Small Cap Value Report (Tue 27 Feb 2018) - JSG, SWL, DOTD, IGE, TIDE
Good morning, it's Paul here!
Please see the header above, for the companies I intend writing about today.
I might do a preamble later, about the US markets recovering. Or possibly tomorrow, we'll see.
Last night's TV programme which attempted to demonise Vice Chancellors at Universities struck me as being a damp squib. Yes, some of them are probably overpaid, but comparing salaries with that of the Prime Minister is complete nonsense, and lazy journalism. Directors of listed companies deserve far more scrutiny over their bloated remuneration, and would have made a much better TV show.
As for the so-called scandal of the university heads' expense accounts, I was scratching my head to understand what the problem is? They have to travel abroad for various reasons, and flying business class on a long haul flight, and staying in a 5 star hotel, seems perfectly reasonable to me, given that these are the heads of quite big organisations. The grand total from almost 200 universities, was £8m p.a. spend - completely immaterial relative to the further education budget.
I've heard stories of horrendous greed on expense accounts at listed companies, even very small ones. It's quite common for company Directors to use their expense accounts freely, to fund really lavish overseas trips, with first class travel, and all the trimmings. Often on a largely spurious pretext. What a pity we shareholders can't file Freedom of Information requests on the expense accounts of listed company Directors. If we could, I bet we'd discover some real horrors, not the spurious horrors that last night's TV programme presented. It's always worth asking Directors what class they fly, and watch them squirm!
Another disappointment, was that all the students who were asked for a reaction simply provided the faux outrage that they realised they were expected to give. Not a single one gave the correct answer - which is that they would need more information and context to form an informed judgement on whether the cost of an overseas trip by the Vice Chancellor was justified.
Although maybe such replies ended up on the floor of the editing suite? Years ago, I took part in 2 documentaries, and discovered that TV really is all down to the edit. If they like you, then the TV people will edit your pieces sympathetically. If they're trying to demonise you, then the whole thing is edited to…
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Johnson Service Group PLC is a United Kingdom-based company that provides textile rental related services. The Company is the supplier of workwear and protective wear. The Company operates through Textile Rental segment. The Textile Rental segment is engaged in the supplying and laundering of workwear garments and protective wear; linen services for the hotel, restaurant and catering markets, and high volume hotel linen services. The Textile Rental segment principally consists of workwear garments, cabinet towels, linen and dust mats, are initially treated as inventories. It operates Textile Rental business under the brands, including Apparelmaster, Stalbridge, Bourne and London Linen. Its market workwear rental business, providing a clothing portfolio to the workplace, supported by sourcing supply and aftercare service solutions. Its Johnsons Stalbridge Linen Services offers the laundry service to the hospitality sectors. more »
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Brand Architekts Group plc, formerly Swallowfield plc, is a United Kingdom-based company that is engaged in the beauty brands business. The Company has a portfolio of brands including in skincare, haircare, bodycare, bathing, men's, gifting and accessories. The Company’s brands include Super Faclalist, Dirty Works, Kind Natured, Fish Soho and Dr SALTS. Super Facialist is a skincare range suitable for everyone, it combines natural extracts, scientific ingredients and exquisite aromas. Dirty Works is a British brand and the range includes a mix of beauty products. The Dr SALTS range is comprised of bath and shower products that includes the therapeutic benefits of the Dead Sea, Himalayan and Epsom Salts. The Company has presence across other European Union countries and rest of the world. more »
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dotdigital Group Plc is a United Kingdom-based company, which is engaged in providing software as a service (SaaS) and managed services to digital marketing professionals. The Company offers dotmailer, which provides e-mail and multi-channel marketing automation platform with various tools that enable marketers to create, manage, execute and evaluate various campaigns. In addition to its automation technologies, the Company also provides multi-channel marketing consultancy and services for businesses seeking to manage customer acquisition, conversion and retention. The Company also has pre-built integrations with e-commerce platforms and customer relationship management (CRM) products, such as Magento and Salesforce. dotmailer helps in using contact data to design, test and send automated campaigns. The Company's subsidiaries include dotmailer Limited, dotsearch Europe Limited and dotmailer Inc. Through its subsidiaries, it is engaged in providing Web- and e-mail-based marketing. more »
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36 Comments on this Article show/hide all
Swallowfield (LON:SWL) looks to be building a very nice business - my only concern is that the CEO who has led this is leaving. His successor looks well qualified - does anyone know anything about him beyond what's stated in the RNS?
I shall make a note of the fashion tip about shaving gel
Would appreciate any thoughts on Greggs results. Thanks.
Cheesed off ot have slept in and missed the results from Provident Financial (LON:PFG). Does anyone think the recovery will continue?
Sorry, I can't do any more requests. It's taking a long time to wade through the existing things on my list, and I'm off to the cinema to see Darkest Hour in a couple of hours.
Regards, Paul.
In reply to post #331008
It's a cracking film Paul and very enjoyable with a glass of wine in hand. I won't spoil the ending!
Cheese,
Damian
Hi Paul,
Please DON'T include DSG (I know you are long) as I am trying to build a position. It's a great momentum update.
Enjoy the film
In reply to post #330928
Maybe you shouldnt be concerned about Swallowfield (LON:SWL) as the following shows that the succession link with Cussons is clearly there.
Swallowfield is the brainchild of Chris How, a veteran of the sector who has held senior management and sales & marketing positions with PZ Cussons (owner of the Cussons, Imperial Leather and Carex brands) and Colgate Palmolive (Colgate, Sanex, Palmolive). He joined Swallowfield in 2013 and quickly laid out a strategy of migrating from its historical roots as a sub-contract manufacturer of third party cosmetics and personal care goods to being a brand owner.
Paul - I enjoyed your section on Universities v. listed companies. I once held shares in Aegis and when CEO Peter Scott (no relation I trust) left then the kitchen-sinking by the incoming regime included the sale of the company's two executive jets. They were included in the "vehicles" line on the a/cs so mere shareholders just thought that they had a lot of company cars.
http://www.independent.co.uk/news/business/aegis-company-jets-up-for-sale-1538278.html
I own DOTD and decided to keep it after giving the figures a look and the company the benefit of the doubt. The YoY EBITDA increase did look paltry against a very strong income increase (I think the contribution from Compari can pretty much be discounted for last year, the acquisition only occurred in November). There was clearly a big increase in revenues through partners (+35%), notably in the USA, and this will tend to reduce margins a bit. There is a big geographic expansion going on. The UK is still easily the biggest market but growth is much bigger overseas which this half produced 25% of revenues. In fact the operating margin was UP QoQ but way down YoY with the cost of revenue as a percentage of sales the culprit. I don't know why. Annual revenues are only just over £30mn so this is a real minnow in the internet ad market - I cannot see how they can realistically grow in international markets without strong partners. Buth thety have done very well so far, they believe the acquisition is 'scaleable', and there aren't so many ways to play multi-channel advertising in the UK markets. I agree the share is expensive by the way, but so are Aston Martins.
"dotdigital Group plc (AIM: DOTD), a leading omnichannel marketing automation platform, announces its Interim Results for the six months ended 31 December 2017 ("H1 2018"). The results reported here represent strong progress towards the Company's strategic pillars of geographic expansion, strong partnerships and product innovation."
Anyone able to translate the statement above? I wouldn't even bother looking at the company on the basis of that statement.
In reply to post #331008
Out of interest Paul with regards to today's report highlighted NTAV figures is there a minmum percentage figure for NTAV against market cap that would have you wary of investing in a stock ?
These recent in depth reviews are a big learn thanks for sharing.
Crimson Tide (LON:TIDE) does look interesting but a couple of things concern me, I’d need to do more research.
First up is how much of the revenue is passed straight through to the cloud provider? Which leads on to, how much margin increase is possible?
Next is where’s the moat? A few kids with some decent directions from management could probably replicate the entire stack within 6 months. If they start making decent profits every man and his dog is going to flood this space. CBRE already do something similar internally, it wouldn’t surprise me for them or another FM team to jump in here with much bigger marketing and development budgets. The iot module is presumably using COTS sensors so would likewise offer little protection from competition.
1pm (LON:OPM) this interview with Ian Smith CEO, adds a little more detail on today's RNS which announces their peer-to-peer fintech funding with Mintos.
http://www.piworld.co.uk/2018/02/27/1pm-opm-secures-international-peer-to-peer-fintech-funding-capability/
It's about 6.5mins, and covers of the key questions.
Fintech Strategy – 00:05
What does Mintos Offer? – 00:53
Does this give 1pm a competitive edge? – 1:33
When will the funding start? – 2:10
Commercial terms – 2:49
Amount of funding? – 4:01
How will this benefit 1pm’s profits? – 5:03
The next step with Fintech strategy – 5:40
The website below has a comprehensive review of dotDigital (LON:DOTD) 's product (dotmailer) and it also has reviews of dotmailers competitors.
https://comparisons.financesonline.com/dotmailer-vs-ambassador
In reply to post #331003
FCA review of Money barn is still outstanding but with £169m fine and price up 70% it appears investors had expected worse. The HC model has been fundamentally damaged with the move to employed vs agents but under the new MD likely to regain some ground. The problem is determining a defensive value on all three operations to assess whether the price is under/over valued. But I prefer more stable pickings to speculation, so not one for me.
"I thought Universities were supposed to teach people to think, and to question everything? Sadly, I suspect that might be disappearing, being replaced by mindless group-think, in many areas."
Goodness me Paul where have you been?
Universities are now bastions of Political Correctness peddling the Cultural Marxist doctrine of snowflakedom, safespaceitis,and gender identity tosh where having the wrong thoughts, aka Conservative ones, sees you discriminated against.
Don't believe me , listen to this Delingpole podcast with a 19yr old!
Yes, OE, 19yr, extremely bright.
Didn't make Oxbridge, despite his obvious modesty, because he was a Conservative!!
http://www.podbean.com/media/share/dir-hb38b-398e52c
"Personally I despise email, as it takes up so many hours of each day. Some of it is necessary, but it's infuriating the way any business I buy something from, puts me on to their email (spam mostly) list without my specific consent"
Blocking is your friend.
But yes, i concur.
GDPR is good for sophisticated marketing automation tools. GDPR doesn't remove that e-mail remains an important market channel for businesses. What it does mean is that companies cannot just blast their e-mail list, they need to prove the consent. To scale that will require technology. Does dotdigital have that capability? I don't know. If they do, GDPR is a catalyst for growth. If not, it is indeed worrisome.
From my limited knowledge of the markets, the report seems to indicate that Paul knows what he's talking about..
Hope I can afford the suscriptions to continue reading.
On dotDigital (LON:DOTD) (a very late continuation of the discussion)
I was very interested in your comments about the possibility that GDPR might have a significant impact on DOTD's business with companies not allowed to keep us on their email lists unless we specifically opt in (hurrah!). DOTD's results include a few comments on ways in which their systems specifically cater for GDPR and help clients to be GDPR compliant. So:
* on the one hand mailing lists might be significantly reduced
* on the other hand companies might become more reliant on systems such as DOTD's Dotmailer in order to be able to keep us on their email lists in a GDPR compliant manner
I really don't know how to assess this. I am keeping my relatively small holding for the moment.