Small Cap Value Report (Mon 20 Sep 2021) - FIF, CHRT, ZOO, CTG, WIL
Good morning, it's Paul & Roland here with Monday's SCVR. Today's report is now finished.
We like to keep you on your toes, by switching the writers without warning! Welcome back Roland - thanks for your fantastic contributions.
Paul's preamble -
I've relocated from Malta to Madeira (via Heathrow) this weekend, for the next fortnight, and am thinking about what other islands beginning with M that I could try next? Madagascar springs to mind! Anyway, I've got my laptop with me, decent wifi (more reliable than in my London home anyway), and of course a box of Yorkshire Teabags, so can happily work anywhere!
Incidentally, Heathrow T5 seemed to be very busy when I got there at some ungodly hour on Saturday morning. By about 08:00, I'd say it looked (subjectively) similarly busy to pre-pandemic. So the re-opening, re-start of travel trade, looks back on. I mentioned this to the BA stewardess, en route to Madeira. I asked her, is it time to buy shares in travel companies? Yes, she replied, every flight is full, and the staff are so happy to be busy again. As a friend mentioned though, caution is needed because the capacity might be lower, so this needs some expert comment, I'm just mentioning this as half-baked scuttlebutt.
Also the recent data that out of 50k deaths with (not necessarily entirely from) covid this year, only 59 people had been double-vaccinated, and had no underlying health issues, is of absolutely seismic importance. Think about it. That's 0.1%. Many people are happy with those odds, to get on with life, instead of hiding away maybe forever. I know I am, and have taken far worse odds quite routinely as part of normal life - e.g. pulling out of a blind junction without knowing whether a speeding artic is around the corner or not, etc.
Risk is all around us, all the time. Investing is all about trying to assess the risks, and the upside, risk:reward. I think at the moment, with speculative share prices generally very high and a lot of macro risk out there (inflation, Fed tapering, supply chain, shortages of everything, etc), then risk:reward looks potentially dicey for some shares. This market looks complacent. Not so much with UK value shares, but in the US in particular it seems euphoric & poised for a correction.
Blockchain seems an obvious, and excessive speculative frenzy. All this money-printing and zero interest rates looks like it's set off a dangerous speculative mania, that could continue for some time. But history tells us what the outcome will certainly be - a crash. The only question is the timing.
Agenda -
Paul's section:
Zoo Digital (LON:ZOO) - an in line trading update for H1. I remain sceptical.
Christie (LON:CTG) - improved (profitable again) in H1. Overall though, I can't generate any excitement over the future prospects of this company. The pension deficit still dominates its balance sheet unfortunately.
Wilmington (LON:WIL) - solid results for FY 06/2021. Dividends reinstated. The PER is 16.5, which is probably about right. Seems a good sector to be involved with. Weak balance sheet doesn't seem to be causing any problems. I quite like this one.
Roland's section:
Finsbury Food (LON:FIF) : A strong set of numbers from this food producer, which has been a convincing turnaround. Last year’s pandemic food shopping tailwinds could make for tougher comparatives this year though, especially given the current supply chain difficulties
Cohort (LON:CHRT): A cautious update from this small-cap defence group suggests to me that performance could fall slightly below expectations this year. However, I can see long-term potential here.
Explanatory notes -
A quick reminder that we don’t recommend any stocks. We aim to cover trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty.
We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).
A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.
Paul’s Section:
Zoo Digital (LON:ZOO)
125p (up slightly today) - market cap £103m
AGM Statement & Trading Update
ZOO Digital Group plc (AIM: ZOO), the provider of cloud-based localisation and digital distribution services for the global entertainment industry…
Both Jack and I have reviewed this company previously, and are sceptical. That’s because ZOO has a long history of not really making any sustainable profits/cashflow, despite rising revenues and permanently bullish commentary from the company. The >£100m market cap baffles me.
What’s the latest? The tone is bullish, but the conclusion is it’s trading in line with expectations, so price neutral -
"A strong pipeline of work and excellent customer relationships gives us great confidence in meeting full year market expectations, and I look forward to updating shareholders on our further positive progress in due course."
Summarising the other points -
- “Strong momentum”
- Further territories to be entered (so more costs presumably?)
- H1 revenues “slightly ahead” of expectations
- Significant increase in EBITDA vs H1 LY
- “Much improved visibility”
- New production of TV/films resuming
- Taking on more staff (so more costs again)
- Loan notes are converting - investors need to check the dilution, because our previous notes here indicate the conversion price is well below the market share price - maybe conversion could lead to profit-taking?
My opinion - unchanged. Zoo’s track record has been poor. So shareholders need to be sure that things are going to markedly improve, otherwise the £103m market cap doesn’t make sense to me.
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Christie (LON:CTG)
118p (up 8% at 13:41) - mkt cap £31m
Christie Group plc ('Christie Group' or the 'Group'), the leading provider of Professional & Financial Services (PFS) and Stock & Inventory Systems & Services (SISS) to the hospitality, leisure, healthcare, medical, childcare & education and retail sectors, is pleased to announce its interim results for the six months ended 30 June 2021.
These figures look good, showing a progression from heavy losses in H1 2020, a small loss before tax in H2 2020, into a profit before tax of £1.2m in H1 2021.
H1 revenues are strikingly higher, at +52%
Management describe performance as “rampant” in H1!
Dividend reinstated, but only 1p
Pension deficit is reduced, but still dominates the balance sheet, and makes NTAV negative.
Q3 trading well.
Strong & profitable H2 expected, to exceed expectations.
It claims to have net cash of over £8m, but this seems to ignore borrowings of c.£5m, so I make net cash £3m, not £8m
Benefited from £2.1m Govt grants in H1 2021, which is more than the entire profit for the period.
My opinion - it’s now a modestly profitable business, saddled with a big pension deficit. The removal of Govt support creates a headwind. If it’s only modestly profitable when conditions are “rampant”, then I don’t hold out much hope for the future.
It looks an OK business, but cashflows seem to be primarily needed to service the pension scheme.
It doesn’t interest me for these reasons.
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Wilmington (LON:WIL)
224p (unchanged) - market cap £196m
Financial Results - year ended 30 June 2021
Wilmington plc, (LSE: WIL 'Wilmington', 'the Group') the provider of data, information, education and training in the global Governance, Risk and Compliance markets, today announces its full year results for the year ended 30 June 2021.
These numbers look quite good.
Revenues flat at £113m, despite covid restrictions.
Adj PBT up an impressive 27% at £15.0m
Adj basic EPS also up 27% to 13.6p - which looks a beat against the 13.3p consensus shown on the StockReport - the PER is 16.5
Cost cutting & efficiencies, as the business successfully moved online in some areas.
All the adjusted profit is wiped out by non-cash impairments of £14.8m, so investors need to be clear that you accept the adjusted numbers.
Dividends reinstated at 6.0p total for the year, a yield of 2.7%
Net debt reduced to £17.2m, which is fine, it’s relatively modest compared with adj profits.
Strong demand
Current year has started well, in line with expectations.
Balance sheet is weak, with negative NTAV of £(43.3)m - I’m not unduly concerned with this, because WIL looks like a business that operates normally with favourable working capital.
My opinion - we all know that ESG, and compliance, are lucrative areas for advisers & training companies like WIL. It’s trading well, makes a strong profit margin, and is decently cash generative.
Overall, I quite like it. Worth a look possibly.
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Finsbury Food (LON:FIF)
Share price: 95p (pre-open)
Shares in issue: 130m
Market cap: £124m
Baked goods firm Finsbury Food (LON:FIF) produces bread and cake products for supermarkets and foodservice channels. The company has delivered a decent turnaround over the last two years, despite the hit to foodservice demand caused by the pandemic. Profitability now seems to have returned to historic highs, although the business does face the predictable short-term headwinds.
Note: Finsbury Food will be giving a presentation for private investors on the Investor Meet Company platform at 3.30pm tomorrow (21/9). I find these presentations to be an excellent way to find out more about the character/style of a company’s management. Well worth a look if you’re interested in this stock - presentations are usually available for later playback as well.
Financial Highlights
Although Finsbury’s sales to restaurants and cafes suffered last year, with sales down 14.9%. However, these represent a minority of the group’s output.
The main part of its business is supplying supermarkets and other retailers. Demand was strong last year due to lockdown and Finsbury’s retail sales rose by 5.8%.
Here are the main financial highlights:
- Revenue up 2.3% to £313.3m
- Adjusted operating profit margin 5.1% (FY20: 4.9%)
- Adjusted pre-tax profit up 10.2% to £15.1m
- Adjusted earnings per share up 15.2% to 9.1p
- Net debt (excl leases) down 50% to £13.1m
- Dividends resumed at 2.4p per share for the full year
According to Stockopedia data, these numbers are slightly ahead of consensus. We can see that last year’s performance represents a return to a level of profitability last seen in the 2018/19 financial year:
Profits vs adjusted profits: I should point out that Finsbury Food’s profits are quite heavily adjusted. The company presents separate reconciliations between adjusted and statutory versions of EBITDA, operating profit and pre-tax profit.
Unusually, statutory profits for the year are higher than the adjusted figures:
- Adjusted pre-tax profit: £15.1m
- Statutory pre-tax profit: £17.0m
I don’t think there’s much to be gained by ploughing through all of the adjustments here. In my view they are all fairly reasonable. I’m happy to accept that the adjusted profits are representative of the underlying performance of the business.
Cash flow: Cash generation seems good. I calculate that free cash flow last year was £15.3m, providing a 112% cash conversion rate from net profits of £13.6m - a good performance.
Balance sheet: Finsbury’s balance sheet looks okay to me, although perhaps not outstandingly strong. Net debt excluding lease liabilities is comfortable at £13.1m.
Unusually, Finsbury appears to have included IFRS 16 lease liabilities under “interest-bearing loans and borrowings” on the balance sheet, rather than listing lease liabilities separately, as most companies do. The numbers are split out in a footnote instead.
The only other comment I’d make on the balance sheet is that the current ratio measure of liquidity (current assets/current liabilities) is quite low, at 1.1. It’s common to see this with consumer businesses that get paid quickly by customers, and enjoy generous payment terms with trade suppliers.
Finsbury is a B2B business, so I expected more evenly matched payment terms. However, the numbers suggest that Finsbury gets paid by its customers more quickly than it has to pay its own suppliers.
My sums suggest Finsbury’s invoices are paid in an average of 53 days.
In contrast, it seems that the company takes an average of 108 days to pay its own suppliers.
Like supermarkets, Finsbury appears to enjoy a significant amount of free credit from its own suppliers. This can be used to fund working capital. This isn’t a problem unless the company is forced to accelerate its payment schedule for any reason - 108 days does seem quite slow to me. I estimate that reducing this to 90 days would require a cash outflow of over £10m.
Outlook: Chief executive John Duffy is bullish about the future growth prospects of the group. But he also warns that “persistent challenges” are likely “around inflation, skilled labour and driver shortages”.
Looking ahead, the company is targeting growth in its overseas division, where sales rose by 13% last year.
Markets such as vegan, gluten-free and artisan bread are singled out as growth opportunities.
As far as I can see, the company hasn’t provided any explicit financial guidance for the 2021/22 year in today’s results. I’ve not been able to find a new broker note either, this morning.
Consensus forecasts on Stockopedia prior to today showed earnings rising by a further 12% this year. This would put Finsbury stock on a forecast P/E of 9.5, with a useful 2.6% dividend yield.
My view: Finsbury’s results look fairly solid to me and show decent cash generation and an improved performance despite last year’s headwinds. Overall, I think this is a decent, well-run business.
However, cost pressures and labour shortages this year seem likely to put some pressure on margins, unless supermarkets choose to absorb cost inflation or pass it onto customers. Both of these seem unlikely, in my view - I’d guess the big retailers are likely to insist that suppliers share some of the pain, too.
Finsbury shares look cheap on less than 10 times forecast earnings, but this is a low-margin business that’s always likely (in my view) to face margin pressures. It’s not a stock I’d want to hold at a premium valuation, but if I held the shares I would continue to do so after today’s results.
Cohort (LON:CHRT)
Share price: 554p (-4% at 09:24)
Shares in issue: 41m
Market cap: £237m
AGM Statement & First Quarter Update
This small-cap defence group is composed of a portfolio of businesses which enjoy considerable autonomy but benefit from the support of the parent company in areas such as finance, strategic support and shared information and best practices.
I’ve been interested in this stock for a while, but haven’t yet persuaded myself to hit the buy button. One concern is that the EID subsidiary in Portugal appears to be underperforming, suppressing growth elsewhere. The market has become cautious too.
Cohort shares have gone nowhere for the last two years:
Checking back in the archives, I covered Cohort in May when the company issued “a subtle profit warning” due to order delays at EID.
Let’s see whether today’s update sheds any fresh light on this situation.
Order book: Since 1 May, Cohort has secured £85m of new orders. These have lifted the order book from £242m at the last year end (30 April) to just under £300m on 16 September. Revenue cover against forecasts for the current year is now 82%, which seems reasonable to me at this stage.
New orders are reported for most of the group’s businesses today, but not the troubled EID division. There’s no mention of this business at all in today’s trading update.
Balance sheet: Cohort has always maintained a strong balance sheet and this remains true. The group had net funds of £3.3m at 31 August (30 April: £2.5m). Available liquidity stands at £43m, providing plenty of dry powder for current commitments and potential acquisitions. I have no concerns here.
Continued delays: The company says that progress since the start of the year has been good across most of the group. But delays to “certain aspects of our work that were highlighted at the time of the Group’s preliminary results” have persisted.
Management say that underlying causes include extended negotiations with customers, travel restrictions and supply chain challenges. However, these are challenges faced equally by most businesses.
My guess is that these comments relate to the delays with certain EID projects that were mentioned in the full-year results. I’d have preferred a more explicit statement about trading headwinds, but there we are.
Outlook: The board remains “optimistic that the Group will return to a higher rate of growth in 2023/24”, based on long-term orders and a “strong pipeline of opportunities”.
My view: I’m a little disappointed that we haven’t seen a more explicit update to guidance today. But it sounds to me like Cohort’s management expects a pretty flat set of results this year.
I’m not surprised to see that the shares are down this morning. For now, my working assumption is that trading will be in line with or slightly below current consensus expectations. On that basis, I’d say the current valuation of the stock is probably up with events:
However, I do still have a broadly favourable impression of this business. If the shares continue to fall, I could be tempted to buy.
Disclaimer
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105 comments
"Also the recent data that out of 50k deaths with (not necessarily entirely from)
covid this year, only 59 people had been double-vaccinated, and had no
underlying health issues, is of absolutely seismic importance. "
Paul, what is your source for this? By the way, >80% of C19 deaths have underlying comorbidities.
Here is the Public Health England, Technical Briefing #23, page 19-20 :
vaccinated deaths are now at 74,4%.
Delta cases, age > 50:
vaccinated: 79,434 (89,2%)
unvaccinated: 8,551 (10,8%)
Deaths, age >50:
vaccinated: 1,714 (74,4%)
unvaccinated: 590 (25,6%)
Source:
https://assets.publishing.serv...
On a different topic; I have recently become a French resident and have been informed by my brokers (Barclays) that they can no longer allow me to trade. Can anyone recommend a broker that accommodates non resident UK citizens to trade on the London Stock Exchange?
I'm not sure but Ig Group (LON:IGG) maybe worth trying, they have international clients. It is a basic platform but the fees are low.
Also DeGiro I have seen mentioned by European residents.
Scepticism on Zoo since last Autumn seems misplaced as the share price even after the setback has doubled could Jack as a Yorkshire sceptic have a closer look
We're sceptical on fundamentals with Zoo Digital (LON:ZOO) with good reason, as explained in the article. Share prices are completely different, and move about on market sentiment, we don't have any views on that, and are not trying to predict what short term share prices do, which is based on market sentiment.
Other people obviously think the company has good prospects. We're just saying that so far, it has failed to deliver any meaningful profits/cashflows in its 20 years history.
Hope that clarifies.
Paul.
My first time reading these articles as they seem quite long but your views at the end of each stock report is really useful.
Sure, just jump to the conclusions ("My Opinion") or the short summaries at the top, if you're time-poor. We put them in for that reason, to help people quickly identify anything of interest, not having to read the whole thing!
P.
Anybody know what was in the Liberum report (apart from a downgrade to Sell) to cause Naked Wines (LON:WINE) to drop 15% today...?!
There's always one...
Electra Private Equity (LON:ELTA)
this would be of interest to holders of the above
Hotter secures partnership with John Lewis as part of its growth strategy - Retail Gazette
Just heard on Bloomberg that US will start accepting vaccinated passengers from EU and UK at the beginning of November, International Consolidated Airlines Sa (LON:IAG) up 10% on the news and Saga (LON:SAGA) up slightly.
That explains the blue (SAGA) in my sea of red.
Many people are happy to get back to normal. True, but many people are not. It depends on your own circumstances and risk personal assessment so I would really be very wary of applying your own perceived risk tolerance to those whose situation you cannot possibly know.
Paul, I've heard good things about Mauritius.
Any thoughts on forthcoming Peel Hunt share issue? Value?
Spot on Paul re risk and the vaccine. Italy have got it right. Basically it has become compulsory to be double vaccinated to be able to function on a day to day basis.
I am visiting Italy in a month (I am double vaccinated, healthy and have no underlying conditions that I know of) but am very glad of their policy and hope the rest of Europe (France where I live is close/World adopt it as a policy, though of course it won't happen in the states, so that is a big stumbling block to the world getting back to normal.
Regards
Michael
I try not to comment on vaccine related posts as it is highly emotive. However, it is worth pointing out that in the UK it is enshrined in our constitution/legislation (back to late 1800's) that no UK government can force a person to take a drug against their will. ie It is every adults right to determine what drugs they put into their body. This very law was introduced and protected because of the introduction of vaccines as a safeguard. To ride roughshod over this (even given the serious nature of covid) is quite a serious democratic issue that should not be taken lightly and breaching it has long term unintended consequence. This is quite possibly why the government backed away from vaccine for nightclubs for example as it would almost certainly have been challenged at the highest UK courts as a point of constitution.
There are risks to vaccines. We should remember that technically the covid vaccines are still "experimental" pending results of longer term studies. We know that blood clots and myocarditis are potentially serious side effects and appear to have bigger impacts in the young. We have very little idea about any long term impact. This part of the population has almost zero deaths from covid. When they balance the risk for themselves I can understand why they may choose either option or even to go with a single vaccine dose for example. We should not be restricting their right to live normally based on which drug they put in their body.
I am of the age where having looked at both my sets of risks I chose to get vaccinated but that was my choice based on my own risk assessment. It is very dangerous in my view to create campaigns of fear as they tend to whip up a torch and pitchfork approach and polarise factions of society, something we should be desperately striving to avoid rather than encourage.
I fear that one lesson politicians will RElearn from the Covid pandemic is that if you frighten the population sufficiently the majority will back suppression of minority views and support their persecution. Like you I am myself fully vacinated but I am also of suffient age to be aware that it is not only communist regimes which may suppress freedom but righ wing nationalist ones too. I guess I'm just one of those "liberals" who believe in tolerance towards differences.
hear hear davidjhill. The lack of ethics and empathy by Michael and others are very concerning. One should really wonder to emigrate if they chose not to vaccinate (yet).
There are very good reasons to not inject yet for healthy adolescents. They have negligible risk for Covid19 and therefore good reason to await the long-term safety studies.
It is concerning that adverse reactions like blood clots and myocarditis only have shown up after the CONDITIONAL approval.
There are many scientific studies that show that natural immunity is much stronger than the vaccine-induced protection. Also the natural immunity is much broader since the vaccine is only based on the S-spike protein and therefore narrow in protection.
The anger and madness of some people here are disheartening and very scary. Pushing their views on other people, with no respect for bodily autonomy.
Real-world data shows that transmission is not reduced at all. Therefore you are not vaccinating 'for another'.
Public Health England, Technical Briefing #23, page 19-20 :
vaccinated deaths are now at 74,4%.
Delta cases, age > 50:
vaccinated: 79,434 (89,2%)
unvaccinated: 8,551 (10,8%)
Deaths, age >50:
vaccinated: 1,714 (74,4%)
unvaccinated: 590 (25,6%)
Source:
https://assets.publishing.serv...
Michael, how about that you don't decide over anyone's else body?
Have you ever heard about the right on bodily autonomy that are implemented in the constitutional rights?
If your vaccine (you scream everywhere that you are vaccinated and seem to be very proud of it) works so well (95% efficiency right?), why are you so darn scared and intruding on other's people's constitutional rights?
Hypothesis
vaccine 95% effective. Almost all deaths are in 75+ and with underlying comorbidities. Then vaccinate them and the problem is almost completely over, right?
I flew out of Gatwick two weeks ago. On a Saturday afternoon, South terminal closed and north terminal was a ghost town. Half of food outlets closed - PRET seemed to be doing the best business. Easyjet to malaga was around 45% occupied. On my return, last Monday, around 85% of seats occupied. Two days back and I get a message to quarantine due to someone on my flight tested positive on day 2 PCR. I think we have some way to go before people start to fly en-masse
Paul
When you get peckish I’d recommend the TOKOS restaurant just beyond Reid’s Hotel on the main road out of Funchal. We discovered it in 2018 – the food is great and the chef / patron is a very ‘interesting’ character.
http://www.madeira-restaurants.com/funchal/tokos
Also, if it’s still on, the String Concert playing Rock at the English church is very good entertainment.
I am starting to think my book is in Correction territory.
-4% today due to 6 out of 9 heavily down.
If there's something wrong with the fundamentals... I'm not seeing it.
Looks like Evergrande default worries - Chinese property bubble popping with resultant hit to demand even if the financial contagion is contained. Anglo American (LON:AAL) down 9% on the day.
It's the 19/20th of the month. At this point every month the market scrapes a low for the month, and it's this point that the FED finds a reason not to taper. A pretty interesting analysis by Sven Henrich:
https://northmantrader.com/202...
Of course the line has to break eventually.
A good read, and quite ominous. Makes me want to be in cash!
If I interpret it correctly, the thesis is basically that global fundamentals suggest the S&P should be much lower than it is, but its upwards trajectory is due entirely to the Fed's support and manipulation of its own balance sheet.
Seems like its all a house of cards which 'at some point' is going to crash fast and hard.
sigh.
UK_Investor_8888
"I am starting to think my book is in Correction territory.
If there's something wrong with the fundamentals... I'm not seeing it."
Perhaps today is a day to belive in one of Peter Lynch's quotes ??
“Sell a stock because the company's fundamentals deteriorate, not because the sky is falling.”
Hmmmm having said that i wish i had sold up on Carnival Cruises when the sky was falling in early last year before the fundamentals changed for the worse. So the danger here is that the fundamentals are going to change for the worse in the near future we just know that this is the case yet - but the clever money does (ughh??)
They will still be affected by supplies and also energy costs in Europe have soared this year which no doubt will affect their manufacturing costs.
Amazon etc will also be affected by supply shortages etc and their prices tend to be high.
'Blockchain seems an obvious, and excessive speculative frenzy.'
Don't really want to get into a big pros and cons of Bitcoin discussion as this is not the place but just by way of balance and to try to help those who don't understand why Bitcoin is so valuable (or has any value at all!). Bitcoin is the only widely available, truly inflation proof asset that exists. The number of bitcoins that will ever exist is mathematically limited to 21 million, due to the amount irretrievably lost over the years the number actually available could be as low as 14 million. As a store of value that can never be diluted this makes it hard to beat and many believe it will eventually replace gold as the preferred long term store of value.
Gold market cap is $11T, current Bitcoin market cap is $0.8T.
There will be no more UK predecimalisation coins either, so their number is also limited. It seems to me that the limited number of bitcoins doesn't inevitably mean that they are a long term store of value.
UK predecimalisation coins are not widely and easily available, nor do they have a market cap of $0.8T. Critical mass adoption is also required for an asset to become a viable store of value.
With the only downsides that it consumes as much electricity as Finland and each transaction costs over 100,000 more than a Visa transaction.
Not going to comment on energy usage as its been well publicised, although there are very interesting reasons to do with network security why the energy usage is a feature not a bug which I wont get into here. It can even be argued that what bitcoin is is essentially a way of converting energy into a digital form, but thats getting a bit philosophical.
Would be interested in seeing your sources for the claim about transaction cost though. As far as I know the cost of a VISA transaction is about 2% to the merchant? Bitcoin transactions have a fixed cost can vary depending on network congestion and priority but currently is averaging about $2. Recently a $2 billion bitcoin transaction took place for a total fee of 78 cents. I'm not aware of any cheaper way of moving that kind of money.
There are other blockchain coins that have a much lower energy overhead. Bitcoin was only a demo of blockchain and not intended as a general trading currency.
I should have said the energy cost of a Bitcoin transaction is over 100000 x Visa. The 2% cost of Visa is mostly a 'brand' tax.
I can make paypal and bank transfers for zero cost to me.
Has the risk of death from Covid not always been 0.1%? If we take the death rate from 2019 to 2020 and account for a small population increase the change is 0.1%. Of course you will get different rates for different age categories but that is no different to any other year or disease.
I think you're getting the statistics a little mixed up - yes, the death rate of Covid of the entire population (including those who have and haven't had Covid) is about 0.1% . But Paul is saying that of all of those dying of/with Covid at present, only 0.1% have had both jabs - 59 double jabbed people out of 50,000 deaths approximately.
As a percentage of the entire population that is only about 0.000001%.
But Paul is saying that of all of those dying of/with Covid at present, only 0.1% have had both jabs - 59 double jabbed people out of 50,000 deaths approximately.
Yes but it's still wrong because it doesn't include the people who died before they could be fully vaccinated but who would have died even if they had been.
The numbers will still be very good, but not just as good as this appears.timarr
Correct, my point was if we completely ignore the vaccine ever existed, hasn't the excess death before the vaccine came into effect been 0.1% anyway? the point of happy to accept the risk and go about my daily life, well shouldn't we have always been happy to accept that risk and go about our daily lives if you are not that old and healthy once the data started to show the excess death was 0.1% for the population.
Three-in-one announcement from Open Orphan Open Orphan (LON:ORPH) this morning - first 'real' figures plus another new contract, offset by a 'light' profit warning (large covid contract likely to be recorded next year, not second half of this year). 75 percent of revenues non covid, and seen as likely to increase, modestly profitable on this year's revenues, now estimated at £40m for 2021, targeting £50m for non covid work next year - so potentially about £60m turnover total in 2022?
Shares currently up about 2 percent on a down day.
I think I had possibly expected a higher degree of profitability - How impressive is a 28 percent gross margin in this line of work? I just don't know. The key question is just how much operational leverage there is, and how much costs will rise in line with revenues, or to what extent greater volumes can drop through to the bottom line. Not quite sure how much they can benefit when every contract presumably requires a similar level of work. Plus of course there is still value to unlock in the non core assets after the spin-off of Poolbeg Pharma.
This is a large position for me and I've trimmed it slightly at just about 10 percent above my average buy-in price.
I think they have done well to make the company profitable, but I wonder how scalable their business model is? I am hoping there is more to their income stream than "challenge studies".
Encouraging observations on a busy T5 and full planes, Paul. I like to invest in companies that, at least in some small way, I can observe what’s actually going on and I am a holder of International Consolidated Airlines Sa (LON:IAG) (LON:IAG). That said, you’re right about the reduced capacity, my neighbours have just had a flight cancelled to the Caribbean in November and moved to a different day (Trailfinders are not charging for the extra hotel nights), but as great as it is to see holiday flights getting going again, a big issue for IAG must be the continued restrictions on flights to the US. LON-NY is, I believe, the most profitable route in the world and for as long as the US continue to restrict travel from the UK and Europe, the capacity on that route must have been slashed and it’ll be a long time before city bankers and lawyers are filling those planes again anyway, now that they’ve discovered zoom.
dharding22,
Worry not! According to the Telegraph 'Boris Johnson to tell Joe Biden: 'Lift travel ban and let Britons back into America'. Probably behind their paywall but you get the idea.
Increased travel and the arrival of booster vaccinations should benefit Saga (LON:SAGA), I imagine
What effect might the likely default by Evergrande in China have on UK and world markets?
Michael Burry of the big short fame, has highlighted an interesting thread by @TheLastBearSta1 on the topic, suggesting that to start with, both Country Garden and Sunac will be in trouble also.
Directly, probably not much. None of the big Western banks have exposure to Evergrande.
Indirectly, hard to tell. Will a financial crisis in China cause contagion globally? Very likely. But as with anything this complex, I'd be surprised if anyone has a clear crystal ball!
I'd be surprised if China allow Evergrande just to default. Whilst they are talking about them having to solve their own problems I would expect some level of intervention to stem any contagion across Chinas financial sector. Particularly given it is a controlled economy - no point in allowing the default of one firm to send the economy way off course just to avoid setting precedent.
davidjhill
"I'd be surprised if China allow Evergrande just to default. Whilst they are talking about them having to solve their own problems I would expect some level of intervention to stem any contagion across Chinas financial sector."
Who knows - I would be surprised if China doesn't do whats best for "China PLC" - not sure what % of "Evergrande" "liabilities" are to "non fully China owned entities" and who the main shareholders are (are they in favour with the powers that be??). I have a sneaking suspicion if the contagion is manageable they may want to be seen to not directly support the entity that is "Evengrande" (you paid you money and took your chance current shareholders) with perhaps direct support being provided to a pre pack company or to fully chinese companies affected on the supply side (supplying Evengrande on b2b basis)?
exposure is predominantly to local banks (ie no Western exposure) but more importantly Evergrande plays an important role in China's housing and construction, which has a reasonable size impact on the Chinese economy.
They won't bailout the Evergrande shareholders but they will try and avoid a domino effect on the other Chinese financials and constructors.
Does anyone have any info/view on the share price decline of Supreme (LON:SUP) ? Down a lot over the last week on no news that I can find. Many thanks, Rob.
Yes I cant see anything either. Maybe caused by illiquidity?
what buying power do sup and upgs have? shipping goods in from china compared to amazon, argos/sbry? why take the risk shipping cost and containers in wrong place,
From memory they are manufacturing many of their products themselves in the UK - i.e. they are vertically integrated for their Vaping products. So not the same as UPGS. That doesn't mean that they won't be impacted by increases in cost of raw materials of course.
Would need to go back over the last presentation for exact proportion they are doing themselves
I hold. Was very impressed by the recent presentation.
My thoughts are potentially a six month lockup ending on the initial institutional investors?
Or read across from the US, where it looks like the FDA are restricting the sale of vaping products by small and mid size companies. No doubt the big tobacco companies here will be pushing for the same thing:
Politico Link
Morning all,
Looks like it's one of those days in the markets today, where it's probably best to close the laptop and go out for the day!!
Regards.
my Level2 screen is a list of large red numbers. Wahhhh!!
On the other hand, time to start looking for more UK bargains! Correction is long overdue in the US and it will impact on other indices as I think it has another 10% to go yet- although maybe not all in one go! There do seem to be a number of factors conspiring to pressure equity markets right now, and valuations aside not much to provide positive momentum.
Yes, one or two shares looking interesting now!
its grim out there.
Hopefully a September flush before a bull run in the last quarter.
At least we're not going to have a crazy day like the Hang Seng index, which ended up -3.3% down today due to Evergrande issue and wider drops in the property sector.
I think we will go close maybe 2%ish
San Leon Energy (LON:SLE) : Repayment deadline of US$32 million of MLPL's Loan Notes extended once again, although this time only to the end of Septembers so perhaps some signs of an imminent agreement on the proposed transaction with Midwestern Oil and Gas Company or else a default! This has been dragging on for an age now.
Interested to hear form anybody with a view on what might follow and bonus points for guessing when shares might resume trading and what might then happen to the SP.
The reason the Loan note repayment timeframes are being extended is because they are part of the consideration in the proposed deal for San Leon Energy (LON:SLE) to take 100% control of the assets, not because there is any suggestion of default. Given the oil price and production levels that would appear highly unlikely in my view.
The term "save for, inter alia, if there is an event of default" at the end of the announcement is not there because there is expected to be a default if terms are not agreed. It is there as part of the credit language used in the loan docs. In this case the loans will not become due for 90 days after the expiry of the extension unless there is an event of default, in which case they become due immediately.
The structure of this deal originally was super complicated so it doesn't surprise me that it is taking some time to get this transaction completed (assuming it does). No idea when it resumes - i'd imagine in the next 2 or 3 months at a guess.
Thanks David. I was being a little facetious about the default risk but I appreciate the insight. The fact the extension on this occasion amounts to just a couple of weeks made me wonder if the transaction might be near to completion or at least conclusion one way or another.
Looks like the perfect storm is brewing in the markets, stagflation concerns abound. What to do? Personally for me not a lot, I remain invested in what I think are good growth companies that are mostly profitable. I am about 25% cash (which is really surplus income from my day to day job thats built up in the last year) and am ready to put it to work probably in a more general tracker fund should the overall index's fall substantially. Not sure what level would make me jump in more but at this stage clearly not
Paul, I have just come back from Menorca, really nice Island, you would love the old capital Ciutadella.
It's a nice little island we were there a few years ago. Stayed in Calen Porter. There was a brilliant but extortionate cave bar along some cliffs nearby.
We just returned from Mallorca interesting that the flight was also full both ways but having booked it only 2 weeks ago we were surprised that £Jet2 added a stop in Ibiza on the way back with only a couple of days notice. Our flight there contained passengers who were flying onward also. I'm not sure what you can read from this but I'd imagine given the late change that they'd generally operate individual flights for these locations.
fwiw on top of the headlines I've heard from several sources that European travel is heavily booked next year and prices are significantly higher than the prices currently.
I'm am encouraged by the low levels of deaths in double vaccinated - but there are 2 caveats:
1. Very little data is available on the prevalence of long covid. Hopefully that is in massive decline in numbers and effect.
2. For the first half of the year a considerably smaller proportion of the population was double vaccinated so to include that time in the data set is misleading. Having looked at the ons data in some detail earlier this month it became highly likely that the increase in deaths over the last month is due to vaccine wane (esp. in the oer 50's) - so I'm really happy the booster is coming.
Being more positive (not something that comes naturally)... it does look like we're coming through it all. And the sun's out in the UK! (and in Malta Madeira Madagascar....)
Also the recent data that out of 50k deaths with (not necessarily entirely from) covid this year, only 59 people had been double-vaccinated, and had no underlying health issues, is of absolutely seismic importance.
It is important, but there needs to be an element of interpretation. The data was taken between January and July and at the beginning of that period almost no one had been vaccinated, so the data will be skewed. In particular, we don't know how many of the very vulnerable who died in the early part of this year without being fully vaccinated would have died even with full protection.
To put this in perspective, if everyone had been vaccinated at the beginning of the period then everyone who died with CV-19 would have been jabbed. So we should assume that the number of breakthrough infection deaths would have significantly higher had everyone been vaccinated.
The actual numbers are that 256 fully vaccinated people died in that six month period. Of those most people were clinically vulnerable, the majority were male and the average age was 84.
The point, I feel, is that we should continue to exercise caution if we or close friends / relatives fall into any of those categories until we have data for the rest of this year. But beyond that, there's not a great deal of reason to avoid sampling life's pleasures.
timarr
"Also the recent data that out of 50k deaths with (not necessarily entirely from) covid this year, only 59 people had been double-vaccinated, and had no underlying health issues, is of absolutely seismic importance. Think about it. That's 0.1%. Many people are happy with those odds, to get on with life, instead of hiding away maybe forever. I know I am, and have taken far worse odds quite routinely as part of normal life - e.g. pulling out of a blind junction without knowing whether a speeding artic is around the corner or not, etc."
Interesting data Paul, but what people seem to forget is the approx 5% of the population that are immunosuppressed in one way or another, so even when double or triple jabbed may still have no antibodies to fight the virus!
All of a sudden that 0.1% is multiplied many times for some, and with the restrictions lifted in the UK things have become much more dangerous!
As with investing it will be a case of Risk vs Reward, but when the risk is almost certain death or organ rejection leading to some other form of life-limiting scenario. On that basis, as we settle into the fourth wave, we'll be erring on the side of caution.
That said - enjoy your holiday - well deserved!
Decent result from Finsbury Food (LON:FIF) this morning with diluted adjusted EPS of 8.6p (remember there is a non-controlling interest so better to use the diluted EPS figure). Taxation seems a bit lower so I wonder if there's been a bit of a one-off benefit there? The outlook message unsurprisingly highlights some of the pressures from inflation and lorry driver shortages - if anyone sees a broker note this morning I'd be interested to know what the FY22 EPS outlook looks like!
Just on your COVID recovery comment Paul, I think it's key to monitor the number of hospitalisations as full hospitals may encourage the government to bring back some restrictions. Week-on-week this was down 5% on the latest available UK data from 14 September which is encouraging. I have speculated before there is some weather effect and the end of August/early September was quite good (sunny = more people outdoors = lower transmission of COVID) so I think key is what happens in next 2-3 weeks as the weather gets cooler and more people socialise indoors.
The other thing to keep in mind going into the winter is possibly new COVID treatments. Various trials on antivirals are getting nearer the end so if there are any positive results here we might see new treatments being offered as soon as you test positive for COVID which would help to avoid hospitalisation. Coupled with vaccines that should help drive down the severe effects of COVID and help us to live with it.
Maui Hawaii - Or would the time zone difference affect the SCVR production?
Thank you Paul for all your information you give ,i personally find it a great help . i am not here to criticise ,mere to clarify ,re your COVID can i just confirm that the 59 deaths this year from the double vaccinated with no underlying health condition ( which is great news) are actually all under 50 because if i am right ( and i really hope i am wrong and it would be for all age groups , the figure i have is 50+ 01/02-31/08 1627 covid deaths of which 1054 are fully vaccinated ) its very important bit to know, especially if you're 50+.Have a great break Paul.
@216090. Not sure where you’re getting that from. This BBC article seems to say the same as Paul.
https://www.bbc.co.uk/news/hea...
i see thank you JohnEustace,that makes sense. this article is on figures up to 2/7 where as the figures i saw were up to 31/8 (which make a big difference because there was a lot more people fully vaccinated and out of there 3 week window ), i will see if i can find the article it was around the 10 th september as i sent the info to my family should just posted the link, i been old school for to long but changing :)... ( still hope i am wrong as much prefer the figures from this article )
https://uk.news.yahoo.com/how-...
Hi johnEustace i found the article https://uk.news.yahoo.com/how-...
It all depends on how you present the numbers and where you have the cut of points.
https://toknow.uk/shocking-ons...
The published research behind Angle (LON:AGL) continues to impress. Its current application to the FDA relate to breast cancer, but as the CEO, Anthony Newland says, its current first major funded study by a major pharma relates to prostate cancer, often described as as the forgotten lethal illness in men. The latest Vienna study indicates the unique ability of its system, Parsortix, to follow with live cancer cells from simple blood tests the progress of patient treatment, offering vital help to the direction of that treatment.
As he says "The study demonstrated gene expression analysis of the cancer cells, in this case using an established molecular analysis technique, qPCR, which is used widely with tissue biopsy. This study therefore provides further evidence of the capability of the Parsortix system to provide cancer cells for analysis from a simple blood test when tissue biopsy is not feasible, with the potential to guide future treatment decisions.
The study adds to the body of evidence for the Parsortix system in relation to prostate cancer, which is the focus for ANGLE's first large scale pharma services contract and continues to be a key area for ANGLE's development efforts following our recent capital raise."
You might be away for a while. There’s about 150 “M” islands at the last count according to Wikipedia.
https://en.wikipedia.org/wiki/List_of_islands_by_name_(M)
Muckle Flugga in the Shetlands sounds promising.
Gus.
I doubt the WiFi is up to much on Muckle Flugga given it’s uninhabited.
Would love to see a video of you on the Funchal downhill basket ride whilst you’re in Madeira.
Would love to see a video of you on the Funchal downhill basket ride whilst you’re in Madeira.
So would I! It's closed sadly, being a Sunday.
In lieu of that, here's a ridiculous video of me having a minor panic attack today on the way UP! lol (this is for fun by the way, for the terminally dull & serious minority)
Love your work Paul - with some Portillo style cerise trousers and a canary yellow jacket you have a promising future as a travel presenter !
oh do tell more about Madeira Paul. We are looking at it for retirement
we have a pad in Mauritius that you are welcome to use as at the moment it’s rarely let out. Another great spot is Meeru Island on the Maldives where we spent 10 days on the way back from South Africa to ensure we did not have to face the dreaded Heathrow jail hotels .
Paul, I know you were concerned about the number of likes for your daily. Seeing the number of likes for your cable car video (which made me laugh out loud) the answer is clear - more funny videos!
Turns out a cable car ride is much like watching my portfolio movements:
One minute:
"woohoo... party!"
The next:
"oh no, no, I don't like this... its ok, I'm perfectly safe"
:)
Enjoy your holiday Paul and welcome back again Roland.
or you could try Mersea Island in Essex and let the double six have an outing
You could try "Mull" but better hurry up before winter sets in. Beautiful on a warm summer/autumns day, but not so great in mid-winter storms.
Thanks for all your work Paul and make sure you get a decent break. All the best.
K
Thanks Kevin,
P.
Paul, I think you missed the opportunity of a lovely young lady willing to join you in the cabin on your way up the hill! Could have held your hand to calm your fears!
Majorca and Mykonos next.
After Madagascar, Paul, be sure to take in Mauritius. Have a cup of Yorkshire tea with Terry Smith and put the trip on expenses, I’m sure Ed will be happy to sign it off!
But seriously though for a minute, I do think that travel will recover strongly next year as there will be many people who want to treat themselves. However, I think that many of the travel stocks already have that in the price and the bargains are gone. There’s also the possibility of a new variant that can evade the vaccines. But we may all be somewhat resistant to that by the time it arrives having been exposed to the older variants by then.
GrahamF
You beat me to it! Mauritius with a visit to see Terry Smith was top of my M travel list for Paul.
mykonos.
The mykonos beer company makes v.v.v. good beers and there is a nice island behind the town