Small Cap Value Report (Tue 24 Jan 2023) - EMAN, ITS, CFX, SAGA, WAND, SNR, ACRL, SNWS, CYAN, SAA, CPC

24th Jan '23 by Paul Scott

49 comments 9176 reads

Good morning, it's Paul & Graham, here!

We've run out of time, managed to make a dent in today's huge list of news. Today's report is now finished.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Agenda/Summaries

Finish time of 1pm, this is what we've managed to do -

Lots left over though, here are the ones we didn't cover. I'll have a sift through these later today, and try to get some brief comments up tomorrow morning on the more interesting ones -

Paul's Section:

Everyman Media (LON:EMAN)

Up 9% yesterday, to 93.5p (mkt cap £85m) - TU for 52 wks to 29 Dec 2022. EBITDA “ahead of market expectations” at £14.5m. Operating 38 cinemas now (+2 in the last year). 5 new sites planned for 2023. Current trading “encouraging”. Expecting improved volume & quality of new film releases in 2023.

Note separate announcement - 2m “growth shares” in a subsidiary issued to CEO - needs a careful look.

My opinion - check out the broker research - £14.5m EBITDA for 2022 turns into a loss before tax of £(0.7)m. Continued small losses forecast for both 2023 and 2024. So I’m not sure what the point of this business is, if it’s not expected to generate any future profits? To borrow a phrase from Charlie Munger, re EBITDA…

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Michael Tee

24th Jan '23

Bango (LON:BGO).

FY REV $32.9m up 59% on 2021 and slightly ahead of expectations of $31.1m. H1 rev was only $10.8m so H2 $22.1m. This is also notable as BGO accounts in USD which has been quite a headwind. BOKU FY rev was up 1% so a significant difference.

ARR now $5m and 5x compared to Dec 2021.

EBITDA in line. Gross margin temporarily down to 80% due to increase in Audience revenue and also DOCOMO acquisition as clients transfer to BGO platform . GM to return to over 90% in 2024.

Transformational DOCOMO Acquisition 31st August progressing well. Almost doubles 2022 EUS and brings many new clients and routes producing a halo effect. DOCOMO acquisition of largest direct competitor in Japan (big market for DCB) makes Bango the only real option there. Many new and deeper conversations.

Bango generate their own cash which they are investing in their platform so it can cope with increasing growth and also people. They don't need to raise money.

I hold so biased.

Helvellyn

That is excellent work DJ, thank you.

SundayTrader

There was a heavy sell-off earlier on bad news - delays to completion of the new plant in Hull - it may just be response to the fact that no one is selling any more. Or possibly some ingenious individual has been counting lorries at the main plant in Belgium - who knows? I believe most of the stock here is in the hands of investors taking a long term view, so I see the volatility as normal. I hold.

davidjhill

WANdisco (LON:WAND) I traded them a bit a few years back and made some decent money but then realised that whilst the product is good it will take a long time for this to translate into significant revenues let alone profitability.

I am kicking myself as I thought they had good momentum at around the 360p level but didn't buy any so am a bit annoyed up at 1100p which has been more or less a straight line!

However, that said I think a $900m market cap is hefty. They have $24m of revenues and an order book of some $130m so thats 35* sales or 7* the order book value. Wow!

TamzinPiworld

Graham, thanks for your Accrol group (LON:ACRL) comments.

Just to add the forecasts for FY 23 including aPTP & aEPS, which have been upgraded:

Revenue £230m.
Adj EBITDA £15.5m.
Adj PTP £7m
Adj EPS 1.8p

As you say, the outcome of the strategic review includes the plan to build its own paper mill, which will be funded through cash or debt.

We have a webinar with management this Friday 27 January, 12.30. With a Q&A which always tends to be fairly lively. Register: https://bit.ly/ACRL_H123_results_webinar

There will be a video recording afterwards which I'll post on Stocko.

Tommy H

And thank you, along with a lot of other things like don't leave your football boots in the boot bag going moldy :)

Ben1

I can't see any news yesterday from CLIG did I miss something?

peterg

It was Friday (20th)

bohenie

This one is indeed a difficult stock to comprehend but clearly there are guys out there who have decided it's worth paying mega money to use their 'cloud' services - or they would have gone elsewhere. If it is not a worthwhile service - then word would quickly have got out and their impressive list of partners (see their website) would have pulled out. The list of major shareholders is also intriguing - not the usual fund managers but names I have never come across - although I am aware that CRUX do hold in both their UK funds - but probably less than 1%

Dojosan

Totally (LON:TLY) down c 10% - due to https://www.hsj.co.uk/quality-and-performance/ics-cancels-four-urgent-treatment-centre-contracts-after-performance-concerns/7034101.article

Coincidentally, yesterday - Employee Benefit Trust share sale - Further to the announcement made by the Company on 10 January 2023, Totally plc (AIM: TLY), a leading provider of frontline healthcare services, corporate fitness and wellbeing services across the UK and Ireland, announces that it has been notified by Apex Financial Services (Trust Company) Limited, the trustee of the Totally Employee Benefit Trust (the "EBT"), that the EBT has sold a total of 1,384,671 ordinary shares of 10 pence each in the capital of the Company ("Ordinary Shares") at an average price of 32.8 pence per Ordinary Share on behalf of Wendy Lawrence (Chief Executive Officer), Lisa Barter (Chief Financial Officer) and Gloria Cooke (former Clinical Quality Director) (the "Award Holders").

Absolute shambolic behaviour! Why is it that management can sell first before shareholders?

Investegate |Carnival PLC Announcements | Carnival PLC: Cunard sees strongest start to Wave in the last decade

As Saga (LON:SAGA) is in the news today i thought this worth a read . From 3.00pm today .

thanks

portugull

Smiths News Smiths News (LON:SNWS) fell over 8% today which I am struggling to get my head around. I hold. Could it be the lack of actual numbers in the Trading Update which caused some to sell?

Jacxx

Yes, though I presume 2021 figures are on companies house. Note 6 suggests that - combined - they generated sales of £34m and LBT of (£1.6m) in 2022.

I agree with your points. Many competitors in both areas. Better to strategically focus where you can take market share.

Norfolk'n'Good

Totally (LON:TLY)

Why do you want to sell at all? As far as I can see all that is happening is that 4 contracts, that were previously extended, have simply come to their natural conclusion??

I have just watched the capital markets presentation Saga (LON:SAGA) did today. Struck by the extent to which they aim to change the nature of business over the next 5-10 years, with huge plans for media (a destination website etc) with customer analytics etc. Clearly a very ambitious and enthusiastic team, but can they pull it off? No reason why the travel and cruise businesses can't take off again, after the exceptional circumstances of the last few years, but not sure about scale of the media business they say they are aiming for.

tic_tac_toe

...or teach you how to spell mouldy ;)

iancorben

Agreed re Smiths News (LON:SNWS) - I hold - what would have happened if it wasn’t in line with expectations? Still, a good little run, hopefully it rebuilds. Solid. Sound.

donQ

Don't forget the share price of Smiths News (LON:SNWS) changed from 27p to 59p (118%) in less than 4 months! Extreme move without any special news, I guess many PI thought that's a perfect time to take some profit.

25th Jan '23

Smiths News (LON:SNWS) you could well be right donQ that too many traders could not resist selling. I still think this is a very sound share with a great Divi so I am going to hang on.

Small Cap Value Report (Tue 24 Jan 2023) - EMAN, ITS, CFX, SAGA, WAND, SNR, ACRL, SNWS, CYAN, SAA, CPC

Agenda/Summaries

Paul's Section:

Everyman Media (LON:EMAN)

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Paul Scott

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