Small Cap Value Report (Thu 27 Jul 2017) - BON, BOOM, NXR, CWD, FOXT, MONI, KWS | Paul Scott

27th Jul '17 by Paul Scott

38 comments 16560 reads

Good morning!

In case you missed it ("ICYMI" - which I keep seeing on Twitter, but have only just realised what it means) - I wrote 4 more sections in yesterday's report last night. So yesterday's report now covers;

LoopUp (LON:LOOP)

MySale (LON:MYSL)

Quartix Holdings (LON:QTX)

Vertu Motors (LON:VTU)

Joules (LON:JOUL)

You might like to revisit that report whilst I'm busy writing today's.

Bonmarche Holdings (LON:BON)

Share price: 101.7p (up 13.7% today)
No. shares: 50.0m
Market cap: £50.9m

Trading update - the market clearly likes today's update, judging by the share price rising 13.7% at the time of writing. This company is a value ladieswear retailer, operating from 322 sites, and online.

This update covers the 13 weeks to 1 Jul 2017, being Q1 in its financial year.

The numbers look good;

Total Q1 sales up 7.6% vs last year.
LFL stores sales up 4.2% - I'm impressed, as many retailers are struggling to achieve any significant LFL sales growth.
Online sales are up an impressive 39%, but bear in mind that is from a low base.
Overall, trading is in line with expectations for the full year.

You could argue that, as it's only an in line update, then the share price shouldn't really have moved very much, if at all. However, in this case I think there might be an element of relief that things are not getting any worse, after a period of considerable disappointment after the Dec 2015 profit warning. The share price has dropped by two thirds since then, from c.300p to c.100p.

Also the PER, and divi yield, are deep into value share territory. So a positive update should reinforce the market's perception that very generous divis may be sustainable after all.

BON has a solid balance sheet, with net cash.

My opinion - I mentioned in a recent report here, that the Q2 retail sales data from the ONS was actually very good. The total amount spent for Q2 was up 5.6% on the same period last year. For that reason, I'm more bullish on…

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AstonGirl

27th Jul '17

Morning fellow cheese lover...

I recognise it's now a smidge outside your small cap remit but would you be so kind as comment on Burford Capital (LON:BUR) Trading Update today please?

Disc: Burford Capital (LON:BUR) I hold

Brilliant Leader

I think this probably falls outside your market cap limit but Bodycote (LON:BOY) announced great interims today and has a potentially sparkling future. I hold, mainly thanks to the lady propping up today's comments (and a certain rhomboid).

JohnEustace

Perhaps one for "Our Graham" as he covered the previous results

bestace

Norcros (LON:NXR) - I sold my small holding after the finals were released last month.

It's only a slight exaggeration to say the company is now a pension scheme with a small sideline in flogging bathroom products, so it's like a reverse bond proxy which I think is the wrong place to be in the markets right now.

Paul Scott

Bon fromage, AG!

I don't cover Burford Capital (LON:BUR) , sorry about that. Feel free to post a summary of what you like/dislike about it here though, as I know it's a widely held share.

Regards, Paul.

simoan

It's only a slight exaggeration to say the company is now a pension scheme with a small sideline in flogging bathroom products, so it's like a reverse bond proxy which I think is the wrong place to be in the markets right now.

Well I justify holding it as a hedge against my large holdings in Preference shares and Fundsmith Equity Fund :-) In the meantime, the company seems to be well managed, is operating well and in between times the 4.5% dividend acts to keep me interested.

All the best, Si

jonno

Bond yields will rise sooner than later and if Norcros can continue to trade reasonably rising yields will eliminate the pension deficit. Norcros has been adept todate in navigating a challenging trading environment and deserve credit for doing so.

The Burford Capital (LON:BUR) results are being discussed on this thread starting today at comment 125
http://www.stockopedia.com/content/small-cap-value-report-14-mar-2017-gym-bltg-bur-fccn-175455/

wildshot

Many thanks as always Paul. Any views from Graham on the Hansard results today (asset managers seems to be his specialism). Results seemed to be a mixed bag and it would be good to hear the views from an experienced hand.

Thanks as always to you both.

Bond yields will rise sooner than later...

That's the consensus view, but the consensus view has proven wrong for quite a long time now. I am increasingly open to the possibility of a Japan type situation as far as bond yields and monetary policy are concerned.

FREng

Thanks for the link to the Burford Capital (LON:BUR) discussions. JaneBolacha's comment #120 is a good place to start.

andrea34

Re BOY, I suppose the figures in themselves look pretty good and one cannot argue that they have shown a good turnaround. I just worry that, as with quite a number of companies, that a lot of the growth is from favourable exchange rates and were the rates to reverse (which may seem unlikely considering Sterling's weakness with Brexit) then that growth would evaporate. Revenue growth at constant exchange rates is below 10%, which somewhat curtails my interest... :-/

lightningtiger

There is a conference call at 2:00pm BST today with Burford Capital. Fantastic results as well today. I hold a long position in this share too.

rhomboid1

My thinking on Bodycote (LON:BOY) is that the market is largely missing the significance of last Fridays RNS;

https://www.investegate.co.uk/bodycote-plc--boy-/rns/bodycote-launches-powdermet-technologies/201707200700055614L/

"
Bodycote has decades of experience creating complex, high integrity components from powdered metal. Bodycote Powdermet® technologies now incorporate new, patent-pending techniques that combine 3D printing with well-established net shape and near net shape techniques. This new technology dramatically reduces the manufacturing time and production cost of a part compared to producing the same part using 3D printing alone."

The share price didn't twitch , the significance is that Bodycote (LON:BOY) have a patented route to slashing costs whilst enabling vastly more components to be 3D printed. This company is anything but self promoting so the language used imho suggests a major step change in prospects on tob of a resurgent core business.

Disclosure;I'm biased as I piled in on Friday & it's now my 3rd largest holding.

Rusty2

Countrywide (LON:CWD) half year report is out today, does not make good reading but is as I expected. Shares are down 10%, Foxtons (LON:FOXT) down 5%.

Thought I would post this dire-looking update from MONI just supposing anyone for some bizarre reason is still holding a stake in this company:

- Revenue for the year declined to £50.9m (FY 2016 £67.6m)
- Whilst the business continues to focus on cost management, the cost reduction activity has not mitigated either the anticipated revenue decline or the absence of any FINkit® contracts
- As previously stated, gross cash at 30 June 2017 was £22.2m
- Monitise has yet to sign its first FINkit® contract....
- In the absence of material FINkit® revenues, Monitise expects FY 2018 revenue to be lower than FY 2017 with a consequent effect on operating results... current trading remains challenging.

Re. CWD and FOXT reports, PURP are on the other hand up 3%... perhaps unsurprisingly. Wish I hadn't sold all my PURP... though the higher they go the more I am wary of buying back in :-/

cic

Countrywide performance is not good indeed. But look at their 2016 balance sheet. Of 964m total assets £722m are intangibles. Apart from high goodwill, which I would expect as the company has been mopping up small local estate agencies all over the place, the company has 67m in computer software, 232m in brand names, 131m in customer contacts and relationships and 6m in something called "pipeline". The company provides some gobbledegook about how these values are calculated, but I just read "fudge". Strip out all the intangibles and you are left with assets of 243m and liabilities of 485m. But I have other concerns about Countrywide. I counted nearly 300 subsidiaries. Most of these are high street estate agent names and most people would probably recongnise quite a number of these. The typical client probably looks at several agents when choosing one to sell their home. Do they realise that a number of these in the same locality are actually the same outfit trading under a different name? I think there maybe competition issues to emerge here.

Small Cap Value Report (Thu 27 Jul 2017) - BON, BOOM, NXR, CWD, FOXT, MONI, KWS

Bonmarche Holdings (LON:BON)

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Paul Scott

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