Small Cap Value Report (Tue 28 August 2018) - CSFG, IGR, BVC, SPE

27th Aug '18 by Graham Neary

20 comments 9398 reads

Good morning!

We are now deep in holiday territory. Well done to all of us diehard investors and traders who continue to watch the RNS feed every morning! (Though I'm off to Lanzarote on Saturday, so I won't be watching the announcements for at least a week.)

By the way, there's still a bit of time to vote for Stockopedia in the Shares Awards. We are in categories 15 and 17 - here's the link!

As for today's news:

CSF (LON:CSFG) - delisting proposal
IG Design (LON:IGR) - acquisition and placing
Batm Advanced Communications (LON:BVC) - interim results
Sopheon (LON:SPE) - new release

Cheers

Graham

Wey Education (LON:WEY) - Leo has written a detailed analysis of this company's recent progress and prospects, so I'm happy to share the link. Here you go.

Joel Greenblatt Interview - wow! It's fair to say that I'm a little bit jealous of Stocko's very own Ben Hobson, who has interviewed Joel Greenblatt in New York. Greenblatt's books and methods are superb and have influenced me for years. Some excellent questions were asked and Joel didn't disappoint.

CSF (LON:CSFG)

Share price: 2.1p (-11%)
No. of shares: 160 million
Market cap: £3 million

Proposed cancellation of trading on AIM

Some years ago, I noticed this was trading at a "cheap" valuation. But it was in Malaysia, and running an unprofitable data centre business. So thankfully, I never got involved.

A Malaysian company, registered in Jersey, and listed on AIM. I hope nobody put more into this than play money that they could afford to lose. Having a rule to completely avoid all stocks like this has been good for my financial health.

CSF made a big disposal over the past year, so that FY 2018 revenues from continuing operations were just £4.4 million.

The Board therefore believes that the Group is now of a size where it is no longer practical or cost effective for it to have its Ordinary Shares quoted on AIM.

I agree. Though a reverse takeover or at least the gesture…

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MrContrarian

28th Aug '18

My morning smallcap tweet:

CSF (LON:CSFG), Avanti Communications (LON:AVN)

CSF Group (CSFG) Malaysian co proposed delisting, claims it spends £200k PA to be on AIM inc NED fees.
Avanti Communications (AVN) appoints COMSAT as distributor. It gains immediate access to US global governmental and military activity that may otherwise take multiple years to gain approval.

runthejoules

Morning ! Vote for Batm Advanced Communications (LON:BVC) please Graham - lovely chart but as Matylda points out elsewhere, – 41.1p – £165.8m – PER 123.1. Interim Results For 6m To End June 2018 – Revenue up 16.9% to $58.2m (H1 2017: $49.8m), Adjusted Loss reduced to $0.6m (H1 2017: $1.4m loss), Loss Per Share reduced to 0.35¢ (H1 2017: 0.66¢ loss per share) and there’s Cash and financial assets of $23.3m (31 December 2017: $24.0m).

And it's Israeli, and passes a short-selling screen. LOVELY chart though!

Also Sopheon (LON:SPE) - one that got away - unleashes another version of Accolade. Sounds like if I had it maybe I could sort my life out! Cheers!

Blissgull

IG Design, IGR.
Acquisition that will "Deliver significant earnings accretion in each of the next three financial years" and an "in line" trading statement confirming "that trading in the current financial year to date has been strong."

PeterC1969

Any thoughts on Sylvania Platinum?

GrowthStocks

IG Group - I second this also please Graham, would be interested to know your thoughts on the company. Keeps edging higher & higher.

Many Thanks

Wol

A third request for IG Design (LON:IGR) if it’s not too big for the SCVR. The CEO and FD gave a super impressive presentation at a recent Sharesoc event. They really seem to know what they are doing. I have held (very happily) for several years.

Graham Neary

Hi rtj..... Batm Advanced Communications (LON:BVC) is on the list, cheers! G

Yes, I'll have a look at IG Design (LON:IGR). Thanks. G

andrea34

Peter,

I doubt Sylvania Platinum (LON:SLP) will be covered by Graham as it's a resource stock. However, I think the results look very good, and am a happy holder having bought below 20p. The stock ranks and other metrics look cracking too!

Regards,

Andrea

nickwild

Yes I bought recently at 16p. The metrics seem very good and it is now paying a dividend. Rhodium price continues to rise.

Nick

Howard Marx

Given that the largest end-market for platinum is diesel catalytic converters, where will the overall demand growth for this metal come from?

Thanks Andrea :)

Ha ha thanks Graham, back in the too-difficult tray it goes!

Your suggestion turned out to be a hospital pass! I should've guessed there was a reason we'd never covered it before. Oh well. G

Beginner

Petrol engines also have catalytic converters. Platinum is mixed with rhodium and palladium.

miti 1000

Wrt BATM ,I'm not quite sure what a short selling screen is (is that good or bad) .What does strike me is that BATM was around i the tech boom of 2000 and even though its share price moved from 8p to 40 quid and back again,its still exists. Amazingly, it hasn't raised any money in that time from memory and its CEO has remained the same and retains a big ownership of the company .
A lot of blue sky hope in the ARM tie up it has made and 5g demand for its products but I think its going a lot higher!

Sk8dad

Short selling screen is a filter of stocks which may be considered appropriate for short selling (expectation of going down) and therefore recommended to avoid if holding long. Of course, depends on the success of the screen but these things tend to play out well on average.

I concur with views here regarding Sylvania Platinum (LON:SLP). Stockopedia ranks it highly and it has kept popping up in my screening/analysis. Not a holder yet but looks encouraging.

davidjhill

Batm Advanced Communications (LON:BVC)
It has around 12-13p share in hidden value made up of cash and a 95% stake in an Italian medical diagnostics company valued at circa £41-2m.

operationally geared with cash profit of circa $8m pencilled in for next financial year out to 2020.

Strip out the $80m of hidden b/s value and you get $130m market cap. That's 16* expected cash profit, so not a particularly rich valuation.

Then you have the ARM JDA which, the company anticipates could/should add millions in royalty revenue streams practically all of which would drop to the bottom line and none of which is factored into forecasts.

Throw in their IP leadership in the 5G space and you start to get a feel for both current valuation and also the future potential upside.

LeoInvestorUK

Graham,

Thank you for linking to my Wey Education (LON:WEY) writeup.

Indeed it was quiet today, but Beeks Financial Cloud (LON:BKS) full-year results tomorrow might be more interesting. This will be their first substantive update since their H1 results and they are likely widely followed here after presenting at Mello Derby.

They're another speculative microcap trading at around 10x historic sales. As you've probably guessed: I hold :)

Mikeyflange

29th Aug '18

Anyone needing further understanding of the hidden value and growth potential of BATM should read Simon Thompson’s recent detailed update in the Investors Chronicle. As David Hill mentioned this is a good business that has survived the crunch and has some great technology, patents and Joint ventures. Also take the look in Stockopedia at their institutional holders.
I hold the shares and despite a 60pc rise since purchase will continue to hold as I believe this share has further to go.

Small Cap Value Report (Tue 28 August 2018) - CSFG, IGR, BVC, SPE

CSF (LON:CSFG)

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Graham Neary

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