Small Cap Value Report (Thur 21 Feb 2019) - PURP, PTSG, MCB, MACF, IDP, KWS, AVAP
Good morning!
Lots of updates today, including a shocker from Purplebricks (LON:PURP).
- Purplebricks (LON:PURP) - trading update
- Premier Technical Services (LON:PTSG) - statement re: share price movement
- McBride (LON:MCB) - half year report
- Macfarlane (LON:MACF) - final results
- Innovaderma (LON:IDP) - half year report
- Keywords Studios (LON:KWS) - acquisition
Also, please see comment #7 in the thread below by Carcosa, who is something of an expert on Avation (LON:AVAP) and provides us with analysis of its interims. It's not worth my while studying it for you guys when he has already done the work!
Thanks for the comments - and for all your excellent contributions.
Purplebricks (LON:PURP)
- Share price: 123p (-25%)
- No. of shares: 303 million
- Market cap: £373 million
Trading update and management changes
The wheels have been coming off this online estate agent's growth story for a while - see its coverage in the SCVR archives.
My point of view on this stock has been straightforward enough: the company hasn't made enough progress in the UK to justify a large international growth spree. Aside from poor numbers in black and white, there have been a few red flags:
- the company's aggressive treatment of negative reviews and the websites which host them
- question marks over how it accounts for revenue
Today's update indicates that the company is struggling in several geographies:
- UK: revenue still expected up 15-20% this year despite a challenging market. The UK CEO leaves after two years in the job.
- Australia: revenues will miss expectations
- USA: revenue will miss expectations. The US CEO leaves after two years in the job.
- Canada: set to meet expectations.
In December, guidance for the year ending April 2019 was reduced. This guidance is now reduced dramatically again (bolding is mine):
As reported at the interim results, the Company updated its revenue guidance for the 2018/19 financial year to £165-175 million under IAS 18. Given the reasons noted above, the Board believes revenue for the current financial year will now be in the £130-140 million range under IFRS…
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All my own views. I am not regulated by the FSA. No advice.
Purplebricks Group plc is a United Kingdom-based company engaged in the business of estate agency. The Company operates through the division of providing services relating to the sale of properties. The Company uses technology in the process of selling, buying or letting of properties. The Company operates in the United Kingdom. more »
LSE Price
Premier Technical Services Group plc (PTSG) is a United Kingdom-based company engaged in the maintenance, inspection, testing, repair and installation of permanent facade access equipment, fall arrest systems and lightning protection systems together with fixed wire and portable appliance testing and high level cleaning. The Company operates through three segments: Access and Safety, Electrical Services and High Level Cleaning. The Company's Access and Safety segment offers Safety Testing, Safety Installation, Cradle Maintenance and Cradle Installation. The Company's Electrical Services segment offers Lightning Protection, Fixed Wire Testing, Portable appliance testing (PAT) Testing, Fire Alarm and Extinguishers, and Steeplejack Services. The Company's High Level Cleaning segment offers Window Cleaning, Gutter Cleaning, Building Cleaning and Pressure Cleaning. The Company's Training Solutions division offers Training, Consultancy and Insurance Inspections. more »
LSE Price
McBride plc is a provider of private label household and personal care products. The Company is engaged in developing, producing and supplying its products to retailers across Europe. Its segments include Household and Corporate. The Household segment consists of UK; North, including France, Belgium, Holland and Scandinavia; South, including Italy and Spain, and East, including Germany, Poland, Luxembourg and other Eastern Europe. The Company's brands include Surcare, Clean and Fresh, McBride Direct, Limelite and Ovenpride. Its Surcare product range includes Surcare Sensitive Capsules, Surcare Sensitive Non-Bio Powder, Surcare Sensitive Non-Bio Powder and Surcare Sensitive Fabric Conditioner. The Company operates approximately 18 manufacturing sites in over 12 countries. more »
LSE Price
36 Comments on this Article show/hide all
Hi Graham
Your views on RPS would be appreciated.
Thanks
In reply to post #450688
re: Purplebricks (LON:PURP)
Yes timarr, I agree. I call it obfuscation - talking about the accounting standards as if they are responsible, when the company has previously said that they are no big deal. It can't have it both ways. Great comment.
In reply to post #450758
Hi Gary, yes I will be looking at Innovaderma (LON:IDP). Cheers. G
Purplebricks (LON:PURP)
"here are seasonal factors at play (people not moving around Christmas time". FWIW and I know anecdotal/sample of 1, but i sold (completed) my house on December 7th through a traditional EA, who said that because of the bad weather in the Spring they had seen the main buying/selling period pushed back into later in the year. So perhaps Purplebricks (LON:PURP) should not have seen "seasonal factors" effecting listings?
In reply to post #450783
Hi gus / andrea / andy
Tend to agree with the comments on Macfarlane (LON:MACF), all very dull and uninspiring at the moment. The results would almost send you to sleep! It looks a decent business all the same. G
In reply to post #450803
Aislabie, You are correct. For non-aviation geeks I think A320 is good enough as I doubt the nuances are not of value. However, for the record, the VietJet aircraft is specifically a A321-200 and I think it is potentially registered as VN-685 with Manufacturing Serial Number 7427, manufactured 29th November 2019 with CFM56-5B3/3 engines and seating for 230 passengers, which is the highest seat density of an Airbus A321-200. Purchase cost of ~US$ 51,358,000
;-)
Thanks for the great comment on Avation (LON:AVAP) Carcosa, I wil mention it in the body of the report!
In reply to post #450883
I humbly bow to a greater aviation geek!!
In reply to post #450883
".... manufactured 29th November 2019 ...."?
In reply to post #450883
Thank you Carcosa - Very much appreciated your comments from you and time taken. I have been in them since April 14 at 1.06 so I guess a long term holder but was considering reducing if the SP tests close to 3.00.
Thanks again.
In reply to post #450743
Thank you, too, Carcosa. I too have been in Avation (LON:AVAP) for quite a while and don't want to sell. It's one of my very few real 'growth-rather-than-income' stocks (others are either income stocks or high-risk exploration plays). I think their presentations are very well done, as clear and accountable as any on the market. And I liked this one too: the strategy is still being consistently well executed. Any view on key man risk with Jeff Chatfield?
My only current sadness is that the NAV hasn't risen a bit further. We now seem up with events. Would you sell if it finally got pushed, say, 10% beyond?
In reply to post #450743
Carcosa
As a long term holder I much appreciate you analysis an thoughts on Avation (LON:AVAP). I alway go though them more than once to ensure I have the full picture
Thanks again
Steve
In reply to post #450743
Sorry forgot to add to previous note.
What is the impact on the Airbus cancellation of the A320 project do you think? Longer life and values for the A320/321 series over the long term?
In reply to post #450933
They cancelled the A380, not the A320/321.
The A320 range will carry on selling quickly as long as it only has to compete with the 737.
However, 2 prototypes of the Comac C919 are flying. If this goes into service on schedule in 2021, this sector is no longer a 2 horse race.
Thanks Graham for your comments on McBride. I am not a current holder but have been twice in the past. They are back on my watchlist.
In reply to post #450938
Sorry, slip of the pen re cancelled A380
Thanks for your note
If purple bricks is still trading in two years time i will be amazed . Business modelin my opinion doomed to failure over the long term
Purplebricks is not going to derive any significant benefit from a network effect, as all the buyers will search via Rightmove. So any number of small scale competitors could do what Purple Bricks are offering. I have seen adverts for what seems to be a similar service.
So I don't see why Purple Bricks would spend so much on advertising.
The management of critical reviews is an interesting one. Estate agents are not exactly known for honesty. I could easily envisage the worst of them posting fake critical reviews of a low cost competitor. So there could be a need to counter this. However, Purplebricks management of reviews appears to go well beyond this and seems to include genuine customers. I see that as a red flag. Why take the risk ?
I held this a couple of years ago, with a modest profit, but have no plans to purchase again unless there are major changes to their strategy or my interpretation of it.
In reply to post #450808
Thanks for sharing your calculations. I come in at a similar level although I find it hard to trust Innovaderma (LON:IDP) as they have a history of not meeting expectations.
Incidentally I thought this table from their house broker FinnCap was useful - demonstrates how Roots is growing quickly. FinnCap publish broker notes freely providing you register.
Trust - Agreed.