Small Cap Value Report (Thu 23 April 2020) - LGRS, SDI, G4M

23rd Apr '20 by Paul Scott

113 comments 10298 reads

Good morning, it's Paul here with the SCVR for Thursday.

I finished off yesterday's report last night, with a new section on BooHoo, which is here. What a fantastic business that is. Although on current trading, the company should have just given the figures, instead of ambiguous narrative. Numbers in a table is always the best way of conveying information. If vague or ambiguous language is used, then my conclusion is that the PR is probably trying to hide something unfavourable from us.

Estimated timings - I should have a decent amount up by the 1pm email deadline, but intend continuing until about 3pm. Update at 15:09 - oh dear, I've only managed to get through 3 of the 9 companies I wanted to cover today. I'll keep going until whenever. Today's report is now finished. Most of the companies I didn't get round to looking at are now in tomorrow's report here.

Loungers (LON:LGRS)

Share price: 95p (up 23% today)
No. shares: 92.5m + 9.25m new shares = 101.8m
Market cap: £96.7m

Extension of bank facilities and placing

Loungers - the operator of 167 café/bar/restaurants across England and Wales under the Lounge and Cosy Club brands - today provides an update on the actions it is taking in response to the Covid-19 crisis.

This RNS came out after market close last night. It joins the rapidly growing list of companies which need to refinance, because nobody thought of the possibility of a pandemic. The business models of entire sectors were completely wrong, for decades, with a huge risk lying dormant, we just didn't realise it. Once Covid-19 is over, I wonder how long it will be for this lesson to be forgotten again? 5-10 years, at a guess!

Loungers floated in April 2019. I reviewed the IPO document in quite a bit of detail in a video here. Although I made a mistake, in miscalculating the debt, therefore my main conclusion of it being over-geared, was (partially) wrong. Doh! Although the main purpose of the video was to demonstrate how you don't need to spend half a day wading through an admission document, but can actually skip a lot of it, and focus on the most important bits, in about an hour. Time well spent, if you're about to buy thousands of pounds-worth of shares in…

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mark1308

24th Apr '20

Some people would say that Covid-19 is not much risk to HEATHLY people

Its the methods used not where Sweden is or who goes there that interests me. People go out but with great care.

I bought for the Divi just like you , what a prat I feel now !!!

timarr

Seriously though, is there anything in this that we didn't know or haven't already been told at the UK press conferences? R must be kept under 1 - No sh*t Sherlock...

I don't think so. But if you read the comments here you might think otherwise, Watson ...

2ShedSam

fair shout!

FREng

Assessment of the SARS-CoV-2 basic reproduction number, R0, based on the early phase of COVID-19 outbreak in Italy in Biosafety and Health, concludes:

"The findings of this study suggest that R0 values associated with the Italian out- break may range from 2.43 to 3.10, confirming previous evidence in the literature reporting similar R0 values for SARS-CoV-2."

xcity

They don't know what they're talking about. There's a lot of that about.
There's a lot we don't know, and some we do, and that's evolving, which makes it even more important to be very clear about what we do.
Covid affects many healthy younger people, some severely, some fatally. Most have no or mild symptoms, but that is also true for most healthy older people.
Most flus aren't a death threat to healthy younger people at all. Though the Spanish flu apparently was.

john652

I can't see the public accepting that every pub, bar, restaurant, football match, sport event, concert, theatre, cinema etc etc is shut until dec (or 'for ever, lock em all down' if you are a scientist in your dark univercity office) or the conditions for attending are so miserable people don't want to go.

We constantly see the government say this or that, a scientist says this or that, but:

1. the lockdown is to allow the health service to cope, it now can and can continue preparing with unlimited money.

2. You are highly likely to get C19, the disease isn't going away, we'll have to live with it at a sustainable infection rate (a million infections a month..?)

Open them up for 2 or 3 days a week, have one of every three games of football with a crowd etc. There are more imaginative ways.

The fact is we have a disease thats not going away, there is a level of infection that is acceptable & they will have to-find that level. A puritan approach of stopping everything that social beings find pleasurable..... socialising, isn't going stick (we all still will work, those who still have jobs, shop, meet friends and family, ie pass the disease on).

We'll see, but they have not got a clue how to handle this other than 'lock em down', and I think they will constantly change their minds, test lots, and test the approach, such as 3 day openings etc. Invest in a pub or leisure group, still a bet though.

Ben1

Isn't it true that Covid does affect younger people but predominantly those with other health issues eg. Asthma, diabetes, obesity, etc. Therefore it could be argued that it isn't a major risk to healthy people. It depends on the definition of healthy you use.

Rusty2

I think also can be spread from speaking, so maybe everyone should wear a mask when out outside in public?

No. Young people with no other health conditions can become severely ill and sometimes die. Having some other conditions massively increases that risk and age progressively so. But a risk is there for all. But risk for women is about half that for men at all ages.

the lockdown is to allow the health service to cope, it now can and can continue preparing with unlimited money.

The health service isn't coping. Front line staff are dying and those who aren't ill are working unsustainable hours. Many are living away from their families to avoid infecting them. Everything non-urgent has been postponed.

That depends on the definition of coping. Not being able to treat patients because there are no staff, or beds, or equipment is how the government view not coping. Your points are highlighting the difficulties of the situation, which is of course very difficult, but not that they cannot cope.

One hospital is now starting to do routine operations again as corona patients have dropped considerably in the last week or so. London corona beds have dropped even more than other areas, so it looks like they are coping and have some capacity. The fear is the second peak if we lift the lockdown.

Which hospital? I hadn't heard that one had restarted routine operations.
Hancock said yesterday that the NHS will restart as capacity becomes available, but there's quite a bit of high priority work to do before they get to routine. Some specialties can afford to start up because neither their staff nor their facilities are needed but they will still need PPE etc even when they didn't before.
There will certainly be a second peak in the absence of a successful treatment.

Sounded as if you were giving your own opinion to justify opening everything up rather than explaining government policy.

In fact you said:
We constantly see the government say this or that, a scientist says this or that, but:

before expressing your opinion that the NHS is coping.

I think it was in Wales, it was on the news last night.

Why not use some of the Nightingale hospitals for Coronavirus and then start operations in hospitals? Some hospitals have plenty of capacity it seems now. Have you seen the fall in beds occupied today?

Bed occupancy isn't the issue - it's staff availability. The London Nightingale never had the staff to do much, even if other hospitals hadn't been able to cope; presumably there would have been staff redeployment if it had been absolutely necessary. The NHS only got through so far by calling up the recently retired (requalifying them even without recent training topups), deeming students as fully qualified, and having many staff work extra long hours.
Many will need to take their accumulated leave or holidays. Hospital managers will be trying to work out what resources they will have for the next wave. Some staff won't be able or willing to go through this again - there are already reports of mental health issues and they will mushroom once the pressure is off.
I'm sure they will look to use the Nightingales etc and local hospitals want to return to their normal work, but planning how to do it is a bit like planning to undo lockdown. Cardiology and Oncology are seen as priorities, but everything will depend on resources available.
And referrals. Most GPs are still in semi-lockdown, and most patients are understandably cautious about the prospect of mixing with sick people.

25th Apr '20

But if their are less patients then there should be enough staff this is why many hospitals chief executives are talking about starting cancer and routine operations in the next few weeks. One in Northumberland said they are only using about 30% of their ICU capacity at the moment and he said it was similar in the northeast region. If the govt. can test workers who are at home isolating then more staff could get back to work. Yes doctors have been very quiet I saw on an interview yesterday.

Small Cap Value Report (Thu 23 April 2020) - LGRS, SDI, G4M

Loungers (LON:LGRS)

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Paul Scott

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