Small Cap Value Report (Mon 18 Jun 2018) - PTSG, VLX, ANG, KOOV, OPTI

Sunday, Jun 17 2018 by

Good morning, it's Paul here!

I'm making a guest re-appearance, as Graham's busy today (Monday).

Graham's doing the main SCVR writing this summer, as I'm taking a sabbatical. However, I'll still pop up here every now & then, whenever Graham needs some cover, and to comment on stocks mentioned in Graham's articles.

Premier Technical Services (LON:PTSG)

Share price: 172.5p (unchanged today, at 08:33)
No. shares: 104.5m
Market cap: £180.3m

AGM statement (trading update)

This is what the group activities are;

Premier Technical Services Group PLC is the UK's leading provider of façade access and fall arrest equipment services, lightning protection and electrical testing, steeplejack and rope access services and fire solutions.

Operating through four divisions, Access & Safety, Electrical Services, Building Access Specialists and Fire Solutions, the Group provides highly-engineered industrial products and quality services and has a substantial presence in a number of niche markets.

This seems a reassuring update. The company's next year end is 31 Dec 2018;

"I am pleased to report that the Group has seen continued sales growth and strong levels of orders in the year to date.

In addition, working capital utilisation, margin and profit levels are in line with the Board's expectations.

Outlook comments also reassure;

"Contract renewal rates remain high and a number of significant three to five year contracts and framework agreements have been signed across all disciplines with new and existing customers since the beginning of the financial year, underpinning our organic growth strategy.  

Acquisitions - going well also;

"The acquisitions completed last year are contributing significantly to the growth of the Group. We have been particularly pleased with the improvement in the contract renewal rates for BEST since its acquisition last year.  In addition, we are seeing unprecedented demand for Fire Solutions with UK Sprinklers trading 50% ahead of the acquired business."

The group seems to have a canny eye for acquisitions. When I met the Yorkshireman CEO a couple of years ago, he didn't strike me as the sort of chap who would overpay for anything!

Balance sheet - a reader dismissed my focus on balance sheets last week, quoting Mark Minervini's comments on this matter. Of course I'm not suggesting that the balance sheet is the sole driver of success in investing.…

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Premier Technical Services Group plc (PTSG) is a United Kingdom-based company engaged in the maintenance, inspection, testing, repair and installation of permanent facade access equipment, fall arrest systems and lightning protection systems together with fixed wire and portable appliance testing and high level cleaning. The Company operates through three segments: Access and Safety, Electrical Services and High Level Cleaning. The Company's Access and Safety segment offers Safety Testing, Safety Installation, Cradle Maintenance and Cradle Installation. The Company's Electrical Services segment offers Lightning Protection, Fixed Wire Testing, Portable appliance testing (PAT) Testing, Fire Alarm and Extinguishers, and Steeplejack Services. The Company's High Level Cleaning segment offers Window Cleaning, Gutter Cleaning, Building Cleaning and Pressure Cleaning. The Company's Training Solutions division offers Training, Consultancy and Insurance Inspections. more »

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Angling Direct plc is a United Kingdom-based fishing tackle retailer company. The Company is principally focused on selling fishing tackle products and related products through retail stores and also online via its own Website ( The Company’s product categories include reels, terminal tackle, rods, bait and additives and bivvies and shelters. The Company fishing tackles products, including capital items, consumables, luggage and clothing. Theses all fishing tackle products sells under its own brand Advanta. The Company operates approximately 15 retail stores. The Company has developed angling superstores. more »

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Fishing Republic plc is a fishing tackle retailer in the United Kingdom. The Company's principal activities are the retailing, production and wholesaling of fishing equipment. The Company operates through the segment, being that of the retail of fishing tackle and equipment. It operates from a chain of retail outlets principally located in the North of England and online. It caters for various types of the anglers, such as coarse, carp, game and sea fishing, and supplies a range of products, including brands. It also offers consumables, such as bait, lines and hooks; clothing, and luggage products. The Company's product offerings include a range of own-brand ranges, such as Klobba for clothing and Theseus for carp fishing products. Its stores are located in Barnsley, Doncaster, Hull, Manchester, Rotherham, Sheffield and Sunderland. Its subsidiaries include Fishing Republic Trading Limited and Fishing Republic Retail Limited, which are engaged in the retail of fishing equipment. more »

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

21 Comments on this Article show/hide all

runthejoules 18th Jun '18 2 of 21

Morning Paul welcome back! Versarien (LON:VRS) and OptiBiotix Health (LON:OPTI) have this morning both landed royalty deals for their actual products going in actual products, VRS with mediadevil (mobile phone accessories) and OptiBiotix Health (LON:OPTI) with Morley foods, you know, the pricey muesli guys. Imo this now takes them from jam tomorrow to jam later this evening although we're not sure how much jam but it looks like quality Robinsons jam not Tesco value crap. But do your own metaphors!

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Aislabie 18th Jun '18 3 of 21

I hold Premier Technical Services (LON:PTSG) and am happy to see a bullish AGM statement today which highlights the success of recent acquisitions and a strong outlook. BUT. Somebody hates this, 2.5million shares already traded ( 20x usual volume) pushing the shares down from a level I already regarded as cheap.
My one concern on the company has been the low return but this was also addressed positively today. Classed as a "Momentum Trap" although the stock has wandered up and down between 170 and 200 for a year now I don't normally mind being out of step for a while where I think I can detect long term value, but today's move has me beginning to be concerned that I have not spotted something. Can someone give me the bear case from here?

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threeputt 18th Jun '18 4 of 21

I'm an existing holder of Premier Technical Services (LON:PTSG), took profits when it looked fully valued. I'm also interested however since the 16th Jan update caught my attention:
"the Board expects that the results for the year ended 31 December 2018 will be materially ahead of current market forecasts. This reflects the strength of the Group's order book and successful integration, and ongoing progress at its recently acquired businesses"
I'd also be interested in an impartial view on today's rns

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Aislabie 18th Jun '18 5 of 21

Thank you Paul! My comments on PTSG crossed with your analysis. I see the balance sheet issue, particularly on the receivables ,but have decided that as a continuing position it seems to be structural but, you are right, I should get a positive check on this.

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kenobi 18th Jun '18 6 of 21

Hi Paul, hope you had a good holiday, congratulations on the award,

I wonder if you could comment on last weeks update from BOO ?

Graham was not keen, but I know your background is in clothes retailing so would be interested in your view,


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Paul Scott 18th Jun '18 7 of 21

In reply to post #375684

Hi Kenobi,

I won't have time to look at Boohoo.Com (LON:BOO) today, as have to travel back to London from Manchester shortly.

The growth at PLT seems to be stellar, which is eclipsing the core BooHoo business to a certain extent. I no longer directly hold any BOO shares, as the FT supplement on sweatshop conditions in factories in Leicester, supplying fast fashion chains, unnerved me, so I sold just after that. I'm happy to sit on the sidelines for the time being. Might revisit if the share price drifts down again to 150p.

Regards, Paul.

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ricky65 18th Jun '18 8 of 21

Paul, I wasn't dismissing balance sheets. My point was that a good balance sheet is not a substitute for risk management. A good balance sheet doesn't remove risk just because you'll avoid a 100% loss. A company doesn't have to go broke for it to do significant financial and psychological damage. There's always risk. Bottom line, if you think a good balance sheet will protect you, I’m afraid you will eventually be in for an unpleasant surprise.

Kind regards


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Paul Scott 18th Jun '18 9 of 21

In reply to post #375704


We'll just have to agree to disagree on balance sheets.

My experience has been that avoiding companies with weak balance sheets has greatly improved my investment performance, compared with when I paid little attention to balance sheets.

So I'll stick with what works for me!

I think perhaps where we're getting our wires crossed, is that you seem to imagine I'm suggesting that strong balance sheets remove risk. Whereas what I'm trying to say is that strong balance sheets considerably reduce risk. Sorry if this wasn't clear enough previously. Of course there will always be some risk - that's the nature of equities.


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bobo 18th Jun '18 10 of 21

Volex, over the years I have watched this company after working for one ex-ceo who failed to turn it around (more than 30 years ago). I also worked in a few cabling companies in/with the UK and the USA. Volex is unable to offer a diferentiated product, a low cost product, to sit itself in a community of like minded companies or offer a service that cannot be duplicated very quickly elsewhere. Hence it will always sit at the bottom, rather like a hay trader, everyone can do what they do. So nothing to invest in, avoid.

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Will Marsh 18th Jun '18 11 of 21

Great analysis of Optibiotix here. The share has very significant hope value attached to the current price and is being ramped like mad. I have been following this share for a while and must admit to taking a small stake in shares. What was very interesting is your analysis of Morley who show an annual profit of £729k on £30m turnover. I suspect this is not going to transform Morley profits so the likely benefit from any deal is going to be very small for Opti shareholders.

That said a private company buying into this brand is on balance good news as they are likely to be sensible, conservative, know their customers and do their research which bodes well for the opti product.

My big concern on this share is that the board is issuing no proper stab at target revenues over the next two years(that I'm aware of). The Opti product is very current though and if it kicks off it will be huge. This share must one to keep an eye on.

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BobHylton 18th Jun '18 12 of 21

Hi Paul

Please don't leave us for too long - we need you and your comments... who else could come-up with:

Plus ANG seems to be emerging as the leader online in the UK

So that'll be hook, line and sinker :)


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threeputt 18th Jun '18 13 of 21

Hi Paul

many thanks for your research on Premier Technical Services (LON:PTSG)
I'm also grateful for the mention on new ipo's, these are something I always find of interest for a watchlist but I normally miss their entry either through laziness or not really getting their potential, not sure if this is a regular thing of Stockopedia to pre-advise of future ipo's but really helpful

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DJCP 18th Jun '18 14 of 21

Welcome back Paul, although Graham's been doing a very admirable job :o)

With your Angling Direct (LON:ANG) and Fishing Republic (LON:FISH), all you need now is to invest in 5 bakers (or is it the other way around?), and we'd be able to write a story about you ;^)

Re your comment on niche businesses being under less threat from Amazon - IF Amazon did want to get into fishing tackle/musical equipment (or any other sector), they'd quickly, and (possibly savagely) make their size work to their advantage.

I read a news item of Amazon approaching a book publisher to purchase their books. When dismissed as offering too low a (wholesale) price, Amazon removed ALL that publishers items from their catalogue. Not only their own offerings but also those of marketplace sellers.
They are not allowing (or making it extremely difficult for) new sellers to list many music (vinyl, CD, etc) items - market control, or pushing their streaming/Prime service more?

They have, in the past, bought-out companies to gain traction, but I'm still wary of investing in anything I think Amazon could bully their way into. The other side of the coin is the reward if Amazon were to buy-out a company!

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gsbmba99 18th Jun '18 15 of 21

A quick story of what a difficult industry Volex (LON:VLX) is in. It was probably early noughties. A previous management team was battling to keep pace with price competition. The difficult decision was made to close one of the European facilities and shift this production to a new facility in coastal China where wages were lower. About six months to a year after the new Chinese facility opened, the management team admitted that increases in the labour cost of the coastal China facility rendered it uneconomic and they were going to have to abandon the facility and move to a new facility further inland. The price pressure is relentless.

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IGotPoesJacket 18th Jun '18 16 of 21

In reply to post #375784

Have you any evidence of this anti-competitive behaviour by Amazon?
If so, I’ll forward it to my MP, MEP, CMA and whatver the European equivalent of the CMA is.
If they are behaving in this way abusing their market position, I can’t see the company not being forced to break up.

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ambrosia 18th Jun '18 17 of 21

Paul youll be missed, is your sabbatical away from writing altogether or are there any places we can still follow your insights.

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tomps3 18th Jun '18 18 of 21

Proactis Holdings (LON:PHD) presentation given at Progressive Equity Research - piworld investor event last week, has been published:

Covers a little of the history with the acquisition of Perfect Commerce, and some detail behind the latest results. It's about 40 mins.

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JohnEustace 18th Jun '18 19 of 21

In reply to post #375789

I met a Volex (LON:VLX) competitor who designed in hotel facilities on the top floor of their new factory so that visiting customers have somewhere to stay because the factory is in such a remote location.

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jonthetourist 19th Jun '18 20 of 21

In reply to post #375734

" So that'll be hook, line and sinker :) "

Not to mention Optibiotix, muesli - sorting the wheat from the chaff.

Little gems :)

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gus 1065 19th Jul '18 21 of 21

Interesting to see OptiBiotix Health (LON:OPTI) has moved up from the 65p at the time of this report about a month ago to today’s close at 91p. Plenty of background noise on the various bulletin boards and there have been a number of trade deals coming to the fore of late. Not sure if there’s more to it than this but seems to be on a decent roll at the mo’.


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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 on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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