Small Cap Value Report (Mon 28 June 2021) - NAPS, COG, LOOK, ESC, CPC
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Morning, its Paul and Jack here with today’s SCVR.
Agenda
Paul:
Cambridge Cognition Holdings (LON:COG) - new contract win for cognitive testing group, with Finn Cap raising its price target to 175p.
Lookers (LON:LOOK) - strong current trading as with other car dealers, but delay to audited results is a concern.
City Pub (LON:CPC) - looks to be a well managed pubco with lots of freehold assets. As with others covered today though, dilution limits potential upside.
Jack:
Napster (LON:NAPS) - heavily loss-making MelodyVR changes its name to Napster (acquired in December 2020) but doesn't yet give any financial data on the Napster business. This plus track record of heavy losses and equity dilution makes it an extremely risky and speculative investment.
Escape Hunt (LON:ESC) - encouraging post-lockdown trading momentum with organic growth opportunities. Shareholders have been heavily diluted here in the past, though.
Disclaimer -
A friendly reminder that we don’t recommend any stocks. We aim to cover notable trading updates & results of the day and offer our opinions on them as possible candidates for further research if they pique your interest. We tend to stick to companies that have news out on the day, and market caps up to about £700m. We avoid the smallest, blue sky type companies, and a few specialist sectors (e.g. resources, pharma/biotech).
A central assumption is that readers then DYOR (do your own research) and discuss in the comments below. The comments, incidentally, sometimes add just as much value as the articles. We welcome all rational views, whether bull or bear!
Paul’s Section
Cambridge Cognition Holdings (LON:COG)
(I hold)
144p (up 7%, at 08:05) - mkt cap £46m
I only mention contract wins if they’re significant financially. Often companies trot out contract win announcements to ramp the share price, and conveniently forget to mention that they have no material impact on forecasts because they were already baked in.
COG has had clever technology & an extensive track record in cognitive testing for a long time, but it never seemed to establish a consistent growth track record, with too many contracts turning out to be one-offs.
It seems to me that, in the last year, things have significantly improved, which is why I’m taking a close interest in the company. What’s changed?
- The newish CEO, Matthew Stork, is much more commercially focused than his predecessors, and is delivering good results now.
- The order book shot up last year, meaning that revenues for 2021 were largely underpinned with signed contracts, not just hope.
- More contract wins are being announced at a decent clip, with each one the forecasts become easier to beat.
- Breakeven achieved in Q4 2020, and with the large order book, should now be profitable in 2021 and in future.
- The pandemic has triggered an industry shift in the right direction for COG - pushing pharmaceutical companies towards doing clinical trials virtually, using COG’s software, as opposed to being done in person.
As you can see from the chart below, this progress has already been rewarded with a strong share price rise. Although the market cap is still only £46m, which strikes me as quite modest for a company with proven, high margin services, that are taking off (as evidenced by all the new contract wins).
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Contract win today - it’s described as a “large, at home cognitive testing contract…” for a “virtual clinical trial”. It seems such an obvious improvement to do clinical trials through software, with patients being asked to perform tests at home, through a smartphone or iPad. This new trend plays right into COG’s strengths. There’s not much competition either, because the know-how has been accumulated over many years. COG works with the big name pharmaceutical companies, who stick with what works - so repeat business is rolling in.
There’s a lot I like about this business model - e.g. high margins, barriers to entry, repeat business with major clients.
Today’s contract details -
£2.2m revenue (for context, revenue in FY 12/2020 was £6.7m)
Spread over 3 years, starting in H2 of this year
In the “growing field of virtual clinical trials”
Broker update - many thanks for Finncap for a brief update today.
Forecasts remain unchanged, but it notes that 2021 forecast revenues are now in the bag, and there’s scope for upgrades.
I’m not sure why the broker is being so cautious, when there seems obvious scope to upgrade now. I’m not sure why analysts are being so timid at the moment, often leaving unrealistically low forecasts standing, despite positive newsflow. Finncap does however raise its target price to 175p. Personally I’m hoping for a lot more than that, but am taking a long-term view.
My opinion - in bull markets, speculative small caps often reach astonishingly high valuations, before ultimately crashing back down to reality. My memoires of 1998-2000 are still quite vivid, with many similarities in today’s market (especially in USA) with pockets of speculative frenzy very clear.
Given that market backdrop, I don’t see £46m as a stretched valuation at all for COG. If these contracts keep rolling in, then an operationally geared profit upside could be highly significant. Obviously that’s dependent on more contracts being won, which can’t be guaranteed.
Given the positive fundamentals & newsflow, I reckon this share continues to look attractive, which is why I hold it personally, and have increased my position size this year.
Expect further broker upgrades later this year.
Lookers (LON:LOOK)
The way this announcement is worded, it sounds pretty harmless. Although Lookers has a poor history when it comes to accounting problems, which makes me wary -
Procedures in relation to the Group's 2020 Annual Report & Accounts are almost complete and we are not aware of any material issues. However, the Board and the Group's new auditors, BDO LLP, require slightly more time to conclude the audit process.
If you’re going to delay publication of the accounts (which sometimes spooks investors), then combining it with a strong trading update is a smart move!
Trading Update -
Full year 2021 outlook significantly ahead of current expectations
Lookers plc, one of the leading UK motor retail and aftersales service groups, today provides an update for the current financial year to date, reporting strong momentum in trading and a significant upgrade to its full year 2021 expectations*.
*Management compiled analyst consensus for underlying profit before tax for the full year ended 31 December 2021 is currently circa £40m.
Many thanks for the footnote. It’s handy when EPS is mentioned too, as that saves time in working out the valuation, but never mind.
Key points from the commentary today -
- Strong trading has continued into May & June 2021
- Robust customer demand
- “Ongoing out-performance of the UK retail new car market”
- Used car margins strong
- Self-help initiatives & omni-channel offering are good
- H2 outlook - uncertainty re covid, and supply restrictions - tightening in recent weeks
- Strong H1 should mean FY 12/2021 will be “significantly ahead of current expectations”
- Net cash of £18m
My opinion - we’ve heard from both Vertu Motors (LON:VTU) (I hold) and Marshall Motor Holdings (LON:MMH) recently, that business is booming. LOOK says very similar things today. All 3 have also flagged H2 uncertainty, particularly supply restrictions (a knock-on effect of the global shortage of semiconductors).
I was worried about renewal of the bank facilities, but since it’s moved into net cash, that doesn’t sound like it should cause too many problems.
Personally, I try to avoid shares where there have been accounting irregularities of any kind. We can buy dirt-cheap car dealers that are able to correctly do the books (and on time). So why take the unnecessary risk of buying a share with those additional problems?
I suppose there is an argument that buying beaten down stocks which should recover, can be lucrative (but risky).
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City Pub (LON:CPC)
128.5p (up 1% at 09:57) - mkt cap £134m
This is a mostly freehold property based pubs group.
Business since re-opening is described as “encouraging”, at 10% down on 2019 comparatives. Not bad considering there have been social distancing measures in place, due to be removed on 19 July.
Cost base reduced.
Trading profitably at current level.
Social distancing & lack of large bookings have been a headwind (e.g. people reluctant to watch football at the pubs under social distancing rules)
Outlook - positive once restrictions removed in July. Assuming of course that they don’t bring back restrictions yet again in the autumn.
My opinion - it looks as if there’s been a significant increase in the share count. Checking back, CPC raised £22m by issuing 44m new shares at the start of the pandemic, in March 2020, at just 50p per share. This resulted in the share count rising from 59.7m to 103.8m, which is quite a lot of dilution. That’s a big headwind for the share price now, at 128.5p, because future profits have to be spread over so many more shares.
It’s nice buying a pubco that owns the freeholds for most of its sites, with not much bank debt funding it. That’s a far more secure base than having leases, where you have little control over where the rent is set - hence open-ended potential liabilities, and less secure tenure.
CPC is also selectively expanding, and has 4 development sites.
Looking at the chart, and taking into account the increased share count, I’m struggling to see where the upside is going to come from?
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Jack’s section
Napster (LON:NAPS)
Share price: 1.86p (-0.38%)
Shares in issue: 2,760,945,548
Market cap: £51.4m
Napster (LON:NAPS) used to be a really big name in the US software scene a couple of decades ago, a pioneer in MP3 music files and with 80m registered users at one point. Let’s be clear: the current incarnation is a far cry from those days.
In truth, what we are dealing with here is not the renegade, revolutionary digital download pioneer but the residual strength of its brand post-liquidiation. Napster was hugely influential - in fact you can argue that it paved the way for the likes of Spotify, which used the P2P architecture in its earliest days of building its streaming service.
But here we find Napster listed on AIM and with a StockRank of zero.
Here’s a brief catch up on what’s happened.
- Napster was founded in 1999 by Shawn Fanning and Sean Parker as a peer-to-peer file sharing service emphasising digital audio MP3 files,
- It proved hugely popular but soon ran into copyright infringement issues and ceased operations before being acquired by Roxio, where it became an online music store,
- It merged with Rhapsody from Best Buy on December 1, 2011, valuing it at $121m,
- In 2020, MelodyVR (creates immersive live music experiences that you watch through VR headsets or phones) acquired Rhapsody for $70m in a cash and share reverse takeover.
MelodyVR said at the time of the reverse takeover:
MelodyVR’s acquisition of Napster will result in the development of the first ever music entertainment platform which combines immersive visual content and music streaming… For music fans today, live and recorded music are intrinsically linked. We are as keen to see our favourite artists perform live as we are to listen to their albums. Our purchase of Napster, one of the music industry’s original disruptors, is born out of our wish to deliver the world’s foremost music experience, available seamlessly across audio and visual media and in turn presenting a truly next generation music service.
An interesting tale, but with Napster now so far removed from how it made its name, is this anything more than a stock market curio?
The rate of equity dilution here has been breathtaking, with a 5Y CAGR of 125% - at that rate, barring incredible growth, you can expect to get diluted into oblivion in short order. The chart below doesn’t capture the present shares in issue: now nearly double FY19 at 2.76bn.
And there are other clear risk signals. Weak F and Z scores, lack of cash generation, and growing net losses. So it’s extremely risky.
Highlights:
- Revenue up from £195k to £987.7k,
- Gross loss widened from £1.6m to £4.6m, with cost of sales up from £1.8m to £5.6m,
- Operating loss up from £15.9m to £26m,
- Net loss after R&D tax credits up from £15m to £22.4m,
- Net cash outflow from operations of £28.26m and net cash outflow from investments of £1.22m.
If you’re hoping to actually look at the trading figures, you’ll have to scroll quite far down here. That’s rarely a good sign. In this instance, historical results probably don’t reflect the enlarged business post-Napster but there are still vitally important matters for investors to consider such as cash burn and balance sheet strength.
Given the group’s track record for dilution these should be prominently and clearly communicated at the top of the update, in my view.
With the reverse acquisition of Napster being completed on 29 December 2020, Napster felt it would be more appropriate to prepare these financial statements excluding the Napster business. That means the results solely reflect the activities of MelodyVR.
This gives us no visibility on the current trading profile of the enlarged group. Who knows, the acquired Napster business could also be heavily loss-making. The group must have done its due diligence on this acquisition and so presumably it would have been possible to present pro-forma results.
Napster says subscriber growth will be at its core - initially focussing on relationships with both existing and new telco partners including SingTel, Telefonica, NOS, and six others.
To date about £4.8m of annualised OPEX savings of c.£4.8m have been secured. Existing losses are significantly larger than that though.
Napster has a term loan from Davis Capital (representing its largest shareholder) and a convertible loan facility from Swiss Investment firm Nice & Green. In total, the group has c$40m of aggregate funding ‘to fund our operations over the near term as we work towards the launch of our new Napster platform’.
During the course of 2021 the group expects to invest some $27m (including internal resourcing) in the development of its cloud-based platform which is intended to launch during Q4 2021 across mobile, web and TV.
It will also launch a marketing and PR campaign to establish the new Napster brand identity and preview the new platform.
Conclusion
It seems like there is still a lot of heavy lifting required before Napster is anywhere near its final state and a sustainable business model looks to be some way off.
As a Board we are aware of the amount of capital we have had to invest in our technology and people over the last 5 years.
That’s the crux of the matter. Napster could be building something of value, but investors have had to have very deep pockets so far and this could remain the case.
For now, this looks the very definition of a story stock. There could be some good intrinsic value in the acquired business but we can’t say because MelodyVR has not published any relevant information.
The track record of shareholder dilution makes me wary of trying to catch an inflection point. If the idea does work, I’d much rather forego some of the upside and wait for concrete signs in the financial data that this strategy is sticking and no further dilution will be required.
Yes, the MelodyVR business has been busy over lockdown, but all this activity has led to revenue of less than £1m and a near-trebling in cost of sales to £4.6m.
The woeful track record so far and the fact that these results shine no light on the actual nature of the Napster of today that investors would be buying into makes these shares uninvestable for now, in my opinion.
Escape Hunt (LON:ESC)
Share price: 39.3p (+0.77%)
Shares in issue: 88,620,091
Market cap: £35.8m
Speaking of extreme shareholder dilution, Escape Hunt (LON:ESC) is another case in point. Fair enough nobody could see Covid coming, but this company’s issues began before the pandemic with a delayed rollout and missed operational milestones.
Then came equity placings after a substantial decline in share price. Current shares in issue now stand at 88m, having IPOd with about 17m back in 2017. It continues to make me wary.
Trading sounds good on the face of it here though, so it’s entirely possible that the company is now hitting its stride.
Highlights:
- Revenue +47% in the five-week period compared to the same period in FY19,
- Like-for-like revenue across its eight established UK owner-operated sites +87% (again, on FY19 not Covid-disrupted FY20),
- Five new owner-operated sites opened in the UK in the past 12 months, performance so far ‘extremely encouraging’,
- Work commenced at proposed site in the Lakeside shopping centre and imminent exchange of contracts at a site in Milton Keynes,
- Paris and Brussels own sites were only able to reopen in June, but Dubai is performing well,
- Franchise estate performing in line with board’s expectations. Australia strong but Europe more disrupted by the pandemic,
- Further progress has been made in the US with partner Proprietors Capital Holdings ('PCH'), although completion of master site in Houston has been delayed,
The company's UK owner-operated sites re-opened on 17 May 2021.
Escape Hunt says it is benefitting from initiatives implemented during 2020 to improve site level margins. This is good as cash burn has been a real issue in the past.
The group has also benefitted from the temporary reduced VAT rate which is expected to run until 30 September 2021. As a result, estimated EBITDA at site level for the five weeks to 20 June 2021 was 310% of the site level EBITDA in the same five weeks in 2019. On a like-for-like basis, site level EBITDA from the company's eight established sites was 189% of the equivalent site level EBITDA in 2019.
Conclusion
Cash burn has been an issue in the past here, with delays to the roll out proving costly. Those interested would want to check that more closely, given the degree of dilution so far. In FY20 the group spent a total of £3.5m in the year.
That’s exactly Escape Hunt’s reported cash balance at the end of May 2021. The cash balance at the end of May 2021 was £2.5m. In addition, the company has access to a £1m convertible loan note facility. This facility remains undrawn.
So if revenue continues to grow, newer sites do well, and the group manages its costs, perhaps it has enough cash on hand to meet that all important inflection point into break even. The improved cost management and site level profitability is food for thought.
But if there are any snags along the way then another placing is possible, although at the current share price that would be more tolerable. It does seem as though the trend is improving - which was always the plan - but probably a year or two behind schedule.
There is potential upside in its remote play and corporate initiatives, as well as scope to expand its international franchise network. The US has been delayed but this could prove in time to be a fruitful partnership.
The management tone sounds upbeat and the like-for-likes versus 2019 are strong. I do think there is a market for escape rooms and it sounds as if the company could be turning a corner with some good initial post-lockdown trading momentum.
The degree of unplanned equity dilution overseen by current management (a portion of which predates Covid) still makes me cautious, however.
Disclaimer
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49 comments
Not sure who has the job of putting the shares mentioned on the right hand panel BUT they have fallen down badly today as only City Pub is shown. Yes I know I can look them up but it is a very handy service usually to have them on the right all together. A very tongue in cheek complaint but worth a mention. Many thanks.
Sorry mark, looks like the ticker tags dropped off, which occasionally happens.
I'll ask Jack to fix it in the morning.
Regards, Paul.
I have been told that Lookers (LON:LOOK) shares are about to be suspended again. I have sold mine today on this knowledge.
Paul, re Lookers, where did you get this info from please?
I made a call to someone who I thought would know more and that is what they told me.
He has shares in the company but said he would be hanging on to them.
It could be that shares aren’t suspended, but I was told that was the rumour.
I have been told that Lookers (LON:LOOK) shares are about to be suspended again. I have sold mine today on this knowledge.
Well, if that's correct it's inside information and trading on inside information is a criminal offence. Probably best not to publicise it if you're going to do it.
timarr
Very very odd as tipped over the week-end !!!!!!
If they don't meet the 30 June accounts filing date, then Lookers (LON:LOOK) shares would presumably be suspended again?
Has anybody got a view on why MPAC has gone down by 26% since their good results in March and still falling today.
I am not aware of anything - no updates since end of March so could be just drifting lower on lack of news. I hope so as I took the opportunity to buy back in today.
I heard on radio 4 last week relating to packaging companies, not specifically MPAC, Shortage of raw materials also relying on recycled cardboard. Which seems to be contaminated. Rising costs could well be an issue
Think they normally release results 1st week of july
An off topic question, which I am sure has come up before. Do people tend to split their accounts across various providers just in case of any disasters? I previously used EQI (formerly selftrade), ii and iWeb, but now EQI has merged with ii and having almost all of my portfolio (and net worth excluding my house) in one place makes me a little nervous. Am I being silly? Thanks.
MattH - number of providers - no you are not being silly - I use three for the same reason. If you are thinking of getting one to replace EQI and an ISA is involved I would suggest you do so before it is merged with ii as I don't think (although I may be wrong) that you can transfer only part of an ISA.
You may like to consider xo (run by Jarvis Securities (LON:JIM) ) which is similar in charge structure to iWeb.
Thank you, I will look at XO. They’ve already transferred across but luckily it is (currently at least) 2 separate isa accounts so it looks like I’ll be able to transfer one across.
Sorry to interrupt but wasn't EQI being moved into ii last Saturday? ii had warned its Investors not to do any work on folios.
hi, yes that is right. It has moved now, but I’d like to move it out again to somewhere else.
Matt
I use three brokers. Why? The risk is that a broker in difficulties might raid the clients' assets. In that event we are only covered for £48k per broker. At least with three brokers about 2/3 of the funds are outside the failing broker.
I did have shares with a broker which failed- Beaufort Securities. My losses were trivial, but my portfolio was frozen for about 6 months while PwC sorted it out. It could have been rather longer had there been significant complications.
Sometimes i get better buying prices from one broker than another.
Good luck!
Richard
ISA's are held in custodial accounts that are legally ring-fenced from the brokers own accounts? Am I right in thinking there is no way they could "raid" the client's assets?
ISA's are held in custodial accounts that are legally ring-fenced from the brokers own accounts? Am I right in thinking there is no way they could "raid" the client's assets?
No, that's wrong.
As the Beaufort Securities mess showed, if there are insufficient funds in the parent entity to cover costs then the administrators can raid client funds, even if ringfenced. Although it turned out over for Beaufort customers the underlying legislation hasn't been changed.
Smaller, less well capitalised brokers should be avoided for this kind of reason.
timarr
Hi Tim,
I might be wrong and I don't mind if you correct me but if my memory serves me correctly, didn't the FCA step in finally and cover the administration costs whilst the mess was sorted??
As a result of the above, customers didn't lose out in the end despite there being a big huh-arh about the administrator wanting to raid the client funds.
As a result of the above, customers didn't lose out in the end despite there being a big huh-arh about the administrator wanting to raid the client funds.
This all arose as an unintended consequence of changes made after the banking crisis in 2008 - the Special Administration Regulations. However, despite this becoming public knowledge because of the Beaufort Securities scandal there's been no change to the law.
I believe that a small number of HNW customers did lose money.
The point being that any future broker problem might not lead to such a good outcome because the BS outcome didn't create any legally binding changes:
https://www.thisismoney.co.uk/...
timarr
Food for thought Timarr. I've got approximately £100k in my AJ Bell Isa and am now sufficiently worried. I'll set up a new one in the next tax year I think.
Food for thought Timarr. I've got approximately £100k in my AJ Bell Isa and am now sufficiently worried. I'll set up a new one in the next tax year I think.
There comes a point where you have to make a choice - I decided back in 2008 and 2009 to only use the very largest brokers as I figured they have the best finances and would cause the government the most serious issues. So I'm happy with AJB, interactive investor and Hargreaves Landsdown.
Of course a lot of people here dislike these platforms because they tend to fall over when the market gets excited. I consider this an advantage :-)
timarr
I used to split my holdings bewteen two brokers - Interactive Investors and SVS Securities (who went into administration). The administrator's fees for SVS were eye watering, however client losses were covered under the Financial Services Compensation Scheme up to £85k. I got everything back, but the collapse of SVS came pre Covid, and I was unable to make any adjustments to the SVS portfolio before or during the Covid collapse of Feb / March 2020.
Moral of the story is don't put all your eggs in one basket, and avoid the weaker players in the stockbroking market.
I now ony have one broker, Interactive Investor, so I'm aware I'm now breaking my own rule.
My ISA’s are with Halifax and Natwest, both considerable funds, I hope they are more secure being with big banks.
Re Marks And Spencer (LON:MKS)
I was reading the Sunday Times online, and noted a positive comment about by one fund manager about M&S, and his commenting that they own 50% of Ocado. I know this is old news, but somehow I had failed to absorb that M&S had ownership, and was not just in a customer/supplier relationship.
Apologies for those only interested in small company comments, but this struck me (somewhat belatedly) as a fairly brilliant move by M&S management, when Morrisons only took out a licensing agreement.
I have fallen slightly back in love with M&S particularly for their food offerings during the pandemic. They also have a fairly good ethical, and quality background, so I wonder if one day we will see them in a more dynamic light.
Ocado Retail is a 50:50 joint venture of Marks And Spencer (LON:MKS) and £OCDO.
Marks And Spencer (LON:MKS) own 50% of Ocado Retail which is the UK only retail operating arm of Ocado. They paid £750m for that which struck many as a rather full price.
It doesn't own any of the international business or the IP.
I've held M&S for what feels like an eternity (probably 6 months in this market) and it's up around 2/3% as I write. I bought it after being impressed with their clothing offering. Plenty of nice looking coats and jumpers around the same price point as Next (LON:NXT) (from memory). If I went into a town centre and didn't know much about either of them I don't think I'd be able to tell the difference. I suppose the difference is that next is a much smoother machine. Their online offering is second to no other clothing retailer I regularly use and their range is seemingly endless. -(This endlessness is a bit of a fault in homeware for example try buying a bespoke couch from them: 50 different legs, 50 different material types, 50 different styles of sofa etc etc simply too much choice)-. They have clear strategy and seem to execute very well. They also have excellent metrics across the board ROCE/ Margins etc.
The above must be why Next are on a pre-covid normalised PE of c.14.5 whereas next are on an equivalent PE of c.4. (as reported on here: the disparity between this and reported earnings is chiefly as a result of their recent and failed endeavours to restructure ). I think the Ocado JV strengthens their food offering which almost runs itself I feel. If they can get their restructuring and online clothing offering right then surely it could be a bit of a bargain?
NAPS - I had a brief look at this when MelodyVR reversed into Napster as I am definitely old enough to remember fondly the original pioneering company that sent shock waves through the music industry. A quick look showed me it was not for me but I was intrigued by the convertible loan facility from Nice & Green as it looked odd. I discussed it with a few friends and it was pointed out to me that this is an arrangement commonly known as 'death spiral' financing, where the lender has a vested interest in driving the share price down by shorting and then covering their short by converting options. A huge red flag IMV.
One for Paul, and twoof his favourite stocks.
Maybe I dont see many TV ads. Usually record TV I watch and FF through them. Caught sight of my first new Debenhams ad yesterday. Made me think that this really should be a great brand for Boohoo (LON:BOO) going forward.
The second one was Saga (LON:SAGA) and my thoughts about all the emails I am getting from them on non-cruise holidays. I have in the past been on two group holidays with friends - Turkey gullet (boat), and island boat + add-on on land in Croatia, then safari in S Africa and coach hol in Portugal. They have all been exceptional; fantastic value for money, especially if you drink a lot (we dont).
Here, we tend to be talking about the cruising and insurance side a lot, but would be interested to know how much their conventional hols bring in during a normal year, and this should support their brighter future when things get back to normal again,
Hi - any view on Saga's Friday news, re. bonds? I presume this is confidence to expand the business, despite their Net Debt shows a jump from 565m to 721m (2021) on Stocko?
''Saga ..Offering 250Mln 5.5% Guaranteed Unsecured Bonds due 2026''
Saga, speaking as a user is brilliant, I also hold the shares and have made enough to go on a couple of cruises!
Here are my SCVR heat maps for today (prices as at ~10:05am).
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 feel free to ignore them if you don't find them useful.
Please read my heat map thread for a great deal of explanation of how the heat maps are formed and how I use them to guide me with my research, and for a full key to the contents.
I very much welcome feedback so if you do have any feedback, not already covered in the heat map thread, it would be very helpful if you could post your comment in the heat map thread rather than the SCVR thread. The more specific and constructive the feed back is, the more that likely it is that I will be able to act upon it. Thank you all for the feedback so far.
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!
greensiax
Morning Paul.
Thanks for your excellent write-up on Cambridge Cognition (LON:COG).
I am also bullish on this stock and particularly like that there is potentially a long run-way, growth is all organic, high margin, COG are generating cash so do not need to raise funds and now profitable.
Do you think there is potential for a buyout?
Michael
I'm amazed Napster (LON:NAPS) hasn't been picked up as a meme stock - or are all the Robinhood traders too young to remember?
PCF (LON:PCF)
pcf's issues are very frustrating - i should take solace from the fact they don't seem directly trading related. But its far from ideal that some solution to the issue, drawing a line in the sand couldnt have been found by now.
Here's looking a future where this is put behind them and we have people in charge who can count their buttons.
re £PCF - was your reading of the RNS that they couldn't count their buttons or less positively, that they knew/have now worked out that a lot of buttons had been/would be lost?
The former just requires a clean sweep of the Finance Dept and its culture - underway with new CFO & CEO. The latter means we should expect huge write-downs when it re-opens.
I hold (my breath).
"re PCF (LON:PCF) - was your reading of the RNS that they couldn't count their buttons or less positively, that they knew/have now worked out that a lot of buttons had been/would be lost? "
Thankfully it wasn't that the buttons had been lost specifically or they couldnt count the buttons they had although we won't really know if that is the case fpr sure till this sorry saga is dealt with. If its all related to regulatory % numbers being filed i am not aware that its a given that would directly affect any aco####s totals and tgherefore buttons shoudl be as they were.
Unfortuantely when the button police turn turn up they invariably take away some of the shinest buttons you may have anyway (probably an upfront button police) - so that being the case there is certainly extra costs with regard to advisor fees putting this sorry mess right even if the accounts come out with a clean bill of health otherwise.
It wouldn't surprise me if they also now go super cautious ref everything to do with this company to cover their own backs (who is there now) more than anything - so i would not be surprised to also see other stuff turning up "separately" too in the near future.
anyone interested i would recommend checking out the thread on the "other place" thats full of elightened comments (rarity for the other place).
note there is the elephant in the room question as to whether the PRA will impose any restrictions on their ability to continue writing out new business anytime soon specifically 1st July if deadlines are missed at the end of June - so there are still quite a few unresolved worries that may bite other than simply putting their house in order asap.
A superb trading update from Croma Security Solutions (LON:CSSG) this morning [I hold].
https://www.investegate.co.uk/croma-sec.-sol.-grp--cssg-/rns/trading-statement/202106280700112227D/
This company is generating over £1m a year PTP and carries £5.5m in cash on its balance sheet but, as of last week's close, had a market cap of just £10m!
I challenge anybody to find better value elsewhere!
Thanks Effortless Cool. I've kept an eye on Croma Security Solutions (LON:CSSG) following your helpful commentary. How did you get to £1m PT(pre-tax?)P - I am conscious there wasn't much actual profit left in 2020 results after EBITDA albeit mostly due to a one-off impairment charge. I hovered over the buy button at 67p last week but hoped for lower annoyingly...
Hi Patrick,
This morning's announcement was for £1.85m EBITDA, and I estimate the IDA elements of that to come to about £750k.
Last year, PTP was only £87k but, as you mention, that was after a £857k non-cash impairment charge.
Cambridge Cognition (LON:COG)
Be aware this is a highly illiquid stock.
Wins a £2.2m contract over 3 years for at-home cognitive testing.
This contract begins H221 and means that 100% of FY21 expected revenue is now already booked. With 6 months of the year remaining, there is the potential for a beat. As margins are 81/82% any beat would have a material impact on the bottom line.
FinnCap upgrade their target to 175p with the improved revenue visibility and reiterate the scope for further upgrades.
Matthew Stork CEO says: "As widely predicted, the COVID-19 pandemic has accelerated interest in virtual clinical trial assessments and Cambridge Cognition is well positioned to benefit from the consequent substantial growth opportunities. We are pleased to have secured another large contract for a virtual clinical trial where we will be working with a leading pharmaceutical company in the sector. The Company has established a robust science foundation and an excellent customer service record and this combination continues be rewarded by securing contracts for the growing field of virtual clinical trials."
HY update was on 30th June last year so expect one any day.
I hold
Cambridge Cognition - New £2.2 million contract - Vox Markets
Tandem (LON:TND) announces today that it has appointed Cenkos Securities (LON:CNKS) as its advisor. I assume (& hope) this means that Cenkos will shortly publish some research on it, and that forecasts will become available for the first time. This should help the SP. (I hold).
Hello GrumpyS. Yes I agree and it seems to have boosted it already as Tandem (LON:TND) limps back to its pre-AGM SP.
My morning smallcap tweet: PCF - Pretty Cooked Finances
PCF (LON:PCF) Quadrise Fuels International (LON:QFI) Nanoco (LON:NANO) Cambridge Cognition Holdings (LON:COG) Lookers (LON:LOOK) Bion (LON:BION) City Pub (LON:CPC) Croma Security Solutions (LON:CSSG) Escape Hunt (LON:ESC)
PCF (PCF) update on review of 'errors and misstatements' in PCF Bank's accounts. Overstated capital ratios and hiding of regulatory Large Exposure limits. Group will be unable to publish and file its annual report and accounts by the due dates. Remains suspended. [SP=23.8 Cap=60m]
Quadrise Fuels (QFI) seeing increasing interest in bioMSAR from all segments of the energy market that are targeted. [SP=3.82 Cap=54m]
Nanoco (NANO) has petitioned the judge to delay the Samsung patent trial until after the patent review decision is announced. Expects trial late 2022. [SP=24.62 Cap=75m]
Cambridge Cognition (COG) wins 3 year £2.2m contract for at-home cognitive testing. [SP=137.5 Cap=43m]
Lookers (LOOK) another car dealer guiding FY significantly ahead of current expectations (which are U/L pretax £40m). [SP=69.8 Cap=273m]
Bion (BION) Malaysian biogas plant: co unable to secure and deliver 'engineering, procurement, construction and commissioning' contracts. Accounts delayed due to Malaysia lockdown. [SP=3.2 Cap=13m]
City Pub Group (CPC) AGM stmt: Group is trading profitably at today's volumes but trade hit because many customers didn't want to watch live sport at pubs because of the social distancing restrictions. [SP=127.5 Cap=132m]
Croma Security Solution (CSSG) guides FY(June) EBITDA of at least £1.85m , above mgmt exp. [SP=67.75 Cap=10m]
Escape Hunt (ESC) recent 5 week rev up 47% on 2019, EBITDA 'at site level' up 210%, LFL up 89%. [SP=39.8 Cap=35m]
With the GM cog.L posts that 2.2m contract looks like a bit of a game changing win to me if the stockopedia forecasts are anything to go by.
A couple of announcements from auto retailer/services provider Lookers (LON:LOOK) this morning. Very positive “ahead of market expectations” trading update but also a(nother) reported delay in delivery of audited accounts.
https://www.investegate.co.uk/...
https://www.investegate.co.uk/....
Accounts are required by June 30th deadline so squeaky bum time for the finance department although the tone of the RNS seems quite relaxed. Interested to see share price reaction to push/pull effects of the two releases.
Gus.