Small Cap Value Report (Thurs 20 May 2021) - BEG, NEXS, MMH, BWNG
Good morning, it's Paul and Roland here, with the SCVR for Thursday.
Timing - I've got 2 company zooms coming up from 12-1, and 1-2, so am going to be quite busy today. Am struggling to get my head around the complexity of BWNG too, so think I'm going to need to spend the whole day on this - hence estimated finish time 5pm. Update at 18:58 - what a nightmare! I've finally got through BWNG now, so declare today's report is finished.
Agenda -
Paul's section:
Begbies Traynor (LON:BEG) (I hold) - year end trading update for FY 04/2021 - comfortably ahead of expectations. Also strong cashflow, ending the year with net cash of £3.0m. 4 acquisitions in the last year have gone well. There's lots to like here - I see BEG as cheap, and executing well on acquisitive growth.
N Brown (LON:BWNG) (I hold) - very complicated accounts for FY 02/2021. Massive EBITDA of £86.3m turns into only £9.9m statutory profit. Strong balance sheet. Not a very good business, but it has interesting turnaround potential, I think.
Roland's section:
Nexus Infrastructure (LON:NEXS) - half-year results from this infrastructure group, which has its roots in civil engineering and utility services, but has a growing focus on electric car charging. Can this former AIM growth story get back on track?
Marshall Motor Holdings (LON:MMH) - A solid trading update from this car dealership group. Management expects to match 2019’s pre-pandemic profits in 2021, despite the spring lockdown. Is there still value here?
Paul’s section
Begbies Traynor (LON:BEG)
(I hold)
121p (pre market open) - mkt cap £182m
Begbies Traynor Group plc (the 'company' or the 'group'), the business recovery, financial advisory and property services consultancy, announces an update on trading for its financial year ended 30 April 2021.
Begbies has been putting out decent trading updates for a while now, plus making a flurry of acquisitions. It now seems that it finished the year with a strong Q4 -
Results expected to be comfortably ahead of market expectations
As you can see below, forecasts (in particular for FY 04/2022) have been rising a lot, due to some quite decent sized acquisitions -
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Key points in today’s update -
- Comfortably ahead of expectations
- There’s a footnote (many thanks, very helpful) - analysts range of forecasts is £10.5 to £11.1m adj PBT
- Strong Q4 (Feb, Mar, Apr 2021)
- 4 acquisitions in the last year - significant increase in scale & scope of the group - I don’t think this has been properly grasped by the market yet
- All parts of the business are doing well, including acquisitions
- Strong cashflow
- Net cash of £3.0m at end April 2021 year end - better than expected
- Outlook - well positioned for material earnings growth
Valuation - broker consensus for FY 04/2022 is 9.0p (the lighter coloured, higher line on the graph above). The company is tending to out-perform forecasts, so I reckon 10p might be a better bet. That puts the shares on a PER of around 12, which strikes me as cracking good value for an acquisitive group that doesn’t seem to have put a foot wrong.
Insolvency work is highly specialised, and very high margin (about 30% I think). Begbies (and Frp Advisory (LON:FRP) which I also hold) are both out-performing the sector (which is quiet due to Govt support measures for so many companies averting insolvencies for now).
I can’t see any reason why BEG shares are under 150p, so I’ll be sitting tight on my shares, and am very pleased with progress. Also as mentioned before, I see scope for BEG to be re-rated as a successful acquisitive group, rather than a vanilla insolvency firm.
Plus in any case, earnings are on a strongly rising trajectory, from well executed acquisitions, which usually contain a big earn-out element, hence are partially self-funding. This is the advantage of having an owner-manager in charge (Ric Traynor) - equity is only issued for very good reasons.
Note that the Stockopedia algorithms don't like acquisitive groups, because I have a feeling the figures don't strip out goodwill amortisation, which pushes down the quality metrics. Whereas generally accepted practice is to adjust out goodwill amortisation.
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N Brown (LON:BWNG)
(I hold)
64.75p (down 8%, at 11:44) - mkt cap £298m
N Brown is a top 10 UK clothing and footwear digital retailer, with a Home proposition, serving customers across five strategic brands. Our strategic brands are JD Williams, Simply Be, Jacamo, Ambrose Wilson and Home Essentials and our financial services proposition allows customers to spread the cost of shopping with us. We are headquartered in Manchester where we design, source and create our product offer and we employ over 1,800 people across the UK.
I would describe it as a hybrid of an eCommerce business (selling mainly outsize clothing, and homewares), and a high cost/high default credit provider. I think it’s difficult to avoid the conclusion that it’s not very good at either of these activities.
(for the 52 weeks to 27 Feb 2021)
These are really complicated accounts, and it’s taken me hours to get my head around things. The key question I’ve tried to investigate is whether this business actually makes any money?! See the my opinion section at the end for my conclusion.
Adjusted EBITDA - huge numbers are given for this (artificial) measure of profitability. £86.5m is reported for FY 02/2021, and company guidance for FY 02/2022 is £93-100m.
The problem with EBITDA, is that it ignores many real world costs. £86.5m adj EBITDA turned into just £9.9m statutory profit before tax in FY 02/2021.
The main culprits are these costs, which are real cash outflows, so cannot just be ignored -
Depreciation & amortisation £39.8m - checking the notes to the accounts, it turns out this is nearly all amortisation of software. BWNG seems to have bloated, extremely expensive legacy IT systems, including a mainframe which was mentioned in the commentary today -
Providing credit to make shopping affordable is at the heart of N Brown's business model and remains at the core of the strategy moving forwards. N Brown's current credit platform is built on a mainframe system which is robust but lacks flexibility to make changes to enhance the customer proposition. Customer behaviours have evolved and are generally shifting towards a range of more flexible payment products, which the Group's current system cannot currently service. To deliver more modern products, the Group needs to develop a new Financial Services platform that has the flexibility to offer these products and the equity raising completed in December 2020 will enable investment in this.
Interest cost - net finance cost of £16.6m is important, because BWNG is a finance company, extending expensive credit to its customers, many of whom defaut - e.g. the impairment charge in FY 02/2021 for customers who don’t pay, is a staggering £144.1m. How on earth does that stack up? It does, because BWNG charges interest to its customers of £239.5m in the same year.
The way I look at this, is that BWNG is ripping off its customers with exorbitant consumer credit. The customers then in turn rip off BWNG by not paying! It reminds me of those old Lily Savage monologues, where she used to boast about getting free stuff from the catalogues, by moving house before the weekly payments started!
Despite being a shareholder in BWNG, I’m not at all comfortable with the business model, and it’s fraught with regulatory risk. If you read the notes to the accounts, there are all sorts of legacy issues that have required provisions - e.g. PPI mis-selling, VAT disputes, a £29m claim & counter-claim over PPI liability with insurer Allianz (see note 18).
Hence adj EBITDA of £86.5m becomes only £29.9m profit, once we deduct just the software costs (capitalised & then depreciated), and the net interest cost. Plus there are all sorts of other costs, some classified as exceptionals, fair value adjustments, impairments, etc.
Overall then, I’ve established that the quoted adj EBITDA figures are complete fantasy, and best ignored.
Revenues - fell 13% to £729m, so it’s a substantial business.
This is split £469m product revenues, and £260m financial services revenues, so you can see how important FS is to the overall business model. Some might say that selling stuff is just a mechanism to generate high cost lending here.
H1 was worse, at minus 17.6%, and the company shows a table which demonstrates a sequential quarter-by-quarter improvement in revenues.
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Whilst it’s good to see an improving trend, I can’t help compare how badly BWNG has performed, compared with recent results from Boohoo (LON:BOO) (I hold) which produced barn-storming growth in revenues & profitability. BWNG went backwards over the same timeframe.
Variable costs - a massive advantage for eCommerce businesses, because in a downturn they can quickly & easily cut back on costs, given that many costs are variable. BWNG massively reduced its marketing spend from £136m last year, to £60.3m in the year being reported. It strikes me that a lot of that marketing spend is probably wasted, as they seem huge numbers, even the reduced spend.
The management commentary in this morning’s webinar seemed to imply that previous marketing spend had been wasteful. They seem to have discovered digital marketing fairly recently, and are moving into that area. So there could be good upside here from more effective digital marketing spend in future, perhaps?
Equity raise of £100m, and a move to AIM. This has greatly strengthened the financial position. Also, bad debts were expected to be much worse due to covid, which hasn’t happened. They showed a slide on the webinar which seemed to demonstrate that customer defaults had briefly spiked in lockdown 1 but since returned to normal.
Overall, BWNG looked financially distressed last year, but now it looks fine to me. Hence I think we should view this as a stable, well-financed business.
Balance sheet - NAV is £416.3m, less £133.0m intangibles, gives NTAV of £283.3m, which is close to the market cap of £298m. Therefore this share is strongly asset-backed, and there should not be any further dilution.
Are the assets being used productively though? Clearly the market thinks not, as a low multiple of price to tangible book value means that investors see poor returns from capital. Note that Stockopedia shows a P/TBV of 1.72, which is out-of-date now due to the equity fundraise. That should drop to just 1.05 once the database updates in the next few days, from the new numbers published today.
I like tangible asset backing. It means that the downside should be limited, insolvency/dilution risk is little to none, and buys time for management to improve the business.
Although the covid crisis did demonstrate that a business like this, which borrows from banks, and then extends consumer credit, is vulnerable to the banks getting twitchy in times of crisis. Hence why a £100m equity fundraise was necessary at the time. So if the banking system were to shake itself to pieces again, then I suppose we couldn’t rule out the possibility of another placing being demanded by the banks.
Land & buildings of £40.4m - looks like that could be freehold property, I’m not sure, but would be a nice asset to have if so.
Pension scheme - there’s a £25.5m surplus on the balance sheet, but I haven’t checked if there are cash outflows relating to that - because accounting surpluses are often deficits in the real world actuarial calculations, under the absurd rules we have for pension scheme accounting, which can give a highly misleading picture sometimes.
Shareholding structure - Lord Alliance & family have dominant ownership. I wouldn’t be surprised to see a bid from them, to take it private.
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Other points -
Bank debt - £500m securitsation facility (lending secured on the customer receivables book), plus £100m RCF and £12.5m overdraft. Plenty of headroom on facilities. Dec 2023 renewal.
Dividends - none at present, look likely to resume at end FY 02/2022
Gross margin for product fell a lot, but due to pivoting to home & garden products during pandemic, when less clothing was sold. Lower margin, but much lower customer returns rate, so this is fine
Guidance is for a return to modest revenue growth in FY 02/2022, 1-4% total revenue growth, but 3-7% growth for product. Shouldn’t an eCommerce business be growing faster than this?
My opinion - overall, it’s not really making much real world profit. I think these figures show a bloated, inefficient, old-fashioned business, which needs a massive sort out.
Why do I hold shares in it then? Because I can see the turnaround potential here. Imagine if the product ranges were improved, and sold at higher margins - then gross profit would soar.
Imagine if they could improve their credit scoring, so that they sell things to people who will actually pay up?! Although high cost credit is only really going to appeal to people who can’t afford it.
If BWNG could get some product & digital marketing experts in, to transform the business into something more like BooHoo, then the shares could really take off.
So I see this share as an unimpressive existing business, with terrific turnaround potential.
The balance sheet strength & asset backing mean that I feel it’s a safe share to tuck away for a couple of years, and see what happens. Any sign of a convincing turnaround, and the upside could be quite exciting from a £298m existing market cap. Look at what BOO & Asos have achieved, they’re valued in the billions now.
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Roland’s section
Nexus Infrastructure (LON:NEXS)
173p (pre-open) - market cap £78m
Nexus Infrastructure (LON:NEXS) has published its half-year results today. This infrastructure group operates in three main areas:
- TriConnex (38% of H1 revenue): this business builds utility infrastructure for new housing developments
- Tamdown (57% of H1 revenue): Civil engineering for housebuilding and commercial sectors. Services include groundworks, roadbuilding, etc
- eSmart Networks (4% of H1 revenue): Launched in 2017. This business covers electric car charging infrastructure, renewable energy connections and on-site high voltage electrical infrastructure
Nexus has a September year end, so today’s interim results cover the six months to 31 March 2021 and appear to be in line with expectations:
- Revenue of £63.7m (H1 2020: 84.2m)
- Operating profit: £1.5m (H1 2020: £3.5m)
- Order book: £301.6m (H1 2020: £299.5m, FY 2020: £282m)
- Net assets up 22.4% to £30.1m
- Net cash £10.7m (H1 2020: £4.6m)
- Dividend restarted with interim payout of 0.6p
To understand the performance, I think it’s worth splitting out these numbers across the group’s three operating businesses:
TriConnex: Revenue rose by 5% to £24.4m during the half year, while operating profit was down 4% to £2.4m. TriConnex’s order book grew by 4.7% to £190.9m - that’s 63% of the group’s total order book.
This business builds the multi-utility infrastructure needed on new housing developments. Trading appears to be stable - indeed, I’d say that TriConnex is supporting the wider group at the moment.
eSmart Networks: Still early stage, but growing fast as electric car charging infrastructure becomes a high priority across the UK. Revenue rose by 156% to £2.8m, while eSmart’s operating loss was cut from £0.7m to £0.4m.
Importantly, the order book is growing fast - up 455% to £12.2m versus H1 2020. As Jack has commented previously, this business could potentially standalone in the future and certainly seems likely to become a bigger part of the group.
Tamdown: the oldest part of Nexus and currently the most problematic. Tamdown is essentially a construction contractor performing work for housebuilders and commercial property developers.
Nexus says that Tamdown’s client list includes “the majority of the top ten largest UK housebuilders”. According to management, uncertainty relating to Brexit and Covid-19 put new contract awards on hold during the first half of 2020.
Order momentum is now said to be improving, but the numbers aren’t great. Half-year revenue at Tamdown fell by 40% to £36.8m (vs H1 2020) and the unit generated an operating profit of just £0.3m.
Tamdown’s order book of £98.5m is still lower than at the end of H1 2020 (£114.9m) but has increased since the end of September 2020 (£92.8m).
I think it’s fair to say there are early signs of improvement at Tamdown, but this business still has a way to go to return to its previous run rate of revenue and profit.
Balance sheet: This is a sector where solvency and liquidity can become a problem, thanks to sizable working capital requirements and slim margins. Given this, I’m pleased to see the group’s net cash position improved last year. Gross borrowings and lease liabilities look manageable to me, too.
I don’t have any serious concerns about the balance sheet here. I’m also reassured to see that CEO Mike Morris remains Nexus’ largest shareholder, with a 22% holding.
If I was going to invest in this sector, I’d prefer to go with owner management, to (hopefully) reduce the risk of dilution or worse.
Cash generation: Nexus reported an operating cash outflow the half year, due to large working capital movements:
Given the group’s net cash position and lack of significant dilution since its flotation, I don’t see anything to be alarmed about here. But before investing I’d want to look at the longer-term pattern of cash generation and understand more about these inflows and outflows.
Outlook: The company says that eSmart and TriConnex are expected to continue trading well, supported by government programmes to encourage new housing and electric transport. Tamdown is expected to show improved profitability “over the medium term”.
The outlook is said to be confident, hence the decision to reintroduce the dividend.
My view
Nexus floated on AIM in 2017, but after a strong start progress has been somewhat mixed since then:
Oddly enough, profits appeared to peak in 2016 (the year before IPO) and have not yet returned to those levels. Another example of private owners knowing the right time to sell?
The Stockopedia stats show revenue was flat from 2015 through 2019, while profitability varied:
In fairness, this isn’t a terrible performance for this sector. But today’s half-year results show a further decline in operating margin, to 2.4% (H1 only). The direction of travel needs to reverse soon, in my view.
Looking ahead, consensus forecasts suggest that after the setbacks of last year, earnings are expected to improve over the next 18 months.
However, a fair amount of growth does seem to be priced into the stock already:
I reckon that this valuation could be supported over the medium term by the growth of the eSmart Networks business. But for now, my view is that Nexus is probably close to fair value.
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Marshall Motor Holdings (LON:MMH)
175p (+1.5% at 0845) - £137m market cap
Car dealership groups such as Marshall Motor Holdings (LON:MMH) have been a good recovery play over the last year. In Marshall’s case, the stock is now trading ahead of pre-Covid levels.
Profits have recovered strongly, too. In today’s AGM trading statement, the company says that underlying pre-tax profit for 2021 is expected to be “not less than 2019’s result of £22.1m”. This will be achieved “after repayment of CJRS and non-essential retail sector grants” totalling £4m.
I’m pleased to see Marshall’s repaying these government monies. Although the business was entitled to them, my personal view is that companies should not retain these payouts unless they’re needed to support employment or the operation of the business. That’s clearly not the case here.
Moving on, what can we learn from today’s update?
Trading summary: Trading during the first four months of 2021 was hit by the lockdown closure of showrooms. However, like many of its peers, Marshall was able to continue operating on a click and collect basis.
According to the company, both new retail and used car sales outperformed the wider market during this period:
Used car sales have also been strong:
One comment I’d make on these numbers is that the comparison period (the first 3/4 months of 2020) is not necessarily very meaningful, given the situation in the early stages of the pandemic. Even so, I think Marshall’s performance looks very respectable.
Indeed, I’ve been impressed by how quickly car dealers have made the shift to online retail during the pandemic. In my view, this is a trend that aligns well with the reduction in outright car ownership (versus contract plans). I think online car buying will stay with us.
Financial position: No detail is provided, but the group says its financial position “remains strong”, with good cash generation so far this year.
Although I’d like to see some numbers, I’m inclined to accept this claim based on the group’s historical performance and its 2020 year-end net cash position (ex-leases).
Growth opportunities: Marshall’s describes itself as a consolidator in this sector and says it is reviewing a pipeline of potential acquisition opportunities. However, management promises to focus on deals which add shareholder value and complement brand partners’ objectives.
Again, based on past performance I don’t have too many concerns about this.
Outlook: Management are pleased with performance so far, but flag up significant uncertainty for the remainder of the year. In addition to Covid-19 risks, the company warns that the market could see supply shortages of new and used vehicles, as a result of global semiconductor shortages.
This is an issue for a number of sectors at the moment. But one account I read recently suggested that car manufacturers have ended up at the back of the queue for chips, after cancelling orders early last year and then being forced to reinstate them more recently.
However, despite “a range of possible outcomes” for 2021, the board remains confident of matching 2019’s pre-pandemic profit.
My view
I’ve admired this business for a while. My perception (as an investor and a customer) is that the company is well run and disciplined. I don’t see anything to change that view in today’s statement.
Are the shares attractively valued after such a strong run? Rather like housebuilders, a lot depends on your view on the outlook for the economy. I try not to take a strong stance on this as I view it as beyond my paygrade and competence.
What I can see is that Marshall’s underlying trading seems likely to remain at the upper end of the group’s recent historic range:
This business also seems to be emerging from the pandemic in good financial shape, with its historic competitive advantages intact.
However, we need to remember that this is a famously low-margin sector which depends heavily on aftersales for profitability. Gross margins on new and used car sales were just 0.66% last year - the equivalent figure for aftersales was 45%.
There’s also some cyclical risk to this business, which is hard to quantify right now..
On balance, I think Marshall’s stock’s forecast P/E of 9 and prospective yield of 3.7% could be attractive, if not obviously cheap
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79 comments
I do like a good list .... here's my 10 largest individual shareholdings holdings by current market value in alphabetical order: Boohoo (LON:BOO) Bellway (LON:BWY) Judges Scientific (LON:JDG) Jersey Oil And Gas (LON:JOG) JPMorgan Lloyds Banking (LON:LLOY) Pantheon Resources (LON:PANR) Royal Dutch Shell (LON:RDSB) Rio Tinto (LON:RIO) Sylvania Platinum (LON:SLP) Samarkand (OFEX:SMK) and Volex (LON:VLX) . Some oddballs in there admittedly.
I've excluded funds/IT's and ETFs from the list (I tend to hold these in larger amounts than individual shares as they are in themselves diversified) but included them in the deminator for calculating the portfolio concentrations. The largest individual holding is JP Morgan (shares held over from an ex-employer scheme since the mid-1990's) and is about 2.2% of my total portfolio. This top ten in total represents about 9.6% of the portfolio. I suspect I am at the extreme end of the concentration/diversification spectrum holding 233 individual company shares at the last count. The top ten list changes from time to time - after taking a 9 month sabbatical last year I found I had Itm Power (LON:ITM) , Novacyt Sa (LON:NCYT) , Renishaw (LON:RSW) , Gb (LON:GBG) and Cmc Markets (LON:CMCX) in the top 10 when I checked back in in January but have since pruned these back considerably.
Gus.
An interesting sharing exercise, thank you to all who participated.
My top 10 by value (in alphabetical order)
888 Holdings (LON:888)
Air Partner (LON:AIR)
Best Of The Best (LON:BOTB)
Burford Capital (LON:BUR)
Everyman Media (LON:EMAN)
Hellofresh (German)
Ig Group (LON:IGG)
Purplebricks (LON:PURP)
Revolution Bars (LON:RBG)
West Wing (German)
For reference a few of these would not ordinarily be in my top 10, and have appeared after a year of share price appreciation. I don't plan to sell these even if valuations might look toppy now.
And a few are recovery plays, where I am hoping for significant upside, and which I imagine I will sell in the next 12-18 months.
A
Ah well, if we're playing this game ... top ten by value:
Aj Bell (LON:AJB), Alphabet, Apple, Cmc Markets (LON:CMCX), Ig Group (LON:IGG), Itv (LON:ITV), Paypal, Pearson (LON:PSON), Record (LON:REC), Scottish Mortgage Investment Trust (LON:SMT).
ITV and Pearson were both bought in the last year. The others have, at least partially, been held for periods of between 3 years and 12.
Although in principle my holding period is forever that's always dependent on the long-term investment case holding up. I would be surprised if the spreadbetters IGG and CMC would be able to exhibit consistent growth as lockdowns ease and, potentially, volatility subsides.
However, top ten by value is a bit misleading as it doesn't differentiate between stocks where we've seen growth and those that we've simply chucked a ton of cash at. If we were to consider those stocks that have grown the most (rather than the largest by value) then James Latham (LON:LTHM), Xp Power (LON:XPP), Cerillion (LON:CER), Croda International (LON:CRDA) and Treatt (LON:TET) would in my top ten, all ten would have been held for over three years and the minimum gain would be 250%.
In general my largest gains come from holding the longest time. It ain't rocket science.
timarr
"the minimum gain would be 250%"
Wa wa wee wa Timarr.
Fantastic returns and a sign of the power of longevity.
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"In general my largest gains come from holding the longest time. It ain't rocket science."
Very true.
One thing I was doing (before last year when I sold and rebought a lot of my portfolio) was calculating my annualised return per holding. I thought this might be more meaningful. A +100% is great, but less so if it's over 20 years.
Maybe it's a bit late in the day, but if the Stocko team read this and are able to incorporate annualised returns per holding into the new Portfolio system currently being worked on, that would be most appreciated.
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It's a bit tricky showing my largest by growth as there was a lot of chopping and changing last year.
So top 3 that have grown without selling and buying back (and including dividends) and that I still own:
Curiously it's the one I've held the longest - Best Of The Best (LON:BOTB) - which has grown the most, with my first purchase giving an annualised return of +400%.
And of course the success of West Wing, a German company, reminds me never to forget the gems that can be found on foreign shores.
A
Wa wa wee wa Timarr.
Fantastic returns and a sign of the power of longevity.
Sort of. It's also testimony to the power of diversification.
Buy 100 stocks and a few will do very well. Keep the good ones, sell those that do badly (i.e. can't grow earnings relative to the market) and reinvest in some more likely candidates. Keep on doing that for 20 years.
Eventually you're bound to have a few very big winners without needing to be very good at picking very big winners. The critical thing is not to trade them away because of short term problems.
I never cease to wonder at the "x has gone down 5%, what does it mean" type posts. If an investor needs to worry about that they either don't understand what they've invested in or they've invested too much in it.
Of course, I sold Best Of The Best (LON:BOTB) because I got bored of it at about £12. Just because can you can teach an old dog new tricks doesn't mean you should.
timarr
I have a large holding in BWNG (as well as SHOE). Both SHOE & BWNG are family run businesses which are at risk of being taken private by its main owners (the families). Hence i suspect the lacklustre trading updates from both companies. Why boost it up with strong trading updates? They would just it make it more expensive for themselves to take it off the market. On SHOE it looks like the family may have just bought 18% of the company today (we will find out tomorrow/Monday who it was). Similar things could happen to BWNG.
Huge effort on N Brown (LON:BWNG) Paul - quite the longest and most impenetrable set of accounts I have seen for a while and some great analysis from Roland too. Thanks
Regarding the sub thread of investor's Top 10 holdings, all my holdings can be viewed on my Profile page. They are available to view all year round.
I believe Stockopedia is in the process of developing software which will enable investors to view other investors holdings, so long as investors opt into the feature.
The Top 10 idea is a great one, but 10 is quite a big number... I prefer Top 3's
Here's my Top 3 by Value:
And by profit:
And in the spirit of full disclosure, Top 3 by loss (by which of course I mean ‘yet to be realised potential’):
N Brown (LON:BWNG)
Thanks for all your hard work on N Brown which I have been meaning to look at for a while. One question please. You say that there is a £500m facility secured on the customer receivables book. That doesn’t seem to equate with the annual revenue total and I recall that banks typically only finance maybe c20% of debtors given hammered value in event of a fire sale. Have I missed something please?
Best wishes to you, Jack and Roland
To join in the sub thread (here is my Top Ten, actually I only have 10, love to have 10% in each, but I want to reduce my SLP, I don't want to sell SLP, I want to reduce my SLP etc
What I will say except for £BNGO (Bionano Genomics) everything was found either in the Jim Slater stock screen or from one of the excellent STOCKO writers, so from the bottom of my heart, I thank this wonderful site very much.
Stock, % of Portfolio, Gain/Loss
Sylvania Platinum (LON:SLP) ,28 210% Record (LON:REC) ,11, 58% Volex (LON:VLX), 11, 16% Boohoo (LON:BOO) ,10 ,11% Saga (LON:SAGA) ,10 ,53% Morgan Sindall (LON:MGNS) ,8 ,73% Rio Tinto (LON:RIO) ,6 ,7% £BGNO ,5 -5% Tissue Regenix (LON:TRX) ,4 ,-10% Revolution Bars (LON:RBG) ,3 ,52%
Loving this sub thread of our top 10 holdings. This should be a regular feature for Stockopedia.
My Top Ten Saga (LON:SAGA) 17%, Boohoo (LON:BOO) 13%, Morses Club (LON:MCL) 12%, Best Of The Best (LON:BOTB) 10%, Smiths News (LON:SNWS) 6%, £TSLA 5%, Premier Miton (LON:PMI) 5%, Pan African Resources (LON:PAF) 5%, Gear4music Holdings (LON:G4M) 5%, Revolution Bars (LON:RBG) 4.5%
Looking to top slice SAGA @ 450. But it just does not want to push through 400. Recently top sliced RBG as this was my largest holding and I was nervous that the unlocking of the nation could be delayed. Watching MCL very closely too as I am not sure it will climb all the way up to pre covid highs.
Begbies Traynor (LON:BEG) I first bought for my SIPP on Paul's note, pointing out its counter cyclical quality and 6% yield and am still holding after some modest top slicing. Now it looks like a growth company with a remarkably low P/E. I can only guess it is the low apparent ROCE and ROE. As the group develops I expect those ratios to improve, particularly if, as noted, the receivership business becomes a larger part of the whole operation. At the moment I don't see any reason to sell.
Fear of being laughed at prevents me publishing my Top 10 however it's reassuring, to me, to note that I do seem to have one or two of nearly every one of those so far listed by some clearly knowledgeable contributors.
Burford Capital (LON:BUR), Scottish Investment Trust (LON:SCIN), Gear4music Holdings (LON:G4M), Astrazeneca (LON:AZN), Record (LON:REC), De La Rue (LON:DLAR), Sylvania Platinum (LON:SLP), Glaxosmithkline (LON:GSK), Boohoo (LON:BOO), Halma (LON:HLMA)
My top 10:
Sdi (LON:SDI) 8.1%, Sylvania Platinum (LON:SLP) 7.3%, Treatt (LON:TET) 6.8%, Blackrock World Mining Trust (LON:BRWM) 6.5%, Sig (LON:SHI) 5.9%, Norcros (LON:NXR) 4.6%, Legal & General (LON:LGEN) 4.5%, Somero Enterprises Inc (LON:SOM) 4.3%, Duke Royalty (LON:DUKE) 3.7%, Up Global Sourcing Holdings (LON:UPGS) 3.7%
This top ten holdings looks like an interesting idea, here's mine as of today's valuations:
Games Workshop (LON:GAW) - representing 19.7%, it was a 2.5% holding when I bought it but as you know it has performed well in the last few years and I see it as a long term hold so unlikely to scalp.
4imprint (LON:FOUR) (6%)
GB (LON:GBG) (6%)
Halma (LON:HLMA) (5.9%)
Diploma (LON:DPLM) (3.5%)
Liontrust Asset Management (LON:LIO) (3%)
Avon Rubber (LON:AVON) (3%)
$BRK.B (2.7%)
Mitchells & Butlers £MAB1 (2.7%) - note this should be Mortgage Advice Bureau (MAB1) and not Mitchells & Butlers
Bioventix (LON:BVXP) (2.6%)
Total number of stocks held is 41 which I want to reduce down to between 30-35 over the next 12 months if possible.
Can we also play the Jim Cramer game "Am I diversified"?
Angle (LON:AGL) I have never attended a MELLO event but I know many Stocko users do. I noticed a post on another board from Melloteam so I hope it’s OK to copy it :
“Just to let shareholders and prospective investors know that ANGLE plc, Inspiration Healthcare Group plc, Polarean Imaging plc, Diaceutics and IBT will be presenting at Mello Events’ Healthcare webinar on the 25th May at 5:30pm-9:30pm. The webinar will also include the latest insights and analysis from investment managers, research professionals, analysts and experienced investors. If you are a shareholder and you would like a ticket to the Healthcare event, please use the code SHVIP75 to receive 75% off your ticket. Https://melloevents.com/invest... Additionally, on the 24th May, The Property Franchise Group PLC and Samarkand will be presenting at the MELLOMonday webinar event on 24th May at 6pm-9:30pm. There will also be special insights from Michael Taylor (@shiftingshares): Using technical analysis to find trades. There will be over 600 investors attending and these are very popular shows with company presentations, fund manager and investor interviews, and panel sessions including the popular Mello BASH (Buy, Avoid, Sell or Hold). If you purchase a ticket to MELLOMonday, you will automatically get sent a link to the healthcare event! Tickets are still available and if you would like one at half price then enter the code MMTADVFN50. Https://melloevents.com/mellomonday24thmay/.”
My top 10 holdings...
Shield Therapeutics (LON:STX), Electra Private Equity (LON:ELTA), Saga (LON:SAGA), Vertu Motors (LON:VTU), Oakley Capital Investments (LON:OCI), Smiths News (LON:SNWS), Capital (LON:CAPD), Bilby (LON:BILB), Scs (LON:SCS), React (LON:REAT)
"Mothercare will announce its planned FY21 full year pre-close trading update
on Tuesday 25 May 2021, ahead of its audited final results in July."
Paul, I know you've mentioned this company a few times in the past, any further thoughts would be appreciated.
Hi turbo,
I reviewed Mothercare (LON:MTC) (I hold) here in April 2021: https://www.stockopedia.com/co...
I'll look at it again when the next trading update/results come out.
Regards, Paul.
Hmmm ... am finding this interesting. My top 10:
Sylvania Platinum (LON:SLP) 11%, Burford Capital (LON:BUR) 8%, Anglo American (LON:AAL) 6%, Scottish Mortgage Investment Trust (LON:SMT) 6%, Tharisa (LON:THS) 5%, Ashtead (LON:AHT) 5%, SEGRO (LON:SGRO) 5%, Burberry (LON:BRBY) 4%, Beeks Financial Cloud (LON:BKS) 4%, Ferguson (LON:FERG) 4%.
I hold 34 stocks. My top 10 currently account for 57% of my portfolio.
Top 10 Holdings
So how about the folk from Stockopedia doing a feature on the top 10 holdings of the Stocko community every 3 or 6 months? They have the data to hand and already publish something similar with the annual ‘stock picks’.
This could also be enhanced in similar way to podcast Gary and the MOTD boys produce on the Premiership - Top 10 FTSE 100 holdings; 250; AIM etc, etc. This list could be endless and also quite interesting for the rest of us to understand which stocks feature heavily within our community.
So how about it Stockopedia - worth considering?
"So how about the folk from Stockopedia doing a feature on the top 10 holdings of the Stocko community every 3 or 6 months? They have the data to hand and already publish something similar with the annual ‘stock picks’."
Assuming that by "community" you mean all of "us" rather than Stocko employees then do they (have the data)??
The only share data they have on me is that contained in ten Portfolios I've got set up on the site but I only own some of the shares in two of those - the others are watchlists.
They don't have the data, this has been discussed a few times and they admit they only have what is in the folios. Considering 90% of my folios don't reflect my holdings then it is fairly inaccurate.
As you say most folios are watchlists.
Nut can't the Stocko data wizards just filter to only look at Portfolios that have £££ values in them, as opposed to watch lists that don't have any?
dahokolomoki - that wouldn't work for mine as I "buy" a notional amount of £10,000 worth of shares when I add them so I can keep track of progress from the "interested" date.
I keep a ‘sold’ portfolio to try and track whether I am selling well.
I think Stocko would need to add some sort of flag for the subscribers to mark their different folios as real life holdings or not real life holdings. Probably quite simple to do, but not so simple to get sufficient people to use it.
I don't think that will make much difference, all my folios have £ values in them, so I can compare the performance, some shares don't not have values though.
For example all the NAPs type folios all have values. My USA folio does have values also but I don't hold many of them, same for my Euro folio. So all my folios have values in £s but it does not mean I hold the shares.
My top 10
Sylvania Platinum (LON:SLP) 8.5% Marks And Spencer (LON:MKS) 6.3% Itv (LON:ITV) 5.9% Sanderson Design (LON:SDG) 4.9% K3 Capital (LON:K3C) 4.6% Taylor Wimpey (LON:TW.) 4.2% Boohoo (LON:BOO) 3.9% Wynnstay (LON:WYN) 3.9% Morgan Sindall (LON:MGNS) 3.8% Central Asia Metals (LON:CAML) 3.2%
As always, great info on here. Perennial resource favourite Anglo Asian Mining (LON:AAZ) have reported FY results today. Would anyone cover this at all?
Any possibilty of covering PURP i know you were massively fond of it a few years ago just wondered what you though of the update
thanks
A
Yes, I am surprised it's drifted down (both YTD and today)
Purplebricks (LON:PURP) (I hold)
I don't think there was really much insight from this trading update.
Revenue per instruction looks in line with historical rates
The reduced H2 EBITDA looks to me like an increase in marketing spend to more historical rates.
What I would really have liked to see is their current market share. and more importantly an indication that it's increasing faster than their competitors, otherwise there's less incentive for me to hold in the long run.
That minor point aside, this still looks reasonably valued to me.
EBITDA is c £12m.
For this sort of business I apply a x20 multiple due to the size of the business relative to similar online peers, so the valuation looks okay vs the EV of c £220m.
And then of course there's the sizeable holding in Home Day, a German peer, which I personally believe is worth a lot.
Fingers crossed going forward.
A
I think the market is having trouble digesting the deceleration of EBITDA from H1 to H2 of £8.4m to £3.4m.
Revenue from H1 to H2 looks flat.
Instructions went from 35387 in H1 to 24851 in H2. So possibly, macro-wise, the COVID bump might be slowing down (or maybe they're losing market share!)
There are good reasons why and I've pencilled in some time this evening to investigate.
Purplebricks (LON:PURP)
Purplebricks (LON:PURP)
Regarding the revenue decrease from H1 to H2 it's actually quite hard to work out what's going on as there's been lots of deferred revenue over the last few periods.
For my own models, I've assumed 53% of revenue for the year relates to instructions (so £19.4m), which gives me revenue per instruction for H2 in line with historical performance.
And if that's correct, then ancillary revenues should be c £25m in H2, which would be a record half for the company for this revenue stream.
That would make things appear much more exciting.
---
In any case it's the long term I'm interested in. If the company can grow market share, then operational leverage should kick in at some point making the company much more valuable.
According to the latest market research the hybrid property market grew c +9% in Q1 (Jan-Mar).
https://www.twentyci.co.uk/wp-...
Purplebricks (LON:PURP) instructions grew +19% in H2 (Nov-Apr).
So there's some positive signs there, but not enough to make me super confident until I see the full year report.
Cheers
A
my top ten are Boohoo (LON:BOO) (28%),Redde Northgate (LON:REDD) 9% Polar Capital Holdings (LON:POLR) (8%) Sylvania Platinum (LON:SLP) (7%) Saga (LON:SAGA) (7%) Revolution Bars (LON:RBG) (5%) Wynnstay (LON:WYN) (5%) Volex (LON:VLX) (4%) Begbies Traynor (LON:BEG) (4%) Reach (LON:RCH) (3%)
Have 30 stocks in total ,many of which I trade quite regularly. My core holdings however are long term positions .
Here are my SCVR heat maps for today (prices as at ~9:20am).
I share these heatmaps with the intention of giving a visual indication of what is going on in the SCVR world: who’s reporting (and it's impact on the share price); and what’s moving more than 'normal'. There are no associated recommendations, implied or otherwise, just information. How, or indeed if, you choose to use that information is up to you. Please feel free to ignore them if you don't find them useful.
Please read my heat map thread for a great deal of explanation of how the heat maps are formed and how I use them to guide me with my research, and for a full key to the contents.
I very much welcome feedback so if you do have any feedback, not already covered in the heat map thread, it would be very helpful if you could post your comment in the heat map thread rather than the SCVR thread. The more specific and constructive the feed back is, the more that likely it is that I will be able to act upon it. Thank you all for the feedback so far.
Small / Micro Caps reporting today:
Big movers today in the SCVR world (moving more than a 20d EMA of the ATR against either yesterdays close, or today's open):
Warm regards, stay safe, and best of luck!
greensiax
seems a reasonably quiet day today , we were on about top 10 holdings the the week and i have just been reviewing my holdings so i might as well post the list. i am always interetsed to see where other bods atre invested.
My top 10 at present are as follows Fevertree Drinks (LON:FEVR) , Norcros (LON:NXR) , Virgin Money UK (LON:VMUK) , Corsair gaming (crsr us) , Redde Northgate (LON:REDD) , pfizer , Sanderson Design (LON:SDG) , Boohoo (LON:BOO) , B.P. Marsh & Partners (LON:BPM) , funko inc (fnko us). These make up just under 50% of my portfolio so i don't really see myself as being particualrly ovewight in anything (fevertree a 9% ish possibly excepted) .There are some random stocks in the list i would not have started out with as being top 10 holdings due to price fluctuations. next 5 on the list are Somero Enterprises Inc (LON:SOM) , walt disney , toll Brothers (tol us) Marston's (LON:MARS) and Legal & General (LON:LGEN). Reference recent investments i must admit i have almost exclusively being buying us stocks the last few months - not sure if my logic here is sound or not but at present i seem to find it easier to get excited about some of these non uk companie than i do with the standard uk fare at present. Even companies like dropbox are corsair aren't on a particularly demanding forward ratings so its not the case that all us stuff is on ridiculous ratings.
Heres my top 10, which accounts for 50% of my portfolio. Have tried to go for a complete mix of growth & value etc. Probably holding too many stocks overall (36), but find it so hard to priorities and evaluate existing holdings over new opportunities: Boohoo (LON:BOO) 11%, React (LON:REAT) 9%, Sosandar (LON:SOS) 7%, Sylvania Platinum (LON:SLP) 5%, Best Of The Best (LON:BOTB) 4%, Saga (LON:SAGA) 3%, Somero Enterprises Inc (LON:SOM) 3%, Shield Therapeutics (LON:STX) 3%, Volex (LON:VLX) 3%, Aviva (LON:AV.) 3%. Btw, I also hold Marston's (LON:MARS) 2% and Sanderson Design (LON:SDG) 2%
my top 10 holdings as of today:
Rambler Metals And Mining (LON:RMM) 6.8%, Polymetal International (LON:POLY) 4.3%, Electra Private Equity (LON:ELTA) 4%, Somero Enterprises Inc (LON:SOM) 3.8%, Fevertree Drinks (LON:FEVR) 3.8%, Jubilee Metals (LON:JLP) 3.7%, Tekcapital (LON:TEK) 3.3%, Glaxosmithkline (LON:GSK) 3.3%, Ferrexpo (LON:FXPO) 3.3%, Aj Bell (LON:AJB) 3.3%
LON: VMUK Virgin Money (Sorry to be off-topic)
I have a very big problem with Virgin Money. I have a tracker fund with them for over 15 years. Both initial sum and 10 years of monthly payments. I tried to withdraw some of my money recently and they have been prevaricating for over six months now. They are telling me I am money laundering, even though I am requesting them to send it into my Nast-West account that I have for over 40 years, and I was using this same account to send them my payments. They did not refuse the money when I sent it to them. I am currently in Tanzania and calling the helpline numerous times ( great expense on my part, keeping me on hold for a long time) In fact, I have given up calling them now. I will now leave it until I get back to the UK in the summer.
Needless to say, I am not very happy with them.
Virgin Money UK (LON:VMUK)
This is symptomatic of big uk established banks their customer services can be woeful , i have seen barclays and hsbc close down buisness aco####s for no reason - at present some refuse to open new accounts and the hopps you jump through are terrible. Money laundering is tricky as pass through money can be a danger item - so it might seem ridiculous that anything needs to be provided but unfortuantely they probably all have past sins where they didnt previously ask but now are in a pickle between doing whats right and over complicating matters. all i would say is complaint with well constructed letter asking exactly what reasonable evidence they need/want and take things from there. Possible slight bit of background info may help. Obviosuly any letter from you or email could be faked. It must be tricky for them trying to keep on top of the rampant money laundering and fraud that does go on.
My investment thesis for virgin money was pretty simple - they seemed to be on a bargain price compared to the level of profits their merged entities can in theory produce and from a customer services point of view i would some confidence that the virgin brand and ethics installed will ensure that they are at least thinking along the lines of customer service when for barclays and hsbc customer service seems to be at the bottom of the list. Being frank they would have to be very poor to be worse than the big 4. Its a reasonably low conviction holding that is now somewhat overweight (near top of my list if i need to sell something) as i made the decision to top up here during covid and that has served me well - that top up was complete gamble i must admit albeit i had no specific concerns about solvency. even with the shareprice stength recebtly the future pe is still only showing as 8.2 ! so there is an element of buying on the basis that its cheap and praying its not cheap tat!
As a shareholder I am happy to email approrpiate people in virgin if you would like asking probing questions to try and resolve the situation - i fear you turning up in branch might be necessary though perhaps?
rmillaree
Thanks for your reply, and thanks for the offer, but I better get back to the UK first. My post was not to have a go at you but to warn others if they are thinking of invest with Virgin products.
It so frustrating, it's my hard-earned money, not there's.
I have a very big problem with Virgin Money. I have a tracker fund with them for over 15 years. Both initial sum and 10 years of monthly payments.
Although there are cases where companies are simply terrible it's an unfortunate fact that anti-money laundering laws are extremely prescriptive (and wlill get more so in the near future). If you're attempting to withdraw a large amount (defined by the regulations roughly as over £10,000) then that will trigger an automatic referral to a fraud team and will almost certainly require step up authentication, including address verification.
If there's any kind of mismatch then that will cause problems. If you want to withdraw significant amounts - especially if you have any kind of special circumstances, such as living in a country which is likely to be linked to money laundering concerns, then it's best to contact the company first to discuss the issue.
Once a money laundering risk case has been triggered I'm afraid it's a real problem. This is the major reason financial institutions lose their licenses or receive eye watering fines so they're paranoid about it. Not only that but the regulations don't allow them to tell you why they've triggered the case or what its status is (since this tells real money launderers how to avoid the triggers).
To be frank, it's unlikely to a problem specific to Virgin Money and you will almost certainly need to deal with them directly to resolve this.
timarr
So that's OK then.
So that's OK then.
You think so? How peculiar.
timarr
So that's OK then.
You think so? How peculiar.
Irony. Like Boris referring to our "European friends".
My top 12 (3 at joint number 10) comprise 42% of my 2 portfolios (SIPP and ISA). I hold too many stocks but am gradually whittling down. Impax Asset Management (LON:IPX) 6% Sylvania Platinum (LON:SLP) 5% Saga (LON:SAGA) 5% Games Workshop (LON:GAW) 4.5% Ergomed (LON:ERGO) 3% Somero Enterprises Inc (LON:SOM) 3% Up Global Sourcing Holdings (LON:UPGS) 3% Volex (LON:VLX) 3% Scs (LON:SCS) 2.5% Jarvis Securities (LON:JIM) 2.5% Cenkos Securities (LON:CNKS) 2.5% Norcros (LON:NXR) 2.5% Cash currently 2% . Current investing going into small growth stocks and selected value but these are long term holdings except Ergomed and Saga both of which I hope will be.
Looking forward to your analysis of N Brown (LON:BWNG)
Its a lot to take in. Seems to be a slight miss on revenue and EPS, slightly above on EBITDA if Ive read it correctly.. At least according to Shore Capital
Shore have new note out today with
PBT -2022 increasing to 39m, then 47m, then 58m 2024
adj EPS - Dropping to 6.9p 2022, then 8.2p, then 9.5p 2024
Dividend resumption possibly end 2022..
"N Brown is trading on a FY2022
PER of 10.3x, falling to 7.4x by February 2024F. The EV/EBITDA multiple falls from an already undemanding6.4x to 5.0x over the same period. N Brown has much to prove after recent years of disappointment, though if evidence of delivery comes through then notable rating expansion beckons."
Looks like it may be a slow burner.
I went to my local pub on Monday and again last night. It was fairly quite on Monday and a bit busier last night. The manager told me he went to an Indian restaurant on Tuesday which wasn't busy but the restaurant manager said he had one table booked on Monday. The pub manager said the whole chain had been quite on Monday.
For what it’s worth, I could get a drink in London for love nor money on Tuesday evening. Unless you had a booking, there were no tables at the Inn, either inside or out. What a crazy world we now live in that you now have to book in advance to have a pint after work!
What type of area was you in, business or residential. My area is a bit of both mostly residential.
Clearly I should have stated ‘I couldn’t get a drink...’
This was in and around the City
Henry Boot (LON:BOOT)
Solid trading update today , it seems like the pandemic has never happened with this company. Unfortunatley that applies to the shareprice recovery too where the price is still below pre pandemic levels despite recovery in trading being back to what it was pretty much now (no making back lost ground though unfortuantely) . I think one issue with boot is that its such a slow burner with investments taking so long to payback that there is very limited scope to outpeform significantly as they very much plod along and can only ever really hit targets at best. It's lovely to have a holding though i can rely on 100% and let thme just do their thing knowing they are a very safe pair of hands. I doubt they will shoot the lights out anytime soon ref returns but i remain a happy holder.
Perhaps other companies are starting to eat N Browns' (£BWNG) lunch. N Brown was the first place to shop for the larger person but now even the top fashion outlets offer clothes in much larger sizes to cater for this growing market. As obesity rates rise this market segment has become too important to ignore.
Re N Brown (LON:BWNG) - agree, others ate its lunch. It had a chance as ex catalogue to do for specific niches and (poorer) consumers what Next did. However, it started to reform too slowly and lost its service ethic (Trustpilot comments were abysmal at the end of Fit for the Future). It has simplified its brand architecture hugely but only at the expense of losing customers (eg its distinctive brands for really old women (in both age and mindset) have gone in the JDWilliams relaunch and now it lacks a reason why it is any different to an Amazon. The final nail was the changes to credit access. On the one hand regulation has restricted what can be done (it used to make much of its money in the good old days for scalping the poor with expensive credit) whilst at the same time younger consumers have been able to buy from better brands/outlets via Klarna-like offers. The return of old owners and re-financing may fix the strategic mistakes but I doubt if the Mojo is coming back in enough scale to make it attractive vs new, more sharply focused businesses/brands (SOS) and better platforms (Next, Amazon) etc.
Perhaps I am bitter - an ex-shareholder for whom N Brown (LON:BWNG) was my 3rd worst investment ever as I waited too long for potential to be turned into profit. But I still see issues ahead.
I totally agree with you Zipmanpeter, The elephant in the room is the massive increase in the issued share capital to 460m at £BWNG. The statutory EPS of 2.63p calculated for last year used a weighted average share denominator of 315m. That increases to 460m for next year, so earning have to increase by 46% next year to achieve an EPS of 2.63p.
That isn't going to happen. The RNS announcement is typical of N Brown. They make statements that hope will distract you from the fundamentals. Here is one example:
"Improving product revenue trajectory throughout the year" when they should be saying the rate of decline in product sales has slowed.
They point out that product revenue sales fell 25.7% in Q1 and only by 4.3% in Q4. And then they state in their FY22 Guidance:
"Since the start of FY22 we have returned to product revenue growth and for the full year we currently expect product revenue growth of between 3% and 7%. Financial services revenue is expected to fall." Overall revenue will be up 1% to 4% compared to this year. "
This tells you earnings are not going to increase much, so I expect EPS will be under 2p next year. That is what management are telling you, but they fill the report with so much crap they hope you won't notice. All they talk about is their "Adjusted EBITDA" which is a useless indicator.
I bought into Brown last April and piled in again in June. I sold everything once the out-of-the-blue £100m fund raise was announced. The enlarged share base is going to cripple EPS for years to come. Yesterday's announcement was utterly predictable. The strategy isn't working. I'm surprised the Stockopedia analyst suggested this is a long term hold.
Any chance of a quick peek at Games Workshop (LON:GAW) Paul? I think you hold. I'm interested in your view on valuation of what is now a very big company, but still growing like topsy.
Definitely not a Small Cap but I know many here are holders and/or interested. It was comments on here that first got me interested and finally persuaded me to start buying Games Workshop (LON:GAW) in 2018.
Trading Update today indicating for the year about to end (May 31):
Sales up 30%
Profit of £150M (up over 68%)
Another dividend - this time 50p making 235P for the full year (up 62%)
And they look after their staff - £12M paid in staff profit share during the year (up from £2M last year)
The share that just keeps giving!
Games Workshop (LON:GAW)
I think the stunning thing about games workshop is that if we compare 2015 to 2022 sales will have trebled in that period but profits are up 10 fold!. Being honest 2015 wasn't a bad year either with 10% of sales dropping through to net profit which is always decent for a seller of things.All done with negligible extra shares in issue .A very impressive bit of operational gearing. Shame on me for being too much of a tight wad when it comes to purchasing shares in this company. Looking at a company like hornby they go do with the quality of management that Games Workshop (LON:GAW) seem to have - then again perhaps the Games Workshop (LON:GAW) products sell themselves and the hornby products are from a bygone era?
Hi Nothingventured
For what its worth, I'm not sure what to make of the brief but normal trading update from £GAW. Capital allocation is great: returning surplus cash to shareholders in the way of a further dividend of 50p per share and remain focussed on the business. This seems to have spurred the share price into action today.
However, looking at FY21 revenue of £350m and PBT of £150m shows something interesting in the splits between between 1H and 2H:
Revenue: 1H £187m and 2H £163m
PBT: 1H £91.6m and 2H £58m
There is quite a significant drop off profits in the 2H. I acknowledge this may have been caused by the recent lockdowns as 2H would cover December to May but this also takes into account the Christmas period (unless some Christmas sales are recorded pre-December or Games Workshop is not deemed to be a gifting product). It would be helpful if further narrative was provided to help put this into context, but this has been the style for Games Workshop for years.
I suspect it is COVID related as when I look at Y/E 2/6/2019, the split is:
Revenue: 1H £125m and 2H 131m (excluding royalty income from licensing)
PBT: 1H £41m and 2H £49m
Edison research from 4/8/20 had anticipated Revenue of £275m and PBT of £85m, so that has clearly been blown out the water. GAW have a tendency to under-promise and over-deliver, which I can't fault. I see it as a quality company offering a niche and fashionable product that is currently growing in popularity.
As a long term holder of Games Workshop (LON:GAW) I'm not yet alarmed but I did nonetheless wonder about the apparently rapid deceleration of 2nd half revenue. Bearing in mind that H1 was up to November 2020 and therefore took in the much harsher initial lockdowns, H2 has included Christmas and much of the vaccine euphoria. I therefore share a little concern that perhaps growth may be stalling somewhat. On today's numbers, I calculate a PER of around 30 so if revenue does indeed start to go backwards, then the current sky high share price might well come off a little. It could simply be that the £187m H1 figure was a one-off lockdown bonanza. That seems plausible and therefore perhaps Edison's forecast for 2020 may become a more realistic view of FY21 revenues. If H2 2020 was "only" £131m and the more normal weighting of 2019 applies in future, then perhaps we might see something like: H1-2021 revenue of £145m (£131m +10%) and H2-2021 of £170m (H1 + 17% as in 2019) giving FY2021 of £315m. These figures are clearly very arbitrary and the commentary we get on the 27th of July will hopefully clarify the true underlying direction of travel. I remain a happy holder (especially given the nice dividend) but I'm wary of a backlash if underlying growth starts to waiver.
Spectacularly underwhelming set of results from N Brown (LON:BWNG) (I hold). Whilst considerable amounts of talk as to the transition to an online business this is not borne out by both the profitability, their glacial changes to the brand mix or the impact on sales over the past 12 months.
I actually believe that N Brown (LON:BWNG) have a compelling product offering but how are the getting things so wrong?
As ever with N Brown (LON:BWNG) (I hold), there are many moving parts to the numbers, and I am still digesting the RNS. But the reduction in marketing spend of £76m (56%) is huge in the context of the business. They acknowledge this will have impacted on revenue, but the impact of profitability is much harder to understand. This together with a customer base which has been confined for much of the last year means that are substantial changes going in the operational part of the business. I hope they address this in the presentation later this morning.
My morning smallcap tweet: 18 companies today
Marshall Motor Holdings (LON:MMH) Adm Energy (LON:ADME) Braemar Shipping Services (LON:BMS) Sourcebio International (LON:SBI) Rurelec (LON:RUR) Cordiant Digital Infrastructure (LON:CORD) Kanabo (LON:KNB) Genuit (LON:GEN) £N4P Begbies Traynor (LON:BEG) Purplebricks (LON:PURP) Idox (LON:IDOX) IXICO (LON:IXI) S&U (LON:SUS) Nexus Infrastructure (LON:NEXS) Nanoco (LON:NANO), Kape Technologies (LON:KAPE), Henry Boot (LON:BOOT)
Marshall Motor Holdings (MMH) AGM stmt: has significantly outperformed the new retail and used car markets in Jan-Apr. [SP=172 Cap=135m]
ADM Energy (ADME) sells holding in Superdielectrics for £850k, a £656k profit. [SP=3.3 Cap=5m]
Braemar Shipping Services (BMS) sold remaining AqualisBraemar holding, reducing net debt by £7.3m and realising a profit of £3.9m. [SP=208.66 Cap=66m]
SourceBio (SBI) accepted for UK-wide National Microbiology Framework .(Lot 4) tender. Also added to the Gov't list for covid tests on international arrivals. [SP=159 Cap=118m]
Rurelec (RUR) still no new tariff agreement for the Argentinian powerplant half owned by RUR. "Since the expiry of the resolution in September 2020 the only cash the Company has received from EdS via PEL was US $224k...Rurelec will continue to experience significant working capital pressure." [SP=0.67 Cap=4m]
Cordiant Digital Infrastructure (CORD) PrimaryBid share offer as per RNS 17 May. [SP=104 Cap=NA]
Kanabo (KNB) agreement for Pure Origin to manufacture, package and supply Kanabo's CBD wellness product line. This "marks the end of the period of pilot sales and is the prelude to a full product launch internationally." [SP=18.09 Cap=66m]
Genuit (GEN) guides FY U/L op profit close to top end of F/C of £80-88m. [SP=572 Cap=1414m]
N4 Pharma (N4P) Material Transfer Agreements to assess how well Nuvec can bind and be optimised for transfection with two different proprietary plasmids. [SP=7.9 Cap=14m]
Begbies Traynor (BEG) guides FY(Apr) comfortably ahead of market expectations with rev up 19% and adj pretax up 25%. [SP=120.8 Cap=183m]
Purplebricks (PURP) guides FY(Apr) adj EBITDA in line with mkt exp despite H2 instructions ahead of market expectations. [SP=96.5 Cap=296m]
IDOX (IDOX) guides H1(Apr) rev up 4% and adj EBITDA up 17%, in line with mgmt exp. [SP=61.6 Cap=274m]
IXICO (IXI) wins 5 yr £1m expansion contract to support Phase II Alzheimer's trial. [SP=84 Cap=40m]
S & U (SUS) guides Feb-May profit at Advantage motor finance and in Aspen property bridging arm ahead of group projections. [SP=2690 Cap=327m]
Nexus Infrastructure (NEXS) H1. Restores div, confident. [SP=173 Cap=79m]
Nanoco (NANO) Patent Board requests inter partes reviews of the five patents in the Samsung claim case. Samsung may apply to delay the trial. [SP=23.4 Cap=72m]
In line: Kape Technologies (LON:KAPE) Henry Boot (LON:BOOT)
£AGL is pleased to announce that the University Hospital Ghent, Belgium has published results of research undertaken in oesophageal cancer, using ANGLE's Parsortix® system. These are the first published results in this cancer type, with the Parsortix system now validated in 24 cancer types in 28 independent cancer research centres located across 11 countries.
Hello Jim McLad. The report from Belgium is potentially very good news indeed. Of course we are talking money here, in terms of Angle (LON:AGL) and its SP, but also we are talking about treatment costs and in the current post-critical pandemic Covid 19 situation in Europe and N America huge waiting lists for treatment of other medical issues. The Big C is a scary subject at any time and in any case but the figures for this type of cancer are truly horrendous. I quote:
'The International Agency for Research on Cancer reports that there were 600,000 cases of oesophageal cancer and 545,000 deaths in 2020. Despite an improvement in survival rates, oesophageal cancer is a deadly disease with 80% patient mortality at 5 years from diagnosis. This is in part due to late diagnosis, with 40% of patients diagnosed with metastatic disease and a further 35% diagnosed with Stage III disease. There is an urgent need for targeted treatment options to improve patient outcomes.'
Much progress has been made in other C areas such as breast cancer, but we were reminded only the other day by disappointing results from a large study into ovarian cancer early diagnosis and treatment that we need to make progress across the C board with all the tools available. We are reminded today too that Angle (LON:AGL) and its Parsortix® system has now been validated in 24 cancer types in 28 independent cancer research centres located across 11 countries.
Perhaps I am overstating the case but I for one await the FDA approval delayed by pressure on its systems until H2 calendar 21 really cannot come quickly enough. In the meantime, the Angle (LON:AGL) labs are up and running in the UK and USA, and I look forward to other pharma companies coming forward to use them asap.
Angle (LON:AGL)
Perhaps I am overstating the case
From a skim read of the quoted paper I think you are probably overstating the case a little. Based on that paper, it's hard to see how the Parsortix system would be used in oesophageal cancer. Perhaps I am missing something obvious.
£AGL Don’t know which cancers may be covered but folks might get a better insight into the benefits and uses of CTC analysis from the webcast scheduled for Thursday 3rd June 2021 – 7pm BST entitled “CTCs, what tests can we perform on them and what is the clinical use?” by Professor Justin Stebbing. You can register on the Angle website and I’ve confirmed a recording will be made available within a few days.
Angle (LON:AGL)
As I understand it (as a non-medical person), the Parsotix system is unique in that it captures WHOLE circulating cancer cells: not markers or fragments unlike other systems. Consequently, when a lump is found, rather than doing a biopsy, you can capture the cells and better analyse them and then give the right targeted treatment.
However, if used more pro-actively, it can be used to monitor those who have had cancer for recurrence or for those at risk to capture cancer cells before there are any signs. So for the oesophageal cancer, in those who have smoked, cancer could be captured much earlier and hopefully treated.
I hold BTW.
looks like a good trading update from begbies traynor. I calculate 400% growth in eps. A lot from aquisitions made in the year but it only trades on a pe of 13. Would we expect to see a re-rating in pe considering the growth.
Paul, Roland, will you be taking a look at N Brown (LON:BWNG) today? Full year results announced this morning. I am not sure what to make of them. I hold.
Good morning DaviStoVest,
Yes, I'll be looking at N Brown (LON:BWNG) (I hold) next.
Regards, Paul.
Re N Brown (LON:BWNG) looks like the markets dont like them, at least initially.
Paul what are your thoughts on Fevertree, do you still think its a falling star?
Good morning 8clarky,
I haven't looked at Fevertree Drinks (LON:FEVR) in a long time, and it's way too large to cover in these small cap reports. So no opinion on it.
Regards, Paul.
Fevertree Drinks (LON:FEVR)
Very subdued inline trading update from fevertree this morning , i was perhaps hoping for slightly more positive murmurs but its very early in the year , on trade is on now really getting back on its journey to where it was and the comparatives compared to last year are so quirky that its hard to make much sense of them. At this time of year inline is ok but i would rather have an upbeat inine than cautious one - being frank with closed outlets and ongoing issues etc its unlikely all the old ontrade stuff will fully return on lfl basis anytime this year - so they will need new buisness just to keep standing still (compared to pre covid).
It's strange how its still classified as fallen star when the shareprice is up 50% in twelve months and is not far off trebling since the low point of sub 900p last year.
Fevertree remains my largest holding (IMHO this would be a sought after brand to acquire for one of the big global brands)
I have slightly trimmed my holding over the last week as the position size grew to over 10% of my portfolio value so i have trimmed it back somewhat to get below the 10% level. Even 9% is probably a little oversized by with tis investment i am simply trying toi let the company roll and do its own thing - progress over last 3 years has been somewhat patchy and pe aint cheap. On the plus side 16% eps growth expected this year and 30% next year will hopefully get things back on track somewhat.
Note over 50% of sales are now non uk so anyone trotting out the "reached uk saturation point" line is missing the picture as to where growth is coming from. Build a wordlwide brand as they are doing and it will be an all the more attractive acquisition target to one of the big global players.
I would say at current prices its anything other than a bargain so i doubt it will hold much appeal to regulars here at present - price is nearly 20% higher than it was on 1st April - it seems to have been very range bound over the last 6 months so i wouldnt be surprised to see pullback in shareprice - having said that it is now at pretty much 52 week high so perhaps it is ready to burst out of its 2100-2500 sticky zone.