Small Cap Value Report (Tue 16 Jan 2018) - VANL, IGR, PTSG, GYM, JD., WAND, IDP

Tuesday, Jan 16 2018 by

Good morning!

First of all, apologies - I had a very early night last night, and forgot to put up today's placeholder article (I have an alarm set for 21:30 on my mobile to remind me, but was already asleep by then yesterday).

Please note in the header the companies that I shall be looking at today. There's room for 1 or 2 more, so please feel free to leave requests in the comments below. Preferably for something interesting, not just an in line update. Oh and no financials, resources sector, pharma, property, or blue sky please, as I don't usually cover those (we have to whittle it down to a manageable number of stocks somehow).


I see that Bitcoin is now down more than 40% from its recent highs, priced at $11,400 at the time of writing. Ripple is also plummeting, down 30% to $121 at the moment. Mind you, these things are so volatile, that they could even end the day up! That's why I've given up trying to trade them on IG, as even if I get the direction right, I'm invariably stopped out, due to the extreme volatility.

The spread betting companies must be having a field day with crypto-currencies, so it might well be worth looking at buying shares in that sector, if you can tolerate the regulatory risk? They've certainly made plenty of money out of me, that's for sure! It's true to say that whenever I step outside of my sphere of competence, the results are miserably poor.

Is the (so-called) crypto-currency meltdown underway? Quite possibly. I think this bubble is highly likely to blow up in 2018, due to there being so many obvious signs of the bubble being at or near its peak.

I've made no secret of my views on this - the valuations, running into many billions for things that are totally worthless, is complete nonsense. It's a speculative mania which ticks all the boxes warned about in books like Galbraith's (see picture below). This book is a terrific (and pleasingly short) & enjoyable read. I bet you'll say, "That's Bitcoin!" repeatedly, as you read this book, published in 1990. Galbraith's tone is dripping with disdain for foolish speculators, which is most enjoyable & amusing to read. It's a pity he's not around to pour scorn on Bitcoin.

Warren Buffett ("It will definitely come…

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Van Elle Holdings plc is a geotechnical engineering contracting company. The Company offers end-to-end solutions, including site investigation, driven, bored, drilled and augered piling, and ground stabilization services. It also develops, manufactures and installs precast concrete products for use in specialist foundation applications. It operates through four segments: General Piling, which is involved in open piling on brown and green field sites, particularly on new housing and new development sites; Specialist Piling, which is involved in installing piles where access to the area is restricted or specialist techniques are required; Ground Engineering Services, which is involved in providing site investigation, soil sampling drilling, grouting and soil nailing techniques to consolidate ground conditions, and Ground Engineering Products, which manufactures and installs modular precast concrete beams, primarily to the new housing market. more »

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IG Design Group plc, formerly International Greetings plc, is engaged in the design, manufacture and distribution of gift packaging and greetings; stationery and creative play products, and design-led giftware. The Company's geographic segments include UK and Asia; Europe; USA, and Australia. The Company sells its products in over 150,000 stores across approximately 80 countries. It also offers a portfolio of licensed and customer bespoke products suitable for sale through multi channel distribution. The Company's products include crackers, pens and pencils, stickers, single cards and gift wrap. The Company offers its products under the brands A Star, B Stationery, Papercraft and Pepperpot. Its subsidiaries include Artwrap Pty Ltd, International Greetings UK Ltd, International Greetings USA, Inc, International Greetings Asia Ltd, The Huizhou Gift International Greetings Company Limited, Hoomark BV, Anchor International BV and Hoomark S.p.z.o.o. more »

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Premier Technical Services Group plc (PTSG) is a United Kingdom-based company engaged in the maintenance, inspection, testing, repair and installation of permanent facade access equipment, fall arrest systems and lightning protection systems together with fixed wire and portable appliance testing and high level cleaning. The Company operates through three segments: Access and Safety, Electrical Services and High Level Cleaning. The Company's Access and Safety segment offers Safety Testing, Safety Installation, Cradle Maintenance and Cradle Installation. The Company's Electrical Services segment offers Lightning Protection, Fixed Wire Testing, Portable appliance testing (PAT) Testing, Fire Alarm and Extinguishers, and Steeplejack Services. The Company's High Level Cleaning segment offers Window Cleaning, Gutter Cleaning, Building Cleaning and Pressure Cleaning. The Company's Training Solutions division offers Training, Consultancy and Insurance Inspections. more »

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  Is LON:VANL fundamentally strong or weak? Find out More »

91 Comments on this Article show/hide all

tomps3 16th Jan '18 72 of 91

1pm (LON:OPM) here's the CEO, Ian Smith & CFO, James Roberts giving a bit of colour to H1 results today:

About 7 mins, covering:

Ian Smith – Introduction & brief overview of 1pm – 00:23
James Roberts – Financial highlights – 01:26
James Roberts – Continuing growth – 02:54
Ian Smith – Continuing the strategy – 03:36
James Roberts – Funding facilities – 04:43
Ian Smith – Summary & Outlook, 06:01

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VegPatch 16th Jan '18 73 of 91

WANdisco (LON:WAND) if ever there is a company that needs a lesson in plain English this is it
"Our market doesn't stand still - and nor does our product. There has been a transformation at WANdisco which started when we launched our core WANdisco Fusion product. We moved from a Hadoop focus towards providing a general data replication platform and we now support Cloud Object Storage and a variety of other technologies, increasing our addressable market. "

err... what does it do ?

Too much technical jargon, not enough hard data for my liking

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hawkipa 16th Jan '18 74 of 91

In reply to post #299073

Hi, it might be worth noting that if the bonds qualify as a QCB (I haven't checked - but no reason why they wouldn't), any capital gain will be tax free.

There was a lot of pa buying of the 23's when they got down to 80 by bond market folk FWIW.

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ricky65 16th Jan '18 75 of 91

In reply to post #299263

Perhaps, it will be interesting to see what Mr Scott thinks of 1pm (LON:OPM) interims.

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Fangorn 16th Jan '18 76 of 91

In reply to post #298878

Agreed - Certainly wouldn't invest in credit card companies that people are using to buy Bitcoin!!!

Seriously, WTF - ."Bubble red flag" right there.

People Desperate to Buy Bitcoin Are Paying With Credit Cards

Way Too Many People Are Using Credit Cards to Buy Bitcoin

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JohnEustace 16th Jan '18 77 of 91

In reply to post #299268

Bilby (LON:BILB) customer list includes Carillion (MoD properties in Colchester)

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Velo 16th Jan '18 78 of 91

About Jesse Livemore and that - "...His eventual suicide..."

His wife had been married 4 times previously. All the ex-husbands had died. FROM SUICIDE.

Jesse Livemore's death meant she now had 5 husbands and all deceased and all from suicide. Say it was all happening today, you are single and both you and his now free ex-wife fall in love, all her previous 5 ex-husbands had committed suicide - would you marry her?

She was never charged over any of the FIVE deaths - sheer coincidence that they all died by suicide - but would you marry her? :)

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Edward John Canham 16th Jan '18 79 of 91

In reply to post #299393



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lifford86 16th Jan '18 80 of 91

In reply to post #298673

Re Medica (LON:MGP), I'm long on this (not too smart today) and see the potential in it. I think that the sales pitch is sound in that you outsource to UK experts, reduce the need for specialist staff 24/7 and therefore reduce the cost to the NHS. Keeping it in the UK seems smart to me (an no doubt creates links between clinicians).
They don't mention it however I'd be amazed if they aren't trying to introduce some sort of automation or machine learning into the process - there are a lot of companies out there trying to use machines to predict scans, you just need to train the machines a lot and it seems an open goal for Medica (LON:MGP).
The business model appears to be something that can be replicated in other countries (albeit other companies can do something similar) particularly a high cost area like the USA.

On the flip slide the current business model is revenue based on people - so lacks the operational gearing and scale as well. The revenue per consultant needs to be carefully managed.

The drop in price appears overdone in my opinion, however the market is currently punishing companies with a high PE ratio for any slip in expectations, so not all together unsurprising.

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gus 1065 16th Jan '18 81 of 91

Looks as though Bitcoin might be heading back towards $10,000 sooner rather than later .... screen shot taken from IG Index Cryptocurrency page at 21.40 this evening.  What the Lord giveth, the Lord taketh away ....


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clarea 16th Jan '18 82 of 91

In reply to post #298853

Hi Paul,

If you don't have it already check out "How to trade in stocks" also penned about the great man written many moons ago but still probably the best book I have read about investing essentially he was the original momentum investor cracking read.

A 1940's Robbie Burns all be it hopefully Rob won;t walk into a bar with a loaded revolver.

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narp 16th Jan '18 83 of 91

In reply to post #299123

Re Carillion: Someone who works at one of their joint venture company has been told that only 6 of the 350 subsidiary companies have been put into liquidation.

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cic 17th Jan '18 84 of 91

In reply to post #298988

This was sale of 47% of awarded shares sold to cover the tax bill. This is a frequent occurence with share awards to directors. I don't think there is any significance to this type of sale.

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Gnome2 17th Jan '18 85 of 91

Unbelievable coincidence for Jesse Livermore's wife to have had all 5 husbands commit suicide. Like much of what we read on the Internet, it's worth checking:-

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gus 1065 17th Jan '18 86 of 91

In reply to post #299118

Gattaca (LON:GATC) RNS this morning quantifying relatively small fall out to Carillion insolvency.



Gattaca plc

Statement re: share price movement

Gattaca plc ("Gattaca" or the "Group"), the specialist Engineering and Technology (IT & Telecoms) recruitment solutions business, notes the recent share price fall.

Gattaca has historically provided recruitment solutions to Carillion plc and its subsidiaries, primarily in the public sector arena. Whilst Gattaca has outstanding debts from the Carillion group, the vast majority of these are insured by a leading credit insurer and, at this time, we estimate our uninsured balance sheet exposure to be less than £100,000. The impact of Carillion's liquidation on our balance sheet will therefore be minimal.

Our annual Net Fee Income from the Carillion group of companies is in the order of £0.5m. Gattaca continues to support the delivery of important public services and management is actively engaging with the relevant Carillion counterparties to ascertain how we can continue to support the related underlying projects which would also maintain this income, whilst ensuring that we will be paid for such services.

Gattaca's Trading Update for the six months ended 31st January will be released 8th February 2018.

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gus 1065 17th Jan '18 87 of 91

In reply to post #299393

RNS this morning re. Bilby (LON:BILB) Carillion exposure. Would appear to be negligible.



Statement re: CarillionAmey Limited

Bilby Plc (AIM: BILB.L), a leading gas heating, electrical and building services provider, notes Carillion Plc's ("Carillion") recent announcement that Carillion has entered into immediate compulsory liquidation, and gives the following update in relation to its contract with CarillionAmey Limited ("CarillionAmey"), a joint venture between Carillion and Amey UK Plc ("Amey").

The Group does not believe these recent developments will have any financial impact on Bilby's trading. As previously announced, Bilby currently has two contracts to provide building and support services for three of The Ministry of Defence regions. This work is carried out on behalf of CarillionAmey, a separate legal entity that operates independently of Carillion.

Bilby notes the statement by Amey on 15 January 2018 in which Amey stated that the terms of the CarillionAmey joint venture mean that Amey will now continue to provide the services previously provided by CarillionAmey.

Bilby also notes that Amey has confirmed it is fully prepared to continue the service obligation of the CarillionAmey contracts without adverse effect on the employees of the joint venture or its supply chain.

The Group maintains a strong relationship with Amey and is proud of the high level of service it provides The Ministry of Defence.

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nicobos 17th Jan '18 88 of 91

In reply to post #299218

Richard - with regards DekelOil Public (LON:DKL) it looks like Cantor has issued a positive note:

"A stronger Q4 shows DekelOil back on track in our view following earlier one-off mechanical issues. The ability to secure premium prices is also apparent. The company is now set to complete the planned capacity increase at the Ayenouan mill ahead of the peak harvesting season starting in February. The production numbers and underlying return to form give us confidence that this will drive growth at least in line with our forecasts"

"We value DekelOil on a DCF basis with a cost of equity of 15% and cost of debt of 10%. This gives us a target price of 24p. The principal risks to our valuation are volatility in the CPO price and production volumes." (taken from ADVFN).

Acknowledging it's a bit of a gamble, I've decided to take a small nibble ;)

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Samsgrandad 17th Jan '18 89 of 91

In reply to post #299303

I attempted to give a synopsis of their business prospects earlier which someone gave a thumbs down to. Hardly helpful to further discussion without any comment. I worked in IT most of my life .

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Richard Goodwin 17th Jan '18 90 of 91

In reply to post #299693

Hi @nicobox, As with all commodity producers, for DekelOil Public (LON:DKL) price and volumes of crude palm oil and similar products are definitely a risk. Hardman's assumption of the cost of debt seem high as DKL is gradually re-financing it's debt and rates have come down to around 7%. On the other hand the company is ambitious and if the takeover they are negotiating goes through then there might be a discounted placing perhaps? They have also failed in the their confident promise in last year's annual report that 2017s volumes would be higher than 2016s. Similarly the conversion rate from fruit to oil in 2017 has fallen from 2016 levels despite an investment predicated on improving it by 0.5%.
I understand that it is a new company still in the process of sorting itself out but there are plenty of things to keep an eye on (in addition to all of the inherent overseas AIM company risks).

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Richard Goodwin 17th Jan '18 91 of 91

In reply to post #299693

I've done some more analysis of the production update of DekelOil Public (LON:DKL) and it implies that by Q4 2017 CPO prices were back down at E607/tonne, the levels of mid 2016, having spiked in between.
What I would really love to better understand is the commercial model with the local growers. What is the determinant of the price DKL pays for FFBs? With the FFB:CPO conversion rate having fallen to 21.8% in Q4 it matters a lot for profitability whether the CPO output resulting from the bought in FFB or the weight of FFB input determines costs. The current 25% mill capacity increase sounds like it is driven by a contractual obligation to buy-in from local growers rather than growth in higher margin sales from owned plantations.
Fwiw I estimate that 2017 full year sales will be E29.8m +14% vs 2016.
On the plus side I estimate CPO volumes will be 20%-30% higher in 2018 than 2017 and alternative fuels such as Brent crude are rising in price which will impact CPO prices.

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

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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