Small Cap Value Report (Thu 8 April 2021) - COG, ASC, ALT, MOTR, PMI, EQLS, WINK

8th Apr '21 by Paul Scott

56 comments 11782 reads

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

Timing - we're rattling through things this morning, so should be done by official finish time of 1pm. Today's report is now finished.

Agenda -

Paul's section -

Early snapshots - quick fire comments on stand out news items between 7-8am. Readers seem to like this innovation, so we'll keep doing it. Paul gives a quick view on:

Cambridge Cognition Holdings (LON:COG) (I hold) - another contract win. Looks a very good, and reasonably-priced turnaround share.
Asos (LON:ASC) - Not a small cap but .... strong interim results, could be worth a look.
Altitude (LON:ALT) (I hold) - in line trading update. Seems to have enough cash to keep going. Recovery potential? I'm not sure on this one, it could go either way.

Motorpoint (LON:MOTR) - review of FY 03/2021 trading update. Interesting business model. Uncertain outlook. No guidance, so I can't form a view overall.

Tracsis (LON:TRCS) - Interim results are in line with the last trading update. A good quality group, I think.

Jack's section -

Premier Miton (LON:PMI) - UK equity fund inflows but multi-asset outflows worth monitoring
Equals (LON:EQLS) - cash break even and improving momentum into 2021 for this turnaround fintech company
M Winkworth (LON:WINK) - resilient results from this high quality but illiquid real estate franchisor micro cap

Paul's Section

Early snapshots -

Cambridge Cognition Holdings (LON:COG)

(I hold) - another contract win, £0.5m, mostly for delivery in 2021 - with a new client, which has a pipeline of new drugs (implying there could be more contract wins in future). Gross margin last year was 80%, so each new contract layers on useful extra gross profit, onto a largely fixed cost base - that's the perfect business model to me, and very much what I look for.

Given the large growth in order book previously reported, I think a recent flurry of new contract wins (e.g. £1.3m announced 9 days ago) makes it increasingly likely that forecasts could be raised again - current forecasts look too low to me. I covered all the main points here on 23 March 2021, when it issued much improved 2020 results.

My opinion - COG is clearly…

Unlock with Email

Unlock with Google

Already have an account?
Login here

nanotrader

8th Apr '21

Just points to the 100 bagger idea that you ignore the share price and just focus on the business. As long as the business is performing the share price will eventually catch-up (if not it will be taken over)

abtan

Tracsis (LON:TRCS) (I hold)

To add to the commentary here I think it's worth highlighting:

Increasing gross margins over the last 12 months:
Good growth in Europe across the last 12 months (+15% YOY):
NB: I assume the negative North America H2 revenue is FX-related, but it's so immaterial I'm not too concerned.
I am also hoping that Tracsis (LON:TRCS) become a beneficiary of the Biden Infrastructure plan.
2020/21 revenue forecasts in the StockReport are £51m.
Based on the commentary today I can't see how the company will exceed £47m.
In fact, achieving £51m would mean the company achieving it's best 6 month performance ever.
Are the forecasts we see the same as management's forecast?
Capital light model, with underlying cash generation for H1 of c£4m.
I'm assuming this will double to at least £8m for the FY and, if things get back on track, £12m in 2021/22.
I apply a x20 multiple on this given the quality of the business = £240m valuation looking 1 year out.
The current valuation is c£200m.

---

As a believer in things returning to "normal" in the next few years, I'm happy to hold in anticipation of that material uplift next year and beyond.

Fingers crossed.

grumpy5

I am not sure the financial pages of the Guardian are worth the valueble time of Stocko members!

bryaz

been with company for a number of years and i suspect we may see a special dividend coming our way

timarr

Definitely not, if all people want is to have their beliefs validated. Nils Pratley's comment on Saga (LON:SAGA) seems pretty much on the nose, mind:

“Customer demand remains strong, with evidence of significant pent-up demand from customers ready to travel,” says Saga, a statement that is clearly true because the first cruises this summer involve customers swapping their usual tour of the Mediterranean for all-British packages. Limited choice has not undermined demand.

Strictly speaking, one tour includes a look at a Norwegian fjord but the closest passengers will get to setting foot in Norway is the Orkneys and the Shetlands. The novelty of British tours might wear off if they became annual affairs. But, yes, the popularity of a cruise trip seems undimmed.

https://www.theguardian.com/bu...

Hugh Jass

Special Divi is almost a certainty , Andrew Grant said as much in his last statement.

greensiax

Here are my SCVR heat maps for today (prices as at ~2:00pm).

I share these heatmaps with the intention of giving a visual indication of what is going on in the SCVR world: who’s reporting (and it's impact on the share price); and what’s moving more than 'normal'. There are no associated recommendations, implied or otherwise, just information. How, or indeed if, you choose to use that information is up to you.

Please read my heat map thread for keys to the heat maps contents, more (non-SCVR specific) heat maps, and an explanation of how I use heatmaps to guide me with my research.

I have added a MarCap category to the heat maps, along with a high spread indicator. The key to the symbol heat maps is now:

Small / Micro Caps reporting today:

Big movers today in the SCVR world (moving more than a 20d EMA of the ATR against either yesterdays close, or today's open):

Warm regards, stay safe, and best of luck!

PS: My apologies for the slightly erratic nature of my contributions at the moment, school holidays and the day job are significantly impacting on my 'focus' time!

Gostevie

Which company are you referring to?

shanklin100

Jarvis Securities (LON:JIM)

Thanks abtan, are you saying that forecasts are too high at the moment? Not often we find that situation in the current environment

Tracsis (LON:TRCS)

Hi Nanotrader

"are you saying that forecasts are too high at the moment?"

I'm asking which forecasts should I be looking at, because the ones in Stockopedia just don't seem right.

Cheers

UK_Investor_8888

A fascinating week:-

XLMedia (LON:XLM) closed @63.8 and is close to doubling from 35p on 26/02/2021.

For me, I've noticed XLMedia (LON:XLM) the share split has been applied on my HL Corporate Account but not on my HL ISA. I guess different back-office teams doing the admin.

My Corporate took the offer turning the 40p offering into the current 63.8p. Silly me for not taking my personal offering due to year end financial lockdown and window-dressing.

Here we may really find out the value of StockRank, Q and Magic formula. My money is on the algos being right. I bought XLMedia (LON:XLM) when it was No1 on the Magic Formula screen and threw everything at it in the crash.

International Personal Finance (LON:IPF) closes @110p.
Nice surge from the purveyor of self-destructive products to the dull-of-mind British American Tobacco (LON:BATS) +3%.
Centamin (LON:CEY) poking its head about 110p.
Plus500 (LON:PLUS) @1483p at last starting to chase its peers who have shot ahead.
IG Group (LON:IGG) @931p - all sins forgiven.

I'm up 8.6% this week and could be breaking two more milestones if nothing goes wrong.

Final fact of the day from a scientist on "Newsnight": You are more likely to die having a bath, coming down the stairs, eating breakfast or going for a walk than of a blood clot from the Astra Zeneca bug-jab.

sharw

abtan - the only forecast for Tracsis (LON:TRCS) is from finnCap, one of the more PI friendly brokers, so you can register with them yourself and read it for free.

This morning they did a marginal trim and now have eps 25.8 this and 34.7 next on revenue 48.0 this and 60.5 next.

Troymcclure1970

I would also add that the competition is very high profile, can't switch on the TV without an Ad for them, Motorpoint seem conspicuous by their absence.

Boon

On Asos (LON:ASC) margins might have jumped alot, driving a much better profit. But you have to take a call on whether returns rates will trend back to normal after lockdown, or not.

Two things that could drive increased returns: people going out and about, so able to drop off at the parcelshop or post office easier. And people buying more fancy, party wear instead of homewear, which drives more returns too.

eg even if you assume revenues are going to be same YoY, but margins returning back to where they were pre-COVID, you're looking at a 30% drop in operating profit YoY.

Hi Sharw

Thanks very much for that.

I don't really read broker notes, but it's good to read that Finncap's revenue forecast this year is now £48m, that's much closer to what I have pencilled in too - thank you for sharing.

It looks like the £51m in the StockReport is therefore just out of date. I'm sure the updated Finncap number will feed through shortly.

Hopefully the £48m is management's view too, though I really wish they would just state this in their releases.

That's because competition (Cazoo, Carwow, etc) have VC money to burn and not concerned about turning a profit.

Cazoo is reversing into a SPAC, valued at US$7bn. In Q1, it did annualised sales of US$600m/yr. Used cars too. 100% of sales online.

Motorpoint (LON:MOTR) doing circa £800m in sales for FY Mar21. Market cap is £233m. But >50% of sales are online.

Presumably, the logical conclusion should be that if US$7bn is for "online car selling tech that can do $600m/yr sales", then Motorpoint (LON:MOTR) doing £400m+/yr (US$552m) sales online should be worth roughly the same US$7bn market cap?

Food for thought!

Maybe Motorpoint (LON:MOTR) management should just stop selling cars at retail completely. Therefore become a 100% online company. Doing £400m/yr sales (instead of £800m) but market cap will increase from £233m to US$7bn overnight.

Hi Dahokolomoki

I recall receiving a response from an Investor Relations department in the last few months for an online retailer (sorry, I can't remember which company it was) and they confirmed that they didn't expect return rates to increase in the future.

Doing more in-depth research into Stitch Fix ($SFIX) (no position) revealed that they too didn't seem to be placing too much emphasis on a normalisation of return rates.

I don't really understand these positions, but it will certainly be interesting to see what happens.

Perhaps if people get used to personally ordering so much through a handful of online retailers (as they did in 2020) they already have an idea of what will and won't fit them, hence lower returns?

KTF67

the key £COG quote during the webinar was that they were becoming more focused on selling products hence recruited more sales people. This seems to be helping the order traction.

RomanShare

29th Apr '21

Equals (LON:EQLS) Hosting Capital Markets Day next week for anyone interested.

https://www.equalsplc.com/capi...

Small Cap Value Report (Thu 8 April 2021) - COG, ASC, ALT, MOTR, PMI, EQLS, WINK

Paul's Section

Early snapshots -

Cambridge Cognition Holdings (LON:COG)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

56 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...