Small Cap Value Report (Thu 4 Oct 2018) - ABDP, EHG, IGP, DFS, BOOM, VLE

Thursday, Oct 04 2018 by
71

Good morning!

Please see the header above for the shares that have caught my eye this morning.


CEO interview - Best Of The Best (LON:BOTB)

In case you missed it yesterday, here is the link to my audio interview with William Hindmarch, CEO of BOTB (in which I have a long position).

Sorry if this project rather curtailed yesterday's report. I've decided that it's too much to write a SCVR and do an interview on the same day. So in future, I'll only do interviews when Graham is writing that day's SCVR.


FinnCap research

Excellent news for private investors. FinnCap tweeted me last night, to say that all investors, including PIs, can now access their research. The website is here. I've just registered, and it works! So that's a very handy initiative to widen the distribution of research notes - something that I'm very keen to encourage.




Ab Dynamics (LON:ABDP)

Share price: 1472p (up 14.8% today, at 11:08)
No. shares: 19.5m
Market cap: £287.0m

Trading update

AB Dynamics plc (AIM: ABDP), the designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry, is pleased to provide a trading update in advance of the publication of its final results for the twelve months ended 31 August 2018.


A very nice update today;

The Group has performed well through the year and the Board expects both revenue and profit before tax to significantly exceed market expectations.


Most of the growth has come from track testing products, used for autonomous vehicle development.

My opinion - I'm not sure how to value this share, as I don't have any updated forecasts. So I'll have to use some guesswork.

Stockopedia shows broker consensus of 34.0p EPS for y/e 31 Aug 2018. What does "significantly exceed" mean? Maybe c.40p EPS? At 1472p per share, that would be a PER of 36.8 - expensive.

Maybe the market thinks the company will achieve more than 40p then? And/or that the new year might deliver say 50p EPS? That would move the PER down to a still expensive 29.4.

As you can see from the Stockopedia graphs, this company has an outstanding track record, and the light blue forecast…

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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AB Dynamics plc is a holding company, which is engaged in the provision of testing systems to the global motor industry. The Company is a designer, manufacturer and provider of testing and measurement products for vehicle suspension, brakes and steering to the global automotive research and development sector. Its geographical segments include the United Kingdom, Rest of the European Union, North America and Rest of the World. It designs and manufactures specialized testing systems to produce equipment for its customers to develop suspension, brake, chassis and steering systems; evaluate vehicle dynamics and safety systems on the track; employ driver in loop simulation for prototyping; develop and evaluate the next generation of safety systems in vehicles; test and evaluate the technology for use in future driverless cars/autonomous vehicles, and carry out end-of-line noise/vibration (NVH) testing of power train assemblies. more »

LSE Price
1454.01p
Change
-0.2%
Mkt Cap (£m)
284.7
P/E (fwd)
27.2
Yield (fwd)
0.3

Elegant Hotels Group plc is a holding company. The principal activity of the Company and its subsidiaries is the ownership and operation of hotels and restaurants on the island of Barbados. It owns and operates six freehold beachfront hotels and a beachfront restaurant in Barbados. Its hotels include Colony Club, Tamarind, The House, Crystal Cove, Turtle Beach and Waves. It operates Daphne's restaurant, which is located on platinum West Coast in Paynes Bay, adjacent to The House and Tamarind in Barbados. Its Colony Club hotel is spread across six acres of tropical gardens with approximately 300 feet of beach frontage on the Caribbean Sea and lagoon style pools. Its Tamarind hotel is on the Platinum Coast. Its Crystal Cove hotel has three freshwater lagoon pools, two restaurants, two bars, two floodlit tennis courts and a fitness center. Its Turtle Beach property is on the south coast of Barbados. Its portfolio consists of over 550 rooms. more »

LSE Price
67.55p
Change
0.8%
Mkt Cap (£m)
59.5
P/E (fwd)
7.6
Yield (fwd)
5.0

Intercede Group plc is a United Kingdom-based software and service company. The Company is engaged in developing and supplying of identity and credential management software. The Company provides MyID software, which is an identity and credential management system that enables organizations to create and assign trusted digital identities to employees, citizens and machines. Its MyID software protects the networks, facilities and intellectual property of governments, agencies and other enterprise customers. In addition, it provides MyTAM, which is a cloud-based service that provides Android application developers and service providers to deploy trusted applications to the trusted execution environment (TEE) on mobile devices. It offers its solutions to various sectors, including aerospace and defense, finance and telecommunications; governments and federal agencies, and mobile developers. The Company operates in the United States and the United Kingdom. more »

LSE Price
28.5p
Change
 
Mkt Cap (£m)
14.4
P/E (fwd)
n/a
Yield (fwd)
n/a



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


39 Comments on this Article show/hide all

RichardK 4th Oct 20 of 39
5

Re EHG and Barbados tax changes:
Effective July 1, 2018, the highest rate of corporation tax would rise from 25 percent to 30 percent.
Effective October 1, 2018, a health service contribution will be introduced at a rate of 2.5 percent on incomes, with 1.5 percent payable by employers and one percent by employees.
The incidence of the above will fall on EHG (and employees).

VAT on hotel accommodation will double to 15 percent from January 1, 2020, with a per night hotel room levy applying in the interim, which will range from USD2.50 to USD10 per night. In addition, a 2.5 percent product levy will be imposed on all direct tourism services. This will be collected by the providers of these services.

A 10 percent tax on all sharing economy transactions, such as those provided by Airbnb, Homeaway, Expedia, and others, will be imposed from August 1, 2018.

An airline travel and tourism development fee will be introduced from October 1, 2018. Passengers flying to destinations outside the Caribbean Community will pay USD70, while those flying to destinations within the Caribbean Community will pay USD35. This fee will be in addition to the departure tax.

The incidence of the second group will be on tourists rather than hotels, but may reduce demand for tourism.

Source: https://www.tax-news.com/news/Tax_Regime_Overhaul_Announced_In_Barbados____76835.html

I hold EHG.

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sharw 4th Oct 21 of 39
4

One caveat to the finnCap research is that you do have to tick a qualification box the minimum for which is High Net Worth Individual. I have found that defined as:

If you earn at least £100,000 a year or have net assets excluding property and pensions of at least £250,000, you can self-certify yourself as a high net worth individual (HNWI) or a ‘sophisticated investor’.

from https://www.nelsonslaw.co.uk/h...

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dahokolomoki 4th Oct 23 of 39
2

In reply to post #404414

On Elegant Hotels (LON:EHG), there was also a preliminary bid approach from the Accor Hotel group. So that's another consideration, that they could become a nice acquisition for one of the large chains, all who have been doing well recently and probably hungry for some growth in their portfolio.

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rogergreen 4th Oct 24 of 39
6

Three cheers for FinnCap (and thanks for flagging it Paul).

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FREng 4th Oct 25 of 39
3

In reply to post #404569

Why not "self certified sophisticated investor"?

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StandardModel 4th Oct 26 of 39

Hi Paul

Any opinion on £TED? I know it's not a small cap but you have commented on it before ... Is today's drop an overreaction?

thanks
Mick

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Gromley 4th Oct 27 of 39
4

In reply to post #404639

I hadn't looked at Ted Baker (LON:TED) for ages and my recollection was that in stockrank style terms they were a High Flyer (high Quality and Momentum but little by way of Value credentials).

But no longer, the momentum has gone and they are now considered as a Falling Star.

And it is not just the shareprice that has lost momentum , earnings forecasts have been consistently downgraded throughout the year.

5bb619a94463cTED.JPG


Not a happy picture.

I have hardly even skimmed the surface of the results, but I do note that Stock are showing a forecast 7% increase in revenue for the year but for the half year they are +3.5% (+5.5% at constant currency) .

With no obvious reason why H2 will be any better I would expect further downgrades to come.

On this basis I didn't look any further.

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shanklin100 4th Oct 28 of 39
2

Hi Paul
Many thanks for the heads up re FinnCap
Best Regards
Martin

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Beginner 4th Oct 29 of 39

In reply to post #404364

https://twitter.com/MrContrarian

A succinct explanantion by one wiser than me.

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peterthegreat 4th Oct 30 of 39
9

Thanks for the comments on Intercede Paul as the company does look interesting. I went to the company's web site to find out more but found it quite difficult to evaluate the company. A key strength promoted on the web site appears to be that the company's "team of experts has deployed millions of identities to governments" and other organisations which sounds impressive but I haven't a clue how you measure the significance of this. Also I found that the video on the web site explaining the "PSD2 Hub" does not exist so I am none the wiser on what that is. I then clicked on the link on the web site "rapid.intercede.com" to find out about the company's RapidID technology and the link did not work! If Intercede can't even get their web site up to standard I wonder how they manage with more complicated tasks?

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shine66 4th Oct 31 of 39
24

In reply to post #404569

I managed to sign up to Finncap as a 'sophisticated private investor', and so far they have totally failed to spot that I'm an idiot. 

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JohnEustace 4th Oct 32 of 39

There is a definition of "sophisticated investor" and I will be surprised if many people qualify:
Sophisticated investors
23.—(1) “Certified sophisticated investor” means a person—

(a)who has a current certificate in writing or other legible form signed by an authorised person to the effect that he is sufficiently knowledgeable to understand the risks associated with participating in unregulated schemes; and
(b)who has signed, within the period of twelve months ending with the day on which the communication is made, a statement in the following terms:
“I make this statement so that I can receive promotions which are exempt from the restriction on promotion of unregulated schemes in the Financial Services and Markets Act 2000. The exemption relates to certified sophisticated investors and I declare that I qualify as such. I accept that the schemes to which the promotions will relate are not authorised or recognised for the purposes of that Act. I am aware that it is open to me to seek advice from an authorised person who specialises in advising on this kind of investment”.

Does anyone know who would issue such a certificate?
www.legislation.gov.uk/uksi/20...

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Lion Tamer 4th Oct 33 of 39
2

In reply to post #404694

And a supplementary question to John's (re the definition of "sophisticated investor"):

I notice the definition of a Certified high net worth individual is on this page:
http://www.legislation.gov.uk/uksi/2001/1060/article/21/made
It states a number of conditions (basically you've got either an annual income of over £100,000 or net assets after house, potential insurance benefits & pension etc. £250,000 or more). However the copy/paste certification text also has to be signed by the recipient’s accountant or by the recipient’s employer. Well I've got neither an employer or an accountant, as I'm early retired and do my own accounts / tax returns (always have done, which may be why I could afford to retire:)). So although I meet the conditions, I'd be unclear how to arrange the certification.

For the record, this is a rhetorical / academic question, since I took the pragmatic approach of clicking "High Net Worth" on the FinCap registration page and signed up anyway. Let the authorities come looking for me if they've nothing better to do!

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peterg 4th Oct 34 of 39
2

In reply to post #404694

The FinnCap category is "self certified sophisticated investor", so the question of who issues a certificate doesn't really arise.

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davidjhill 4th Oct 35 of 39
2

In reply to post #404544

The best place for Broker research in my opinion is Research Tree that includes many brokers to small/medium cap companies.

It is an aggregator of most research houses and Edison, FinnCap, Liberum, SP Angel, Zeus, N+1 Singer, Cenkos, Capital Network. WH Ireland are all on there.

I subscribe and if you haven't already taken a look I think they do a 30 day free trial from memory.


ps edit : I was just looking and I see 2 notes on Elegant Hotels (LON:EHG) for example so you can compare what different brokers think/say.

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Paul Scott 4th Oct 36 of 39
6

In reply to post #404739

Yes, I agree, Research Tree is a fantastic service. I'm a big fan.
It's very handy to have things in one place, and the £25 pm fee is insignificant, compared with one losing trade, if you didn't have important information. A lot of people tend to be pound stupid, but penny wise, in my view - re scrimping on important services such as Stockopedia & Research Tree.

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FREng 5th Oct 37 of 39
2

In reply to post #404694

I think I can work out who would issue it for a "self certified sophisticated investor".

Isn't this all about shifting any liability for bad decisions on to the investor (where it should be)?

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davetparkes 8th Oct 38 of 39

tried finncap.

it wont accept my password - along the lines of Eabcde01x[

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stepone 8th Oct 39 of 39
1

Maybe it's upper case O rather than 0?

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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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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