Small Cap Value Report (Tue 14 July 2020) - BAR, SOM, VTU, CNCT

14th Jul '20 by Paul Scott

116 comments 10458 reads

Good morning, it's Paul here. You have my undivided attention today. Many thanks to Jack for covering yesterday.

Here's the placeholder for Tuesday. Please see the header for the first batch of 4 companies that I'll be reviewing, which have all issued trading updates this morning.

Estimated time of completion - should all be done by 1pm, as I've started at 7am.
Update at 13:34 - most sections are done now, but I'll spend a bit more time on things, hence 3pm finish now.
Update at 14:51 - today's report is now finished.

Covid - as usual, I'm monitoring the media for latest developments, as I'm sure many of you are. Two recent reports in particular have concerned me;

1. A King's College London study has shown that immunity may only last a few months, for people who recover from covid. Specifically, antibodies peaked 3 weeks after symptoms appeared, then rapidly reduced in the following 3 months. This raises the horrible prospect of people possibly being re-infected. This study has not yet been peer reviewed. Researchers in Munich came to a similar conclusion apparently. If these studies are confirmed, then it sounds very bad news to me.

2. The rapid spread in some southern states in the USA led to some lockdown restrictions being re-imposed yesterday, and hospitality sector being closed down again. I feel US markets are being incredibly complacent about covid, and seem to think bringing in a vaccine and eradicating it is a given. Hence the V-shaped recovery in stock markets. Now that lockdowns are returning, at least in some states (e.g. Texas, Florida & California), then it raises the spectre that this thing could be around for some time and further disrupting the economy. That is not compatible with the huge stock market rebound, in my view.

Hence I'm leaning more towards the bearish side of things over the summer. We're overdue a correction I reckon - especially for the pockets of euphoria around tech in particular, and ludicrous momentum trades like Tesla (I'm short again, couldn't resist it).

Brand Architekts (LON:BAR)

Share price: 112.5p (before market open)
No. shares: 17.23m
Market cap: £19.4m

(I'm long)

Trading Update and Board Succession

Brand Architekts, the personal care and beauty products group with its own portfolio of brands, announces an update on trading for the 52 weeks to 27…

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fulgrim1

14th Jul '20

completely agree so much easier and less risk in this crazy world of covid to sit at home and order online, delivered hassle free next day. high street was already failing before this outbreak if anything this is the death nell.

Chris1011

Thanks @FREng - appreciate your response.

ISAallowance

"Someone told me they were spraying over London at night and it has affected their allotment yields. "

I think you can safely file whoever it was in the "barking mad" category!

ken mitchell

Graham

I’ve just seen your post. With luck someone else will post a source for that. If not I’ll see if I can find confirmation sometime tomorrow. There has been a lot of media coverage on this and Government Ministers including Matt Hancock have referred to the early scientific advice they were given that care homes were not at risk from coronavirus. I would be surprised if others reading this thread were not also aware of that advice.

Zipmanpeter

"I don't see how shops will ever be able to reduce their overheads to a level where they can compete with online."

The answer is they can't - directly. They need to offer something other to justify and charge a bit higher price and have a differentiated product (when online actually enables a much wider choice! as £Next 's last results presentation showed clearly..

For example, some services are best enjoyed/must be enjoyed in a physical way. These will remain. Examples might be (I'm told) buying a dress with others before chatting about it over a wine or other personal services. More prosaically, buying really fresh stuff that cannot be sent via the post (less & less in this category) - flowers, some food like fresh bread. For others it may be more convenient than online when combined with other tasks eg as an adjunct to working in an office (but less and less of this?) In short many small reasons why a High St will remain but it will be just much, much smaller and more orientated to services vs goods, especially low price ones.

I already start to see some shops converting to little offices and houses in my area where they are in fringe residential areas. Govt will likely look to push this conversion strategy to mop up surplus retail /provide houses on brownfield sites once COVID setles down. Will be interesting to watch.

bryaz

anyone interested in litigation companies should check out juradicia it went bust about 3 years ago

GrahamF

Well hopefully you can find something to back it up.

And if that turns out to be the case that this not just the benefit of hindsight.

mojomogoz

Hello SCVRers...this Odd Lots episode on Angrynomics is great (and then segue into general economic circumstances). You may agree or disagree depending on your tribe but the whole melting pot of s.h.i.t. of our times is very well succinctly covered here....

https://open.spotify.com/episode/46YcO357H3dVvrF3L62XYR?si=BpDB-QVHQ76sDRxee7tsQg&context=spotify%3Ashow%3A1te7oSFyRVekxMBJUSethH

Enjoy (or not).

Piledriver42

My recollection was that slightly unscrewing the respirator cannister aided breathing... reduced survivability of course.

Oh no! I see we've gone angry ;)

Will this do?

https://fullfact.org/health/co...

Cockerhoop

Bigdish (LON:DISH)
Actually looks like LAC Ventures are sellers - they had 39,000,000 shares at the time of the AR now down to 36,000,000

15th Jul '20

Ken

I’m afraid it won’t. That link is talking about advice from the government. It doesn’t mention advice from scientists which is your complaint.

But let’s assume for a moment that this was based on scientific advice. The number of cases was so low at the time this was issued that the risk was very low. So, it was a correct statement it seems at the time it was issued. However, the situation was moving very fast and that advice should have been withdrawn sooner. Easy to see with hindsight. Not so easy in the maelstrom of a fast changing pandemic from a completely new disease.

It’s not worth pursuing this further as we’re at cross purposes. I wasn’t complaining about anything, and just stating a fact. Namely that wrong advice had been given; namely that Care Homes were not at risk from covid. And it was Government Ministers and not me who said that advice was from scientists.

peterg

No, that's what the govt said. We have no real idea what Sage were telling them.

And it was Government Ministers and not me who said that advice was from scientists.

That probably reduces the confidence we should have in the statements, not increases it!

Gromley

The thing is the statement as given was correct in its context.

“This guidance is intended for the current position in the UK where there is currently no transmission of Covid-19 in the community.

“It is therefore very unlikely that anyone receiving care in a care home or the community will become infected. This is the latest information and will be updated shortly.”

At that time there were I think 13 reported cases in the UK and the view was still these were imported & direct contacts.

However, I think it was clear that we were planning for the eventuality that community transmission would occur - although it is not apparent that there was a coherent forward plan for care homes at that time.

timarr

Namely that wrong advice had been given; namely that Care Homes were not at risk from covid

AFAIK there's no evidence that any advisor ever said that - but nor is there any evidence that they didn't. There was advice from PHE on February 24th that recommended that care homes be shut to new admissions in the event of a Covid outbreak. There's also a statement from Sage in late January that care homes should be subject to special measures.

The PHE advice changed in late March - the suggestion is that that was a political decision in order to make space in hospitals. Again there doesn't appear to be any evidence either way.

What is definitely true is that care homes didn't have access to testing until April and only this month have they had access to repeat testing. Nor did they have access to PPE on any scale until last month - and those aren't failures of advisors.

As yet we don't even know whether the main source of care home infections were patients being discharged from hospital. It's certainly the case that some infections were spread by agency staff moving between homes, that may have been the major issue. Again, not an advisory failure.

Broadly the evidence that the care home disaster was driven by scientific advice is at best unproven. And even if people with infections were discharged into care homes the overall impact could have been mitigated by proper testing, PPE availability and proper funding to ensure they were properly and permanently staffed.

Also, Sage's advice was driven by what they believed was possible to deliver given our state of preparedness. Both Patrick Vallance and Chris Whitty have been clear that had we been better prepared - and after Exercise Cygnus we should have been - then the advice would have been different.

But probably the biggest overall factor in the outsize number of deaths in the UK was the lack of testing. We were two weeks late locking down because it was believed we were three weeks behind Italy on the infection curve. We weren't.

Bonitabeach

Government Ministers will be very careful to be selective about which "scientific advice" they quote and refer to. Scientific advice that the government could not comply with because of inadequate PPE and testing facilities was discounted as undeliverable; despite being highly desirable.

The only thing that is clear to me is that the Government panicked and devoted and wasted enormous resources, energy and money in grand schemes (Nightingale Hospitals etc) when some basic sanitiser and face masks would have been far more effective.

We shall only ever know what they wish us to know.

turbo

A thumbs up from me (have to do this by writing a comments as currently I don't seem to have any access to clicking on the thumbs up count to add my vote) :)

Small Cap Value Report (Tue 14 July 2020) - BAR, SOM, VTU, CNCT

Brand Architekts (LON:BAR)

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Paul Scott

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