Small Cap Value Report (Tue 23 March 2021) - LOOP, COG, PMP, TMO, LUCE, WYN, BOOT, ERGO

23rd Mar '21 by Paul Scott

74 comments 13463 reads

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

Timing - it's an all day job, with a deluge of results/trading updates out today. Update at 15:57 - today's report is now finished.

Agenda -

Paul -

Loopup (LON:LOOP) (I hold) - delayed accounts & NOMAD appointed

Cambridge Cognition Holdings (LON:COG) (I hold) - results in line with Jan 2021 trading update. Almost reached breakeven, strong order book, looks very good to me, and still cheap.

Portmeirion (LON:PMP) (I hold) - brief update from webinar last weeks, some interesting points I jotted down.

Time Out (LON:TMO) - Pulls out of a London development site, and confirms it is reviewing another fundraising proposal. Looks an awful investment to me, very high risk.

Luceco (LON:LUCE) - impressive results for FY 12/2020, in line with January's trading update. Still looks reasonably priced.

Jack -

Wynnstay (LON:WYN) - 'in line' trading update, 3.2% dividend confirmed, and two bolt-on acquisitions

Henry Boot (LON:BOOT) - improving outlook for this prudently run construction company

Ergomed (LON:ERGO) - great results from this high flying pharmaceutical services provider, but the shares might be too expensive for some.

Paul's Section

Loopup (LON:LOOP)

(I hold)

78p (pre market open) - mkt cap £43m

Delayed accounts

FY 12/2020 results are delayed. A very specific reason has been given - that a “routine technical review” has not been completed in time by the auditor, Grant Thornton. This relates to the amortisation treatment of intangible assets from an acquisition.

I’m surprised at the reason given. I would have thought it was very simple to decide whether goodwill has to be amortised or not. You just look at how much profit is being made by the subsidiary in question, and if that supports the goodwill on the balance sheet or not. If not, then you write it down. Why that would cause a delay to the accounts, I’m not sure. Is there some other reason, I wonder? (e.g. auditors not being happy with going concern?)

This bit is positive though - the RNS specifically re-confirms the 2020 results given in a previous trading update -

For the avoidance of doubt, this is a non-cash, technical accounting review and the Group reconfirms…

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Boon

23rd Mar '21

Ah, but when the facts change you should also re-evaluate your investment opinion :)

Time Out (LON:TMO) is no longer banking on magazines, content, and advertising revenues.

The play now is whether they can execute a global network of food halls under their brand, and make money from it.

To be honest, I'm skeptical and barge-poling their new business model having looked at it.. But some of the best multi-baggers have come from former basket-cases who manage to pivot and create a successful new business. Many investors put companies on permanent bargepole lists. But when management, strategy, and market changes.... so should our opinions.

ridavies

Hello manbre. I will be interested to hear what Saga (LON:SAGA) have to say. The way I see it is that £SAGA's apparent advantage of UK back to UK could turn out to be their short term weakness. As I say, they seem to be just pushing back their cruises (or presumably cancelling some?) to non UK destinations, whereas the P&O's of this world werent going anywhere and so can switch to UK only cruises almost at a moment's notice.

Some of their ships are here already. P&O and Princess have short cruises on offer now - 3 and 4 days at this stage, in June, July to Sept. P&O are also offering non stop (apparently) cruises for up to 7 days too in Aug and Sept on a choice of a couple of ships, Britannia and Iona. Great value, special drinks packages included. What's not to like? Have a look at the P&O website

Fred Olsen are doing the same, though they seem to have some stopping cruises in the UK already planned in.

But you failed to mention the flip side, that the 19% stake in Checkit (LON:CKT) was picked up by a company called Montoya Investments Limited.

The trade was also done at a decent price compared to the prevaling bid-ask that day too.

Haven't been able to find out who the eventual owners are, although news articles say they also have owned declarable stakes in Elektron and Pressure Technologies before.

sharw

"The second largest shareholder in Checkit (LON:CKT) D & A Income, Ltd has just notified the sale of almost all of their 19% holding".

With all due respect that is only half the story - the purchaser was Montoya Investments Limited.

We know little of D&A as it hides behind a Jersey registration and that it picked up most of its stake in an emergency "cashbox" placing in 2014: https://investegate.co.uk/elek... . Montoya hides behind a BVI registration but does name the final holder as Graham Edwards. Google leads us from this https://londonminingnetwork.or... to this https://www.telerealtrillium.c... Make of it what you will.

Edit - dahokolomoki - you beat me to it!

mojomogoz

Re Cambridge Cognition Holdings (LON:COG)

I listened to the presentation (I've looked at and watched presentation before too). CEO Stork is good and sensible and executed well since coming in. He's got a plan that's cut to COG's cloth...herein lies the stock's valuation problem...what price a modest growth stock with middling rather than high software biz margins?...

Margins will not be comparable to straight software business as there is a high cost sale and relations element plus varying need to adapt and comply with each client's needs. Also there are the ongoing regulatory compliance/alignment costs across many different treatments. This makes the platform complex and whilst scalable not at moderate cost
There would be an option to acquire and/or invest heavily to accelerate growth. I suspect that as that is not considered as an option suggests that there is a lack of opportunity to do it
Moderate growth can lead to good cash flow...but is that what this stock is priced for? High growth will consume cash...but management are clear in saying that they don't need cash and will be cautious. I suggest this is going to cause narrative failure for current price. Of course, it can run hot from here for a long while longer depending on sentiment as the growth-cash juxtaposition takes some reporting periods to show through
Partnering to sell their products is a sign of weakness and lack of critical depth. It brings costs and reduces margins for the growth achieved, plus dilutes relationships

IMO this is a stock to buy at a moderate valuation for its cash generation and some element of growth option. However, today it is priced as a high growth option company. This means that investors are likely to be disappointed. I guess that a price up 2/3 current is an entry point.

Management are being 'too honest and diligent' if they don't take advantage of the current high price to raise cash. A nice round £6m more sets them up to invest in growth including product development in way they are currently restricted in due to cash and resource

Of course theme/narrative speculators are selling the software-healthcare dream nexus....be wary.

Dojosan

In a similar vein w.r.t hospital backlogs, £TRX (I hold) is all funded up with £9.5mn per latest TU, with new U.S CEO, additional manufacturing facilities + new white label products growth area.

laurie

--presentation of comments--and why EPIC codes are important

I don't see the tabs width. Neither, apparently, does sharw. If half of readers do not, that would be c. 3500 readers.

When I first read SCVR, I read it threaded (with the tabs width). As it is difficult to find comments added after my initial reading if I view the threaded version, I switch to unthreaded (without the tabs width) where I find all unread comments in a red box. By not mentioning the name of the company, you are denying me and perhaps c. 3500 readers with similar reading strategies the fruits of your wisdom.

When I am looking back at readers' comments in old SCVRs during research, I only look for the specific EPIC code in question; it is easy to spot in blue. If the EPIC is included in the comment, I can easily find what could be essential information.

If you feel that you are writing something important that you want to share and that you feel others would find beneficial, it really is important to remember to supply the EPIC code.

Shrubby

Re : Time out £TMO

Firstly: forget about the publishing business. This is all about the Time Out Markets. Ultimately businesses are all about the product. Of course you have to get everything else right, but if you don't have good products you are sunk.

Time Out markets are a great product. When you are allowed, have a weekend break in Lisbon...apart from being one of the great cities of the world, the T

oops.. presses Enter...I'll continue...

The time out market Lisbon is a fantastic atmospheric open experience. It is scaleable all over the World. They are next moving into the middle East. London will be a temporary hold because Dubai is better. It is about how they can expand within the constraints of cash. So covid means they have to rein themselves in a bit.

So why have these big boys funded it... no mystery really, they envisage a scaleable very popular product.

Sometimes the opportunities are beyond the immediate numbers. Of course the immediate numbers are terrible. But this is a 10 year development. Why are investors involved.?they see an opportunity.

My advice: as soon as one re-opens go there and you will understand, it ticks all the boxes for modern, cash rich, 20-50 year olds.

It will tootle along with the occasional upward blip, but when lockdown finishess, despite the need for more funding, this will press ahead. It's a Market opportunity. !

End of part 2

Tin1

Neither investors or companies should have to pay, it is market information. RNS should have an upload presentation option.

Time Out... (why doesn't this £ in front of ticker wiork ? )

Finally : re: your 'lot of risk, not much upside' comment. Pre Covid price was 125...current price apart from this week's blip...35. hmmmmm

DaviStoVest

Well ... providing that service comes with a (significant) cost. Somebody has to pay. If it's not companies and it's not investors, who should it be?

Michael Tee

@peterg

Happy to write the name of company each time.

Had no idea that some could not see clearly that a response corresponded to a particular post.

abtan

Time Out (LON:TMO)

"The time out market Lisbon is a fantastic atmospheric open experience. It is scaleable all over the World"

I completely agree. Lisbon was the first Time Out market I saw and (in normal times) I can certainly see it being popular in other countries too.

JohnEustace

US companies have earnings calls that all can join and put the slides on their websites. Same with the German shares I hold. Simple.

mark1308

24th Mar '21

Thank you for the FULL picture as the first post caused me a slight heart flutter ( I hold)

Time Out (LON:TMO) If this link from morningstarworks, it explains the prospects, albeit now held back by covid. This ought to help Paul understand the appeal of this share and help explain it's interest from the 'clever and shrewd people' involved.

https://lt.morningstar.com/e4e...

That's it....no more from me onthis !

Rusty2

It does.

Harry Hindsight

Other than the odd legal Eagle Eagle not much of a moat. Pumped by IC etc. With MSM to compete with a hard play.

stevenhume

29th Mar '21

Luceco (LON:LUCE). Promising snippet at the end of the results presentation where they mentioned entry into the EV charging market. This will be huge and even if they only get a small share it will contribute to growth. They certainly have the manufacturing capability and infrastructure to do well in this area.

Small Cap Value Report (Tue 23 March 2021) - LOOP, COG, PMP, TMO, LUCE, WYN, BOOT, ERGO

Paul's Section

Loopup (LON:LOOP)

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Paul Scott

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