary 11th Dec '17 36 of 54

In reply to post #251868

Thanks for the suggestions, appreciate it. Not sure what to conclude from the Spectra Systems (LON:SPSY) postponement today.


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Graham Neary 11th Dec '17 37 of 54

In reply to post #251813

Love the Hollywood Bowl (LON:BOWL) suggestion - been keeping an eye on that one. Cheers RTJ.


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Funderstruck 11th Dec '17 38 of 54

In reply to post #251833

Aislabie re Spectra Systems (LON:SPSY);

They have postponed the AGM in both '15 &'16 ; after the latter, prices rose by 50% in the next two weeks , so in that case was not a forecast of bad news. Unlikely to be so in this current case either, as there was a jubilant trade update only on 16.1017

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nicobos 11th Dec '17 39 of 54

I saw this and thought it worth posting ...

Another case of flagrant abuse on AIM and authorities seemingly not caring.

Does the Company ring any bells ? Maybe Stockopedia sleuths can work it out ...certainly if it sounds like one of your investments, could be time to ditch !

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JohnMM1969 11th Dec '17 40 of 54

Re Sosandar (LON:SOS) I highlighted this to my better half after reading about it on here. I think she is about the target market (45), and she loved the look and ordered quite a few items. Unfortunately for my credit card bill, kept most of them.....

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Aislabie 11th Dec '17 41 of 54

In reply to post #252153

Thank you for the note on Spectra Systems (LON:SPSY)
I have been trying to figure out why getting a quorum is so hard; it appears to require over 50% of voting shareholders to register/attend. This would seem high but "broker non-votes" are included in any count which seems to refer to shares held in nominee accounts. Since the company has 52% held privately you would think that this could be rounded up fairly easily. Hargreave Hale has 5%, a former NED has 8% , a single company In Guildford, Worsley Associates, has 15% and the CEO has 4%.
But it may be that in a company with only 29 people (re Stockopedia) that nobody has got round to organizing this.

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smatthews1 11th Dec '17 42 of 54

Mixed views regarding Photo-Me International (LON:PHTM) as the way things stand the company pays a good dividend and even special dividends over their £50m Threshold (not sure if this still stands).

The recognised growth through the laundry side is clearly very good, and I am sure they will continue to invest in this as they see fit.

Cautious about the photo booth side, considering this has traditionally been their bread and butter source of income.It would seem there are other competitors eager to capitalise on Japans 'My Number' inititive scheme. Also they have commented about a softening demand in the UK.

However I feel very bullish about their efforts going into the Photo Identification technology. I personally have never been sold on the fact that a 'selfie photo' would be adequate for the future, when security levels have been at their highest for a while. So now the HM Passport service has rolled this out I see this as very positive.

This technology seems to be rubbing off into the banking sector. With recent news about RBS potentially closing around 250 of its high street banks, this would be a great benefit for them as they could open more smaller automated branches utilising their technology, if it works of course.

It leaves me questioning how easy will it be for someone else to emulate their technology In this sector, anyone have any thoughts on this?

So as a holder I am prepared to sit tight for now and tuck this one away for the long term.


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Tanglands 11th Dec '17 43 of 54

Marlowe (LON:MRL) I hold. Not sure you can treat a trading company as an investment company simply because it is executing a buy and biuld strategy. Put simply if you buy at say a PE of five or six and live in a stock market world where a PE of say ten was not considered toppy then every acquisition adds value. Now of course you need to trade them profitably and synergies are clearly an added benefit but assuming you do this then you also throw off cash and pay down the debt provide yield return to shareholders. Look at victoria ( which I have held for a number of years) classic and very well executed buy and biuld in a very untrendy "dull" market space. I think graham calling it and valuing as an investment company misses its point and its execution plan. Anyway, time will as ever tell! Great write up as ever. Just completed the survey and your section key reason for me being here.

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Julianh 11th Dec '17 44 of 54

In reply to post #252168

Thanks Nicobos
A fascinating Evening Standard article. Sounds just about par for the course. There are some great companies on AIM. But the poor regulation and lack of enforcement have turned AIM into a treasure trove for crooks and charlatans. And sorry, I don't know the name of the company.

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Wimbledonsprinter 11th Dec '17 45 of 54

In reply to post #252168

Thanks for posting. Only partly related, there was an FT article on Zeus today, mentioning a number of Zeus's AIM flops (Accrol, DX, Entu) and that the LSE is studying whether to tighten up rules on the due diligence required to be done by NOMADs on AIM. The catalyst for the FT printing the article was not clear, as there was no recent news in the article - other than a tangential reference to the recently announced P/L of Zeus

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herbie47 11th Dec '17 46 of 54

In reply to post #252193

I'm confused, I'm reading you can do passport photos just with your ipad or mobile phone? Apple have 100 different country templates set up. Also in UK "Applicants can now renew their passports online by uploading a head-and-shoulders shot from digital devices, such as phones, tablets and cameras, in a move that will do away with the need to physically post a photo printout to the passport office."
Passport is usually only every 10 years but visa could be yearly but quite a few countries are going over to evisas which don't need a photo printed out, so I think the market is declining.

The CEO holds over 22% of the shares, I can see the dividend being maintained.

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ed_miller 11th Dec '17 47 of 54

In reply to post #252193

Re Photo-Me International (LON:PHTM), I'm just one case, but I'm not particularly good at taking selfies. However, I paid attention to the stated requirements for digital photos for a very recent passport renewal. My selfie, taken at home, by me, and without any help, and submitted online, was accepted, no problem. Advice was to get a friend to take the photo. Either way, if you follow the advice on how to take the shot and what the photo must, and must not include, it's a lot easier than making a special trip to a venue with a photo-booth to pay for the inconvenience of taking a photo away from home, when a photo conveniently taken at home is free. Worth bearing in mind perhaps, given PHTM's reliance on their photo-booths for revenue and profit? I have no position in Photo-Me International (LON:PHTM).

Ed Miller

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ed_miller 12th Dec '17 48 of 54

Re Hollywood Bowl (LON:BOWL), note that, if pricing is along the same, or similar, lines as its rival Ten Entertainment (LON:TEG) (I don't actually know, but I assume it is) then the quoted game price is PER PLAYER. I recently played 2 games at a Ten Entertainment (LON:TEG) bowling alley in a provincial city (Derby) on a Saturday late afternoon (so peak time - I understand Hollywood Bowl (LON:BOWL) use dynamic pricing? I think Ten Entertainment (LON:TEG) does too) as a group of three players. Our 2 games cost us £12-90 each (drinks extra; anything else extra) and provided entertainment for 40 to 45 minutes or so. Granted, I'm not used to crazy London prices, but it didn't strike me as good value, especially for small groups, for which the games are done in a jiffy. I can understand why both Hollywood Bowl (LON:BOWL) and Ten Entertainment (LON:TEG) are so cash-generative though. I have no position in either, though that might change in the future.

Ed Miller

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smatthews1 12th Dec '17 49 of 54

In reply to post #252253

Yes I certainly agree that the way things stand at the minute doesn't really promise alot of future value from their booths, why would travel to one if you don't have to. I guess this is a play on if governments change the rules/restrictions in a few years from now. France Ireland and the UK are certainly making all the right noises.


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ed_miller 12th Dec '17 50 of 54

In reply to post #252473

Agreed (re £PHTM). That 'play' though seems to me a bit of a gamble rather than an investment, given that my convenient selfie-at-home was accepted by the UK passport office because it met their stated requirements. Given that they have already approved self-taken digital photos, I could only see them changing the rules and disallowing them if failure rate was over say, 50%. It does require paying attention to their requirements and perhaps to their advice on how to take the shot, but nothing else really. And given that the UK government have already allowed self-taken digital photos, it has to be a distinct possibility that many other governments - perhaps those of France &/or Ireland - will follow suite. Shame really - there's a lot to like about Photo-Me International (LON:PHTM), but the laundry-machines business is, for the moment, too small and too low-margin to make good for any unwelcome news affecting their photo-booth business.


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MickyC 13th Dec '17 51 of 54

Just wish Sosander had a different ticker!

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ed_miller 13th Dec '17 52 of 54

In reply to post #253098

Evidently some companies do actually need some help with their PR!

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xxx 15th Dec '17 53 of 54

I have to say that I am a little surprised by the general press comments.
What I see, is a solid business built around 3 core products/services, which trades on a pe of 18. But within these figures are the purchasing, re-equiping and the restructuring the ASDA franchises. The upgrading of the French,Irish and now UK photobooths and the roll out of the laundry business.

Their Japanese business has been criticised.
My number in Japan will come about, but there was a delay due to an initial rush of applications and then a data breach. For Japanese people, having a my number card, cuts the paperwork to negotiate the govt system, so demand will increase, the only questions for me are when and whether other operators will undercut the price.
The company has improved the products in each and their market positions, thus making them more valuable.

Apart from the current offering, the company has developed a number of new products/services which are hit or miss in nature, but crucially, these have not stopped the the significant cash generation finding its way back to shareholders.
Yes the car wash, figurine and wall paper business looked a bit odd, but they are a by product of the ant like industriousness.
At some point they may [or may have] develop[ed] a really useful product.

What is reassuring for me, is that the management have a measured approach to allocating cash to each idea.
I look on it a a 4.5% index linked bond with a venture capital arm thrown in for free. ie inexpensive to my mind. Personally, having seen the fingerprint scanners in Singapore at work and knowing how easy it is to photo shop 2d ID pictures for passports, I think the 3d photo idea could well be a winner.

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xxx 15th Dec '17 54 of 54

In addition to the investments mentioned, there have been the purchase of 1/2 commercial laundry operations + the retirement of 800 amusement rides. Thus although the number of machines is similar, there are no ugly ducklings in terms of ROE.This investment leads to a heavy D+A charge, depressing the P+L. Cashflow is the relevant measure here IMV.

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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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