Small Cap Value Report (Mon 12 Oct 2020) - CBOX, SAG, TPX

12th Oct '20 by Paul Scott

62 comments 9175 reads

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

It's very quiet for small cap trading updates and results again today.

Agenda -

Cake Box Holdings (LON:CBOX) - Trading update

Science (LON:SAG) - Trading update

Panoply Holdings (LON:TPX) - Trading update & significant contract wins

Cake Box Holdings (LON:CBOX)

Share price: 174p (up 5.5%, at 08:17)
No. shares: 40.0m
Market cap: £69.6m

Trading Update

Continued trading momentum in store and online

Cake Box Holdings plc, the specialist retailer of fresh cream cakes, today announces its half year trading update for the six months ended 30 September 2020.

I recall that this franchised cake shop retailer put out an impressive update after re-opening, which I reported about here on 1 Sept 2020. Re-reading my notes, it does look good. In particular a previously cancelled dividend of 3.2p was reinstated, as a special divi. LFL sales were up 14.1%, and online was up 74% - remarkably good, considering footfall is well down for retailers. This previous update covered the 5 months to end Aug 2020.

Update today - adds September to the reporting period, now 6 months for the half year to 30 Sept 2020. For the 6 month period, revenue was slightly down, at £8.6m (H1 LY: £8.8m). However, this includes 6 weeks of store closures at the start of the period, so the more meaningful comparison is LFL sales for the period after lockdown, being the 20 weeks to 30 Sept 2020;

Stores: LFL sales up 12.1% (very good, but down from 14.1% reported previously, so Sept has seen a slowing of the growth rate)

Online: up 81%, meaning that growth has accelerated further from the +74% figure previously reported. I would have liked to see the split of total sales between stores and online, because it's difficult to judge how important the online growth is, e.g. if it's coming from a low base.

Store rollout - given the chaotic circumstances of the last 6 months, I'm really impressed that CBOX has continued to roll out more store franchises. To open a cake shop right now, shows a lot of commitment from the franchisees, so they must find the offering compelling, which makes me sit up and take note.

Six new franchise stores were added to the…

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Damian Cannon

12th Oct '20

That's an excellent question. A high and rising inventory was one of the warning signs with Patisserie Valerie. I've no idea if this is a red flag for Cake Box Holdings (LON:CBOX) but it's worth investigating.

LinnetIC

Hello Paul. What are your thoughts on the Big Dish strategy change, announced in today's RNS?

barnetpeter

A lot of small cap stocks on the way up today; often on very little. They are going up because they are going up. A sign of froth at the end of a bull market? Or a huge influx of private traders trying to make a few £££? I have lost count of the number of individuals on social media saying they have lost their job so are going to become a full time trader. Robin Hood style "covid traders" I guess. Many of them might do fine in this time of extreme volatility and a few might just turn out to be naturals. Good luck to them all.

I do wonder though. I got a "tip" to buy All Asia Asset Capital (LON:AAA) recently. This is a tiny lossmaking investment company that is up 50 times from the lows and is valued at an amazing mkt cap. No thanks.....but it took me back to the 1980's where you had to phone and listen to a recorded message to get share tips. You never knew when they were being released so followers often phoned ten times a day. If you were lucky, you got the tip, phoned your broker and got in quick ....and then watched the price soar on ceefax or similar. Or phoned the FT line for "movers of the day". The key was to sell out before the next tip. Of course, now I realise that the tipsters had bought up a shed load of shares and it was just a form of bucket shop. Sometimes they had got wind of what was going to be printed in a publication ("red hot penny shares" or similar) and later on there was even a TV program where the contestants picked a stock for a week and the winner was the one that made the most money in that week. Of course, the picks soared the next morning so if you knew what was going to be tipped before the mkt closed that day.....leaky or what! Fun times....but not really that legal I guess. In those days though, without fast internet nobody seemed to be that bothered and insider trading was so rife that everyone knew of takeovers the week before. The first half of the movie Wall Street is so accurate for the times.

MiserableJacktPotato

I thought Robin Hood announced they were pulling out of the UK market.

Bonitabeach

I have no industry knowledge (wife is very capably in charge of the baking department), but in defence of Cake Box Holdings (LON:CBOX) the increase in inventory over the past four years, £0.87M is only a fraction of the increase in retained earnings, £7.09M.

Now FRASERS (LON:FRAS) has increased retained earnings of £383M and increased inventory of £681M - cost of sales have risen by 44%, inventory by 132%. That alone makes it a bargepole stock for me - but always DYOR.

No position

Laughton

As it's a fairly quiet day and I know many here are either holders or followers, another RNS out today from Revolution Bars (LON:RBG) announcing yet another purchase of shares by Mark Ward. Now up to a 10% holding so even though the share price is close to being on the floor that's still quite a chunk of change and sign of commitment.

Anyone know who Mr Ward is and whether his history might shed some light on what he sees here that many don't?

I do hold and, unfortunately, have held for quite some time.

intuitive6191

Intrigued about Cake Box. It doesn’t seem to be listed as a British Franchise Association member?

I would have thought that a quoted company would automatically want to be part of the BFA to help reassure both franchisees and Investors.

peterthegreat

Thanks kgb1953 for drawing our attention to the latest thoughts from Robin Angus and Personal Assets Trust, which I have been reading for years. Although diametrically opposed to the approaches to stock selection underlying many articles on SCVR, it is apparent that both Personal Assets Trust and SCVR are successful ventures. Personal Assets Trust regards capital preservation as of paramount importance so it is perfectly designed for those who want a better return than leaving their money in a building society, but would have difficulty sleeping at night during market turbulence. My opinion is that Personal Assets Trust and its Investment Manager, Sebastion Lyon, are one of the best exponents of this "safety first" approach, using mixed asset investing. However, if you compare their returns to the best pure equity fund managers (who I believe you can identify) then the high cost of the "safety first" aspect is apparent from the lower returns. I also question whether Personal Assets often substantial investment in government bonds, (index-linked or otherwise) would prevent permanent loss of capital in the event of systemic failure of the financial system. In such a situation, I reckon selected blue-chip equities would eventually recover better than government bonds (which might be written off) after such a collapse.

Glorenfeld

If it's the same chap, he seems to own a big chunk of Innovaderma (LON:IDP), too. That said, it's a fairly common name.

My best guess is that it's this chap:

https://www.linkedin.com/in/mm...

https://find-and-update.compan...

What does this tell us about his edge in Revolution Bars (LON:RBG)? No idea...

Albm7

Hi Paul,

Bigdish (LON:DISH) (I hold and I know maybe too much airtime) but just wanted to highlight that: I agree when say:

is a broadening of the strategy, and it seems sensible to find additional uses for the app, and getting some free stakes in startups could be interesting. It only takes one to hit the big time, and it could be transformational.

But my read is they will not be focused on food tech in particular (which in my view is frustrating) but anything that can try and utilise their platform ...

from the release "Looking ahead, BigDish is expected to grow into what is termed a Venture Builder and through this diversification, own stakes in companies across the technology spectrum. The Company will also consider a change of name as the Venture Builder model progresses."

As a tech firm offering sweat equity they will be in a crowded space...generally a start up looking for investment would normally gravitate to firms with expertise in their space, have a good track record and more importantly can open doors.

But here's hoping I'm wrong and they will find a diamond

Wilbraham

PAT seems to me a little disingenuous in benchmarking against the FTSE All Share rather than a global index, given their main holdings are US stocks and bonds. Also 3 of their largest equity positions are sin stocks (drink and tobacco) which will grate with many prospective investors given the growing awareness of ESG principles.

Your comment has made me realise -

The platform offers discounts when restaurants are low volume right? I see no reason why this can't work really well for say, hairdressers, nailbars etc - anything that needs a booking really.

I still don't know how you get the potential customers to look at the app in the first place though. I mean, that's just GroupOn though.

Snooker2020

£DISH....TBH FatChance would be a better name. I am pretty sure roughly 99.99+% of both takeaway owners and takeaway customers have never heard of it, even directors are selling at any price......

and it's been bouncing around bankruptcy ville...seriously!

Just Eat Takeaway.com Nv (LON:JET) is the #1 by a mile and takeaway owners use it because it works. Forget the rest and choose (and invest) in the best.

Snoo

Anyone tried to use the BigDish site?

Put in the location, no small restaurants signed up. Pizza Hut, Harvester and TGI Fridays are. Despite mentioning discounts, they are nowhere to be seen, and when you click 'book now' you are dumped on the booking page of the restaurant website, where you have to enter in your location again!

Reeks of a bit of a waste of cash to me, as long as they can keep on telling investors that that something is happening, they can keep drawing their salaries.

A back-end system is hardly proprietary. It sounds to me like they have been hanging around at the Google Cafe or something, trying to insert themselves into early stage startups for free.

The change of name thing means I wouldn't be surprised if they pulled out of food in the future. The idea of time-driven offers is actually a good one, so why is the progress so anaemic?

Bigdish (LON:DISH) yes it could lend itself to other businesses which need bookings but I would ask why then not do it themselves, it would be an easy add on... as for using the app...a large marketing budget normally fixes that but for most early stage businesses they do not allow/have sufficient funds for marketing so you could have a great product that nobody knows about..

davidhowman

Robin Hood Energy have pulled out of the market, all companies using them e.g. Ebico, have transferred their clients to British Gas. Transfers are taking place now.

Different Robin Hood :)

https://www.telegraph.co.uk/technology/2020/07/21/stock-trading-app-robinhood-scraps-uk-launch/

Gromley

Indeed, but barnetpeter referred to Robin Hood style "covid traders" I guess.

So it probably doesn't much matter which Robin Hood ;-)

It is though pretty disturbing if a significant people are using redundancy to earn easy money as traders.

Norfolk'n'Good

Hi Paul

First ever comment on Stocko

Cake Box recently made available on Just Eat, Uber Eats and Deliveroo hence rapidly expanding on line sales - but yes from a low base?

Ah, I missed the style.

That happens a lot :)

Small Cap Value Report (Mon 12 Oct 2020) - CBOX, SAG, TPX

Cake Box Holdings (LON:CBOX)

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Paul Scott

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