Small Cap Value Report (Mon 6 June 2022) - GUS, CDGP, IGR, EVE

6th Jun '22 by Paul Scott

56 comments 8171 reads

Good morning! Paul here (not sure yet who's joining me today, am about to find out!). It's Jack, who I'm pleased to say has now partially recovered from a dose of illness last week. Today's report is now finished.

Agenda -

Paul's Section:

Since we've just had the jubilee, today's SCVR will be focused on wine! - results from:

Gusbourne (LON:GUS) - which I think has a poor business model, so not of interest to me as an investment.

I've also glanced at larger competitor Chapel Down (OFEX:CDGP) ) - which turns out to be a lot better than I was expecting. Could be worth a dabble at 30p. Note that the incoming CFO recently spent £212k buying shares at 42.5p - a big vote of confidence there.

And sleeping off the wine! - eve Sleep (LON:EVE) - strategic review & formal sale process is launched. I'm not sure why anyone would want to buy it though.

IG Design (LON:IGR) (I hold) - bank facilities are agreed, with reduced limits, and revised terms. Certainly a step in the right direction, but I think this share remains high risk: potentially high reward.

Jack's section:

Hi everyone, it’s Jack here. I’d just like to announce that I’m moving on from Stockopedia this month. It’s been an absolute blast covering companies with Paul and chatting with the community. I’ll really miss it. In fact, I plan on keeping my subscription, so you’ll probably see me around in the comments.

We’re sorting out a replacement now - I’m sure you’ll like who we’ve got lined up.

As always, best of luck in the markets,

Jack.

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. We are analysing the company fundamentals, not trying to predict market sentiment.

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…

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55555

6th Jun '22

Many thanks Paul.

snavir2022

Hi Paul, regarding Chapel Down (OFEX:CDGP) if you haven't done so I would recommend you try their wine, it is excellent, and if you hold the shares directly you also get a good discount

TamzinPiworld

Jack, you will be missed enormously. Good luck with your new position, they are lucky to have you.

Here is the Ra International (LON:RAI) FY21 results presentation from last week. The results are in line with the guidance provided in the pre-closing statement. The year-end order book was $100m. Here, after their presentation, they answer many questions investors have on Mozambique, government v commercial contracts, margins, etc video & podcast.

Nanotrader09

Where's the thumbs down button for Jack leaving?? Thanks for all the analysis Jack, all the best for the future.

Terry Dickens

Do we know where he is going?

Bluesky Ventura

Sorry to see you go, Jack.

Wish all the best for the future.

BSV

Paul Scott

Hi snavir2022,

Yes I've tried Chapel Down white wines, and sparkling, and thought they were OK (sparkling especially stood out as good), but about double the price of similar wines from abroad. So what's the point? Other than to be patriotic.

It's a nice day out at their vineyard actually, and I enjoyed the restaurant, matching their wines to good food, etc.

Regards, Paul.

andrewdb

I am a long term holder of Chapel Down (OFEX:CDGP)

And a long term drinker of both Chapel Down (CD) and Gusbourne (LON:GUS)

Gusborne positions itself in the premium end - 35 per bottle from memory. Except that as others note, the french equivalents at the same price are definitely better (imo).

CD is more mid - market and supplies Waitrose and probably others at around 12.99. At that price point (again imo) they are competitive with the better proseccos, cremants, cheaper champagnes.

This is pretty impressive as EU produced wine is effectively subsidised by the CAP by 1-4 eur a bottle (from memory), and UK producers get 0 from the govt.

I got my holding from Seedrs when CD did an EIS raise in ~2014, if you buy over 2000 you get a discount card and if you like the wine this is a big saving.

They do wine that is not bacchus / fizz. The climate is changing and the british are learning to make good (white) wine. If you have the money, try some of CD's Kits Coty line. Very good, Very expensive - but if you buy burgundy, it is on a par in terms of quality, just that Kent does not have the same ring as Burgundy (which is out of my price range nowadays).

I see CD as a very long term hold as
Commercial wine production is only just starting in the UK and can improve a lot whereas Europe has been working on the same for hundreds of years and has quite a lot of regulations that prevent innovation.
The 'good' climate is moving north, and quite rapidly (but maybe not in human terms)

The issue is whether CD can establish itself as something other than a 'commodity' producer. It is not there yet.

GMT64

Ken, I agree wholeheartedly.

Moreover, French champagne houses have recently been buying considerable tracts of land in Kent and Sussex with a view to producing in the UK. Taittinger (https://www.domaineevremond.co...) and Pommery (https://www.winealchemy.co.uk/...) have already planted vines, whilst Roederer (Cristal) is currently looking for openings (https://www.decanter.com/wine-...).

I presume these producers know what they are doing and consider the weather to be suitable.

I think UK sparkling wines could represent an excellent investment opportunity in the coming years and whilst I do not yet hold shares in any of them, I am watching carefully for opportunities.

Nyetimber, Gusborne and Chapeldown all produce good sparkling wines and if anyone wants to try an excellent newcomer to the English sparkling wine scene, buy a bottle of Busi-Jacobsohn (https://www.busijacobsohn.com/) !

I have no interests in any of these other than in drinking them.

dcon85

Farewell Jack, Wishing you all the best!

TC99

Thanks Jack for your excellent coverage especially of resource stocks. Best wishes in your new endeavour

TStubbs

The chalk seam that Champagne is produced on in Epernay runs across the channel (White Cliffs of Dover) through Kent , Sussex ... and climate change is eventually going to favour England for producing wine.

Boon

And just saw... at the market close... someone fat-fingered sold 100k shares at 20p instead of 30p! :p

Quilleron

I hold Manolete Partners (LON:MANO) and it's one of my larger stakes with the view that it's an uncorrelated or countercyclical position. They appear very well placed to deal with the impending surge of insolvencies where they do a great job of seeking reparations, often and significantly to HMRC (to the greater good) from Directors who'd sought to take the cash and run.

I commented on them here and became interested when I saw Steven Cooklin present what was a very formulaic approach to running their business. Money for old rope if they get it right but the leniency of Government measures have significantly delayed the day of reckoning for many companies and consequently the cash flow that'll be coming their way.

Tombholliday

The logic for Gusbourne is climate change and the soil similarity with its French equivalent. I am not sure what Salmon Billecart, Krug or whoever would sell you 362 acres of vineyard located in the best Champagne location but a lot more than the current market cap so I do not buy the bad business model argument especially as it conflicts with Ashcroft’s long term shrewd reputation in business and indeed the commentators assessment of him.

Perhaps a review to review

Westway001

Apart from replying to yourself, which company are you referring to? Please try to include the ticker in your comments…

Tombholliday -

You could be right. Taking a long-term view, maybe these England wine growers could turn out to be decent investments. All I'm saying is that for most investors timescales, there could be better options elsewhere?

I've ordered some various English wines, and will mystery shop them, and report back once I've sobered up :-D

Samsgrandad

7th Jun '22

Argos was the new name for the Green Sheild trading stamp company. Remember them? The shops where you had redeemed your books of stamps were rebranded as Argos.

GavSmith01

A very distant memory from my childhood!

Fair enough ! I know the Gusbourne angle is top end champagne and the location was very specific and bought for champagne with a direct look across to the French equivalent

Small Cap Value Report (Mon 6 June 2022) - GUS, CDGP, IGR, EVE

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Paul Scott

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