Small Cap Value Report (Thu 15 Nov 2018) - NXR, CARD, SWL

Thursday, Nov 15 2018 by

Hello, it's Paul here.

This report is 2 working days late, which was missing from the sequence last week. My apologies for the delay. 

Readers have specifically asked me to look at these stocks, which I think are interesting, so am happy to oblige.

Norcros (LON:NXR)

Share price: 228p
No. shares: 80.3m
Market cap: £183.1m

Interim results

Norcros, a market leading supplier of high quality and innovative bathroom and kitchen products, today announces its results for the six months ended 30 September 2018.

The financial highlights look strong;


Note that underlying operating profit growth of 29.9% is well ahead of revenue growth of +12.1% - impressive to see an improved net profit margin. Sales growth is from acquisitions.

Organic revenues growth was -0.3% on a like-for-like, constant currency basis. Although if Johnson Tiles UK is excluded (which suffered from Kingfisher buying less product), the rest of the group achieved an impressive +4.4% organic growth.

The 105.4% increase in statutory profit before tax is a red herring, because of a one-off £4.3m finance income credit - relating to a favourable movement on derivatives (I assume forex hedges). The underlying figures make more sense to me. I've checked the adjustments, and they look reasonable, apart perhaps from the £0.7m pension scheme administrative expenses, which I think should not be adjusted out, as it's a real, ongoing cost.

Diluted underlying EPS is actually slightly down, despite profit being up. This is due to dilution - 18.25m new shares were issued in a fundraising related to an acquisition called Merlyn Industries Ltd, in Nov 2017.

The period being reported, of 6 months to 30 Sep 2018 includes a full half year of trading from Merlyn. That is reflected in the average number of shares in note 5 being the same as the total number of shares currently in issue. So there's no further dilution to come through in future reporting periods.


As you can see, the share count has risen by about a third in the last year, to fund acquisitions.  The group is doing a buy & build - making good quality acquisitions of complementary companies, then pushing more sales through its…

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Norcros Plc is a holding company for the Norcros Group. The Company's principal activities include development, manufacture and marketing of home consumer products in the United Kingdom and South Africa. The Company's segments include UK and South Africa. The Company has six United Kingdom businesses, including Triton Showers, Vado, Croydex, Abode, Johnson Tiles and Norcros Adhesives, and three businesses in South Africa, including Johnson Tiles South Africa, TAL and Tile Africa. The Company is focused on showers, taps, bathroom accessories, tiles and adhesives. In the United Kingdom, the Company offers a range of bathroom and kitchen products both for domestic and commercial applications. The Company offers mixer showers and accessories; tile and stone adhesives; taps, bathroom accessories and valves; bathroom furnishings; ceramic wall and floor tiles; kitchen sinks; tile adhesives, pourable floor coverings and tiling tools through its United Kingdom and South Africa business. more »

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Card Factory plc is a specialist retailer of greeting cards, dressings and gifts. The Company operates through two segments: Card Factory and Getting Personal. The Card Factory segment retails greeting cards, dressing and gifts in the United Kingdom through a network of stores. The Getting Personal segment is an online retailer of personalized cards and gifts. Its physical store network operates in three areas: single cards, non-card items and Christmas box cards. Its single cards include individual cards for everyday occasions, such as birthdays, anniversaries, weddings, thank you, get well soon, good luck, congratulations, sympathy and new baby cards, and seasonal occasions, such as Christmas, Mother's Day, Father's Day, Valentine's Day, Easter, thank you teacher, graduation and exam congratulations. Its non-card offerings include gift dressings, small gifts, party products and other non-card products. The Company operates through a chain of approximately 800 Card Factory stores. more »

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Swallowfield plc is a United Kingdom-based company, which is engaged in the development, formulation and supply of personal care and beauty products. The Company has presence across other European Union countries and rest of the world. The Company offers its products in various product types, such as personal care aerosols, hot pour, premium liquids/tubes/roll-ons, fragrance and gifting, and color cosmetics and pencils. The Company's manufacturing, filling and aerosol packaging capabilities include traditional system in tin-plate or aluminum cans to bi-compartmental systems, such as bag on valve (BOV) and bag in can (BIC). The Company offers its products in various brands, such as TRU SHAVE and MR JAMIE STEVENS. The Company offers a range of services, such as project management, sourcing, manufacturing and logistics. The Company offers warehouse facilities for chemicals, raw materials and finished goods, as well as a global distribution network capable of bespoke delivery. more »

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

2 Comments on this Article show/hide all

kenobi 20th Nov '18 1 of 2

Hi Paul, re NXR can't help but notice that normalised EPS of 20.9p this year is followed on stockopedia by predicted 30.9p next year, for such a modestly priced share this is staggering growth, and if it actually happens should lead to a considerable re rating ? or am I missing something ?


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Paul Scott 20th Nov '18 2 of 2

In reply to post #420429

Hi Kenobi,

The 20.9 EPS normalised figure for y/e 31/3/2018 doesn't look right - so I've raised a support ticket to have it checked. Sometimes Thomson Reuters adjust the data to make it consistent for different companies, so their figures don't necessarily match the figures published by the companies themselves.

It's always worth checking the source figures, and NXR's last full year published numbers show underlying adjusted EPS of 29.5p. Therefore the current year forecast of 30.9p is only a modest increase.

As mentioned in the article above, whilst profit has gone up a lot, so has the share count - due to shares issued to fund a recent acquisition.

Regards, Paul.

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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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