Small Cap Value Report (Thu 3 May 2018) - TNI

Thursday, May 03 2018 by

Good morning, it's Paul here!

We're up-to-date! Yes, Tuesday's report now includes a rather sceptical commentary on Connect (LON:CNCT) (in which I hold a long position, but am pondering whether to sell or not) here.  

Wednesday's report was updated last night, to include six companies in total, so the link for that is here.

Leon Boros - half marathon

ISA millionaire, and all round decent chap, Leon Boros is running a half marathon on May 20th. Leon is always generous with his time, helping to educate and enrich other people through talks at investor shows, etc. His investment track record, based on a clear focus on high quality companies, is extraordinarily good. Stunning actually. So he's very much a person to follow.

Here's a link to Leon's eBook and articles about his highly successful strategy. If you're looking for a proven strategy to adopt, then I think Leon's approach is second to none.

The fundraising cause is for ShareSoc, which as many of you know, is a not-for-profit organisation which campaigns for private investors on numerous topics. The Directors & other supporters are unpaid, and put in a tremendous amount of work on our behalf.

I feel that we should do more to support ShareSoc, and hence it's a good thing to become a paid member. Also, if you can spare a bob or two to sponsor Leon run for ShareSoc, then I know he would appreciate it very much indeed. Here's Leon's sponsorship page.

Trinity Mirror (LON:TNI)

Share price: 84.7p (down 2% today, at 12:43)
No. shares: 299.3m
Market cap: £253.5m

Trading update

This newspaper group updates us today;

Trinity Mirror plc is issuing a trading update for the 4 month period from 1 January 2018 to 29 April 2018 ('the period'), ahead of its 2018 Annual General Meeting later today.

A reader left a very interesting comment here yesterday, suggesting that newspapers might see a resurgence because people are becoming disillusioned with all the lies on social media. That's a nice idea, although newspapers don't exactly have the best of reputations for accurate reporting! It's more about reflecting the prejudices of the readership, sadly. Although that's less the case…

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Reach plc, formerly Trinity Mirror plc, is a national and regional news publisher. The Company is engaged in producing and distributing content through newspapers and associated digital platforms. It operates through four segments: Publishing, which includes all of its newspapers and associated digital publishing; Printing, which provides printing services to the publishing segment and to third parties; Specialist Digital, which includes its digital recruitment classified business and its digital marketing services businesses, and Central, which includes revenue and costs not allocated to the operational divisions. The Publishing segment publishes paid-for national newspapers and paid-for and free regional newspapers, and operates a portfolio of related digital products. The Printing segment operates five print sites with approximately 20 full color presses. Trinity Mirror Digital Recruitment operates three specialist job boards: GAAPweb, TotallyLegal and SecsintheCity. more »

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33 Comments on this Article show/hide all

gus 1065 3rd May '18 1 of 33

Wannabe acquisitive start up Gloo Networks (LON:GLOO) announces it has given up looking for viable targets and has announced self liquidation at not less than 47p per share.

Not really newsworthy, but couldn’t resist the strap line “Gloo comes unstuck”. Coat please ......


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MrContrarian 3rd May '18 2 of 33

My morning smallcap tweet:

Charles Taylor (LON:CTR), Van Elle Holdings (LON:VANL), Midatech Pharma (LON:MTPH)

Charles Taylor (CTR) major contract win. Acquisition for $22.5m + $28m earn out. Placing of £17.6m by book build.
Van Elle (VANL) [edit] guides FY pretax £10.5m due to weather (natch'), Carillion, weak piling mkt. F/V £10.4m. Bad debt charge will be £1.0m (rather than £1.6m guided). New CEO from Balfour Beatty in Oct or sooner. Previously RNS'd CEO leaving.
Midatech Pharma (MTPH) not aware of any reason for the price spike. Reiterates previous guidance on funding and R&D.

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xcity 3rd May '18 3 of 33

In reply to post #360508

The Van Elle Holdings (LON:VANL) FY profit would be in line/slightly above expectations (10.5 vs 10.4).

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MrContrarian 3rd May '18 4 of 33

In reply to post #360513

Thanks. Have corrected.

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threeputt 3rd May '18 5 of 33

In reply to post #360513

not sure I ike the way they call it 'adjusted' pbt

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runthejoules 3rd May '18 6 of 33

If you're after suggestions Paul I wouldn't mind your opinion on Irish hotel chain Dalata Hotel (LON:DAL) reporting slightly above today, tipped in SHARES, but down 3% on open, maybe missed expectations. Have stayed in the Maldron hotels quite often and like them and I know from experience how full hotels in Ireland are right now. And everyone else of course. Ta.

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xcity 3rd May '18 7 of 33

In reply to post #360533

Depends how you see it; one of the better adjustments imo as it is a true one off.
And I think I'm correct in concluding that the broker forecasts were also pre-adjustment (given that the actual bad debt is .6m better than predicted).

But maybe I'm wrong given the market reaction.

Though it got Luceco very wrong initially.

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Gromley 3rd May '18 8 of 33

This morning's AGM Trading Update from Trinity Mirror (LON:TNI)

Had I not read the Johnston Press (LON:JPR) update of a couple of weeks ago then I would have taken this as the most positive statement for some time.

On the Mirror Group side "Print advertising trends were marginally better in March and April"  and "Improvednational advertising performance over Easter resulted in print advertising revenue falling by a reduced 15% in March and April."

On the Express and Star front "Revenue trends since completing the acquisition on 28 February 2018 are estimated to be better than the trends for the period pre acquisition."

Not a mention of challenging or volatile trading conditions anywhere, but perhaps they have finally decided that we take that as read!

"The Board anticipates performance for the year to be in line with market expectations"


However having read JPR's more positive take on print advertising, this more muted statement is mildly disappointing. With regards my "coin toss" position of yesterday, it rather feels like the coin has landed on it's edge. 

Will continue to hold my main position, but will review my fun trade after seeing whether there is any further movement after the AGM itself closes.

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tomps3 3rd May '18 9 of 33

Mello Derby

Beeks Financial Cloud (LON:BKS) presentation just posted:

Also posted yesterday, Xpediator (LON:XPD) presentation:

Both recent IPOs, so great to have the opportunity to hear management to explain the whole story.

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andrea34l 3rd May '18 10 of 33

A positive AGM statement from Johnson Service (LON:JSG) today:

Following substantial growth in 2017, year to date trading has been strong reflecting both an encouraging underlying performance together with the benefit of acquisitions over the last twelve months.  We expect the full year results for 2018 to be slightly ahead of current market expectations.

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bsharman 3rd May '18 11 of 33

It would be interesting to hear readers thoughts on Van Elle Holdings (LON:VANL)

I don't currently hold but they are in my potentially interesting pile. This is based on the fact that they seem to have a moat (good quality scores) and are trading at a low valuation. Impact of Carillion (LON:CLLN) seems minimal and they are giving guidance of a £10.5m profit before tax.


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robin66 3rd May '18 12 of 33

In reply to post #360513

Re Van Elle Holdings (LON:VANL) I think you are not comparing like with like. The £10.4m forecast as shown on the stock report was net profit whereas the £10.5m is pretax so assuming approximately 20% tax this is surely a big miss?

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Julianh 3rd May '18 13 of 33

In reply to post #360558

Thanks Tamzin
I will watch soon just to make sure that my initial impressions (I was there) were not too overly enthusiastic. My view on Beeks Financial Cloud (LON:BKS) after their presentation was:
* a niche operator with no like for like competitors
* strong barriers to entry - it would be difficult to come in and steal their clothes
* great return on their investment - every server pays for itself x 8 before it needs replacing
* a big market still open to them
* they provide an essential service to their specialist customers. Customers will stick around and won't quibble about the price
* overall a very high quality business just in the early stages of its growth
I hope I am right on this. As always, do your own research.
At Mello Peterborough (2015, I think) I bought one share - Bioventix (LON:BVXP) now +247% since my first purchase. My fingers are crossed that this one will do the same
Disclosure (if not already obvious) - I hold

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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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