Small Cap Value Report (Tue 28 July 2020) - FOXT, GRG, SAA, CARD, IGR

28th Jul '20 by Paul Scott

65 comments 9915 reads

Good morning, it's Paul here with the SCVR for Tuesday. Please feel free to add your comments from the 7am RNS, as I gradually write up the main article throughout the morning. I read all your comments, and am finding them very interesting & courteous of late, which is a pleasure to behold!

Estimated timing - I'm aiming to be finished by the official finish time of 1pm today.
Update at 13:09 - today's report is now finished. Sorry I didn't have time to cover everything.

Quartix Holdings (LON:QTX) - have just emailed me their results presentations, so I'm passing on the links for your interest. I'll write up a section on their figures later today;

Quartix - Interims business presentation video

Quartix - Interim financial presentation video from CFO/COO

Interim results - I'm excited to see that the first interim results for 30 June are starting to trickle through - so I'll focus on that first. Trading updates are all very well, but they often tend to cherry-pick key numbers, and omit the full detail (especially if PRs have been let loose on the announcements!). However, nothing can be hidden in interim results. So I'll get cracking on a couple of those first.

Foxtons (LON:FOXT)

Share price: 38.5p (up 3% today, at 08:33)
No. shares: 330.1m
Market cap: £127.1m

(I'm long)

Half Year Report

Foxtons Group plc, London's leading estate agent, today announces its financial results for the half year ended 30 June 2020.

This half year, as for most companies, is split between a normal Q1, and an abnormal Q2 which was dominated by the unique covid-lockdown. All Foxtons branches were closed between 23 March - 30 May. The company updated the market frequently during the crisis, here is our archive, where I wrote about Foxtons 5 times between April & July, including its 40p fundraising in April, which raised £22m in fresh equity.

Interim results - the commentary is well worth reading for general interest, even if you're not interested in buying Foxtons shares.

Revenues down 22% on last year, at £40.4m

Statutory loss before tax of £(4.3m) - somewhat worse than the loss of £(2.5m) LY H1 - I was pleasantly surprised by this, but remember that it has benefited from the furlough scheme, waiving of business…

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lestat101

28th Jul '20

Average increased spend at Card Factory is almost certainly down to pent up demand and people buying more merchandise ahead in case of another lock down. I have non food retail shops and this seems to be the case. Also worth noting that sales in my shops have declined further since face masks became compulsory. Bad news for retail if its across the board

mesb

Regarding CARD, I think some people (well based on a sample size of one being my wife - not me, too disorganised) may well buy cards in batches. Suspect the sales rebound is substantially temporary as people rebuild their ‘stocks’ - have to think longer term lockdown will have further accelerated the pre-existing trend to digital greetings media

kgb1953

I think this is a business that is going online. Moonpig and Scribbler have very good offerings.

Paul Scott

Sorry dealtn, there wasn't enough time to cover this one, and I'm lukewarm on it, given the lacklustre track record on share price over the years, so I prioritised more interesting things.

I had a quick look, and the numbers from Yourgene Health (LON:YGEN) seem to be improving, albeit still loss-making. Cash looks tight. I don't think I could add any value, as it's a specialist sector I'm not familiar with. Sorry about that.

shanklin100

I suspect people being forced to wear masks, on top of social distancing, will largely eliminate the idea of retail as a pleasant leisure activity including impulse purchases at shops one never planned to visit.

More likely IMHO is far fewer better pre-planned shop visits with a list of very specific purchases in mind. That is certainly the case for MrsS and myself who are doing much more prep for shopping trips than was previously the case.

Silver Moon

Some redundancies at £FLO were also mentioned in its report and that might not be the end of them.but from the investor angle the survival of the company is what matters most.

Silver

stegga1000000

Michael Taylor explains in his free ebooks when you sign up at his website shiftingshares.com , how level 2 works and he also mentions that he buys before market open through Direct Market Access (DMA) at a specific price.

With your software skills that 7 digits is possible, software was the key to success for this guy:

;t=5s

JohnEustace

Yes if shopping presents a risk then people logically will seek to minimise it. I added gift wrap and birthday cards to the Ocado order - in normal times I would have gone out to buy them.

MichaelFBS

Thank you doublelutz

This should take you to his email on gold without logging in etc:

https://www.bloomberg.com/opin...

Regards

Michael

Chris1011

Hi @HollandSmith - as others have commented, a very impressive place to be after just 5 years and I’m sure 7 figures is just around the corner for you! I don’t suppose you have Any links to hand regarding trading through an ISA - that is certainly my next enhancement to this investing lark! Many thanks, Chris

Tommy H

I would concur on the initial sample size of 1 (me), I was very glad when our local Card Factory (LON:CARD) reopened. My partner has to send everyone a card for their birthday, wedding, haircut, it is a Tuesday or whatever so maybe she is single handedly trying to save Royal Mail (LON:RMG) ? Anyway this meant that over two trips to the store we could replenish our greeting card draw (without having to spend £3+ per person) with various things for different ages taking advantage of the 5 for £1 and 10 for £1 offers, acceptable quality and fantastic price, even if you pay full price typically that is £0.29-0.79 so still a big saving over going to Clintons or the Co-op.

The staff were lovely, simple case of "please use the hand sanitizer" on the way in, they concurred it had been reasonably busy since reopening and seemed comfortable overall to be back and working once more and more than helpful when trying to find particular cards.

Though I would state I no longer hold as this was by far my biggest loss last year, I did not head the get out of dodge and kept thinking it would bounce back...

I would happily buy back again but agree with Paul, I want to see stability first in sales and also understand where the debt is going. Note there was also a replacement in the CEO recently too.

Tommy

mammyoko

Re Quartix Holdings (LON:QTX) dividend - possible 8% pay-out for the year

Subject to satisfactory performance and market conditions, the Board will consider a final dividend for the year with the aggregate of the interim and final dividend set at approximately 50% of cash flow from operating activities, which is calculated after taxation paid but before capital expenditure. The Board will also consider distributing the excess of cash balances over £2m by way of supplementary dividends. The surplus cash would be calculated by taking the year end cash balance and deducting the proposed regular dividend. The policy will be subject to review.

H1 operating cash of £3.7m x 2 x 50% = £3.7m

H1 cash £10.0m + H2 operating cash of £3.7m - H2 dividend of £3.7m - base cash balance of £2.0m = £8m

£3.7m + £8.0m = £11.7m

£11.7m / 48.1m shares = 24.3p

24.3p final + 3.37p interim = 27.7p

27.7p / 348p = 8%

Looks like they are going to try and catch up the final dividend they missed for 2019

Snoo

Only have a sample size of two stores, but woudln't people working from home act against Greggs?
The stores I have seen are much quieter now when I have passed. On a usual day they are quite busy, the lunchtime queues go out of the door.

I am sure that anyone working from home now is way more likely to make lunch themselves, rather than go out to a shop and buy it. Also if times got really tough, Greggs itself looks like a bit of an unnecessary expense. There may be people trading down from Pret, but then current customers can trade to making packed lunch.

The share price is interesting though, it's getting towards the lows that we saw at the start of the pandemic, and I am a fan of how they have grown their business. A return to previous profits implies that footfall goes back to normal, like Paul I do wonder if some has been lost forever.

rmillaree

Card Factory (LON:CARD)

The staff were lovely, simple case of "please use the hand sanitizer"

My recent incident with a staff member in there when i forget to use the sanitiser (didn't realise there was one or i needed to do owt when i walked in and was browsing) was much more traumatic. Lesson learned though it does one good to take ones severe earbashing once in a while when one is in the wrong. My cards were marked so as to speak for next time - so i intend turning up with full monty balaclava (or perhaps a nice chukkie mask) next time to hopefully slide under the radar and not be reminded what a naughty boy i am - my prior trip being pre mandatory mask.

Boon

Nothing to really get excited about in today's update from Flowtech Fluidpower (LON:FLO)

Interesting a portion of workers still on furlough.

Cautious tone / outlook. Chimes with what I'm seeing in building industry suppliers I've seen across Europe. New construction is getting back on its feet, but not at levels Pre-COVID. Flowtech should be protected from service and maintenance revenue, to a certain extent.

There's just nothing tremendously exciting and its still trading on a historical PE of 8x adjusted, 12x basic EPS for FY2019.

IMO it needs to be about 20% cheaper, around 60p or less, to be interesting value.

Mark Penney

what does your annualized return look like.

greenhat2

You should do a course with Robbie burns nakedtrader.co.uk and read his book too

Smashing, thanks for answering my query, much appreciated!

Small Cap Value Report (Tue 28 July 2020) - FOXT, GRG, SAA, CARD, IGR

Foxtons (LON:FOXT)

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Paul Scott

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