Small Cap Value Report (Mon 4 April 2022) - BLV, MGP, FUL, TED, THRU

4th Apr '22 by Paul Scott

56 comments 9105 reads

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

Agenda -

Paul's Section:

Ted Baker (LON:TED) - takeover approaches. Sycamore has raised its cash offer (was previously 137.5p) but we're not told how much. Other third parties have expressed interest too. So a formal sales process has been launched. I'm sceptical whether any bids are likely to be high enough to persuade the big 4 shareholders (including the founder Ray Kelvin) to sell up, but everything has a price, so who knows?!

Thruvision (LON:THRU) - a serial disappointer in the past, with never-ending losses each year. However, today's trading update shows signs of decent growth, and a positive outlook. Breakeven beckons possibly for 2023? Might be worth doing some digging on this one, the products look interesting, and have attracted big name clients. Valuation looks warm though.

Jack's section:

Belvoir (LON:BLV) - a 25th year of profit growth, stretching back through cycles. Belvoir has organic growth opportunities and smaller acquisition candidates. Meanwhile, the shares trade on 13.6x forecast rolling earnings with an FY21 yield of 3.24%, which hardly seems demanding given the track record and prospects.

Medica (LON:MGP) - elective scanning is now back to pre-pandemic levels, while Nighthawk continues to trade strongly. Recent acquisitions see it enter Ireland and the US. I’m curious to see how the group fares in these markets, which are quite different to UK Healthcare. There is some potential here and the current year will benefit from softer comps, but more research is needed.

Fulham Shore (LON:FUL) - EBITDA to be well ahead of last year and ahead of market expectations. There are cost pressures, but the group’s businesses are relatively low cost and it has a greater ability to increase its own prices compared to competitors. Meanwhile, cheaper new sites fundamentally improve the economics and I think management has a good chance to continue successfully growing the company.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review 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.…

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The Phoenix

4th Apr '22

Interesting I live near Norwich also still love living in Norfolk but Norwich is looking tired compared to what it was ten plus years ago with a lot of empty shops it does seem busy when I go into the city but a lot of the people mulling around seem to be youngsters/students.

Any thoughts on bonds Tim most commentators are saying avoid but although the yields at the short end are rising they dropped at the long end last week. Anything other than bonds you would view as defensive for part of the portfolio obviously cash is an option but with inflation rpi at near 10% you don't want to much in cash either.

Thanks Andy

Rusty2

£1,000 per household looks a bit light, energy bills have doubled, so £1,000 maybe just for energy before you add on petrol, food prices and everything else. Some of its hit already as many bills went up in October 21 and petrol has already gone up. Food prices are definitely going up.

Average gas/electric bill, September 2021 was £1,138.

It does really matter about the few people on here, many people are going be affected by these rises, especially those on low or fixed incomes.

Some food producers have already decided not to plant crops such as tomatoes and cucumbers because of gas prices, so we will have be importing even more food.

Shortages of fertiliser has pushed up prices by x3, so will also add to the costs or lead to a reduced yield.

Helvellyn

Although higher income families are more conscious and cautious of the financial impact of inflation and i wonder if the old saying ' council house tenants spend £101 of every £100 they earn' is still relevant for lower income households ?

Richard

gmtrader

Saietta (LON:SED)

https://www.voxmarkets.co.uk/a...

Worth a watch from last September '21. I do not hold as I spent funds else where but would of been happy buying when they were 150p. If I remember correctly, broker has a target of 275p.

Re Saietta (LON:SED) why are there no rankings on the Stockreport and no prints available at all?

Sorry Rustbucket, I have no idea. I'm just a regular punter!

TheFloatingInvestor

Sorry meant for below

JimMcLad

It joined AIM on 7 July 2021 so presumably there's not enough data available for Stocko to work on.

tindrum

I've avoided Belvoir (LON:BLV) as I don't feel comfortable with the level of options the board have awarded themselves. This might be entirely within the "normal" range of award for this type of company and accumulated over many years, but it's over 5% of the shares in issue if the Stockopedia numbers are correct. To be fair, they don't sell every share bought in most cases (over the last two years). This for a share price that hasn't really gone anywhere for ten years and then shot up about a year ago? I'd welcome any comment from someone more knowledgable than I.

Zipmanpeter

Re hit to discretionary incomes at +/- 10% "It's significant, but it hasn't hit yet and it won't impact higher income families as much"

I agree especially as the backdrop over the P2Yr is (choose you preferred demographic descriptors) higher income/white collar families/rich pensioners, have saved and built cash from forced reductions in consumption (holidays, eating out etc) plus seeing their property prices surge whilst the bottom half of society, the poor, the young and renters, have struggled. NI increases, fuel charges, etc will only exacerbate this 2 speed Britain.

Politically and socially, it's a disgrace but stickling to investing, I think in the consumer space that means companies like Saga l (the old are cash rich and desperate to travel) and Hostmore (premium priced bars) will do well, more mainstream offers will struggle unless geared for it ( Fulham Shore (LON:FUL) ). I hold these 3 but have got out of others even at a loss eg Revolution Bars (LON:RBG) where even though they recovered well to date and are a kind of 'last man standing', in some places, I think there core target market will be forced to draw their horns in.

Maybe OTB be a good holiday investment. Very cheap and on a dip ATM.

timarr

Any thoughts on bonds Tim most commentators are saying avoid but although the yields at the short end are rising they dropped at the long end last week

Hi Andy

I don't really know. If interest rates are rising then bond prices will fall. There's a theory that if recession strikes Central Banks will have to reverse interest rate increases - but with inflatiion running hot that seems an unlikely course of action to me, barring some other crisis.

I have some cash and some gold, a bunch of commodity and oil producing stocks and a selection of shares with little debt (including Belvoir (LON:BLV) and Medica (LON:MGP) who both updated positively today) which I hope can continue to grow through any downturn. If we get a crash that won't make any difference - everything will be crushed in the rush for the exit, so I want to make sure I'm invested in companies that can live to fight another day.

Cash does give optionality in the event of a downturn but, as you point out, it's also a guaranteed 10% fall in real terms at the moment.

£SED I don’t think that is the case, I’ve seen stocks that are only a few months old that have the information and July is now 9 months ago but maybe some information is missing. But prints should be available every few weeks. I will report it to the support team.

JohnEustace

I do chuckle at the idea of the comfortably off old people congregating at TGIF! We had enough of that place 25 years ago for children’s birthday parties.

The ladies I know who lunch during the week go for the cafes at the garden centres or farm shops - somewhere to park easily and do a bit of shopping before or after lunch. At the weekend it’s more likely to be a country gastro pub than the smell of TGIF food.

abtan

5th Apr '22

Thanks for your insight on £MGP maillotàpoisrouges

I've just gone through the results and as a holder I remain quite impressed.
Some plus points:

Cash generation looks excellent, giving scope for more M&A;
Expansion into the lucrative CRO space in the US via RadMD (as highlighted by davidjhill)
Tailwinds going into 2022 (as highlighted by Jack);
Investment in AI-assisted tech, even if this won't replace us error-prone humans;
High Gross margins;
Radiologist costs now making up 41% of revenues, down from 51% in 2020.
It's a shame that these figures have only just been published, so cannot be compared pre-2020, but at the very least, 41% does not seem too bad.

There's lots to like here for a lay person such as myself, so I'm surprised by the apparent caution in your comment.

If you have time to respond it would certainly be interesting to hear your take on the future of such companies. Is it simply the current valuation that would put you off investing here? Or is there something fundamentally wrong with the business model?

Thanks in advance

Saietta (LON:SED) update, the interim data which was back in December is missing, support will get this info. and update the Stockreport. I think Stocko should be checking when there are rankings on a stock, it would fairly easy to do.

BnB

If you have time to respond it would certainly be interesting to hear your take on the future of such companies.

I second that thought. Valuation looks quite reasonable for the growth envisaged if one compares Medica (LON:MGP) to a skilled IT outsourcing enterprise or indeed to pure play CROs. Is the recent diversification a sign that the core tele-radiology product is fading? Or does the original application form a solid cash-generating hub to support multiple related spokes?

tiswas

Hi Norfolk. Yes, I would be interested. How do we take the discussion off board so as not to clutter things up? No private messaging facility as I understand it?

16th Apr '22

Saietta (LON:SED) Stockopedia have now update the data and the rankings are all there now.

Small Cap Value Report (Mon 4 April 2022) - BLV, MGP, FUL, TED, THRU

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Paul Scott

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