Small Cap Value Report (Thur 29 November 2018) - Markets, RFX/HAT, CCT, MOTR, PAM

Thursday, Nov 29 2018 by

Good morning!

I got home at about 1am last night, after a delayed flight. But am feeling surprisingly chirpy, all the same.

The overall level of the market remains on my mind. I might have underestimated the extent to which the air coming out of US equities could be a headwind for UK shares. And I do think there is a lot of air that needs to be extracted from the US markets.

That being said, President Trump is not going to want a stock market crash to be the backdrop for his 2020 re-election campaign. He regrets hiring Fed Chairman Jerome Powell, who bears the ultimately responsibility for rising interest rates:

"So far, I'm not even a little bit happy with my selection of Jay," Trump told the Post. "Not even a little bit. And I'm not blaming anybody, but I'm just telling you I think that the Fed is way off-base with what they're doing."

If the Fed slows down its rate hikes under pressure from the President, that will certainly be good news for equity prices.

The market has started to price that in: after yesterday's rally, the Dow Jones Industrial Average is only about 6% off its recent all-time high. That still sounds rather optimistic to me!

Like most of you, I continue to spend most of my time looking at individual companies. But it's nice to have a sense of history and of overall valuation levels, to give the context for what we're doing. I remain bullish for UK shares, while acknowledging that the road higher will be a rocky one.

Today we are looking at:

Ramsdens Holdings (LON:RFX)

  • Share price: 163p (unchanged today)
  • No. of shares: 31 million
  • Market cap: £50 million

Interim Results - Six Months ended 30 September 2018

What a crazy range this one had yesterday: a high of 167.5p, a low of 147.5p. Results had been reported in line with expectations.

It ended the day 2p higher than the previous day, at 163p.

Ramsdens is a pawnbroking/financial services chain based in the…

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All my own views. I am not regulated by the FSA. No advice.

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Ramsdens Holdings PLC (Ramsdens) is a financial services provider and retailer. The Company operates through four segments: Foreign Currency Exchange, Pawnbroking, Purchases of precious metals and Jewellery Retail. The Foreign Currency Exchange segment consists of primarily, the sale and purchase of foreign currency notes with prepaid travel cards and international bank to bank payments. The Pawnbroking segment is a form of asset backed lending where an item of value is given to the pawnbroker in exchange for a cash loan. Through its precious metals buying and selling service, Ramsdens offers to buy unwanted jewelry, gold and other precious metals from customers for cash. The Company is engaged in refurbishing items bought from customers and retailing them through its store network. The Company also provides ancillary services, including franchise fees, western union, sale and buy back of electronics, and credit broking. It has a portfolio of over 130 stores. more »

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H&T Group plc is a non-trading holding company. The Company provides a range of simple and accessible financial products tailored for a customer base, which has limited access to, or is excluded from, the traditional banking and finance sector. Its segments include Pawnbroking, which is engaged in providing secured loans against collateral (the pledge); Gold Purchasing, which is involved in buying Jewelry directly from customers through its stores; Retail, which is involved in retail sales of gold and jewelry, and the retail sales are forfeited items from the pawnbroking pledge book or refurbished items from its gold purchasing operations; Pawnbroking Scrap, which comprises various other proceeds from gold scrap sales other than those reported within Gold Purchasing; Personal Loans, which comprises income from its unsecured lending activities, and Other Services, which comprises third party check encashment, buyback, prepaid debit card product and foreign exchange currency services. more »

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The Character Group plc is a toy company. The Company is engaged in the design, development and international distribution of toys, games and gifts. Its geographical segments include other EU, UK and Far East. It designs and manufactures toys based on television, film and digital characters, and distributes these products in the United Kingdom and overseas. It also distributes finished products in the United Kingdom developed by overseas-based toy producers. Its diverse product range includes products for pre-school, boys, activity and girls. The Company's brands include Peppa Pig, Little Live Pets, Teletubbies, Minecraft, Scooby Doo, Mashems, Fireman Sam and Ben & Holly. Its customer list includes the United Kingdom toy retailers, the United Kingdom independent toy stores and a selection of overseas distributors. It operates approximately two distribution warehouses located near Oldham, Greater Manchester. It primarily distributes products sourced from overseas third parties. more »

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

65 Comments on this Article show/hide all

Paul Scott 29th Nov '18 1 of 65

Morning All!

Just to let you know that I've updated yesterday's report further with new material on On The Beach (LON:OTB) .

This was because our reader called "Reacher" very helpfully posted a link in the comments section, to results presentation slides which OTB had published. These slides were a mine of useful additional detail, and answered my 2 main queries on the company.

Therefore I have incorporated this additional info into yesterday's report.

It's incredibly helpful when readers flag up results presentation material to me & Graham, so many thanks to Reacher. Also, I encourage all readers to flag up any future results presentation slides on any relevant company, in the comments to our articles.

Incidentally, I've emailed Rob at Research Tree, to suggest that RT includes links to results presentation slides on their platform, which would make it easier for us to pick up on this useful material when it's available.

Huge rally in the US last night. It seems to be because of comments about interest rates, that they're not going to rise much. I think it seems to be interest rates & bond yields that have been the main factor in driving the recent (global) market correction.

Best wishes, Paul.

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MrContrarian 29th Nov '18 2 of 65

My morning smallcap tweet:

Dignity (LON:DTY), Synectics (LON:SNX), Coral Products (LON:CRU), Realm Therapeutics (LON:RLM), Character (LON:CCT)

Dignity (DTY) CMA interim report on funeral mkt concludes mkt not working well enough. Will conduct a full Market Investigation. "Its initial work indicates problems with the market that have led to above inflation price rises for well over a decade - both for funeral director services and crematoria services. The scale of these price rises does not currently appear to be justified by cost increases or quality improvements."
Synectics (SNX) guides FY U/L pretax broadly in line with market expectations. A weak performance in the UK on-vehicle security sector has been offset by strong results from global Gaming security. Will make a £2m write-off, most of which will be non-cash.The pipeline of expected (note) new business is somewhat stronger than originally expected, so "increasingly confident of solid progress in the Group's results in the coming year."
Coral Products (CRU) H1 rev up 10%, U/L EPS 0.87p (0.23p). Div 0.25p (0.0p). 'Delighted' but don't know if it's a beat.
Realm Therapeutics (RLM) update on formal sale process. "From among the several non-binding proposals, the Company has selected a short list of potential transactions and has advanced these to deal negotiation and due diligence." More news in Q1 2019
Character Group (CCT) FY looks like a beat with rev £106.2m and U/L EPS 45p (52p) vs F/C 39p. FY div 23p (19p).

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Edward John Canham 29th Nov '18 3 of 65

James Latham (LON:LTHM)

Good results this morning from this family run business. Operating profits up 10% and EPS up 32%, the latter increased by a £1m profit on property sales. Outlook positive but uncertainties with Brexit. Rock solid balance sheet.

The SP has drifted down quite considerably recently so hoping this will now change for this SNAPS selection.


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skinner66 29th Nov '18 4 of 65

· Revenue of £1,429.7m (2017: £1,171.6m)
· Adjusted EBITDA of £85.4m (2017: £75.8m), up 12.7%
· Operating profit of £50.6m (2017: £40.9m), stated after;
amortisation of acquired intangibles of £20.1m (2017: £20.0m); and
other non-recurring items of £0.7m (2017: £2.1m);
giving an adjusted operating profit of £71.4m (2017: £63.0m), up 13.3%
· Net debt of £264.0m (2017: £287.4m)
· Final dividend for the year ended 1 April 2018 of £47.5m paid in the period (2017: £35.5m) representing 5.95p per share (2017: 4.55p per share)
· Diluted earnings per share of 4.4p (2017: 3.2p). Adjusted diluted earnings per share of 6.4p (2017: 5.4p), up 18.5%
· Interim dividend increased 15.4% to 3.0p per share (2017: 2.6p) to be paid on 30 January 2019 for shares on the register on 14 December 2018

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hawkipa 29th Nov '18 5 of 65

Morning Graham,
I know its not today's news, but if you do get chance it would be great to get your thoughts on Ramsdens Holdings (LON:RFX) results yesterday. A few of us were scratching our heads as to why it was down over 8% during the morning. By the close it was actually up. I think Liberum hosted an investor day and the Investors Chronicle chap Simon Thompson wrote on it also so the mood music coming after the RNS must have been positive I guess.

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About Graham Neary

Graham Neary

Full-time investor and independent analyst. Prior to this, I spent seven years in the financial markets as an analyst and institutional fund manager. I'm CFA-qualified, also holding the Investment Management Certificate and the STA Diploma in Technical Analysis.Away from finance, my main interests are recreational poker and everything to do with China, especially Mandarin Chinese. more »


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