Small Cap Value Report (Tue 13 Oct 2020) - FCCN, SCPA, OTMP, MMH

13th Oct '20 by Paul Scott

85 comments 10017 reads

Good morning, it's Paul here with the SCVR for Tuesday.

Timings - I'm running late today, so finish time about 3pm. To avoid getting side-tracked & stressed out, I won't look at any reader comments until I've got my main work done.
Today's report is now finished.

Agenda - this is what has caught my eye in today's small cap results & trading updates;

French Connection (LON:FCCN) (I hold) - Interim results, 6m to 31 July 2020

Scapa (LON:SCPA) - Period end trading update

Onthemarket (LON:OTMP) (I hold) - Interim results, 6m to 31 July 2020

Marshall Motor Holdings (LON:MMH) - Trading update

French Connection (LON:FCCN)

Share price: 7.8p (down 12%, at 11:11)
No. shares: 96.6m
Market cap: £7.5m

(I hold)

Interim Results

"Majority of Trading Period Impacted by COVID-19 Pandemic"

French Connection Group PLC ("French Connection" or "the Group") today announces results for the six month period ending 31 July 2020.

NB. This is a special situation. i.e. it should not be seen as a normal investment, but instead the loss-making retail stores are being wound down, which eventually should leave a profitable wholesale, and licensing business. The question is whether the balance sheet is strong enough to enable the company to get to that position without going bust. Obviously covid has made things orders of magnitude worse, which has been reflected in the bombed out share price. Therefore equity should really be seen as akin to a call option on the business surviving. Most investors will find this too risky to contemplate, which is a perfectly valid opinion!

The reason I still cover it here, and indeed have a reasonable size position in my personal portfolio (I've bought more since covid), is because I reckon the core (brand licensing & wholesale) business could ultimately be sold for about £50m, once the retail division has been reduced to breakeven, or closed altogether. This compares very favourably with the £7.5m market cap, and no threat of dilution to shareholders. So if I'm right, then this could be a fairly serious multibagger. That's why it's interesting. It's not as risky as people might imagine, because there's no immediate threat of insolvency;

Going concern - the last Annual Report contained a "material uncertainty" over going concern. However, this has now…

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MichaelFBS

13th Oct '20

Thank god for that.

Hi BV

TBH if you cannot tell from they way others on here comment what is the preferred way to comment then maybe SCVR/Stockopedia is not the place for you?

I understand that there are boards (ADFN LSE?) where there is a lot of shall we say unpleasantness (I don’t know as I have never used) but fortunately here it is all much more civilised! :-)

Regards

Michael.

Tortoise investor

Is anyone else finding they don't get some RNS email alerts in the morning? I use the London stock exchange email alerts but I'm finding I don't receive about 1 a week for whatever reason. Does anyone have a view about whether this is a specific problem with LSE or is a general problem others are experiencing right now? It's a real pain. Apologies if this is a bit off topic or repeated elsewhere (I haven't been as active on the comment sections lately).

pleaty1

I would assume that by sticking a popular well know brand name like boohoo into a headline for what would be for most people a dull story about vat fraud, that firstly they grab attention of more people especially with all the recent supply chain issues. But more importantly, how many times is Boohoo googled? They will get a tonne more traffic from boohoo searches than people looking for vat fraud stories. It's probably one of the best keyword for a search engine at he moment

Bluesky Ventura

Correct ADVFN. It not too bad you should give it a go.

BSV

ezlifeme

Hi Patrick - I have had zero success the last 2 mornings on an iPad with looking at the LSE nRNS page (Coffee in bed read!) - I think thy may have done another another roll out over the w/e? Anyway - I have resorted to other means including Stocko [TODAY/- NEWS /ALL ] Which has given me a better result even if I have to ignore all tree NAV reports ! Then I just wait for Mr C and HollandSmith

Martin VT

Absolutely true. Additionally, keeping a story running for months (or years even) is so much easier than finding a brand new story.

So often these days, news is not that new!

barnetpeter

I don't think Paul could have been clearer on FCCN. At about 7.5p to buy this is option money on some form of deal being agreed. It clearly is high risk and could be very volatile with a high spread. I don't hold at the moment although I have in the past. Punting money only I think.....and the low for the year is just over 3p. I personally would take a punt at about the 5p to 6p level looking at the charts; I don't see too much of a rush myself but who knows in these uncertain times?

FREng

Si,

I love your posts. Sane and cynical - they keep me cautious, which is where I know I should be.

Rusty2

Thanks David, I don't use the new site, so you can't even adjust them on the new site?

Silver Moon

I'm hoping this 'getting there' is on the cards.

Silver

Richard Goodwin

Subdividing/consolidation often seem to go hand in hand with a diluting event. It makes the dilution less obvious to the naked eye

JohnEustace

I have found the e-mail forwarding from the investegate.co.uk site has slowed down a lot. I now log on directly in the mornings to check my list.

It did occur to me to wonder if they are being slowed down by people using bots to scrape data automatically first thing.

Paul Scott

Great point Richard, I hadn't thought of that!

ken mitchell

Superb updates yet again today Paul. Thanks. I was particularly looking forward to your latest on Onthemarket (LON:OTMP) as I’ve held for a while and the share has done well so far, and as usual your write up didn’t disappoint.

A bit surprised that share lost an early 10p gain today to finish 4.5p down. Maybe profit taking after recent good run including 11p gain pre results yesterday?

simoan

FREng,

Yes, as long as you keep cynicism in check it can be helpful. However, there are very large insider holdings at Jarvis Securities (LON:JIM) and only two executive directors. The largest shareholder Andrew Grant is Execuitve Chairman and CEO. The Finance director offloaded shares three times in July but his holding is pretty negligible. If they wanted to split the shares in order to improve liquidity for their own purposes, there's nothing really to stop them. If you hold the shares you really need to understand that the rest of us are investing on their coattails.

All the best, Si

Harry Hindsight

Spreadbetters directors selling. H&T price monitoring alert. Something afoot.

David Talbot

That's correct. You are advised to use the old site but at the same time warned that using the old site for splits can cause problems when you return to the new site (and I can vouch for that). Somewhat of a Catch 22 situation!

Humphrey Lloyd

Saga (LON:SAGA) being a case in point. Despite having just raised significant new equity at 12p (and 27p in the case of the largest shareholder) they continue to slide and closed today at the equivalent of below 10p (=150p in consolidated form). Why does a freshly supported share go to an immediate discount - people cannot surely have been stagging it sensing a premium?

smatthews1

14th Oct '20

Scapa (LON:SCPA) is not normally one I follow, but I do have a small holding in £AMS. There seems to be a lot of similarities between these two, Advanced Medical Solutions (LON:AMS) is currently sitting on a mountain of cash and little debt, they could afford to take on some debt to fund this?

There could be some synergies to be gained here, even if they only made an offer for their healthcare division. It would be a huge aquisition for them but would make alot of sense.

There is a natural pent up demand from this health care market as many operations and procedures have been delayed until covid calms down, therefore I believe this market is quite low risk.

This is purely my own speculation, would be interested to hear some other views as well.

Small Cap Value Report (Tue 13 Oct 2020) - FCCN, SCPA, OTMP, MMH

French Connection (LON:FCCN)

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Paul Scott

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