Small Cap Value Report (Mon 15 Apr 2019) - IGR, SND, SYS1, CARR, XPP, RCN, FLTA

Monday, Apr 15 2019 by
129

Good morning subscribers! It's Paul here, I'm on duty this week.

Thanks to Graham for his interesting reports last week. I think he made a compelling case for Tandem (LON:TND) and I picked up a little stock myself after reading Graham's report. Although tiny, illiquid shares, can be problematic, especially in turbulent markets, as it can be very difficult to sell. The bid/offer spread was horrible.

The so-called Brexit cliff-edge seems to have receded until end Oct 2019 now (and likely to drag on well beyond that). So I think we could see buyers returning to oversold small caps. Or at least ones which report positive trading updates.

I'm experimenting with the format here, and have today trialled the idea of posting some earlier, briefer, comments each day. Then expanding on the more interesting announcements in more detail, as the day progresses, and when I've had time to do some more digging, got broker updates, etc. Let me know what you think!



IG Design

IG Design Group plc, one of the world's leading designers, innovators and manufacturers of Gift Packaging & Celebrations, Stationery & Creative Play, Giftware & related product categories announces its trading update in relation to the year ended 31 March 2019.

Strong final quarter, which was expected, as the result is in line with expectations (not above);

The Group's strong trading performance continued in the final quarter delivering revenue and profit growth across all regions in the year.

As a result, the Board anticipates the financial performance of the Group to be in line with market expectations and significantly up year on year.
  • Results helped by acquisition, called Impact
  • Net cash better than expected, and improved on last year
  • Dividend will be increased
  • Directorspeak emphasises international operations
  • Outlook - nothing specific, but management sound positive about further growth


My view - remains positive. This group has a superb track record to date.

Valuation of 19 times FY 3/2020 forecast earnings looks justified.

StockRank of 77 is good. Classified as a "High flyer".

(above written at 07:30)

5cb46ae1e836dIGR_graphs.PNG


UPDATE: The initial market reaction to IGR's update seems somewhat underwhelmed, with the share price down slightly - albeit with only 45k shares reported as having been traded so far. Of course it's only the small trades that are reported straight away. Larger trades could…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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IG Design Group plc, formerly International Greetings plc, is engaged in the design, manufacture and distribution of gift packaging and greetings; stationery and creative play products, and design-led giftware. The Company's geographic segments include UK and Asia; Europe; USA, and Australia. The Company sells its products in over 150,000 stores across approximately 80 countries. It also offers a portfolio of licensed and customer bespoke products suitable for sale through multi channel distribution. The Company's products include crackers, pens and pencils, stickers, single cards and gift wrap. The Company offers its products under the brands A Star, B Stationery, Papercraft and Pepperpot. Its subsidiaries include Artwrap Pty Ltd, International Greetings UK Ltd, International Greetings USA, Inc, International Greetings Asia Ltd, The Huizhou Gift International Greetings Company Limited, Hoomark BV, Anchor International BV and Hoomark S.p.z.o.o. more »

LSE Price
598p
Change
0.3%
Mkt Cap (£m)
470.1
P/E (fwd)
18.1
Yield (fwd)
1.9

Sanderson Group plc is engaged in software and information technology (IT) services business specializing in digital retail technology and enterprise software for businesses operating in the manufacturing, wholesale distribution and logistics sectors. The Company's segments include Digital Retail and Enterprise Software. Its digital retail solutions include in-store technology; back-office systems for processing sales and fulfilling orders, and mobile and e-commerce solutions to underpin online operations. Its systems allow retailers to keep pace with new devices, technologies and channels, driving consumer engagement and retention. It offers Enterprise Resource Planning (ERP) software for manufacturing in general manufacturing, engineering, and food and drink processing businesses. The Company offers industry-specific software and warehouse management systems, delivering sales growth across wholesale distribution, cash and carry, fulfilment and logistics businesses. more »

LSE Price
140.5p
Change
 
Mkt Cap (£m)
90.4
P/E (fwd)
15.5
Yield (fwd)
2.6

System1 Group PLC, formerly BrainJuicer Group PLC, is a United Kingdom-based company, which is focused on marketing and brand consultancy, with proprietary market research and advertising solutions grounded in the principles of behavioural science. The Company’s services include System1 Agency and System1 Research. System1 Agency is advertising agency, that creates advertising proven to translate emotion into profitable brand growth. System1 Research produces the FeelMore50, an annual ranking of the world’s 50 TV and digital ads. The Company offers its client create 5-Star, fame-building communications. The Company operates in the United Kingdom, the United States, Continental Europe, Brazil, China and Singapore. more »

LSE Price
201p
Change
 
Mkt Cap (£m)
25.3
P/E (fwd)
7.3
Yield (fwd)
3.8



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


78 Comments on this Article show/hide all

janebolacha 15th Apr 39 of 78
4

In reply to post #469426

Paul, I did not use the word "rubbish", nor did I imply your report was "rubbish".
I do not comment in that way and that remark is thus completely uncalled for
but, unfortunately, of the kind now quite commonplace on this board, You thus
prove one of the points I was making so I thank you for that, at least.


(Edit:  Anyway, I really can't be bothered with confrontational and squabbling responses,

I have better things to do and I respect myself too much to get into that nonsense).

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Paul Scott 15th Apr 40 of 78
23

Well, you can't please all the people, all the time!  :-(

I'll see if I can tweak things this week to achieve a happy medium where I'm broadly in line with everyone's expectations! (did you see what I did there, LOL!)

P.

P.S. I've come up with an idea for improving the format, which I'll try out tomorrow. So briefer early comments, with a comment like "This trading update looks interesting, so I'll write a detailed section below", or "In line, nothing much of interest in the outlook section. So I won't be writing any more about this update".

How about that? In that I hope to be able to please both people who want a quick early review of updates, and people who want a more detailed report. I'll try to get everything finished by 1pm each day, which will be marked improvement on previously.

It's always nicer when subscribers try to be a little bit encouraging to the writers here, rather than sniping. Maybe we should bring back the free readers?! LOL!

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shanklin100 15th Apr 41 of 78
18

Hi Paul

Its very good of you to try a new approach to writing the SVCR.

As you posted earlier, today's report has involved circa 6 hours work from 7 a.m.

In reading Graham's and your reports, the most "added value" part of what you do is the more detailed analysis, which you probably undertook and added in the latter part of this six hour period. When I refer to "added value", I mean this is the text most likely to make me consider doing further analysis of my own, potentially leading to a buy or sell on my part.

Whilst it is great to have this by 1 p.m. rather than much later in the day, I am 100% happy with your writing of your reports as and when in the day/night you choose to write them. They are a major undertaking and I would not want you having to completely change your working day and sleeping pattern just to accommodate subscribers.

A happy productive Paul is much more important to me than keeping to a strict and what may become a painful timetable.

HTH. Cheers, Martin

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alexdonnelly 15th Apr 42 of 78

I'm experimenting with the format here, and have today trialled the idea of posting some earlier, briefer, comments each day. Then expanding on the more interesting announcements in more detail, as the day progresses, and when I've had time to do some more digging, got broker updates, etc. Let me know what you think!

Anything that gives us more details or even just your thoughts is great.

You can agree with them or not.

More info, more thoughts from someone knowledgeable is more power and better and helps make better decisions.

cheers Paul

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moolahcoast 15th Apr 43 of 78
2

great report as usual - thanks

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purpleski 15th Apr 44 of 78

In reply to post #469326

Hi Si

According to aflash’s profile he is a “premium” which I assume means paying member?

Michael

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JonBirdy 15th Apr 45 of 78
7

Paul (& Graham)

I’m very happy with however you each wish to write these reports in whatever timescale - and I quite like the approach trialled today. I always find you both very generous with your time, and gracious in the face of unwarranted (and often poorly written) critiques.

So thank you.

Jon

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simoan 15th Apr 46 of 78

In reply to post #469476

I'm sorry Michael, but for the record I have made no comment on what aflash wrote. I was referring to what PJ0077 wrote in another thread on Saturday morning. It seems he was not in my fan club but was willing to show his lack of class before departing Stockopedia.

All the best, Si

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Howard Marx 15th Apr 47 of 78
14

I'd liken the SCVR as a high-class restaurant in which the customers (us) consume the food (content) served up by the two Award Winning Head chefs (Paul & Graham).

Today, for whatever reason, some of the customers have become riotous - as soon as the starters have arrived, some have stormed the kitchen to tell the chef how to do is job.

Where did this attitude come from?! Has it been suppressed in the past by the now departed non-subscribers?

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JamesS 15th Apr 48 of 78
3

In reply to post #469456

Hi Paul,

With regards to the timing of the reports I couldn't care if it comes out at 9am or 9pm, to me the value is in the high quality analysis and insight which you and Graham provide.

I hope you two keep up the good work for a long time to come

Cheers,

James

| Link | Share | 1 reply
purpleski 15th Apr 49 of 78
6

In reply to post #469426

Paul (and Graham) please feel free to put out the SCVR at whatever time you feel like and in whatever format you wish. I have been reading it for 7 years now and it works for me. I usually take a look early on (if I remember) then when the reminder email comes out and if not complete then some time later or the next day. I really cannot see why when it comes out or if you miss the odd day makes any difference. On the DYOR basis nobody be should be placing trades just because of what is said here.

I know for certain that I would not have the energy, intellectual acumen or the lifestyle to do the SCVR (I doubt few would) and I would be surprised if there is a regular reader who has not avoided a loss or stumbled on a profit through the SCVR. (In my case, getting out of Globo and being big in Bioventix (LON:BVXP) are just two examples and I was probably in Accesso at the time of the bid because of SCVR).

I think Jane’s choice of words was unfortunate/unnecessary but certainly there is not “interminable squabbling” here. Occasionally (maybe a couple of times a year) it all gets a bit silly in the comments section and then everybody moves on. This is human nature.

This is not a Paul/Graham/SCVR lovein/hero worship comment, just an opinion about the value I get out of Stockopedia.

I also concur with Simoan, that maybe the thumbs up/down thing is past the sell by date and even on the SCVR? I would have thought the reads were the important thing especially as the report might get 5,000 reads but only 40 ish people click on the Yes/No buttons.

Thank you.

BW

Michael.

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ezlifeme 15th Apr 50 of 78
2

In reply to post #469496

Hi James - Afraid you have a mistaken Thumbs down from me - A Hearty Thumbs up was meant!

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andrea34l 15th Apr 51 of 78
7

In reply to post #469456

Personally I think you got it just right today Paul!

I think that for companies that you see favourable updates on, it would be beneficial for you to say enough early on about why you think the update is good so that people can then go away and conduct any additional research they want. Some days you might not be able to get a full update done by 1pm (well done today!)...  so I would want enough early on to get my teeth into.

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rmillaree 15th Apr 52 of 78
3

XP Power (LON:XPP)

Lion Tamer

...suggested to me that the the reduction in first quarter like-for-like, constant-currency drop might be just noise that could well be corrected by the end of the FY, and to be expected given the size of the company. 

simoan 

I don't believe it is noise (I hold btw). Last year saw record sales of semiconductor equipment which are not going to be repeated this year, and in particular the fall in memory prices is not helping things. As of the last half year report, 26% of XP Power (LON:XPP) sales were into this sector, increasing due to the acquisitions of Comdel and Glassman. This had dropped to 24% at the end of the FY reported last month.

i am kind of piggy in the middle here whether this is noise or not- the 2019 expectations deffo look like they took a hit around the turn of the year - per Stocky the expectations dropped from 195p EPs to 180p EPS. That sort of made sense with the lower "order intake" total q4 which presumably is still filtering through now.

However the company advise today the following

We continue to expect further revenue growth in 2019 which will be weighted to the second half of the year. The Board's expectations for the Company's full year performance remain unchanged. Looking at current forecasts thats 2019 sales of 204 mill and 213 mill for 2020 and 195 mill for 2018 - with net profit expected to be up 10% for 2019 and over 5% for 2020. I guess there is a chance though brokers might slightly trim these numbers? How much of this growth is organic and how much might vanish via currency adjustments i don't know but everything looks reasonably on target for continued growth in both earnings and profits - albeit we have the dreaded h2 weighting and growth rates that probably won't probably support the previous higher p/e ratio and some of this growth is presumably non organic.
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prem14 15th Apr 53 of 78

In reply to post #469426

Hi Paul
Appreciate your aim to provide a more lively update in your report. May I suggest perhaps a format like the Daily Telegraph's Finance Live blog may be make it more readable. Keep it up though as these reports are undoubtedly valuable.
Thanks

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leishylegs 15th Apr 54 of 78
7

Loved the new format today Paul, shame there are some detractors, but you cant please everyone so do keep on doing what you and Graham do best - providing fantastic commentary and valuable insights.

Much appreciated.

Richard

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doublelutz 15th Apr 55 of 78

In reply to post #469341

I think the problem here Jane is that if I try something new for clients and someone comes back and says it is very poor without offering any useful suggestion for improvement it may rather annoy me. As for a cursory scanning of the day's RNS I could see that being useful to some people in that believe it or not I never get up to do a cursory scanning of RNS's! The first I know of company's reporting (unless it is something I own and am looking out for) is when I read it on here. So it could be useful to draw attention to what is happening that day with the more detailed comment to follow. In actual fact, I am not sure that Paul hasn't tried to look at too many things today. I wouldn't take it on even if competent to do so!

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dabraham 15th Apr 56 of 78
13

Hi Paul,

I've never posted before, because I normally read a few days after you've posted. So I have to say I agree with jsatchwill1, it really doesn't matter to me what time you complete the SCVR, as long as you do it in a way that suits you and that you enjoy doing it!

I joined Stockopedia for the data, I came across SCVR as a result of being a subcriber, and find it a really interesting read, and how you've done it for the last couple of years has been great. I tend to read 2 or 3 of them once a week, and the informal way that you write about fitting them into your life around other commitments is part of the enjoyment. So I'd rather you did it in a way that you enjoy, even if sometimes is erratic, than that you get frustrated trying to please everyone, I don't feel I'm paying for your column, it's just a nice feee bonus.

I have found some of the insight, into especially the stocks that you've picked up the warning signs about, as well as the ones that none of us saw coming like CAKE, both valuable, but also interesting. It's your insight and writing style, rather than timing that makes it great. So keep the insight and style, and don't stress about the timing! If you can keep the insight and style, and get the timing to suit others, great. But if not, I for one would say don't worry about the timing or "professionalism".

So please just carry on the good work and keep the causal style, it is appreciated!

Cheers
Dave

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brballs 15th Apr 57 of 78

In other news, I see Facebook have today announced they are going to remove the "Like" option for Under 18's. I think such a move here might improve board relations and stop a lot of the attention-seeking comments.

Please feel free to "thumb-up".

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tony akram 15th Apr 58 of 78
7

For me the timing is not that important it is the quality that matters , Graham and Paul's reports are excellent both offering different perspectives and not always agreeing which is important.

Lets try to encourage sensible debate seems a lot of negatively going on at the moment !!

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 Are LON:IGR'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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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