Small Cap Value Report (Mon 19 April 2021) - D4T4, CER, CHH

19th Apr '21 by Paul Scott

21 comments 9240 reads

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

I hope you enjoyed the weekend, at long last it's starting to feel a bit more spring-like, with the sun putting in some appearances.

Charity Update

Before we get onto shares, I have to say a huge thank you to the 66 supporters who have contributed to my fundraising page for ZANE, the humanitarian aid charity in Zimbabwe. Every donation means a lot to me (after visiting this wrecked country in 2019). Some amazingly generous donations have been made, and every one counts, large or small. Also I've enjoyed reading the lovely messages from donors.

Incredibly, the justgiving total is about £9,000, which has smashed my target of £4,000. I asked my family if they thought I should raise the target, but they agreed with my instincts, which is to leave it unchanged, as we can all get pleasure from seeing the target beaten by an every growing country mile! People have been so generous, it's really heart-warming. Also, I completely understand that many readers have your own favourite charities, so prefer to keep doing your own thing.

Right, it's nearly 7am, so am bracing myself for the RNS to start bleeping furiously. Jack and I are caffeined up & raring to go! (Sunday nights are early nights for me now, so I can start the week with a spring in my step, and then fizzle out more gradually as the week progresses!)

Timing - Update at 12:43 - I have to pop out now for lunch, and a routine appointment, but will be back after lunch, aiming to look at Studio Retail (LON:STU) and Eqtec (LON:EQT) later this afternoon. If that changes for any reason, then I'll update this section. Update at 16:47 - sorry, I got side-tracked, so will revisit STU & EQT in tomorrow's report. Apologies for any inconvenience. Today's report is now finished.

Agenda -

D4t4 Solutions (LON:D4T4) (I hold) - change of CEO planned, and upbeat trading update. Not cheap, but the potential looks good to me.

Cerillion (LON:CER) - another strong update. Shares look expensive, but that looks justified to me, as with D4T4 above, due to strong growth & big contract wins.

Churchill China (LON:CHH) - 2020 results look resilient, and it has…

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PDiddy

19th Apr '21

£lie thoughts Paul? At 17:01 on Friday they snuck out an RNS about sale of Kier Living for £100m which frees up working capital, removes a loss making part the business, and pays down debt, I think it's a good move, and a good sign of directors turnaround plan being enacted. Can anyone give their estimate on fair value per share of this now? Would be much appreciated. Analysts rate it alot higher.

damn auto correct, by sausage fingers need an edit button for mobile users...... £KIE

MrContrarian

My morning smallcap tweet:

Atlas Mara (LON:ATMA) Cambria Automobiles (LON:CAMB) Yourgene Health (LON:YGEN) Genedrive (LON:GDR) Studio Retail (LON:STU) Cerillion (LON:CER) SysGroup (LON:SYS) Maestrano (LON:MNO) £D4T4 Pelatro (LON:PTRO) Infrastrata (LON:INFA) Churchill China (LON:CHH)

Atlas Mara (ATMA) sells holdings in African Banking Corporation Botswanafor c. 1.13 times book, in line with the strategic review. [SP=0.36 Cap=52m]
Cambria Automobiles (CAMB) takeover deadline extended to 17 May. [SP=77 Cap=77m]
Yourgene Health (YGEN) awarded a gov't framework agreement for its covid assay and testing service. [SP=15 Cap=108m]
Genedrive (GDR) awarded a gov't framework agreement for its covid kits. [SP=67 Cap=42m]
Studio Retail (STU) end stategic review with sale of Findel Education for £30m gross. Also Q4 rev exceptionally strong with rev up 88% and gross margin up 650bps. Guides FY(Mar) adk pretax £48-50m, up 75% - 83%. [SP=290 Cap=252m]
Cerillion (CER) guides H1(Mar) rev up 25% and adj EBITDA c. £4.8m, above mgmt expectations. [SP=515 Cap=152m]
SysGroup (SYS) guies FY(Mar) rev down 7% but adj EBITDA up 3%, slightly ahead of market expectations. [SP=44 Cap=21m]
Maestrano (MNO) Q3 rev up 1% or down 6% in const currency. Total expenses up 46%. Some rev delayed to Q4 due to bad weather. [SP=18.5 Cap=31m]
D4t4 Solutions (D4T4) guides FY(Mar) rev £22.8m and adj pretax £4.2m, both ahead of mgmt expectations, comfortably so for adj pretax. [SP=324.89 Cap=131m]
Pelatro (PTRO) wins $500k contract. Total contracts for FY21 relivery c.$6.5m. [SP=37.95 Cap=14m]
Infrastrata (INFA) H!(Jan). Outlook "we see an immense amount of promise and a significant quantum of work becoming available...seeing a rejuvenation of business spend from both existing and new clients". [SP=48.23 Cap=39m]
Churchill China (CHH) FY(Dec) adj EPS 6.5 (CHH). No final div. Outlook "growing evidence from enquiries, order levels and sales that activity levels are recovering across our markets" [SP=1490 Cap=164m]

The skier

Hi Paul can you please look at the trading update from D4t4 Solutions (LON:D4T4)?

donQ

Half Year 2021 Kier Group PLC Earnings Release: Wednesday, April 21st 2021

Kier (LON:KIE) (I hold) in addition is also continuing to consider a potential equity raise - we will be smarter in Wednesday.

Looks like the market liked it, 5-10% up in the first 5 minutes.

Norfolk'n'Good

Anyone got any thoughts on why the Quality metric on Saga (LON:SAGA) has gone to zero?

good point, I don't like share dilution, you would think why does it need to dilute after this part of group sale? Could it plummet on Wednesday if that gets officially announced on Weds?

ridavies

Angle (LON:AGL)

Share price has broken out and taken off after what the management and clearly the market considers to be a breakthrough announcement by the company towards the end of last week.

I'm very glad I topped up in the low 90's before the full implications of the announcement sank in. Hope my fellow long term supporters of Angle (LON:AGL) did the same. It feels good to see a great British company getting the recognition it deserves. Congratulations to the CEO who must have enjoyed his best weekend ever.

rmillaree

Saga (LON:SAGA)
They have posted a third (?) consecutive year of statutory losses recently - zero seems slightly harsh but i kind sort of see where the computer is coming from summaring that losing £500 millon + over a 3 year period shows quality scores of "not alot".

Paul Scott

D4T4 is now done. Just for your info, Jack and I carefully select the most interesting updates from small caps each morning. So anything that is above (or below) expectations is prioritised, as is the case with D4T4.

I'll be looking at Cerillion (LON:CER) next, because that has also put out a good update.

So there is method to our madness!

Although it can be helpful if readers flag anything particularly interesting that we might have missed, with a few comments of your own on why we should look at it.

Regards, Paul.

Resource Man

Would be interested in Eqtec given they have issued results today and are prominent in the climate change/waste recycling/energy production areas.

syrio

It must be a data problem. Stock ranks are always 1 to 100. Zero means unable to rank the stock I believe.

greensiax

Here are my SCVR heat maps for today (prices as at ~9:15am).

I share these heatmaps with the intention of giving a visual indication of what is going on in the SCVR world: who’s reporting (and it's impact on the share price); and what’s moving more than 'normal'. There are no associated recommendations, implied or otherwise, just information. How, or indeed if, you choose to use that information is up to you.

Please read my heat map thread for more (non-SCVR specific) heat maps, and an explanation of how I use heatmaps to guide me with my research.

I have added a MarCap category to the heat maps, along with a high spread indicator. The key to the symbol heat maps is now:

The heat maps are also now sorted alphabetically by EPIC.

Small / Micro Caps reporting today:

Big movers today in the SCVR world (moving more than a 20d EMA of the ATR against either yesterdays close, or today's open):

Warm regards, stay safe, and best of luck!

WDWombat

3 blocks of 1 mn shares were sold and bought in early trading today without moving the price which at time of writing (+12%) remains strong.

Re your comment WDWombat on Angle (LON:AGL) always interesting to know who did what? No odubt we will find out in major shareholding RNS's later.

johnmhughes

With regards to Angle (LON: AGL), the STOCKREPORT is fairly negative with regard to this share. Has a ranking of 20 and a quality mark of 10 and a very low (F score) and rated as a 'momentum trap'.

However, Taylor Wimpey doesn't rank very well and it has gained over 50% for me since buying the share, so you can't completely rely on this methodology I suppose?

JohnEustace

Angle (LON:AGL) is pretty much pre revenue at this stage so using Stocko to assess it is pointless as it doesn't have the history to extrapolate from. I view it as a great idea and invention that is turning into a potentially great business. You need to assess the future promise to value it.

ken mitchell

Zane up to £9300 just now from 72 supporters leaving Paul’s £4000 target well behind. £10000 now in sight?

Mike888

Now I am by nature a glass half empty sort of person, so apologies for that in advance.

But there are so many stocks trading at multiples ahead of what they were pre-pandemic, but the recovery to pre-pandemic earnings levels is in many cases more than a year away. I just can't help feel that there is either stock price stagnation in the future, or maybe a fall to reality. Alternatively, I guess we are may be seeing a re-baseline of what the new normal is for these stocks ( I struggle to reconcile this).

D4t4 Solutions (LON:D4T4) maybe a case in point, yes the balance sheet seems stronger by a couple of £m but forecasts are not, at least in my mind, justifying this years share price growth. I'm not close to this company at all, so I may be missing something, but as a theme I can't help feel that many companies are getting a little hot, and with little justification to warrant it.

Phil Mc

Dear Paul, Just wanted to say thanks again for your SCVR today. I rarely post but read and appreciate the SCVR almost every day. I have learned an awful lot from today's report alone. It is an invaluable service, especially for a non-accounting background person like me. The quality of the daily posters below the report adds to what, for me at least, is an essential part of my ongoing investment education.

Best Wishes

Phil

Small Cap Value Report (Mon 19 April 2021) - D4T4, CER, CHH

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Paul Scott

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