Small Cap Value Report (Monday 26th April 2021) - TSTL, LOK, MIND, STAF | Jack Brumby

26th Apr '21 by Jack Brumby

47 comments 10681 reads

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

First item on the agenda is Mello - David Stredder and co. continue to offer an invaluable service to private investors with these events and you can catch Ed speaking tonight about the first quarter performance Stockopedia's Stock Picking Challenge 2021. Here's a link to the event so do check it out.

I've just had a quick look and my performance year-to-date is +15.9% - not bad, but the market has had a strong start. We have a mini competition in the office and the current leader is way out in front with 76.7% so plenty of work to do! There are some pretty chunky Q1 gains on the leaderboard.

Edit: Paul has just posted a fantastic progress update on his ZANE fundraising initiative in the comments below (see here). If this was a company I'm pretty sure it would be trading ahead of expectations so thank you to everybody that donated!

Paul:

Tristel (LON:TSTL) - 30% profit miss from this highly rated disinfectant products provider

Staffline (LON:STAF) - shares have nearly trebled over the past six months and trading momentum is encouraging, but significant balance sheet risks remain

Jack:

Lokn Store (LON:LOK) - good trading momentum and store pipeline from growing self-storage business in a resilient part of the market

Mind Gym (LON:MIND) - recovering trading momentum and revenue ahead of revised expectations (but still down year-on-year) at behavioural science specialist

Paul's section

Tristel (LON:TSTL)

670p (pre market open) - mkt cap £315m

I last reported on Tristel here in Feb 2021, on publication of its interim results. It’s a nice little company, but the valuation was looking very stretched then, yet it’s gone up by another 10% since (like most other shares in this bull market). That was despite a wobbly outlook statement with the interim results.

Tristel has a 30 June 2021 year end, so today we’re getting a Q3 update.

Tristel plc (AIM: TSTL), the manufacturer of infection prevention and contamination control products utilising proprietary chlorine dioxide chemistry, provides the following trading update.

Profit warning - today we are given reduced guidance for FY 06/2021, of revenues c.£31m, and profit before tax of c.£5m.

Reason for profit warning…

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Paul Scott

26th Apr '21

ZANE fundraising update

These SCVRs are about shares, and trying to make money, but every now and then, it’s great to do something collectively for charity too, on top of what I know many of you already do individually for causes that are close to your hearts.

My initial £4k fundraising target for ZANE has been absolutely smashed to smithereens! We’re currently at £14,401 on the UK investors ZANE Justgiving page. Astonishing!

So far, 91 people have donated, and I want to thank every single donor from the bottom of my heart - this really does mean so much, as I conducted personal “due diligence” on ZANE, in Zimbabwe in 2019, and met the forgotten people whose lives are being extended, and made more tolerable, thanks to your donations - which typically buy essentials such as basic food & medicines. ZANE makes a little money go a long way, as I personally witnessed at the sharp end.

Additional donations - we should get to >£20k, because we still have some “matching” donations to come in. I’ve got to personally cough up £1,000, as promised, which I’ll do when I get paid, which is today I hope (I run my personal finances on a “just in time” basis!). Also, our biggest pledge to date of £5k is in the pipeline, so watch this space.

Doubling up again! - I really like the “matching” principle, where larger donors match smaller donations, to motivate everyone to double the bang for the buck. There’s great news on this, as I’ve spoken to ZANE, who have confirmed the charity will itself double our entire fundraising, with an unplanned release from its own cash reserves, to match what we’ve raised. Thereby, our £20k total becomes £40k in new money, sent to the front line in Zimbabwe, to help the poorest of the poor. Isn’t that wonderful! My grateful thanks to the ZANE Trustees for confirming this late last week.

What will our money be spent on?

Several of our larger donors were particularly inspired by the work ZANE does in the “high density zones” (i.e. over-crowded townships), such as pop-up schools, club foot remediation, and a womens refuge for victims of violence.

Accordingly, I’ve asked ZANE to allocate £6k of our £20k to the township projects, in accordance with our donors' wishes. The lovely thing about ZANE is that donors can choose which projects the money is spent on, if they specifically want to.

The balance of the funds raised will go to the core activity of supporting destitute pensioners in Zimbabwe, some of whom are the “forgotten legion” of Commonwealth soldiers who fought for Britain, even a few WWII widows remaining, etc, who had been abandoned in their hour of need, as frail old people in desperate need, often facing starvation and painful deaths from conditions that could be managed, if they had access to basic medicine - ZANE provides that. Remember, I met the people in 2019 & talked to them, so this is all verified. It’s not possible to publish my photos, as meetings of more than 10 people are not allowed by the police.

Message from ZANE - let me round off by publishing a thank you note from ZANE.

I think all our donors will appreciate this, so here it is. I’ve deleted a name mentioned, for security reasons -

Hi Paul. Congratulations on raising such a fantastic amount for ZANE. The funds will make such a difference.

No problem to allocate £6,000 to our high-density work. We would like to use it to cover the set-up cost of a new pop-up classroom, taking us to eight in total and towards the ongoing running costs of this classroom. The set up cost is around £2,500 and the annual running cost just over £2,000 per annum. This means a further twelve children from impoverished families living in DZ will be able to join the programme and begin to receive an education for the first time. This project also supports the teaching mentors who have progressed from our creative therapy programme; women who as you know have very traumatic backgrounds.

I know ######## and her team will be hugely grateful as setting up an eighth class has been a goal for some time. We can provide updates including photos and case studies for your supporters.

As requested, the rest of the funds will be used towards ZANE's core work of providing aid to destitute pensioners - in the form of food, medicine and shelter. Again, we can provide case studies and updates. A full funding report will follow approx 6 months after receipt of funds.

Thanks again for initiating this and for all your support of ZANE's work. I know your visit to Zimbabwe had a big impact on you and this comes across in your writing and it's clearly inspired lots of people to donate.

Do keep in touch and let us know if you need any further information over the coming weeks.

Yellowstone Advisory

Well done Paul this is a fantastic achievement and no doubt the fund raising will continue to grow and help even more people.

MrContrarian

My morning smallcap tweet:

Yourgene Health (LON:YGEN) React (LON:REAT) Blackbird (LON:BIRD) Tristel (LON:TSTL) Staffline (LON:STAF) Panoply Holdings (LON:TPX) IXICO (LON:IXI) Orchard Funding (LON:ORCH) Seeing Machines (LON:SEE) Induction Healthcare (LON:INHC) Mind Gym (LON:MIND) GYG (LON:GYG)

Yourgene Health (YGEN) gets in to UK Framework for covid lab tests. [SP=14.09 Cap=100m]
React (REAT) wins 'material' 3 year contract to supply a full range of reactive cleaning and decontamination services to one of the world's leading facility management companies. Guides rev c. £2m+. [SP=2.52 Cap=3m]
Blackbird (BIRD) Blackbird video editing is being used by 18 more US TV stations for digital news production following TownNews' latest deployment [SP=24.25 Cap=82m]
Tristel (TSTL) guides FY(June) rev over £31m, comparable with last year. Guides pretax at least £5m. Medical device disinfectant sales in the UK still poor but surface disinfectant product sales have continued to gain market share. [SP=675 Cap=318m]
Staffline (STAF) guides FY(Dec) rev down 13% and U/L op profit c. £4.8m, ahead of expectations (whose?). Q1 trading ahead of management expectations. Board continues to evaluate its financing options. [SP=68.4 Cap=47m]
The Panoply (TPX) guides FY(Mar) rev up 62% and adj EBITDA at least 79% up, ahead of recently upgraded expectations. [SP=250 Cap=202m]
IXICO (IXI) guides H1(Mar) rev up 8% and adj order book £19m (£15.3m). [SP=82.5 Cap=40m]
Orchard Funding (ORCH) new bank facility from NatWest making total £22m. [SP=50.3 Cap=10m]
Seeing Machines (SEE) appointed by an additional global automotive Tier 1 supplier to deliver its FOVIO Driver and Occupant Monitoring System tech to an additional OEM. "Mass production is scheduled from late 2022 with an initial lifetime award value of A$7m." [SP=10.4 Cap=396m]
Induction Healthcare (INHC) wins contracts worth £440k total from 3 hospitals for Induction Zesty, "a digital front door for hospitals". [SP=103.95 Cap=44m]
Mind Gym (MIND) guides FY(Mar) rev down 18% cf previous guadance 20-30%. Adj pretax 0-£0.5m. CEO, Octavius Black, sounds like a Bond villain. [SP=135 Cap=130m]
Gyg (GYG) FY(Dec) results. Q1 2021 rev up 22% with some rev moved from Q4 into Q1 as previously reported. [SP=87.5 Cap=41m]

grout123

go go go (REAT)

Ternheim

seen the new name for Standard Life ? Looks like a typo!

Michael Tee

Well done Paul!

carmensfella

Belvoir, React, Wentworth and Trident Royalties are all presenting tonight at Mello.....see the posting here for half price tickets
https://www.stockopedia.com/content/mello-monday-with-a-review-of-q1-in-the-stockopedia-2021-stockpicking-competition-801289/

Small Cap Value Report (Monday 26th April 2021) - TSTL, LOK, MIND, STAF

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Jack Brumby

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