Small Cap Value Report (Mon 13 August 2018) - FA., GMP, CHG, DPEU, MCON, OCN, PLUS

Thursday, Aug 23 2018 by

Good morning!

Let's see what's on the RNS feed today:

This includes a touch screen smart panel for remote monitoring of devices. It "has been designed specifically to address the needs of housing associations and private landlords".

I was concerned that the company was looking to head into overly speculative territory with its new product range, but this sounds promising. Shares up 4% as I type.

Its share price has taken a beating since the release of a fairly innocuous RNS last month. Weak short-term performance might also be playing a role.

The company affirms today that there has been no material change to cause this sell-off, and instead blames "near term portfolio rebalancing by select shareholders; low August stock market volumes generally; and, lack of liquidity preventing full market price discovery".

I estimate the discount to NAV to currently be c. 12%.

The impact on the company is as follows: production at the site is suspended and underlying operating profit is expected to be £10 million - £20 million below previous expectations. Shares are down 16%. The company's performance has always been very unpredictable and the shares should be on a cheap rating, in my view.

  • DP Eurasia NV (LON:DPEU) (I currently hold DPEU shares.) - no RNS, but the stock has collapsed anyway. It's down by 40% over the past two weeks, in sympathy with the Turkish Lira. The Lira dropped by 18% in a single day last Friday. 

President Erdogan of Turkey was reported to have said:

“If there is anyone who has dollars or gold under their pillows, they…

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

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41 Comments on this Article show/hide all

Julianh 13th Aug '18 22 of 41

In reply to post #390399

Thanks Si
Re Mincon (LON:MCON)
Both Somero Enterprises Inc (LON:SOM) and Mincon (LON:MCON) are great companies. I hold both. If I had to go to one it would be Somero Enterprises Inc (LON:SOM). They have almost no competitors, hence the excellent metrics.

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rhomboid1 13th Aug '18 23 of 41

ReSomero Enterprises Inc (LON:SOM) vs Mincon (LON:MCON) there are a few rather spectacular differences...not least that Mincon (LON:MCON) grow by acquisitions...from today’s RNS

‘We know that the improvement in the cycle is a rising tide that raises all boats, and that it makes good acquisitions look great and weak acquisitions look acceptable. We will continue with the substantial work on the company portfolio to derive the value that underwrote some of those business decisions. Some of the acquisitions we have made have been great successes for us, some have been adequate, and some still require work for various reasons sometimes beyond the control of local management.
We seek to continuously engineer improvement in our systems, businesses and management teams. Bedding in acquisitions is a process, an extended process in some cases, but we have nearly always managed to keep the management teams we have brought in and blended their experience and knowledge of products and markets to give us a great platform for the continuing development of the Group.’

..that doesn’t suggest a Somero type operation to me..huge bias as Somero Enterprises Inc (LON:SOM) is a major holding for me .. I think Goodwin (LON:GDWN) is probably a better comparison...which I also hold & rate highly.

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Graham Neary 13th Aug '18 24 of 41

In reply to post #390384

Thanks for the sensible comments on DP Eurasia NV (LON:DPEU), Andrew. G

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rwalford 13th Aug '18 25 of 41

For those interested in Ocean Wilsons Holdings (LON:OCN) , there is a cheap way in via Hansa Trust (LON:HAN) - a UK investment trust which is in reality a family office type vehicle for holding Ocean Wilsons (and a few hedge funds). It is always at a huge discount to NAV. Suitable as a buy-and-forget holding. I hold.

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Steves cups 13th Aug '18 26 of 41

This may be off subject but fashion retailers are a hot topic on this board. Anyone know why QUIZ (LON:QUIZ) has dropped sharply from near £2 to £1.50 ish. I missed them at £1.30 but maybe a second chance


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simoan 13th Aug '18 27 of 41

In reply to post #390434

This may be off subject but fashion retailers are a hot topic on this board. Anyone know why QUIZ(LON:QUIZ) has dropped sharply from near £2 to £1.50 ish. I missed them at £1.30 but maybe a second chance

Political interference! Maybe the Chancellor threatening on-line retailers with an "Amazon tax" has something to do with it? When do you think a politician will ever be pro-active rather than re-active? and maybe try not to put the blame on things other than legislation their own government bought in and "natural selection" for the woes of  UK high street retailers? Don't worry those are rhetorical questions. I know most politicians are idiots :-)

All the best, Si 

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Steves cups 13th Aug '18 28 of 41

In reply to post #390439

Thanks Si
I was looking for some read across from this sector. When nothing seemed obvious I posted the question and rather idly thought about House of Fraser. Seems rather strong drop for a political intervention but its worth watching to see what occurs.


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rhomboid1 13th Aug '18 29 of 41

In reply to post #390444

QUIZ (LON:QUIZ) sell a load of stock through HoF ..they may well have a bad debt potentially Mike Ashley might have other ideas about whether to continue the relationship..and therefore no need to pay any monies outstanding as he is not liable & has no interest in preserving any relationship

Given how material the HoF relationship is to Quiz it seems v poor that they haven’t issued an RNS which perhaps implies difficulty in assessing what the state of play is?

If I were a shareholder I’d be ringing them & demanding’s your money!

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Collector 13th Aug '18 30 of 41

In reply to post #390404

Thanks for that Trigger, I agree with all your points, except the blue sky bit.
As a BVXP shareholder who like many has done well out of these I have kept half an eye on FAB
since they listed, and more so today.
My take is that they must be eyeing BVXP profits. (Who wouldn't ! )
And after self concluding the science of making antibodies is probably not as difficult as it at first sounds, to people who know this stuff, and that the difficult bit is making effective antibodies,
some of which comes down to a bit of luck.
Then maybe FAB could compete with BVXP or replicate its success on future projects / products.
I see these companies as a hybrid contractor/manufacturer, they do contract research if they
can find someone to fund it, they manufacture if what they find is any good.
For example I am sure FAB could manufacture Vitamin D deficiency antibodies based on their
rabbit technology expertise but would not be able to find someone to fund it as BVXP sheep based
technology has already captured that market.
My conclusion is that FAB could actually be a business in the future.
Which for small pharma is a rare thing.
Please, anybody tell me this is dumb conclusion.

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Steves cups 13th Aug '18 31 of 41

Thanks Rhomboid1
Have emailed Quiz to find out


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AnonymousUser252054 13th Aug '18 32 of 41

In reply to post #390389

Not that British PMs, both Tory and Labour, aren't prone to a bit of the old military adventurism...

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AnonymousUser252054 13th Aug '18 33 of 41

Much more balanced assessment of Plus500 (LON:PLUS) than previously. Interesting read.

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smatthews1 13th Aug '18 34 of 41

In reply to post #390274

I believe there is mileage in the hydrogen economy, its ticks a lot of boxes as far as clean, efficient energy is concerned. However I still don't believe electric cars are the future, although its gained huge traction from manufacturers from around the globe, is this because there are attractive tax relief's for producing electric cars?

Also given how big and powerful oil companies are, and how much money can still be made from extracting oil, are we going to see a major shift from cars run by tradition fossil fuels just yet? I am not so sure.

For me, holding something like ITM Power (LON:ITM) will take incredible patience.

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BurglarBill 13th Aug '18 35 of 41

In reply to post #390494

There is legislation in the UK that will force fuel retailers to install the infrastructure required for the transition to electric / hydrogen vehicles.

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Catstycam 13th Aug '18 36 of 41

Graham, thanks for your views on Plus500 (LON:PLUS) today. I know you have been sceptical about the company for some time and with good reason it appears.

I made a decision on Friday, just before market close to sell my holdings at a tad over £20 on the basis that I had a gut feeling that there would be a fall today, having seen so many companies fall back on report day despite excellent results. However, I was surprised at just how much the fall back was early on. Later in the morning when I saw the share price rally I decided to re-invest, only to get caught out in what may have been a suckers rally. It looks like I misread the rally. I guess it can and does happen to any of us, despite our experience. With the share price still retracing up to market close, there may well be a further retrace tomorrow.

There is always the danger that the market will see in any report something that we won't or can't see due to our enthusiasm. We can gloss over items with rose tinted glasses, looking for confirmation bias.

Sometimes we just have to hold our hand up and admit making a mistake, and cut our losses. That is what I may need to do tomorrow. It is so easy to find reasons to stay invested rather than take a hit and put it down to experience. I could say stay in I have only lost 10% today and it may rise tomorrow, or say that it is better to take 75% of the original profit and selling rather than risk more losses. Perhaps it is better to stay out having made a good profit than try to copy; leave something on the table for others. Too quick to re-enter the market it seems, my decision, my fault. Spit!.

Noticed that Plus500 (LON:PLUS) has moved from super stock to high flyer and remains speculative in the stockopedia rankings.

Investing was never meant to be easy; we make it more difficult by letting our emotions get involved.

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Graham Neary 13th Aug '18 37 of 41

In reply to post #390504

Hi, you're welcome and thank you for sharing your own thought process on Plus500 (LON:PLUS). Best of luck with whatever you decide! G

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Graham Neary 13th Aug '18 38 of 41

In reply to post #390274

Hi RTJ, apologies for only getting back to you know. ITM Power (LON:ITM) is very difficult for me to understand, so I chose to look at other things today. G

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Weasel 14th Aug '18 39 of 41

In reply to post #390439

"I know most politicians are idiots"...............MOST? You're being generous.

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davetparkes 14th Aug '18 40 of 41

In reply to post #390494

hydrogen is a long way off , if ever.

electric cars wont do for me - i tow a (small) caravan - i dont want to be stopping every 50 miles.

just a viewpoint.

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Fangorn 15th Aug '18 41 of 41

In reply to post #390364

F35 sale "suspended"I gather

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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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