Small Cap Value Report (Part 2 - 25 Jan 2017) - LOOP, TAP, KOOV

Wednesday, Jan 25 2017 by

Good afternoon!

We have 2 reports for you today. Graham's is taking shape here, plus this one of course by me (Paul).

In case you haven't seen it, I did a Part 2 report last night, covering 5 more companies: XL Media, Lakehouse, Murgitroyd, Kalibrate Technologies, Advanced Oncotherapy, Blue Prism. That report is here.

We understand that readers prefer to have 1 report, with our work combined, but it causes all sorts of technical issues. I managed to destroy Graham's report last night, when editing it, but thankfully then managed to retrieve it. Therefore I decided it was safest to write my own, separate report.


(At the time of writing, I hold a long position in this share)

Capital markets day - I'm going along to this event at 2:30 pm today. The other weekend I did a trawl through the list of recent floats, and this company struck me as looking potentially interesting, hence why I picked up a bit of stock.

The product is innovative conference call software, based in the cloud. The company has moved into profit, although care is needed with the numbers, because it capitalises a fair bit of development spend. By my calculations it's really around breakeven right now.

What's interesting though is that organic growth has been consistently around 35% p.a., and gross margin is high at c.75%. So running a few numbers, you can easily arrive at rather exciting profits & cashflow a few years forwards. That's got to happen, because the current market cap of c.62m (At 152p per share) looks very expensive based on the historic numbers.

As with FreeAgent Holdings (LON:FREE) (another recent float that I bought at the same time, and for the same reasons), I've trialled the software myself. In both cases, the product is terrific, and very easy to use.

With LOOP, customer churn is actually negative - i.e. existing customers use the product more, and thereby generate enough revenue growth to more than offset customers who stop using the product.

Anyway, I'll report back tomorrow on how the capital markets day goes. I think it's important that newly floated companies get out there and talk to investors. This is necessary because liquidity in the shares has to be built from scratch. The way listings are done in the UK usually means…

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LoopUp Group plc, formerly LoopUp Group Limited, is a software-as-a-service provider of remote meetings. The Company's product, LoopUp, is designed to eliminate frustrations associated with conference calls and deliver a remote meeting experience for mainstream business users. For hosts, the LoopUp meeting includes ability to create a meeting invite directly from Microsoft Outlook in over two clicks; a call start alert to their desktop and mobile/tablet devices as soon as their first invited guest joins the meeting; ability to identify who has the distracting background noise and mute their line, and ability to allow other guests to share their screen at the host's discretion. For guests, the LoopUp meeting includes clicking-to-join the meeting from a link in the invite, entering their name and phone number and LoopUp calls out to them. LoopUp plans include outlook integration, and one-click screen-sharing. Its data centers are located in London, Chicago, Hong Kong and Sydney. more »

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Taptica International Ltd offers data-focused marketing solutions that drive execution and brand insight in mobile, leveraging video, native, and display to reach the users for every application, service, and brand. The Company’s technology is based on artificial intelligence and machine learning at big data scale. The Company works with more than 450 advertisers, including Amazon, Disney, Facebook, Twitter, OpenTable, Expedia, and Zynga, and more than 50,000 supply and publishing partners worldwide. more »

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Koovs plc is a supplier of branded fashion garments and accessories for sale by a third party through Website principally in Republic of India. The Company offers dresses, tops, jumpsuits and playsuits, skirts, trousers and leggings, cardigans and pullovers, lingerie and sleepwear, and swim and beachwear, among others, for women. It offers shirts, t-shirts and polo shirts, vests, jeans, jog pants, shorts, hoodies and sweatshirts, coats and jackets, and innerwear and socks, among others, for men. In addition, the Company offers bags and wallets, accessories, sunglasses, jewelry and watches. The Company offers its products of various brands, including Knockaround, KOOVS, Kultprit, Pataaka, Pepe Jeans, Shuffle, Sole Threads, Vans, Voi Jeans, Modello Domani and Mr Button, among others. The Company's subsidiary is Koovs Marketing Consulting Private Ltd. more »

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  Is LoopUp fundamentally strong or weak? Find out More »

13 Comments on this Article show/hide all

FoolishBen 25th Jan 1 of 13

Hi Paul. If you have time I'd be really interested to hear your view on Staffline (LON:STAF) full year results. Not sure if you still hold but from what I can see the company is performing well so slightly surprised at the muted response in share price today. Perhaps there is something my novice eyes are missing?

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truegent 25th Jan 2 of 13

Taptica International (LON:TAP) trading update today was a copy and paste job from their previous update in late 2016 ! no new information at all....

still, does look interesting though.

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billytk 25th Jan 3 of 13

In reply to truegent, post #2

Yep I was just looking at the previous RNS's as well. Too cautious to jump in for the hype at the moment on a whim but I'm sure in this market it will continue its upward trajectory

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truegent 25th Jan 4 of 13

In reply to billytk, post #3

agreed ! i had twitchy fingers at 8am this morning but decided not to go with it. therell be other occasions.

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Wimbledonsprinter 25th Jan 5 of 13

In reply to FoolishBen, post #1

I hold Staffline (LON:STAF), because I think it is cheap and the share price allows for quite a bit will go wrong ( Brexit, politics etc). I thought today's results were reassuring but if you are looking for negatives: 1). The PeoplePlus business had a tough H2 2016, as the Work Programme got redrawn, 2). The company seems to be de-emphasising the £50 million adjusted operating profit (stretch) target for 2017 - probably because it will (narrowly) fail to hit it. 3). To me, the cash generation in H2 was a bit light but the company is still saying that net debt should fall to or around zero by end-2017. For this to happen Staffline needs to produce £40 million of free cash flow in 2017. As the company has a market cap of less than £300 million, this is why I think the company is cheap.

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treeshark 25th Jan 6 of 13

Hi Paul,
You mention that Taptica International (LON:TAP) appeared in one of your share screens and also that you researched it and decided to go long. I'm always interested in learning more, would you share your share screener criteria, and perhaps the ways that you approach your research? I understand you have a background in accounting which would help immeasurably, how should a layman approach this, do you have a list of bullet points to check, or can you recommend any books on the subject?
Many thanks for your great articles.

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FoolishBen 26th Jan 7 of 13

In reply to Wimbledonsprinter, post #5

Thanks for taking the time to share your thoughts, you raise some interesting points.

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Glaws2 26th Jan 8 of 13


You note that "I think it's important that newly floated companies get out there and talk to investors", a sentiment that I fully agree with. Why then do many companies give virtually no notice for events - publishing it on the morning event automatically excludes all those you would have to travel.

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jraitt 26th Jan 9 of 13

Where does one look to see list of newly floated Companies?

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Techno Trousers 26th Jan 10 of 13

I totally agree with you Paul with regards to FreeAgent Holdings (LON:FREE) . I too use their software, and had previously considered this company a year or so ago via the crowd funding route. Unfortunately I was not aware of the recent float which your comments have now flagged. As a result I have today taken a small position in FreeAgent, with the expectation that this will simply be pushed to the back of the cupboard and remain in my portfolio for some time, awaiting developments.
Their software seems to be streets ahead of the competition, and TBH, I wonder why independents or small companies do not ALL use it, it truly is that good. Will re-visit in a few years time, and thanks for the nod on this.


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RMundy 26th Jan 11 of 13

In reply to jraitt, post #9

Hi jraitt

You can see all the IPOs on the London Stock Exchange on their website.

This link will download an up to date spreadsheet. Hope that helps



Website: Research Tree
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xcity 27th Jan 12 of 13

I'm surprised that most people prefer one report. I'd prefer them separately, though with Paul or Graham in the brackets rather than Part 1 or 2. Very different viewpoints and methods and, for me, the value of a comment depends on understanding the writer's perspective so I pay a lot of attention to who is doing the commenting.

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herbie47 27th Jan 13 of 13

I would prefer 2 separate reports as well, it is a lot clearer who is writing each article then.

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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