Small Cap Value Report (Thurs 02 Dec 2021) - SOS, BLV, OMG, ULS, BBB

2nd Dec '21 by Jack Brumby

51 comments 9540 reads

Good morning! It's Jack & Roland here with the SCVR for Thursday.

Agenda -

Jack's section:

Sosandar (LON:SOS) - a quick catch up of results earlier in the week. Trading ahead of expectations and navigating current supply chain pressures well. There's a lot of growth priced into the valuation, but there's a big prize at the end of the road as the company approaches a profitability inflection point.

Belvoir (LON:BLV) - trading ahead of expectations, although the property sales market is expected to normalise next year. Long term growth prospects remain intact and the group pays a useful dividend, backed up by resilient lettings income. A good buy and hold candidate with a proven, steady, and relatively low risk growth strategy.

Bigblu Broadband (LON:BBB) - a period of change here, with the disposal of UK and EU operations followed by the sale of most of its stake in Quickline. Cash returned to shareholders and used to pay down debt. Australasia doing well, Nordic restructuring coming to an end. I’d like to see signs of profitability beyond the adjusted EBITDA level.

Roland's section:

Oxford Metrics (LON:OMG) - a strong set of figures showing a return to 2019 performance at this software business, whose results were hit by lockdowns last year. I like the technology and can see plenty of scope for growth. But I’m concerned by a lack of consistency and long-running losses in the Yotta division.

Uls Technology (LON:ULS) - this conveyancing technology firm appears to be making progress and has plenty of cash to support its growth rollout. However, the business remains loss-making. Success will depend on the quality of the group’s offering and the competitive landscape. Still quite speculative at this stage, in my view, although potentially quite reasonably priced.

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…

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Dragon

2nd Dec '21

Clinigen (LON:CLIN) and the madness continues. A possible offer.

Have you ever had a surprise and spat your coffee out. That must have been what happened yesterday morning. The person writing the subject of the RNS suddenly found out there was a possible offer, spat their coffee out and mistyped the subject of the RNS missing out the word NOT.

Bouden54

Seems to have been working every week this year so deserves a good break!

sharw

Terry Dickens - you must have been away yesterday:

https://www.stockopedia.com/co...

RDHOWARTH

Sorry I was somewhat confused by adding the group cash to the nav calc. I’m sure it’s technically right but slightly disingenuous. Edison have just released a note with more nos to poor over - clearly a cheap share.

Zoiberg

Platinum was trading at around $900 / oz in May as against $700 today. It's all about chips - when the auto industry once again has a reliable supply of semiconductors I think you'll see the price move. Sylvania (mostly geared to rhodium) has declined in recent months.

I don't have the figures to hand but I think you'll find that many of the major auto manufacturers have cut production by as much as 40%. Hence the current bull market in second hand cars!

Tommy H

City Of London Investment (LON:CLIG) has anyone got any insight to why there is such a large volume of trades today? Whilst I cannot see what the trade is there has been at least one >£2m transaction in the last hour...

No news just wondering if one of the Tipsters has said something, or whether it is just a stop loss heaven having dropped below £5?

Cheers

Tommy

I hold

ckidcurrie23

Just a general comment. I was out and about Christmas shopping in Glasgow yesterday and and for a week day the main shopping areas were pretty busy. Thought I would pay particular attention to a couple of favoured stocks of members so I visited the 2 main Ted Baker shops, not much stock compared to past years and not very busy at all, quite disappointing really, also ventured into the main Superdry store which was rammed full of stock but again not very busy.

On a more positive note TGI Fridays Hostmore (LON:MORE) ( I Hold) was very busy, queue at the door to get in and most of the restaurants in general pretty busy ( had to wait 10mins myself to get into Cranachan in Princes square for a bowl of Cullin Skink.) so latest variant not having to much effect on christmas lunches it would appear.

Thanks to Mr. C. for pointing out that Gear 4 Music (LON:G4M) under the RNS heading "Completion of Acquisition of AV Distribution Ltd" had included a trading update. That it was in line with revised expectations was good given the wobbly at the interims just over 2 weeks ago when trading in Europe was reported to be slower than expected.

Rusty2

Sylvania Platinum (LON:SLP) last results the net profit was $99.8m, say £75m. So the P/E was around 3.

This year forecast is $75m n. profit.

The Phoenix

Hi re City Of London Investment (LON:CLIG): spread is always all over the place I would imagine that with the large trade/s and volume being way over the daily norm someone wanted out or to reduce a position and had to take a slight hair cut on the nomral ems bid price.

ridavies

In Roland's section on Pendragon (LON:PDG) yesterday, I was a little surprised that he did not mention the possible future part which may be played by Hedin Group which is currently the largest shareholder at around 26%. The group has been a shareholder since 2019, and has built up this shareholding significantly since then.

Earlier this year the Hedin Group voted against the pay package of the CEO. Also Anders Hedin, company owner, has made a number of statements which may indicate a wish to play a more active part. One such this year was ‘Since Hedin Group first become a shareholder in January 2019, we have supported Pendragon in its mission to regain its position as the leading automotive retail business in the UK and we are pleased with the positive steps the company has taken this year.'

More recently, with the increased stake in Pendragon (LON:PDG), he said ‘We are supportive of the management and look forward to work constructively with the board to continue with Pendragon’s success, to the benefit all stakeholders., (though clearly was prepared to intervene in e.g. the CEO proposed pay deal).

I make reference to these points in the background of the recent offer for Marshall Motor Holdings (LON:MMH) at a substantial premium. Roland's analysis was presumably based on the ongoing value of the business. I raise these points because the Pendragon (LON:PDG) situation is perhaps potentially more dynamic than the analysis of the fundamentals would indicate. Perhaps Mr Hedin is thinking of the times when the SP was around 27p 3 years ago, or 32p 5 years ago.

In absolute deference to Roland, this contribution is based on surmise with some recent history ( Marshall Motor Holdings (LON:MMH) bid) and Hedin's large increase in shareholding. I am an absolute fan of Roland; I cannot fault his analysis yesterday in any way; if I were even 1/10 so successful in picking winners as he is I would be a much richer man. However, sometimes as a reader and contributor one can enjoy the freedom to add a bit of spice to the raw data.

I am a holder, of course.

Momoko Miyamoto

Lots of unknowns over future PGM demand, seems electrification is going faster than expected and there is also significant supply of PGMs from scrapped ICE vehicles. Big unknown is hydrogen fuel cell adoption which would lift platinum demand, but solid state batteries could make fuel cells unnecessary for all but HGVs

ExpectingValue

Anyone who says that they think they are 50% undervalued - a stratospheric sum, ludicrous really - but who doesn't want to put money behind that statement - should be treated with a pretty healthy dose of scepticism IMO

rmillaree

Sylvania Platinum (LON:SLP)

I am aware of the forecasts for this year and and the prior year booked figures figures - my undeducated point was that spot prices have dropped massively from the peak of last year - a reduction from $100 to $75 based on curent direction of spot prices looks optimistic ? thats just based on quick butchers for q1 which was a measley $8 mill and the general trend of spot prices - not saying they won't make $75 mill it just looks all rather sketchy. My calcs are so sketchy here you would like to think they should be ignored and we should default to current stocky numbers which preusmably tie in with current broker or company expectations?. Will be interesting to see how q2 comes out though based on current spot prices.

Zipmanpeter

I'm sure your comment on Sosandar making a cheeky all share offer for Hotter (Electra Private Equity (LON:ELTA) ) was tongue in cheek - but based on these numbers, it would make a tasty snack for someone in the future.

Another SCVR favourite Saga (LON:SAGA) comes to mind! Hotter shoes from Saga anyone? or how about JDWilliams? I am doubtful it will be big enough to really create a really big 50+ platform much as I would like to believe but I think it will do enough to be attractive as an add-on to someone else if it active buyers in the age group are meaningful.

Threepeat

Having watched the IMC presentation with Tharisa £THS I think many of the downside detractions mentioned here may be offset by the Vulcan beneficiation plant and the new operations in Zimbabwe especially if the option agreement that was mentioned in the presentation are signed off during December. It seems to me that they are trying hard to mitigate the macro elements that they cannot solve. I have not put this in a proper forecast you understand just a gut feel that this is too cheap

Happy holder after yesterdays dividend

RandomWalkTrader

What is Euro7?

Sharewallah

You can't beat a good Cullen Skink.

3rd Dec '21

I would guess its the next set of emissions standards for cars - Euro 6 being the current standard.

Small Cap Value Report (Thurs 02 Dec 2021) - SOS, BLV, OMG, ULS, BBB

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Jack Brumby

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