Small Cap Value Report (Thu 22 Mar 2018) - CVR, SFE, KETL, COG, VLG

22nd Mar '18 by Graham Neary

65 comments 16623 reads

Good morning!

There is no shortage of company announcements today, so I'm going through them personally at the moment. As usual, I'm happy to take requests in terms of which ones to cover here.

My final list is as follows:

Conviviality (LON:CVR)
Safestyle UK (LON:SFE)
Strix (LON:KETL)
Cambridge Cognition Holdings (LON:COG)
Venture Life (LON:VLG)

Also, Paul updated yesterday's report with more sections. You can read that here.

Cheers,

Graham

Conviviality (LON:CVR) (suspended)

Update on progress and potential equity fundraise - Conviviality, the alcohol wholesaler and retailer produced an update at 6pm last night.

In short, it looks like a horror show for existing shareholders. The only ray of hope is that we still don't know at what price the new money will be raised, so there is still a chance that the forthcoming dilution will not be too severe. But it is now inevitable that those who take part in the forthcoming fundraise will end up owning the majority of the company.

If you remember the recent timeline, Conviviality discovered a £30 million tax payment coming due shortly and that it hadn't made provision for. This came after an error had led to the company miscalculating its profit forecasts, and trading margins had weakened. The shares were suspended and the CEO stood down, though staying on to help with the transition.

Originally, I thought that the company might only need to raise £30 million, plus a little bit more for extra comfort. After all, there was no clue up until recently that it had any short-term funding requirement. The balance sheet wasn't pretty and its lending facilities were maxed out, but it was thought to be profitable.

It turns out that the company needs to raise far more than £30 million. It is looking for £125 million, for the following purposes:

· "Resolve overdue payments with its creditors and return them to normalised trading terms;

· Settle payments with HMRC;

· Repay the Company's £30.0 million revolving credit facility in its entirety; and

· Provide working capital headroom and fund costs…

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barnetpeter

22nd Mar '18

I think this report is wonderful! We would all miss it....

Would like comments on the mkt in general myself; ftse breaking down through 7000 now and Dow down another 700 points plus. Could be a stampede soon to dump stock I think.

pastysupper

Lion Tamer- you have articulated my view of how the SCVR has changed, far better than I ever could.

I think it's time to stop reader requests and let Paul and Graham do what they want. Nothing wrong with readers discussing among themselves though.

Also, having to set up the template the night before must be really irritating. It's not exactly laborious, but it stops Paul and Graham from ever being able to entirely switch off. Could this not be automated by the Stocko team?

ISAallowance

"Key seems to be the Seimens Troponin project and that seems to be in the lap of the gods"

I don't think that Troponin is as key as is sometimes assumed. There is an excellent post by VegPatch after he met management on a thread here: https://www.stockopedia.com/content/bioventix-fy-results-v-strong-look-how-fast-the-core-is-growing-to-offset-loss-of-nt-probnp-229328/#comments

(Post 12). He (VegPatch) is quite clear that they are his estimates/guesses, not managements words, but they look sensible to me and show potentially 3 income streams having the potential to grow individually to replace NTproBNP (1m lost from FY18 onwards) by FY21 - drugs, Progesterone and Troponin. Any one of them meeting those estimates would be +1m from today individually.

As for the upcoming results, I've no idea what they will be like, but I know what I'm looking for. Bioventix (LON:BVXP) did 3.12m in H1 2017, and 4.12m in H2 (+32% HoH). Assuming 0.45m and 0.55m for NTproBNP for H1 and H2 respectively, and assuming no NTproBNP royalties in H1 2018 (there may still be some), then zero growth in everything else from H2 '17 to H1 '18 would see +15% (sales) H1 '18 vs H1 '17. I would regard that as a poor result. 20% growth from H2 '17 to H1 '18 in everything else would see +37% H1 '18 vs H1 '17. I would regard that as an outstanding result. 10% growth H2->H1 would see +26% H1->H1, that's what I'm realistically hoping for.

Bioventix (LON:BVXP) is one of my 3 largest positions (the others are Burford Capital (LON:BUR) and £ACSO), so hoping for a good update!

mercury61

23rd Mar '18

Hi
I thought all comments were from subscribers only .If not what are the criteria, if any, for non members to comment. Maybe this could be flagged up as member/non member? Just a thought.

matylda

Only members can comment.

sharw

I think use of the word 'member' is ambiguous. Comment is open to anyone who has registered whether they have paid a subscription or not. Those who have paid a subscription are labelled 'Premium' on the profile page.

Vsihv

Fair point - to be honest I was more concerned about Zeus Capital! Will wait for now and do more research/follow price - maybe one for new ISA season

Aha - Was not aware one could register for free to comment - That in my opinion should be changed.

herbie47

Yes indeed, that’s why there is spam sometimes, I agree think this forum should be for subscribers only. Certainly there would be more control.

That is the point I was trying to make. Comment for paid up subscribers only. OR one could show premium member status and those that have registered and are not paid up ....

Johnny2509

I disagree with the above few posts. I first started contributing to Stockopedia when it started and was not a subscriber. I picked up a huge amount of information with many others, some subscribed and some didn't. The problem with subscription only contributions is that you limit very good information being passed on through the forum. The whole point of Stockopedia is to enlighten and educate those who have an interest in share ownership and it should not matter if the odd contributor comes across as less insightful than the volume posters.

Maybe a different colour for subscribers and non-subscribers, everyone is blue currently, maybe green for non-subscribers? Then is would much easier to see their status.

Edward John Canham

Hi

Bioventix (LON:BVXP)

Many thanks for that.

Phil

Zipmanpeter

Further votes on community maters

1. Paul/Graham to write as they wish - I liked comment from someone that good quality commentary from the balance community likely to get them to write about the company (maybe on the news cycle)

2. Comments by subscribers only - reward for paying my money and best posters are likely to be more experienced/larger shareowners and thus willing to invest in Stockopedia (I think Stockopedia ethos is DYOR first and education/community/bulletin board second).........personally I enjoy both and read all comments every day but it is the data provision I buy!

3. Stockopedia mgt to think perhaps about other 'channels' than SCVR - eg employing weekly column commentator on popular areas (eg have suggested Retail/F&B in the past; others could be Large Cap focus, Financials and Resource stocks ie those NOT so often covered here..

dfhscgfsd

I don't see the need to know whether a contributor has paid or not while reading their post. If i feel there's an ulterior motive click name, click view profile, are they premium? if no, when did they sign up and latest comments. This forum is the most polite and pleasant place i have ever been online, the regulars point things out to new people without the need (very often) for moderators and administrators, i love it.

timarr

The subscription pays for access to the Stocko data, not for exclusivity into Paul and Graham's opinions.

It's been said before, but it's probably worth saying again - many people here started as non-subscribers and only became subscribers after participating. So I can't see why Ed and the team would block off their own best marketing channel.

And quite why subscribers would want to deny themselves a constantly interesting and often knowledgeable set of non-subscribing posters a platform here is a mystery. The minor downside that you get occasional spam and the odd idiot posting is offset by the fact that some subscribers are sometimes idiots and that we all occasionally generate spam of our own.

Frankly, this is just about the best moderated and most polite set of investing boards around. All making the boards exclusive will do is allow people to give free reign to their feelings - there's lots of research showing that people feel that paying for something gives them the right to abuse it. As it stands a subscriber can be blocked for being abusive just as much as a non-subscriber - and quite rightly so.

Keep the boards free, minds open and conversations flowing. It benefits us all.

Deeping

For me it’s not about whether one is a subscriber or not, it is about bringing an end to readers requests. I thought Lion Tamer put the point across very well, I agree with everything Lion Tamer wrote.

Graham

25th Mar '18

Hi Phil,

Thanks, but in hindsight the only useful part of my post was the link to VegPatch's post.

My musings about upcoming results completely neglected to consider currency effects and seasonality (shouldn't post at 23:45!). Looking though Bioventix (LON:BVXP) last 3 years I see:

Revenue
H1 2015: £1.93m
H2 2015: £2.40m
H1 2016: £2.37m
H2 2016: £3.15m
H1 2017: £3.12m
H2 2017: £4.13m

So there appears to be some significant seasonality in favour of H2. In light of that, I won't be panicking if H1 2018 revenue comes in similar to H1 2017, given that it won't include much NTproBNP.

(I've used H1 to refer to the interim results half, Bioventix confusingly seem to refer to this in H2 in the interim statements since it falls in the second half of the calendar year).

jonesj

1 Paul & Graham should write about what they want to cover. That way, we keep the quality up.
2 Allowing free access to their reports is an excellent marketing channel for the subscriptions to the paid for service.
The current business model works just fine.

26th Mar '18

Hi

Bioventix (LON:BVXP)

I picked up the seasonality when I looked into further after your post - and I did put my toe into the water on Friday.

Interims look good to me. Have grown from H1 2017, ignoring the back-dated royalties following audit, which implies the existing core antibodies etc have grown by 20%+ to replace and more the lost revenue. Would have preferred some more detail on Troponin but I guess it's still early days.

I think a big plus for me was the update was remarkably upbeat compared to their normally cautious statements. I guess I should beware reading between the lines but it is somewhat reinforced by the 20% increase in interim dividend.

Phil

Small Cap Value Report (Thu 22 Mar 2018) - CVR, SFE, KETL, COG, VLG

Conviviality (LON:CVR) (suspended)

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Graham Neary

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