Small Cap Value Report (Thu 6 Jul 2017) - Quiz, BLTG, ENTU,

Thursday, Jul 06 2017 by
63

Good morning, it's Paul here.


Quiz

As promised, I'm coming back to you about my meeting yesterday with QUIZ. This company is a Glasgow-based omni-channel clothing retailer, which is due to float later this month. The RNS giving some details about the company is here.

It was almost like looking back in time for me, as the company's business model is so similar to my old employer "Pilot" - where I was Head of Finance from 1993 to 2002. Quiz operates from around 67 UK stores, plus about 140 concessions in department stores such as Debenhams. It also has growing overseas, and online sales. It sells about 60% of online sales through its own website & apps, and the balance through third parties, such as Debenhams.com

Its product is fairly cheap, and slightly niche - in that the company focuses on "dressy" items - i.e. special occasion wear for women, e.g. party dresses, evening wear, weddings, etc. So the company doesn't try to compete on basics, but targets higher margin special occasion wear. I noticed from the company's app that everything I looked at was 100% polyester. So what one of my friends refers to as, "all fur coat, and no knickers!"

I went in to the meeting feeling rather sceptical, but at the end of it was impressed. Management & shareholders are a British Asian family, which is usually best for the clothing sector in my experience. They're self-made people who know the sector inside-out, so a tick in the box there for management.

I also found their presentation well put together, with lots of positive facts & figures - e.g. decent profitability & growth. Although I struggled to hear the softly-spoken CEO - he definitely needs amplification to be heard over the noisy aircon at Panmure's offices. The meeting was full, with analysts and brokers, plus me & my broker. Sandwiches were placed in the middle of a large board room table, which most people couldn't easily reach, so few were consumed.

You can tell a lot from the way management answer questions. The first question was from a fund manager friend of mine, who asked management to elaborate on the company's insolvency in 2009. A tricky question, but management gave a clear & honest answer, saying that their rents were too high, which combined with the recession, meant they…

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Blancco Technology Group Plc, formerly Regenersis Plc, is a provider of mobile device diagnostics and secure data erasure solutions. The Company's segments include Erasure and Diagnostics. The Erasure segment focuses on development and delivery of solutions, and includes Blancco, which provides erasure software; SafeIT, which is engaged in cloud and networked data erasure business, and Tabernus, which is engaged in providing software erasure products. The Diagnostic segment includes Xcaliber Technologies, a smartphone diagnostics software business. Its secure data erasure solutions include Blancco Management Console, Blancco Cloud, Blancco File, Blancco 5, Blancco Mobile Solutions, Enterprise Erase E800, Enterprise Erase E2400, Enterprise Erase Mobile and Ontrack Eraser Degausser. Its mobile diagnostics solutions include fault diagnostics, repair and program enablement. It serves manufacturers, financial institutions, healthcare providers and government organizations across the world. more »

LSE Price
141.5p
Change
 
Mkt Cap (£m)
92.3
P/E (fwd)
34.6
Yield (fwd)
n/a

Entu (UK) PLC is engaged in the sale of replacement windows, double glazing, entrance doors, patio doors and exterior improvement products within the United Kingdom. The Company's segments include Home Improvements, Energy Saving & Insulation, and the Repair and Renewal Service Agreements (RRSA). The Home Improvement segment products, doors, windows, conservatories and roofline, are sold through separate brands. The Energy Saving & Insulation segment products include solar photovoltaic installations, air-to-air heat pumps, voltage regulators, remote heating controls and boilers, as well as cavity wall insulation, external wall insulation and loft insulation. The Company's brands include Astley Facades, ZEST, Zenith, Weatherseal, Penicuik, Europlas, St Andrews, St Helens, Eco Piggy and Job Worth Doing. Astley offer external wall insulations and render systems, lightweight external wall framing, composite and timber cladding, as well as specialist terracotta and aluminum rain screens. more »

LSE Price
1.4p
Change
 
Mkt Cap (£m)
n/a
P/E (fwd)
n/a
Yield (fwd)
n/a



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37 Comments on this Article show/hide all

Effortless Cool 6th Jul '17 18 of 37

"... although there's about a 50% chance that might be derailed by me stopping off at the pub".

I will happily offer evens to anyone that wants to bet against Paul stopping off at the pub!

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andydil 6th Jul '17 19 of 37
2

In reply to post #197931

Return rate is likely to grow as online sales grow. I would also add from experience of over 30 yrs in the trade , a high returns rate can be a result of weak quality control systems in place. The trial and repeat model will also not help QC, many corners are cut to get the fabric and garment manufactured to those tight lead times.

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dscollard 6th Jul '17 20 of 37
3

In reply to post #197999

It's Thursday..
It's bloomin' hot...
I'd want much better odds than that, far too much risk given the above macro

Cheese I reckon

Website: runprofits.com
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rhomboid1 6th Jul '17 21 of 37
3

I'm struck by the similarity of the related party transactions at Entu (UK) (LON:ENTU) rightly being viewed as a big red flag yet Quiz has a big related party conflict with the vendors remaining the owners of the new distribution centre. I bet that's not on a 5 year lease...

I've no knowledge of the detail but if it's as described above that alone would rule it for me

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seadoc 6th Jul '17 22 of 37

Paul,

Is incestuous a prerogative term, financially speaking? You (or was it Graham) flagged up float of DP Eurasia NV (LON:DPEU) at 200p. Thank you, it made interesting (as in "may you live in interesting times") reading but it got a 10/10 bargepole rating from me, 90% cash to previous holders, most of remaining10% new cash to be spent in Russia. But any traders who bought in at 160p on day one of trading could have made 20% in a week. And it will go on my watch list at 20p.

Regards,

Seadoc

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jamesflavin 6th Jul '17 23 of 37

In reply to post #197943

Hi, can I ask where you source the Major Shareholders and dealing chart you post? Thank you

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JDW72 6th Jul '17 24 of 37
4

Re Entu, I have learned the same lessons as Paul with an additional one. In the early day, I tried and tried to make contact with the CEO and other mgt. I called, emailed, wrote etc. and was repeatedly fobbed off, at one point actually overhearing somebody (don't know who it was) in the background saying "Tell him I'm away from my desk and that I'll call him back" which he never did.

I had emailed my questions in advance and they were very benign and reasonable, it wasn't an inquisition. So, I figured that there was something fishy and sold out. Luckily for me I lost nothing and after I had sold received a chunk of that unsustainable divi!

With regards high dividend paying floats, hasn't an expensive yacht painting company just "floated" with a divi north of 6.5%? If I were allowed (work compliance prevents it) I'd be as short as a short thing on that!

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seadoc 6th Jul '17 25 of 37

In reply to post #198027

James,

http://images.stockopedia.co.uk/user/595e302ec737ebltg.JPG

Hope the link works,

Seadoc

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Beginner 6th Jul '17 26 of 37

In reply to post #198031

Regarding incestuous relations, does Accrol Group (LON:ACRL) have some form of arrangement where it manufactures but an intermediary sells? If so, this may be another barge pole. (Is there such a thing as a 'yacht pole'?)

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FREng 6th Jul '17 27 of 37
4

In reply to post #198047

Re: (Is there such a thing as a 'yacht pole'?)

Experts call it a "mast"

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seadoc 6th Jul '17 28 of 37
1

In reply to post #198047

Beginner,

"(Is there such a thing as a 'yacht pole'?)"

Bit OT but yacht poles? YES. Google Twistle or twizzle rig. One pole good, two poles better.

Sea(bit of a clue)doc

Edit and PS: FREng, umm masts? yup, need at least one of them as well!  Have sailed with up to three, but not on my Tupperware

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kenobi 6th Jul '17 29 of 37
1

In reply to post #198011

yes I find that highly dubious, why wouldn't that distribution centre be part of the business if it's owned by the same people ? with a correction in valuation to allow of course. It may not be material but it does introduce a conflict of interest, where by it's in the interests of the founders to pay too much for that property. Now I don't know that they will, but I do know that they've left themselves the temptation to. Now if the answer is that it's a temporary arrangement while another facility is built or something, then it makes sense, but if it's a long term arrangement, how does it make sense ? other than to benefit the founders , and leave some assets outside the company in case it fails ? Does not seem right to me.

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DWit199 6th Jul '17 30 of 37
1

Which country is Quiz registered in? There are no registration details on it's website and I can't find it on the Companies House website. Quiz Limited seems to be a private defence company from Bristol.

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rhomboid1 6th Jul '17 31 of 37
1

In reply to post #198067

The company appears to be Shoar holdings limited after a quick Google ,if that's it I'd value it about £15m on a pe of 10, not sure if that is the IPO price...

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DWit199 6th Jul '17 32 of 37
1

In reply to post #198071

Not enough turnover, but Shoar could be a subsidiary. I expect the full admission document will provide all the details.
Interestingly, Quiz Clothing Ltd and Quiz Limited were registered in Jersy in Feb and March 2017

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bestace 6th Jul '17 33 of 37
2

In reply to post #198079

Shoar is the main holding company according to their latest confirmation statement on Companies House.

The T&Cs on the retail website reference a company called 'Tarak International Limited' which is registered in Scotland and is consolidated into Shoar (Holdings) Limited along with a couple of other companies, Kast Retail Limited and Tarak Manufacturing Limited.

As you say, the group accounts for Shoar don't tally with the figures declared in the RNS so maybe there are some other trading companies out there not consolidated into the Shoar group accounts?

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dscollard 6th Jul '17 34 of 37

In reply to post #198027

from SharePad which I get as part of a subscription to Sharescope .

Sharepad.co.uk

Think you can take a free trial

Website: runprofits.com
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ABMorley 7th Jul '17 35 of 37
1

My first post - thanks for the column - much enjoy the quality writing.

A while ago - in 23 May 2017 - you were quite positive about Entu (UK) (LON:ENTU) connected company Epwin (LON:EPWN), who make the money on making the windows that Entu sell. With Entu smelling funny, what's your thought about Epwin? If Entu is in trouble, surely Epwin will struggle. I've the sold my Epwin, feeling a little nervous. Any thoughts anyone?

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garethpaulmorgan 7th Jul '17 36 of 37

Great post

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Ramridge 21st Jul '17 37 of 37

Re QUIZ
In case you missed this yesterday, there was an RNS giving details of this IPO.
First dealing date is expected to be  28 July
The admission document is now available on the company's website. Here is the    link

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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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