Small Cap Value Report (Thur 20 April 2023) - MUL, IGR, PAY, GBG, RNK, DNM

20th Apr '23 by Graham Neary

91 comments 8199 reads

Good morning! Roland and Graham here to comment on this morning's releases.

10.20am: we're done! See you tomorrow.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Graham's Section

Mulberry (LON:MUL)

Share price: 210p (-6%)
Market cap: £126m

These shares rose 7% yesterday, in advance of today’s full-year trading update.

That might just be random white noise, however; the shares are illiquid as the company is 90% owned by the Ong family and by Mike Ashley’s Frasers (LON:FRAS) .

So there’s really only around £10m worth of Mulberry stock that is up for grabs for private investors.

This is a stock I like to follow as Burberry (LON:BRBY) is a core holding of mine, and the two companies share much in common.

Today we have a year-end trading update, informing us that FY March 2023 is in line with expectations.

I note that the estimates for 2023 were cut about a year ago, and then stabilised:

According to Stockopedia, the company is expected to generate revenues of £155m and net profit of £7m for 2023.

Key points:

H2 was better thanks to a good performance in the UK and an improvement in China. I reviewed the poor H1 numbers in November.
Gross margin has…

Unlock with Email

Unlock with Google

Already have an account?
Login here

Snowbum

20th Apr '23

That's precisely the objective of the discord...

FREng

The directors of Kromek (LON:KMK) have been buying (fairly small amounts but at higher prices than currently). Institutions seem to be buying rather than selling. Only David and Monique Newlands have sold (judging from the Stockopedia list). Newlands is a fairly large investor: his disclosed holdings are here. You might see what you think about his judgement by looking at his other investments.

Kromek's value depends on its financial returns or on its strategic significance to a trade purchaser. At the moment it seems that the market believes there are better returns elsewhare, and no trade purchaser is interested.

What might cause this to change? (No position currently).

Lord Gnome

You are bang out of order masquerading as a Stocko development and then having the audacity to promote it on their web site to take traffic from them. I am surprised that Stocko has left your post in place. I would have had it removed tout blooming suite.

jamieswain

Purchased a starter position in PayPoint (LON:PAY) in 2014 with continued purchases until 29th March. Currently down 17% capital loss although more like 12.5% total loss after dividends to date. Currently my largest holding in an otherwise arguably over diversified portfolio.

The cash churned out in dividends hopefully backs up what appears to be is a fairly simple business with tailwinds from exposure to eCommerce and fintech whilst it's defensive inflation linked quasi monopolistic earnings benefit from a raising rate environment.

Mr Market is pricing it at a single digit PE equal to its dividend.

Sounds great!

On the other hand is the current price reflecting the recent letter before action which may challenge its market position? Was the recent acquisition of Appreciate a distraction to hide financial cockroaches?

Or is it just on sale right now and I should continue to back up the truck?

peterg

But there have been single company threads on here, and there's no reason why there shouldn't be. They just haven't taken off. I'm not sure a new site will do much more than dilute.

Perhaps there is a case for Stocko to look at favourite/search/ordering mechanisms etc, to see if it's possible to make long term, single co threads more accessible here?

They've been gradually building a position in PayPoint (LON:PAY), however have yet to purchase in the market since the Appreciate acquisition. It is also worth thinking about the main shareholders of Appreciate and their intentions (Samson Rock aside).

I'd be all for that. However, there appears to be a bug that even causes tags to be lost from SCVR, that the resident writers here have to regularly re-post; so it's likely individual stock threads here would 'get lost' as they wouldn't be found by the 'discussions' tab on the stock reports. In the old site, it was also possible to contact another member directly, rather than wait hours/ days for a response in a thread, if one was even to come. Discord has the ability to 'notify' any member who has made a comment that a reply has been given allowing for more real time discussion on subjects & stocks out with the remit of SCVR.

As Caduceus has mentioned many times, the intention is not for dilution, or to steer traffic elsewhere, but to enhance the experience for users who wish to have this kind of functionality. Of course, many and most will choose not to use it, that is their decision and the discord users (not affiliated with Stockopedia) have no issue with that.

Snazzytime

Eurocell (LON:ECEL)

This share was one of Paul's mystery shares in March, following release of FY'22 results on 16th March.

The SP today is down 8p but that simply reflects going XD today in respect of the final dividend of 7.2p.

In March the forecast EPS for FY'23 was 18p. It is currently shown on Stocko at a slightly reduced figure of 17.3p.

However, on the company website, consensus forecasts were updated in March as follows:

FY'23 EPS - Peel Hunt 15.5p, Berenberg 15.4p.

FY'24 EP - Peel Hunt 17.2p, Berenberg 17.4p.

The reduced FY'23 forecasts have not been updated on either Stocko or Sharepad. Seems rather strange (and unusual) that the revised figures have not filtered through to either.

Without these revised figures feeding through there is a heightened risk of a profit warning.

Paul's valuation was based around FY'23 EPS of 18p then reverting to a longer term reversion to at least a steady historic level of 20p. That might take a while longer than Paul expected in March.

I was doing some research with a view to opening a position but it looks like a downward revision of expectations is required. Not quite the slam dunk bargain it appeared so may pay to hold off for now.

This is the first time I have seen a company provide consensus forecasts on their website so credit to Eurocell for providing this information.

Snazzy

Hmmm - but if Stocko Societas is not affiliated with Stockopedia then why is its usage restricted to Stockopedia subscribers and not to be shared outside SCVR?

Makes no sense.

ken mitchell

Except for this excellent SCVR bb, most threads here seem dead unfortunately, and even here it’s not worth posting beyond late afternoon as posts after that time rarely get any reaction.

matylda

If this was wanted or required by Stocko or its members surely Stocko would have set it up - Odd !

Albm7

I would find it useful on Stockopedia if, when we pull up a stock and look at the discussion tab it pulls up any comments from any of us assuming we have put the ticker in the correct format - Eg. I posted something on Fulham Shore (LON:FUL) in the SCVR April 5th but this does not get flagged in anyway. This I think would be a great addition and very useful.

Someone suggested keeping a manual list but that does not help if you want to research a stock you had no interest in previously?

As for general discussion, maybe a good start could be if Stockopedia could consider creating a page under the Discussion / UK Blogs in which we can discuss any stock we want and maybe a US Page too etc . This could be useful say for example on Monday 10th April (UK Bank holiday ) US markets were open but if anybody wanted to discuss something you would have to write on the last SCVR of the week. We have 2 such dates coming up where the UK is closed but US is open (May 1st & May 8th) - Just my thoughts

BnB

Any recommendations

Robert Walters (LON:RWA) looks ridiculously good value today for a superbly run business with a great dividend. It’s priced for deep recession when it’s main markets in Asia are potentially about to go into overdrive, owing to a combination of a powerful bounce back in China affecting all satellites and structural changes in corporations and employment in Japan. I could be wrong about the entry price or the timing - I usually am - but I’m very confident about the company and the profit potential.

Michael_P

The StockSlam event pitches that were running until last year did have a Discord option for live chat, so it isn't unheard of in the Stockopedia world. It's a shame those haven't made a comeback, hopefully, they will at some point. Not saying I'm going to join the new group but I do think some of the negative comments have been a bit harsh.

Westway001

This comment has been moderated

KevinS1

Thanks Snazzy - very informative. Eurocell (LON:ECEL) is on my watchlist, but am still a little undecided as to if it has reached its bottom yet, so appreciate your thoughts. I will hang on a while longer.

WarrantStar

21st Apr '23

Hi Albm7. I agree that when we are on the stockreport page for any company, and we click on the Discussions heading, that it often does not work as well as it should. And so we don't see all the relevant discussions that we expected to see. Often this is because the person that created the post did not insert the name of the company in the post in the correct manner. As an example, it should look like Portmeirion (LON:PMP) . But i am sure that there are other problems going on. eg We hear that the tags are being lost. I wish that Stockopedia would fix these problems.

As far as Stockopedia creating pages like you suggest, I don't see any need for that. Any subscriber can create a post about any subject they want. It can be about a particular company, or about anything else like what direction the market is heading, To start a new page, all we have to do is click on the blue button "Create Post" on the top left of this discussion section.

jonno

I think the 'easy money' has been made in Portmeirion (LON:PMP) but in my view the shares are still undervalued and have further to run. Given the recent update Volex (LON:VLX) also looks interesting.

I would also mention Jet2 (LON:JET2) . The following are my views/thoughts.

Forward thinking management lead by Executive Chairman and founder Phillip Meeson have run rings around the competition, notably TUI AG (LON:TUI). Jet2 (LON:JET2) has over 1 billion of cash (its own) and confirmed orders with Airbus. It has a very good record for customer service and treats its staff well.

"Following the trading update in late January 2023, the Board now expects to report a Group profit before foreign exchange revaluation and taxation for the year ended 31 March 2023 of between £387m and £392m. Total cash at 31 March 2023 was £2.62bn with an 'Own Cash' balance (excluding customer advance deposits) of £1.12bn."

It has also increased its control over handling operations at its major airports, in line with a proactive approach by management.

"Just as we did last year, we invested well ahead of the summer season to ensure we have adequate, fully trained resources to operate with our normal high standards of customer care. In addition, we have increased our operational resilience by taking control of handling operations at a further two of our UK bases - Bristol and Newcastle - meaning we now self-handle at seven of our ten UK bases and are therefore not reliant on third parties for these aspects of our operations."

Anecdotal evidence indicates that the holiday industry and airlines are experiencing significant tailwinds, if you look at announcements from easyJet (LON:EZJ) Ramsdens Holdings (LON:RFX) and the like.

Extract from easyJet (LON:EZJ) 18 April trading update:

"We see continued strong booking momentum into summer as customers prioritise spending on travel and choose airlines like easyJet offering the best value and destination mix, as well as easyJet holidays which is continuing its steep growth trajectory as the fastest growing holidays company in the UK. "

Jet2 (LON:JET2) is no longer as cheap as it was but trades on <10 PE. The company will to an extent be buffeted from time to time by macro events, but it has excellent management. I think that it is a very good company and may even in time turn out to be a great company. I have recently bought an opening position and will look to add depending on price and availabilty of funds.

Portmeirion (LON:PMP) and Volex (LON:VLX) are my 2nd and 3rd largest holdings. Avingtrans (LON:AVG) being number 1.

Hi WarrantStar, Sorry I missed your reply to my comment - I agree we can create our own posts but again it comes down to the search function which seems to not work - Eg looking at the list of recent posts - I see a post called Diversification - but if I search that term it does not appear.

Hi Albm7. Have you tried making a comment / suggestion / complaint by using the green button at the bottom right of all pages?

Small Cap Value Report (Thur 20 April 2023) - MUL, IGR, PAY, GBG, RNK, DNM

Graham's Section

Mulberry (LON:MUL)

Unlock the rest of this article with a 14 day trial

About the Author

Graham Neary

91 comments

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

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