Small Cap Value Report (Thu 10 Aug 2017) - SIV, DFS, TCM

Thursday, Aug 10 2017 by

Good morning!

I had a discussion with our Graham yesterday. We both agreed that readers clearly want more prompt reports from us. So we're going to experiment with the format, and aim to get our reports up much earlier in the day. So it might take the format of an initial quick review, then some more detailed stuff (which takes longer to research) later, each day.

We've got a bit sloppy, so it's time to pull up our socks! Although I don't really like rushing to get things out, as that increases the likelihood of mistakes slipping through.

In case you missed it, yesterday's completed report included sections on - Telit (TCM), Tasty (TAST), SCS, and Water Intelligence (WATR) - here's the link for that.

So here are today's quick fire comments from me;


Probably the most interesting update that I've read so far today. This marketing company updates us today on the year ended 28 Jul 2017. The key bit says;

The board reports that the overall results for the year are expected to be at the top end of the range of current market expectations.

Stockopedia shows consensus of 12.9p EPS. At the time of writing, the ungodly hour of 08:20, the share price is currently up 12.6% to 61.4p. That puts SIV on a PER of only 4.8 - strikingly cheap.

However, bear in mind that this company has a lot of debt, and a pension deficit. Its balance sheet is very weak - as I explained here when reviewing its figures after a profit warning in Jan 2017.

Bear in mind also that forecasts for this year were reduced considerably after that profit warning, so hitting the top end of forecasts is actually still a performance well below recent years' previous results.

Note that there have been some property disposals of £9.9m, to improve the net debt position. Also that agreement has been reached on pension contributions - at £3.8m in the new financial year, and £3.0m p.a. thereafter. That is an increase from £2.4m p.a. previously. So a fairly hefty drain on cashflow, with money that could otherwise have been paid out in divis. This needs to be factored into your valuation of the company, as a negative.

Overall, whilst I don't…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>

Do you like this Post?
70 thumbs up
1 thumb down
Share this post with friends

Kin and Carta plc, formerly St Ives plc, provides digital transformation services internationally across United Kingdom, Europe, the United States of America, South America, and Asia. It helps clients invent, operate, and market digital products and services. Kin and Carta consists of strategic consultancies, such as Pragma, Hive, and Incite; digital innovation firms, such as TAB and Solstice; and communications agencies, such as Edit and AmazeRealise. The company helps organizations capitalize on technologies to develop products and services to market. It serves healthcare, financial services, transportation, industrial and agriculture, retail and distribution, and other sectors. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

DFS Furniture plc is an upholstery retailer in the United Kingdom. The Company is engaged in designing, manufacturing, selling, delivering and installing a range of sofas, and other upholstered and furniture products. The Company's segment is engaged in the retailing of upholstered furniture and related products. Its other segments comprise the manufacture and distribution of upholstered furniture. The Company offers approximately 10 unit types per range, and a range of materials with approximately 50 colors available. Its branded upholstery ranges include Capsule Collection and Grand Tour. The Company operates approximately 100 retail stores in the United Kingdom, the Republic of Ireland and the Netherlands, an online channel, and approximately three upholstery factories in the United Kingdom. The Company's subsidiaries include Diamond Holdco 2 Limited, Diamond Holdco 7 Limited, DFS Furniture Holdings plc, DFS Furniture Company Limited and Coin Retail Limited (Jersey). more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

Telit Communications PLC (Telit) is a United Kingdom-based enabler of machine-to-machine (M2M) communications providing cellular, short range and positioning modules via its brand Telit Wireless Solutions. The Company develops and markets cellular, global navigation satellite system (GNSS), short-to-long range wireless modules plus mobile connectivity services and application enablement platform to onboard edge devices to the Internet of Things (IoT). The Company is organized into three geographical segments: EMEA, APAC and Americas. Through its business unit m2mAIR, Telit provides platform as a service (PaaS), including M2M managed and value added services, application enablement and connectivity, including mobile network side and cloud backend services. Its modules are integrated in a range of applications, including asset tracking, remote industrial monitoring, automated utility meter reading, insurance telematics, consumer electronics and mobile health devices. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

  Is LON:KCT fundamentally strong or weak? Find out More »

71 Comments on this Article show/hide all

matylda 10th Aug '17 52 of 71

Well - It's a fair few months since I've seen a sea of red on my portfolio account !!!!!!

Blog: Briefed Up
| Link | Share
matylda 10th Aug '17 53 of 71

And there's Mr. Scott topping up on IQE :)

Blog: Briefed Up
| Link | Share | 1 reply
doublelutz 10th Aug '17 54 of 71

In reply to post #206939

I too am a subscriber but what I pay for is the statistical information. I wasn't even aware of SCVR when I subscribed. It leads to interesting debate but not, I believe, what Stockopedia is about. It is not a tip sheet and I think it very dangerous to jump in and follow anyone's views including Paul and Graham's without doing much research oneself first.

| Link | Share
vik2001 10th Aug '17 55 of 71

In reply to post #207034

iqe has been one of the few shares that has kept itself pushing up over the last 3 days, and has not been sucked in by the wider news at hand. so far its helped provide some cushioning to my portfolio, although that's not its purpose :)

| Link | Share | 1 reply
matylda 10th Aug '17 56 of 71

In reply to post #207049

Indeed! But sadly not mine :( Well done

Blog: Briefed Up
| Link | Share
gsbmba99 10th Aug '17 57 of 71

In reply to post #207004

Probably the Berenberg note with target price 1300 citing potential for store expansion and returns of capital in addition to current dividend. Not new news as company has been very clear about this for years. They believe they can take store count "well into the 2,000s" and have committed to returning year end cash above £40m if it reaches an increment of £20m (ie £60m year end balance or more).

| Link | Share | 1 reply
Wimbledonsprinter 10th Aug '17 58 of 71

I see no need for an early SCVR, other than I do see the benefit of one being put out as a holding page to allow comments. Earlier this week, I found myself (and others) commenting on a 4 month old SCVR, in order to put comments on a stock which had news that morning (Telit).

Re Telit Communications (LON:TCM), you make the excellent point that a "new" CEO could really kitchen sink the balance. If a new CEO decided to retrospectively write off as expenses all the accumulated intangibles on the balance sheet ( and maybe some of the working capital - assuming the auditors allowed), to build up losses in prior years and then say that the company is only going to report statutory numbers going forward, which might then look respectable. If Mr Cats were forced to resign permanently, would his shares become an overhang on the market?

| Link | Share
InvestedGeordie 10th Aug '17 59 of 71

Hi Paul & Our Graham,

I think an early holding page is a brilliant idea. It will cut down on older reports jumping up as 'new' posts, when people want to comment on results released.

I also really like the idea of sudden impact from results, with the proviso they are returned to to be fleshed out.

I echo some of the other community posters in that we love these reports so dearly because the quality and care is so obvious - not to mention the odd joke! Personally, I wouldn't want to see the style disappear, as actually, the editing is absolutely brilliant.


| Link | Share
Michael Mortphew 10th Aug '17 60 of 71

In reply to post #207074

Ah interesting! Thank you. I saw there was a note from Edison yesterday along the same lines but I had an idea (rightly or wrongly) that they were paid by Greggs - not that that invalidates their judgement.

Thanks for your help

| Link | Share
purpleski 10th Aug '17 61 of 71

In reply to post #206909

I entirely agree. The SCVR should only be available to paying subscribers.

As for timing like most here I don't mind when or how they come out. I just love reading the reports. They are done with such care and give such insight. My personal preference would be for a report that came out after market close around 18:00 GMT/BST but I trade infrequently and hold for ages so am happy to read whenever!

Anyway thank you so much Paul and Graham.

| Link | Share
ed_miller 11th Aug '17 62 of 71

In reply to post #206969

"what were the auditors doing for their fees?"

It's a good question, and one that is just as valid for GLOBO, Quindell and other frauds, not that I'd place Telit in the same category - there is evidence of genuine, and even good businesses in the group. The accounting is a shocker mind, and anyone putting their faith in auditors' signatures and NOMADS as protection against malpractice in AIM shares needs to develop much more reliable and effective measures, and learn to read between the lines in financial statements. Auditors, NOMADS and so-called 'AIM Regulation' do not care about you if you're a private investor: they think it's your fault, if you get stung, for messing around with something you don't understand - it's hardly a sympathetic, caring attitude and reflects the selfish, grasping behaviour that gives the City such a bad reputation amongst outsiders. Empathy for self-taught private investors is all too rare amongst City professionals - if it were not, then PIs would surely receive better treatment. Thankfully that's only a generalisation and there are some who are a credit to their profession, but you won't find many of those amongst the regulators, else fraudsters wouldn't be tolerated on AIM nor get away with fraud with impunity when exposed, as happens apparently ever time.

| Link | Share
nanguyen 11th Aug '17 63 of 71


| Link | Share
betjeman 12th Aug '17 64 of 71

I completely agree with the sentiments of most on here....the reports are very well done as is and add real value....the timing is not a real issue for me...... I would much prefer the same level if care and consideration in a report later in the day than putting both you guys under unnecessary pressure to produce something earlier in the day

| Link | Share
kalkanite 13th Aug '17 65 of 71

An excellent report from Share Prophets looks ominous for Telit Communications (LON:TCM) ....

Tomorrow could be devastating for holders of this share.

| Link | Share | 1 reply
bestace 13th Aug '17 66 of 71

In reply to post #207868

And a follow up article on some of the allegedly "bogus distributors":

I had a look into a handful of the distributor websites TW focused on:

Melchioni (Italy) - the website does actually exist, Telit are mentioned as one of their partners here:

Eastronics (Israel) - the website does exit, Telit are mentioned here:

Itech (Brazil) - As TW says the website currently generates a 403 forbidden error, but the wayback machine shows a website has existed in the past with Telit mentioned here: 

Everest Sales & Solutions (Mexico) - TW is correct that Telit are not currently listed as a supplier, but they have been in the past:

I have no position in Telit Communications (LON:TCM), it's a bargepole as far as I'm concerned whether or not it's a fraud, but I would suggest people need to do their own research, or at least verify other people's research.

| Link | Share
kalkanite 13th Aug '17 67 of 71


I am neither long or short Telit Communications (LON:TCM) and therefore have no interest in unnecessary in depth research. I am however concerned when investors are being ripped off in company's that are no more than a scam. That is not to say that Telit Communications (LON:TCM) are not genuine, they may be a genuinely good company, I don't know. However there are many red flags and for me personally I wouldn't possibly invest in Telit Communications (LON:TCM).

If we were all required to do thorough research and verify facts and figures before making comments either good or bad then there would be very little discussion on this board. I highlighted the post as it raises sufficient concerns (which you have not proved otherwise). It is for investors in this company to decide on its merit and investigate further.

| Link | Share | 1 reply
bestace 13th Aug '17 68 of 71

In reply to post #207928

Sorry if I came across as aggressive towards you, that wasn't my intention. I was more making a comment about TW's approach rather than responding to your comment.

He may have some valid points but I don't think he's at all balanced about it.

Another example - he claims their Asia Pacific revenue is essentially all Korean based on a comment on receivables in the accounts, but that ignores another comment in the accounts where they said they generated most of their APAC growth from Japan, where they set up a subsidiary in 2015. He hasn't attempted to dig into the accounts for the Japanese subsidiary which may explain some of the discrepancy he highlights.

| Link | Share
kalkanite 13th Aug '17 69 of 71

Ah, then I misunderstood your comment, thank you for your clarification and my apologies for the confusion.

TW is a bit of a bull in a china shop so to speak but he does come out with some good articles from time to time. To be fair I haven't read any of his stuff for quite some time but an article caught my attention recently and I have had notification emails sent to my account as a result of login in. The Telit one being topical and controversial piqued my interest and thought it worthy of wider interest for those invested..

| Link | Share
hayashi22 14th Aug '17 70 of 71

Whatever your views on TW it's worth reading the RNS from Telit this morning, He 's doing rather more than writing 'good articles'.

| Link | Share
dulciemo 31st Aug '17 71 of 71

In reply to post #206919

I now subscribe to Stockopedia but it was only by being able to read SCVR that I decided to subscribe. Maybe they use this as a "loss leader" to bring people in. It certainly worked with me.

| Link | Share

Please subscribe to submit a comment

 Are LON:KCT's fundamentals sound as an investment? Find out More »

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 »


Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis