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

fwyburd 29th Nov '18 6 of 65

Good morning Graham,
It was great to finally meet you at Mello.

And another request for Ramsdens Holdings (LON:RFX) please.


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FREng 29th Nov '18 7 of 65

Scisys (LON:SSY) changed its name yesterday from Scisys plc to Scisys Group plc with the same ticker. following the legal relocation of its HQ to Ireland to avoid any Brexit problems. This seems to have caused A J Bell to declare that the shares are not tradable (which is a pity as I wanted to buy some more). Is this a general problem or limited to A J Bell?

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andrea34l 29th Nov '18 8 of 65

I'm also interested in Ramsdens Holdings (LON:RFX) too, as a holder.

How about your take on Mycelx Technologies (LON:MYX) too please (which I don't hold)? A positive update, though perhaps rather speculative and subject to lumpy orders...

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simoan 29th Nov '18 9 of 65

In reply to post #422668

This seems to have caused A J Bell to declare that the shares are not tradable (which is a pity as I wanted to buy some more). Is this a general problem or limited to A J Bell?

As you have found, AJ Bell are useless for anything slightly out of the ordinary. I've had more problems with them over the years than all the other brokers I've used put together. They have just lost a FOS complaint I made against them and have not met any of the compensation payment deadlines imposed by the Ombudsman. In addition I am still waiting for my Somero Enterprises Inc (LON:SOM) dividend in my SIPP (payment date 17/10) and was told yesterday it will not be in my account until around 8 weeks after the payment date. They have blamed their bank for not processing the USD cheque they (supposedly) sent to them. Sorry if I sound pissed off with them, it's because I am!

Good luck to long-term investors in their IPO. I am going to stag it :-)

All the best, Si

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HornBlower 29th Nov '18 10 of 65

another call for Ramsdens

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Graham Neary 29th Nov '18 11 of 65

Thanks all, I'm on the case with RFX. G

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Laughton 29th Nov '18 12 of 65

In reply to post #422698

This seems to have caused A J Bell to declare that the shares are not tradable (which is a pity as I wanted to buy some more). Is this a general problem or limited to A J Bell?

Interesting (to me) as just this week I contacted AJ Bell about a missing Taptica International (LON:TAP) dividend. They replied two days later that the dividend had been received but it would take 2 to 3 weeks to process the cheque and credit to my account.

Strange as iDealing managed to credit dividends from same company a week ago.

Not sure that this inspires confidence in forthcoming AJ Bell IPO.

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mmarkkj777 29th Nov '18 13 of 65

In reply to post #422698

Hi Si,

Thanks for the heads-up on AJ Bell. I think I will stick with Hargreaves Lansdown, who, despite causing some minor frustrations (mainly on their Iphone App, not the main site) seem to be continuously improving and despite not being the cheapest, the slight premium seems to be worth it for the better quality of the system and back-office processes (or a least this is what I have found).

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fwyburd 29th Nov '18 14 of 65

Re: AJ Bell
I ran some research on Trading Platforms amongst this SCVR community a year ago. Investors considering their IPO might find this interesting. Have a look here to see how they rated vs other platforms


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Mrken 29th Nov '18 15 of 65

In reply to post #422668

Scisys (LON:SSY). Scisys. Everything OK with IWeb Share dealing.
On another front. Does anyone have a view whether Scisys will now be eligble for BPR and therefore OK for a IHT portfolio?

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ezlifeme 29th Nov '18 16 of 65

In reply to post #422718

Genuine business concern, professionally put and worth a thumbs up

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Aislabie 29th Nov '18 17 of 65

In reply to post #422698

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MBFP 29th Nov '18 18 of 65

In reply to post #422668

I hold and like Scisys and added recently. No problem buying on Barclays or Charles Stanley. I find it is a good idea to have more than one broker in case of this type of situation or a problem so I use 3.

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Graham Neary 29th Nov '18 19 of 65

In reply to post #422663

Great to meet you too, Francis. I hope my RFX comments will prove helpful. Cheers!

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Reacher 29th Nov '18 20 of 65

Hi Graham

I refer to your comment about "staycations" and holidays being booked in advance in your analysis of Ramsdens Holdings (LON:RFX)

I agree there is a high percentage of people that do book their summer holidays during the preceding winter months. However, there is a proportion of holidays which are booked late, or almost last minute. On The Beach (LON:OTB) referred to the heatwave impacting bookings in the "lates" market and this resulted in a YoY decrease in Summer 2018 bookings made in May (although there was a pick up in June). Thomas Cook (LON:TCG) also referred to the heatwave impacting "lates" bookings.

See p.4/26

There may be a case to be made about the competition in this space not only from high street retailers that offer travel money, but also growing online competition.

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InvestedGeordie 29th Nov '18 21 of 65

Good Morning Graham,

It appears the CEO of Ramsdens Holdings (LON:RFX) Peter Kenyon agrees with you - He has just bought £80k worth of shares!



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Lgarvey 29th Nov '18 22 of 65

Having ST of the IC tip Ramsdens Holdings (LON:RFX) yesterday lunch time will have also helped them bounce back up in the afternoon.

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Paul Scott 29th Nov '18 23 of 65

Morning all!  I've done a deal with Graham, whereby he's agreed to look at reader requested Ramsdens Holdings (LON:RFX) from yesterday, and in return I'll do a review of a stock I mentioned at Mello as looking potentially interesting, the car supermarket Motorpoint. So here goes;

Motorpoint (LON:MOTR)

Share price: 216.5p
No. shares: 97.2m
Market cap: £210.4m

Interim results

"Motorpoint, the largest independent vehicle retailer in the UK, today announces its unaudited interim results for the six months ended 30 September 2018 (FY19 H1)."

The KPIs table below looks pretty good, at a time when many other car dealers are reporting reduced profits. That's because Motorpoint has a different business model. It's not a franchised dealer of new cars, but instead sells nearly new secondhand cars, at keen prices.


There's not really a great deal to say about this.

There doesn't seem to be much H1/H2 seasonality, therefore the broker consensus of 19.4p for the full year ending 31 Mar 2019 looks reasonable. That gives a PER of 11.2 . This is a good bit higher than bombed out shares of more conventional car dealers, which are typically on a rating of about 6-8 times. The premium for Motorpoint makes sense to me, as it has a better & lower risk business model.

Outlook comments - the key bit says they're in line, but with loads of disclaimers for possible unknown Brexit-related upheaval;

Current trading is consistent with market expectations for the full year.  However, we remain mindful of the current political uncertainty, and that the potential outcomes from the Government's Brexit negotiations could influence our future performance in unpredictable ways.  We are particularly mindful of the potential impacts on stock supply and general customer confidence, resulting from, inter alia, exchange rate volatility, new import tariffs or other supply chain friction, employment and inflation or interest rate changes.  As per Motorpoint's normal seasonal trends, our fourth financial quarter is the most material of our full year's performance, and is therefore a key focus to ensure we remain on track.  
We believe our unrivalled choice of nearly new vehicles and ongoing dedication to Choice, Value and Service positions us strongly to take advantage of any market disruption, and to continue to deliver as the Car Buyers' Champion.

Balance sheet - looks fine, no issues there. Note that inventories of vehicles are quite modest, as they're shifted fast, and there are borrowing facilities to part-finance inventories.

Also note that fixed assets are very modest. This is another advantage of the car supermarket business model - there's no need for fancy premises to promote brands for the manufacturers.

My opinion - this is an excellent business model, which I like a lot. Growth comes from new site openings, so it should be a good roll-out over time.

Stockopedia likes it too;


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bsharman 29th Nov '18 24 of 65

Hi Graham.

Ramsdens Holdings (LON:RFX)

Here is the data on when people book holidays acccording to the website 



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Trident 29th Nov '18 25 of 65

For dividend lovers PayPoint (LON:PAY) announced its interim results this morning. Revenues up, profits marginally up. Cash generation very good. A small tickle on the interim dividend (+2%) plus a special interim announced. Making total interim dividend of 27.8p per share, which is circa 3.2% yield on today's share price, which is up by about 6% at the moment.

This is a business which is in transition to some extent, and is making new markets for its services in Romania. The perception is that UK energy cash payment changes will affects some of its payment services in the UK, and is causing it to look down the line to other add-on services for small stores, and expand its market reach. So, quite a lot of moving parts to this business. But the market has I guess got a query over how it will adapt fully from some of the changing service requirements of this market as a highly profitable presence in the small convenience store arena.

I am a holder

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 Are LON:RFX's fundamentals sound as an investment? Find out More »

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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