Small Cap Value Report (Thu 1 Dec 2022) - HOTC, CRL, PEEL, TRB, MAB1

1st Dec '22 by Paul Scott

60 comments 6831 reads

Good morning from Paul & Graham!

Agenda

Paul's Section:

Hotel Chocolat (LON:HOTC) - preliminary results for FY 6/2022, suggest the accounts department operates at a leisurely pace, but the figures are in line. Outlook comments are vague, but seem to be a mild profit warning. Balance sheet seems OK, although inventories running high does introduce some risk of future write-downs. Overall, I'm struggling to see value here. Aggressive forecasts for next year & beyond mean more profit warnings could be a risk. The story seems a little stale.

Creightons (LON:CRL) - I have a quick skim through the H1 results. Profit has almost evaporated, due to high cost inflation, and difficulties passing that on to customers, as with so many manufacturers right now. Outlook comments suggest it's making some progress though, with a better H2 expected. Balance sheet seems just about OK. Over time I think CRL should probably at least partially recover, so maybe one to just tuck away & forget about?

Tribal (LON:TRB) - noteworthy as shares have dropped 30% today, on news of a problem contract getting a lot worse. This means most of this year's profits are wiped out. Tribal has a history of erratic performance. It's difficult to see how a large contract could go so badly wrong. Shares might be attractive to a bidder, perhaps?

Graham's Section:

Peel Hunt (LON:PEEL) (£96m) - these H1 results are poor, as expected, but the company does succeed in achieving a breakeven result despite “multi-decade lows” in equity capital markets activity. The investment banking division saw a collapse in activity with only a handful of IPOs taking place in the UK market and with other fundraising deals only a fraction of what they were last year. The other revenue streams at Peel Hunt were more stable and thanks to a chunky reduction in pay/bonuses, this H1 result looks ok to me. I now think this share could be approaching value territory thanks to the strong balance sheet which includes £41m of cash and a very strong net current assets position.

Mortgage Advice Bureau (Holdings) (LON:MAB1) (£255m) - a profit warning is seen from this mortgage advice business. With the help of a franchise business model, it has earned excellent profits and returns in recent years. However, it is going to “slightly” miss its 2022 forecasts, and we…

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Michael C

1st Dec '22

Planetx - Following on from your comment about combining energy storage + wind + forestry, and looking at Gresham, would you suggest Gresham House (LON:GHE) or Gresham House Energy Storage Fund (LON:GRID) as the most levered play on this combination? Perhaps with some Crestchic (LON:LOAD) as a pair?

jashunter

CER I am registered for Cerillion webinar at 12.00 . Is 1pm a time change?

TheFloatingInvestor

There is something about physically writing down, modifying (I write in pencil) and updating a written Journal. Since moving to this method along side a small memo on ADVFN I have seen a marked improvement in my thought processes and decision making.

There is something about writing it down, it seems to imbed and rationalise.

eParo

Personal Pension - Are there any stats on how many people have SIPP pots approaching the £1.073m lifetime limit and those who have exceeded it?

Smudge

Just seen that Joules (LON:JOUL) has been taken over by NEXT

https://www.bbc.co.uk/news/bus...

Helvellyn

TFI

Agree, I use a very similar process.

MichaelFBS

Hi Simoan

This was Roberts reply:

regards

sharw

More on Venture Life (LON:VLG) - here is Paul Hill: https://www.linkedin.com/posts...

Mark L.

Re capex, Strix's 2020 and 2021 annual reports mention completion of construction of a new, more efficient factory in China, I think £20m. This explains the capex spike in recent years.

I agree, yesterday's trading update leaves an uneasy feeling about what is really going on with their core kettle controls business. In the reports I noticed they refered to distributing parts (stock?) in different areas in China to mitigate effects of their lockdowns. I also noticed they refered to getting up-front payments for kettle controls. (The later point at least suggests they have good negotiating power with customers.)

Although uneasy about the core kettle controls business, I think the main uncertainty is how the spate of acquisitions work out. £ketl has a stated aim of doubling turnover. Great if it all comes good, destructive of shareholder value if its a mad dash-for-growth. I don't get a real feel from the company's recent statements as to how this is going.

Lennart

A very good comment and I totally agree. I want to hear about good companies with a bright future. Rubbish companies is of interest only to the current shareholders who should sell out and move on.

epo001

Confirmed, I also get 280 shares returned for the FTSE 350.

Edit: I am going to raise this as a separate thread to make it more widely known.

mojomogoz

Thanks. I have Qs not views on Strix (LON:KETL) really...I can see something durable and valuable potentially...but I can also see a potential mess and even hints of structural problems visible to mgt that they have not relayed publicly (and why the super aggressive acquisition). Of course compensation can be a big part of this and haven't looked into that as its secondary to having a view on the biz...but mgt can gain from overextending and volatility in sp if they get easy resets...

...a superb example of this is Venture Life (LON:VLG) and imo its a disgrace that tipsters are promoting this cluster-f stock after the way they rode over shareholders -> mgt getting themselves a really lovely profitable exit and now the same team buy a bunch of new 'better' cos (seemingly as the core biz was crap) and reset their remuneration for another run at a profitable exit hoping that PIs helped along by likes of Paul Hill are on for the game again. He and mgt just abusing the gullibility of PIs. You might win by being early and playing a bit of greater fool...but there's always a risk that mgt have shown operational incompetence once and will do that again BEFORE you get the chance to exit.

I'm not saying that Strix is the same...just pointing out a little echo

simoan

Hi Michael,

Well done on getting a reply so quickly. I raised this issue on 22nd November and have heard nothing since. Tbh I don’t agree with the response - you should be able to generate a list of index members as you can on Sharepad. It should be down to the user to choose to disregard any Trusts or other Collective Investments.

My subscription is renewing in two weeks and I should maybe consider cancelling and switching to Sharepad. I am finding just too many screen restrictions and data inaccuracies for my liking.

All the best, Si

Monty Carlo

Not that I am aware of (or at least not accurately)....
1. The number varies for DC (Defined Contribution) schemes as markets fluctate, and for DB (Defined Benefit, a.k.a. Final Salary) schemes as inflation and wage inflation vary.
2. Individuals have different lifetime allowances as you could apply to "freeze" your allowance each time they changed the rules - provided you stopped contributing or didn't chnage pre-existing contributions (so-called fixed protection or individual protection, 2016 being the latest batch at £1.25m, in 2014 it was £1.5m. Some older folk have bespoke lifetime allowances from back when there was no LTA).
3. People have multiple pension pots - be that SIPPs or employment related DC/DB schemes. Your SIPP provider will not automatically be aware of your other pensions.
4. The rule for DB schemes is different - you multiply your expected pension at retirement age by 20x and subtract that from your LTA. That involves forecasting your final salary (or inflation if you are a deferred member)
5. The pensions dashboard where pension stats could be aggregated at the individual level isn't up & running yet

The Treasury probably has a guesstimate somewhere, but it will be more guess than estimate I suspect.

BnB

Sharepad is night and day better for data crunching, not to mention far wider-ranging in its detailed coverage of quality names in the US and Europe under the basic fee. But I guess you’ll miss out on daily extensive analysis of collapsing internet retailing microcaps.

Yes. I'm not sure my life would feel complete without the latter :-) I think in the end, I will probably stay because Sharepad is a desktop only tool and does not have a mobile app which I use far more than I thought I would. And now I'm retired I just don't have the time to make good use of both sites. There are so many things that niggle me though such as the dreadful formatting of the news items etc. I guess it's better than nothing, but not a lot!

2nd Dec '22

Sharepad is a desktop only tool and does not have a mobile app

You’re thinking of Sharescope. Sharepad is entirely mobile and tablet-friendly. I use it almost exclusively on my iPhone and two iPads, only rarely turning to the laptop. And it’s so configurable in terms of portfolios, filters and charts. What it lacks is Stocko’s algorithms but those show no interest in my defensive growth investing style, where stocks are always relatively highly valued. I’m only here for the thoughts and experience of Paul, Graham and other investors.

KevinS1

According to a report from Royal London in 2019, there were 290,000 above the limit at that point, with another 1.25m at risk of breaching it by the time they retire.

I suspect it is well above 290k now.

You’re thinking of Sharescope. Sharepad is entirely mobile and tablet-friendly. I use it almost exclusively on my iPhone and two iPads, only rarely turning to the laptop. And it’s so configurable in terms of portfolios, filters and charts. What it lacks is Stocko’s algorithms but those show no interest in my defensive growth investing style, where stocks are always relatively highly valued. I’m only here for the thoughts and experience of Paul, Graham and other investors.

Thanks for this. I didn’t realise it was mobile compatible. I will try it for a month and see how it goes.

Rusty2

Some retail shares have done quite well in November, quite a few up over 30%,:so I would not dismiss that sector completely.

Paul and Graham cover many different stocks, which ones do you want them to cover?

Small Cap Value Report (Thu 1 Dec 2022) - HOTC, CRL, PEEL, TRB, MAB1

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Paul Scott

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