Small Cap Value Report - Mon 25 July 2022 - EQLS, CARD, WINE, JDG, EBQ, VLG

24th Jul '22 by Paul Scott

46 comments 7388 reads

Good morning!

Agenda -

Paul's Section:

Equals (LON:EQLS) - finally! Guilt overcame me on Sunday, so I prepared some notes on this interesting growth company. Looks good to me, but I don't understand the sector.

Card Factory (LON:CARD) - is ditching its CFO, after 5 years service, which is bound to worry some investors. An in line with expectations trading update is buried in today's news. It's a potentially interesting turnaround, but the weak balance sheet still puts me off, despite a bank funding agreement that has greatly reduced the risk of an emergency placing. Could be good, we'll keep an eye on it.

Naked Wines (LON:WINE) [no section below] - another CFO leaving, "by mutual agreement", effective last Friday, so no transition period. Although the RNS strangely says there has been a "smooth transition" - I wonder if that just means, here are the passwords, bye!? This one sounds like a falling out, since it's happened with immediate effect. The old CFO (2015-2020) is resuming that role on an interim basis. I've never been keen on this share, and think wine subscription services are not a good place to be right now. I was unimpressed with the FY 3/2022 results, reviewed here.

Graham's Section:

Judges Scientific (LON:JDG) (£467m) - today’s H1 update is in line with expectations. Order intake was up 4%, with very different trends seen in different geographies. Economic conditions remain “challenging”, and revenue growth is held back by supply chain/recruitment issues, and by staff needing to self-isolate. I provide some analysis of the £80m deal announced by Judges in May, the largest deal ever made by this highly successful buy-and-build operator.

Ebiquity (LON:EBQ) (£67m) (+10%) [no section below] - this media consultancy made over £20m of acquisitions in March, raising equity to do so. Today’s H1 trading update shows organic revenue growth of 10%, and total revenue for the six-month period of £37m. That’s half of the full-year revenue estimate shown on the Stock Report, but only includes three months of contribution from the acquired businesses.

Underlying operating profit in H1 has more than doubled compared to last year: margin improved due to “growth in higher margin digital products and improved operating efficiencies”. Net debt is £12.9m.

Historically, there have been huge discrepancies between underlying profits and actual profits (i.e. losses) at this company. Consultancies are…

Unlock with Email

Unlock with Google

Already have an account?
Login here

Bouden54

25th Jul '22

Not looked into Works, but just as a high level observation I think they are in a much better niche than Card Factory - always seems to be plenty of demand for cheap books/games/stationary and don't see this changing.

lemming1

CFO bought £20k worth of shares this morning ...

BnB

Sanderson Design (LON:SDG) and Portmeirion (LON:PMP)

I know how popular these two shares are in the SCVR and I thought there will be many who find this article informative

https://knowledge.sharescope.c...

AstonGirl

Naked Wines (LON:WINE) sold off Majestic Wines back in August 2019 to Fortress

A real shame imo as their physical stores are great with young enthusiastic staff

Naked wines subscription based model imo is not attractive, the wines I tried were over priced for the quality (I previously worked on the wine business so have tasted a few over the years ;-))

Helvellyn

Agree re Majestic but i would add knowledgeable to young and enthusiastic.

When you were working in the wine trade was your 'handle' AstiGirl ? ;-0

TheFloatingInvestor

If you want to get your weekly shopping bill down, a great way to do it is to swap out for a cheaper wine. I think the inflation squeeze will effect these companies, as 'Middle England' is getting hit.

Since Aldi stopped throwing your shopping at you through the tills, I see a steady change in clientele of late, and why not, as the quality of products and wine is very good.

andrewdb

Thank you.

Rusty2

Aldi wines have gone up in price quite a bit in the last few weeks, nothing under £5 anymore.

Some food prices are going up by silly amounts, not shopping in Morrisons anymore.

Roger Baron

Agreed. Always found Majestic staff to be excellent in all regards.

I looked at Works co uk (LON:WRKS) but too much debt for me.

yiannos1

They have no debt last time I looked at it ( and it was last week or so ).

Really, so the figures on Stockopedia are incorrect?

I never look at those ( I mean the figures on Stockopedia ) as they are most of the times not correct.

You must be referring to the IFRS 16 lease liabilities that are definitely not debt.

sharw

The £104m "net debt" for Works co uk (LON:WRKS) shown by stocko consists of:

Lease liabilities 122.423

less cash 17.783

less Unamortised debt issue costs 0.262

IFRS16 = Utter pain

Thanks, very misleading on Stockopedia then. I will have another look.

You really need to go to the source (company accounts) and cannot rely on Stocko figures - these are good for a quick scan but for a more detailed analysis you need to go through the accounts.

Thanks , this is what I have been doing for the last 25 years but these can be misleading as well!

rmillaree

It’s not exactly stockopedias fault that lease liabilities are classed as debt it’s just a fact of life - nowt misleading here as you say financials could be out of date if there has been recent acquisition but still it’s a much better starting place the most recent results than what is shown on stocky as those figures always need to be checked for sanity purposes

Apart from it looks like the company is almost bankrupt, this will probably affect the the scores on the Stockreport and exclude it from some screens.

nicobos

26th Jul '22

Card Factory (LON:CARD)

No, the Banks would dare not demand the resignation of a director ! (unless the business was going into insolvency etc - like a McColl's situation).

Even if he was viewed as highly incompetent, they have no right to interfere with the day-to-day running of the business whilst their debt is not impaired. It may impact their views on providing further facilities / flexibility to the business in future though.

Small Cap Value Report - Mon 25 July 2022 - EQLS, CARD, WINE, JDG, EBQ, VLG

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

46 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...