Small Cap Value Report (Mon 15 July 2019) - Tablets, GOCO, BPM, DPEU, TMMG, SWL, NTBR, INS, AMO | Graham Neary

15th Jul '19 by Graham Neary

34 comments 11049 reads

Good morning!

A very busy morning in RNS-land, with a lot of "small" updates, including 3 relating to my own portfolio holdings.

This list is final:

Goco (LON:GOCO)
B.P. Marsh & Partners (LON:BPM)
DP Eurasia NV (LON:DPEU)
Mission Marketing (LON:TMMG)
Swallowfield (LON:SWL)
Northern Bear (LON:NTBR)
Instem (LON:INS)
Amino Technologies (LON:AMO)

Tablets

It's that time of the year for me to take my main holiday, so I'll be jetting off to Italy soon and you'll be in Paul's capable hands again for a while!

That's not investment-related, but perhaps of more interest is my research into the Tablet market. The only one that I have ever owned is an iPad from about 2012, possibly the iPad 3. It barely works any more (though perhaps I should be glad that it works at all, due to its age!)

I've been looking at some of the models currently for sale, with a view to finding one that I can bring to Italy. It's for light work purposes - I need to log in occasionally while I'm away to do a few small tasks, which should only take a few minutes. What I'd like to do is leave my laptop at home more often, and just bring a tablet instead.

It's easy to forget about the tablet market, since phone screens have become so big in recent years that the need for a mid-size device has diminished. But there is still a market for multi-functional devices with a screen size of 7"-12".

Anyway, despite being a huge fan of Apple ($APPL) when it comes to phones, there is actually no chance of me buying an Apple tablet. The choices available from Samsung, Huawei and Lenovo seem to be more than sufficient, and at very attractive price points. There's also the interesting possibility of the Amazon Fire HD 10. Or if I was going for a more expensive, heavy-duty device, I'd be inclined to go for the Microsoft Surface Pro.

This is a long-winded way of saying that I'm contributing to the trend whereby iPad sales were stronger…

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MrContrarian

15th Jul '19

My morning smallcap tweet:

Mobile Streams (LON:MOS), £GAME, Swallowfield (LON:SWL), Actual Experience (LON:ACT), Spectra Systems (LON:SPSY), Portmeirion (LON:PMP), Northern Bear (LON:NTBR), EKF Diagnostics Holdings (LON:EKF)

Mobile Streams (MOS) dismal FY trading with rev-cont £1.3m (£3.1m). Rationalisation "had a significant impact on the Company's cash balances and, as a result, the Board is considering a number of financing options."
Game Digital (GAME) Sports Direct will take it over as it exceeds 75% of shares
Swallowfield (SWL) sells manufacturing business for £35m. Cap is £33.1m at 193p. Owned Brands business become the entire focus of the Group.
Actual Experience (ACT) bookbuild to raise £3m min at 135p/sh min, an 18% discount.
Spectra Systems (SPSY) wins $1.1m order over about 5 years for lottery security.
Portmeirion Group (PMP) buys Nambé, a premium, branded US homewares business, for $12m. It is expected to be earnings enhancing in the first full year of ownership.
Northern Bear (NTBR) FY rev up 6%, adj EPS 13.5p up 8%. Final div + special div 4p total (4p). Op profit slightly better than guided. No F/C. Outlook: Q1 slow due to a number of contract delays but "majority of these contracts have now commenced and trading should be much stronger in the second quarter." Outlook for the financial year remain good. I hold.
EKF Diagnostics (EKF) H1 trading: rev in line but adj EBITDA ahead of management expectations.

runthejoules

I'd love a slide of the rule over Mission Marketing (LON:TMMG) please Graham - has hit targets this year but uh oh - what's that Sooty? 'H2 weighting'?

andrea34

I'd like Mission Marketing (LON:TMMG) too please - "results for the first half of the year in line with its KPI targets of revenue growth of 5% and profit* growth of 10% from continuing operations** " does not sound like it can support the current share price; we're back to single digit revenue growth again.

Graham Neary

Hi rtj / andrea, yes, TMMG is on the list. G

WDWombat

Slightly surprised no-one is interested in Finsbury Foods, a bread and cake maker I used to own. It looks very cheap and the update though not startling sounds reasonable. Anyone have a view here?

Wol

Instem (LON:INS) if you have the time please Graham. They have been sitting on my watchlist for long enough that I can’t remember much about them but today’s RNS and the stock report both encourage further research..

rmillaree

Northern Bear (LON:NTBR)

Decent results announced today - slightly ahead of the trading update on 11th March - although probably inline with what most shareholders were expecting to to 10th March due to prior updates.

Per march update (memo ye 31/3)

While the final two months of the financial year is a key trading period for the Group, the Board's current expectation is that operating profit (prior to the impact of non-cash amortisation and transaction costs) will be broadly in line with the prior year.

and per results today

Highlights

· Revenue of £56.6m (2018: £53.6m)

· Operating profit of £3.3m (2018: £2.8m)

· Adjusted operating profit* of £3.2m (2018: £3.1m)

· Basic earnings per share of 14.0p (2018: 10.9p)

· Adjusted basic earnings per share* of 13.5p (2018: 12.5p)

Note the update in March spooked the market and the shareprice has remained depressed since that time - so despite the rise this morning the shares are still behind where they were despite the decent figures. EPS of 13.5p puts them of pe just over 5 - so the market simply doesnt rate this company at present.

The company doesn't really give meaningful outlook statements in that there a lack of broker forecasts - they refer to April-September 2018 results being exceptional and q1 this year was poor so at best one would hope that this year will be broadly in line with last year. Unless there are material changes we are unlikely to get any confirmation in that regard to this time next year when the final numbers come in :(

Todays outlook

Despite the slower first quarter referred to above, the medium and longer term outlook for the financial year remain good and we are hopeful of another strong set of full year results. We will provide a further update on trading and outlook via the interim report for the six months to September 2019.

ref the cheap as chips shareprice - its a micro cap and the company doesn't really do much by the way of investor relations - it works in construction and the balance sheet is a bit light - there are high payables and receivables - note the balance sheet is improving naturally ignoring acquisitions each year so that is a plus. Liabilities down £1.3 million - and current assets and debtors due over 12 months has increased by 600k - so decent natural progression being made as earnoings in excess of dividends feed through to the balance sheet.

Portmeirion (LON:PMP)
Seems like a sensible acquisition anything that adds to their us presence and adds cross selling abilities seems like sensible use of their cash/available financing - the following text is always comforting to see in relation to acquisitions.

The acquisition is expected to be earnings enhancing in the first full financial year

Wimbledonsprinter

The Swallowfield (LON:SWL) disposal of its manufacturing business has seen share price rise 15% (at time of writing) and Market cap rise to £38m. Pro- forma the disposal, the group will be left with £23m net cash and a brands business (which in FY19 saw sales of c£20m ). This brand business has been the main contributor to profits £4.8m in FY18 - but to estimate profits going forward you need to be clear how many group overheads can be eliminated by the sale.
But on this analysis, the pro-forma company looks cheap.

But there is also the DB pension scheme that will remain with Swallowfield. The accounting deficit on this is £6m (Dec 18) and the total PV of the fund liabilities is around £29m. One option, for the cash balance might be to seek a buy-out of the pension fund by an insurance company - but I guess (only a guess) this would use up approximately half of the £23m cash balance. The pension scheme, I suspect, will remain an important drag on the valuation of the company.

Lloyd Garvey

I went Amazon Fire HD 10. For the price it has been really good. You are a little more tied to amazon in that you do not get the range of Android Apps (amazon have their own subset) But has all I need. (and they are on sale at the moment on prime day (only £95))

Lloyd

JohnEustace

Re tablets, it will be interesting to see how you get on. I don't think you'll beat the current basic iPad at £319. But you can be a guinea pig for us finding out how difficult or worthwhile it really is to leave the Apple ecosystem.

https://www.techadvisor.co.uk/test-centre/tablets/best-tablet-3265725/

Edinburgh Investor

Hi Graham
One small piece of advice if you do get a new one, don't leave it on the plane. I've never left anything behind until last weekend getting back from my holiday, let alone a brand new ipad pro! Luckily the Easyjet (LON:EZJ) aircrew went back and got it for me as I only realised at passport control (great customer service by them!). On the topic of tablets I must say I have never purchased any devices that expensive before I felt uneasy paying for it, but its been great and have no regrets now..
Cheers

Thanks John! I look forward to reporting back. Basic iPad is at a reasonable price, agreed. G

On tablets, for what it’s worth...
For me, the ecosystem (Apple in my case but the google ecosystem would work in a similar way) is important. The things that work for me are:
* documents, spreadsheets available on my iPad, my iPhone or my Mac to pick up where I left off
* all SMS and iMessages available on my iPad, Mac and iPhone
* Tap Forms database (used to record my investing analysis...) synced between devices
* website reading list etc.
* similar ways of working
Looking forward to hearing your choice and how it works out.

Small Cap Value Report (Mon 15 July 2019) - Tablets, GOCO, BPM, DPEU, TMMG, SWL, NTBR, INS, AMO

Tablets

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Graham Neary

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