Small Cap Value Report (Tue 23 Feb 2021) - AIR, TSTL, SOLI, FIF, BEG, TRCS, SPR

23rd Feb '21 by Paul Scott

74 comments 14093 reads

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

(Today's report is now finished)

Let’s start with some catch up items from yesterday:

Air Partner (LON:AIR) - (I hold) - trading update & dividend policy

Tristel (LON:TSTL) - interim results. Good, but share looks very expensive, and H2 outlook wobbly.

Solid State (LON:SOLI) - Trading update

Finsbury Food (LON:FIF) - interims look resilient in the circumstances. Shares look cheap, in my view.

From today's trading updates & results:

Begbies Traynor (LON:BEG) (I hold) - reassuring Q3 trading update. Looks cheap, based on forecasts for FY 04/2022.

Tracsis (LON:TRCS) - in line update. Looks quite attractively priced, in an expensive market.

Springfield Properties (LON:SPR) - a reader request, interim results from this AIM-listed Scottish housebuilder. Looks quite good.

Air Partner (LON:AIR)

(I hold)

65p (down 8% yesterday) - mkt cap £41.3m

Shareholder Update & Dividend Policy

Air Partner, the global aviation services group...

Year end is 31 Jan 2021.

...re-affirms the Board's expectation, as previously stated in the Group's trading update of 20 January 2021, to announce underlying profit before tax of no less than £11.5 million for the year ended 31 January 2021 (FY 2020: £4.2m).

I reviewed it here on 21 Jan 2021, pointing out that the £11.5m annual profit is split:

£10.5m in H1 (benefits from covid related one-offs), and
Only £1.0m in H2.

We are reminded that AIR raised £7.5m in a placing, and did some cost-cutting.

Acquisition - CHS Engineering was bought out of administration, and will offer additional services within the AIR group.

Cash - looks fine, with what they call normalised cash of £8.3m. Plus debt facilities of £14.5m, currently undrawn.

Dividends - it paid 0.8p interim divi in Nov 2020, and intends to pay a 1.6p final dividend. The total is therefore 2.4p, yielding a reasonable 3.7%. It’s good to remember that a lot of companies are only tentatively bringing back divis, so there’s scope for yields to rise.

Dividend policy is to aim for 3.0 to 3.5 times dividend cover in future.

Current trading & outlook -

Profitable start to FY 01/2022 has been made, but below last year’s exceptionally strong H1.
US business is buoyant.
Other divisions…

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Rusty2

23rd Feb '21

I had a look, not available on HL but is on IG Group (LON:IGG) but: "only trade Volatility Index using a CFD or spread betting account."

So looks like you will need to open a CFD or spread betting account.

Instead of moving your account, which I agree is not worth it for one trade, why not just open a spread bet account?

Don't know if this is on the IG blacklist or not.

rmillaree

So looks like you will need to open a CFD or spread betting account.

Bit of a random OT question here if you dont mind - i had some one tell me they have made 50k profit trading what they think is cfd's? on plusmarkets (pork? to china can't lose kinds trades). It appears that cfd profits are likely chargeable to capital gains tax where spreadbetting is not ?

Question is could this individual likely have done the exact same trades via spreadebts or are they sort of mutually exclusive kind of trades generally speaking. Nice to turn £300 into 50k - even nicer though if you then get to keep that as tax free earnings.

Paul Scott

Hi ken bishop,

You were the presenter Paul and I am happy to help you to blow an early trumpet on your behalf

Thanks, but it's very early days yet. As mentioned in the StockSlam, I think Renold (LON:RNO) is a turnaround with an investing horizon of about 2 years. It could attract a bid sooner than that, who knows?

I'm astonished at how short termist so many people seem to have become. At what point did the stock market turn into a giant casino? I didn't get the memo about that! ;-)

Regards, Paul.

Hi Tony,

Your post triggered me to have a look at Springfield Properties (LON:SPR) so see the section added above about it. Looks quite good to me! Thanks for flagging it. I thought it might make our friends north of the border a bit happier, if I reviewed a Scottish company! ;-)

I find Spreadex excellent for small caps.

My broker told me today that, providing I'm happy to allow them to use the cash on my account (i.e. non-segregated) then Spreadex are very happy to keep my account, and continue offering me small cap positions. So that's very encouraging.

Looks like Spreadex are going to get a lot of business that IG didn't want. The way they've handled things at IG is so high-handed and inept, that I've got serious worries about them, and don't think I really want to do much business with them in future. After all, if they suddenly announce they're stopping doing a load of small caps, then they might follow it up at some random point with a new list of more small to mid caps they're not interested in either.

I can understand if business on some stocks isn't economic for them, in which case why didn't they just put up their fees?!

Maybe IG is now too big to offer decent customer service? It looks that way to me.

Paul.

Camtab

Thanks Herbie47.

davidjhill

Generally someone like IG will have brokers who will hold or borrow stock against client positions. Thus why a lot of stocks are unborrowable. So, no it's not just a derivative market though often aggregate client positions won't be hedged perfectly either. More unscrupulous providers may be completely unhedged and are thus just taking the other side of the trade expecting you to lose.

I use IG and I've found this current experience really off putting. it's a dreadful customer service. To sell / buy back is costly and needs managing, also something they won't do for you. Basically they want to take the spread of closing (ie below Bid for longs) and then you have to open in physical shares at the Offer or inside if you can get it.

What they should have done is offer customers the opportunity to B&B, having got their brokers to speak to the MMs in advance. That would have been a small cost but more seamlessly managed. Yes, there would be no leverage available so you'd need to fund the position but better than the current mess they've launched on the market. It is very poor to accept someones positions, then decide half way through you can't be bothered anymore and then hide behind T&Cs and force you to quit them at your own cost. Feels dishonest.

I've used them a lot but now I will consider going elsewhere. I would have complained but guess what - no customer service!! Please wait in a queue for hours before we don't answer anyway......all because of Gamestop......come on you are having a larf!!!!

Thornabian

The rising bond yields could end up being short-lived given all the supply side stimulus and probably won't change until there are one of the following supply side events: tax rises, fiscal expenditure drops, central banks taper balance sheets or interest rates rise.

The only likely one I see is small tax rises but we might not see any of these until employment is back at full capacity so my own view is a small correction and a continuation of the rally for 6 months until sentiment turns to what supply side measures they will start to use to cool the economy.

I do find it strange that some commentators are already talking about the economy needing to be 'cooled' - not quite sure what economy they are looking at!

These are just my general observations and not Boohoo specific.

Tommy H

Hi Trident

I think that one of the key impacts to Tracsis (LON:TRCS) this last year has been all the slow down and shut down on local government spending. So they do lots of exciting cutting edge things like cameras and cables and boxes that count traffic, yes I am a Civil Engineer by training before you ask, so if you ever drive over a single, or pair, of black cables running across the road look at the box on the nearest lamp post to see if it is theirs.

Anyway the railway business has continued as it does lots of things like defects monitoring, so just gets attached to tracks and left there hence the resilience in expenditure throughout lockdown - none of us wants a derailment for any reason. But the roads side has been badly hit. So with life slowly returning to normal the idea being over the next 12 months+ infrastructure spending at the local level resumes, people want new houses, bypasses, junction improvements and all that, hence demand for products and services goes up.

Here is hoping as I hold.

Tommy

nathantrader

I exited SMT a couple of weeks ago on concern of Tesla holdings may buy back in.

I hold Volex would like to top up but reached limit on size of holding in my portfolio, don't see a reason for the drop in price.

Paul I watched your presentation and was almost complete with me research, I was going to wait for a pull back in the price but opened a starter position today, I remember the Renold Chain factory in Burton on Trent, closed now, never thought I would be a Share Holder.

£clin there top sales person left the company some years back to set up his own drug co which is one of the fastest growing cos In the UK, clinigen seem not to have performed as well since.

IG have had non existent customer services for months, the system keeps crashing and the latest fiasco is the last nail for me, I will move Spreadex in future.

Dojosan

I think it's coz of copper price

In the most recent presentation, according to the notes that I took, they are unprotected in the quarter, if the price of copper moves unexpectedly higher. However, for the next quarter, the price rise will be incorporated into / passed onto the customer contracts. So negative impact will be felt by Volex (LON:VLX) albeit for a few months.

Not sure how material the impact of rising copper prices has on them though....

GibboP

Love your attitude Paul, a lesson for us all.

Pretty surprised that £IG , the company itself is only 2.65% down over 5 days. Given they have triggered a mini avalanche in many stocks, many PIs reckon they still have a bright future.

UK_Investor_8888

LIFE EVENT for UK_Investor

In early December 2020, I broke through the £1M portfolio for the first time with a low of about £560K end of April 2020.

Today I've recorded my largest ever sales and profits, reducing my portfolio down by about 35%, selling my strongest winners.

I give full credit to Edward Croft and Stockopedia for the StockRank system and metrics that guided myself to this profit.

Today, I sold:-

EVRAZ (LON:EVR) 18 months holding +48%
Central Asia Metals (LON:CAML) 12 months holding +62%
Apax Global Alpha (LON:APAX) 12 months holding +32%

Gross Profit before tax on this lot... £102,124.72 +44%

Reasons:-

1. I am buying a house in 60 days, and today seals the balance of payment due. You can enjoy a country home. You can't enjoy a computer screen with numbers on it.

2. EVRAZ (LON:EVR) has full year results on Thursday 25/02/2021. I think they will be excellent, but if a share is going to wobble either way, FY Results and the Dividend announcement is usually when this will happen. +48% has been a great run and I am literally crystalizing my profits and turning it into a house.

Apax Global Alpha (LON:APAX), again, I've had a great run first getting on @120p a year ago, exiting @200p today. The company has done extraordinarily well, but its SR has now fallen to 89 as the valuation stretches value. There is a Dividend and figures coming up. The results usually always please.

Central Asia Metals (LON:CAML), +62% on a small holding, too small. Its been a great run. Thank you.

3. FEAR. I am feeling techy, having seen an amazing bull run. Now I fear losing my hard won gains, and I have a reason to sell and enjoy this wealth.

4. Paul's commentary and others, and the feeling that the bull run, bubble is due to correct soon, with signs of mania. Today I've pulled the trigger on my strongest positions and winners for a purpose.

I find it incredibly hard to sell a winning share, usually regretting it as it carries on soaring.

5. Its just me here! I don't have anyone to teach or mentor me; making this up as I go and acting far beyond my own incompetence.

What's left:

Well I am now a long way off the £1M club again but I'll be back.

My 4 biggest positions currently:-

International Personal Finance (LON:IPF) (I hold £290K worth presently) +21% @83p - This reports, I think, tomorrow. Its going to be epic either way. If it reaches 95 to 100p, I clean up big. If we ever get the world back to normal, I can foresee 120p. I'm happy to wait another year on this.

IG Group (LON:IGG) (£108K) +37.4% - This is going to be a roller coaster ride. Again, investors can lose or win big. I'm in this for the long term. I'm bullish and feel safe here.

XLMedia (LON:XLM) (£178K) -12% - We are waiting for a major turnaround. Premier Asset Management continues to buy about 1% every month or so, and we looking at a timeframe of this year. 45 to 50p and I make a super-profit.

Plus500 (LON:PLUS) - Only a small foray, ex-div the end of this week -3%. Again, I'm bullish over the medium term.

I am going to enjoy the calmness of my new massive cash position in this uncertain time.

Once my house is bought in 60 days and the dust has settled, and there's some signs of value and stability in share prices, I'll start investing in new cash, based on StockRank QVM principles.

I would NOT encourage my friends to invest right now, unless they have the time and patience to sit out any problems and have reduced personal debt first.

24th Feb '21

I was looking into Spreadex and one recent review said that Aim and many small caps were not able to trade. No communication from Spreadex.

davidsmyly

Hi dahokolomoki,

Re: Begbies Traynor (LON:BEG),

Do you mean earnings enhancement rather than "warnings"?

Small Cap Value Report (Tue 23 Feb 2021) - AIR, TSTL, SOLI, FIF, BEG, TRCS, SPR

Air Partner (LON:AIR)

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Paul Scott

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