Small Cap Value Report (Tue 30 July 2019) - Italy, BEG, LUCE, CAR, FA, YU, FJET, NWF, XPD

Tuesday, Jul 30 2019 by

Good morning! I'm back from holidays and looking forward to getting back into the swing of things here.

This list is final: 


A brief word on Italy. This was a terrific holiday which incorporated the central Italian countryside, Sorrento and Rome.

I was deliberately avoiding "work", and did not for one moment think about the threat posed by Italian debts as I toured the Colloseum, the Vatican and the catacombs.

Thanks to my almost total avoidance of work, I have only a few investment-related observations to provide you from this trip.

One thing I did notice was Banca Monte Dei Paschi Di Siena (BMPS). This is arguably the oldest bank in the world which is still operating (despite some financial difficulties) and it was intriguing to see its branches in real life.

Another thing I noticed was chaos on the streets of Naples. It was my first time driving on the wrong side of the road, and this difficulty was compounded by the refusal of the Italians (both motorists and pedestrians) to leave alone any square inch that they did not need. 

It reminded me very much of my trip to China, but at least in China I was on foot. Driving a mid-sized SUV through Naples is not something that I would recommend to anyone from the UK or Ireland, unless it is absolutely necessary. Indeed, I'm surprised that the injury rate from road traffic accidents in Italy is only 12% higher than the EU average.

The countryside, by contrast, was a very pleasant drive. The motorways were in good condition although there were a surprising number of roundworks.

This brings me to my point that as a tourist, I would have no idea that the Italian economy suffered a mild recession at the end of 2018. With plenty of roadworks underway (presumably not abandoned before they were finished), with the trains running…

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All my own views. I am not regulated by the FSA. No advice.

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Luceco plc offers a range of brands, including Luceco, BG Electrical, Masterplug and Ross. The Company's products include Luxpanel, Epsilon and ambient lighting. Luceco light emitting diode (LED) lighting provides commercial and domestic lighting solutions. BG Electrical is a wiring accessory manufacturing brand, which serves electrical trade and specifiers. BG Electrical's products include White Rounded Edge, Nexus Flaplate Screwless, Nexus Metal, Nexus Storm, Nexus Grid and Metal Clad. Masterplug supplies portable power equipment through do-it-yourself (DIY) outlets and street retailers. Masterplug offers products under various categories, including indoor power, such as plugs and adaptors, sockets, chargers and cables; outdoor power, such as case reel, weatherproof box and extension leads, and workpower, such as trailing sockets, inline connectors, cassette reels and cable reels. Ross offers a range of audio visual and home entertainment products. more »

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Carclo plc is engaged in the supply of fine tolerance, injection molded plastic components, mainly for medical products. The Company is also engaged in the design and supply of specialized injection molded light-emitting diode (LED)-based lighting systems to the automotive industry. The Company operates through four segments: Technical Plastics, LED Technologies, Aerospace and CIT Technology. The Technical Plastics segment supplies fine tolerance, injection molded plastic components, which are used in medical, optical and electronics products. The LED Technologies segment develops solutions in LED lighting. The Aerospace segment supplies systems to the manufacturing and aerospace industries. The CIT Technology segment manages its digital printing of conductive metals onto plastic substrates. The Company is a supplier of control cables in Europe. more »

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Begbies Traynor Group plc is a business recovery and property services consultancy. The Company's segments include insolvency and restructuring, and property. It provides services from a network of the United Kingdom locations through two operating divisions: Begbies Traynor and Eddisons. Begbies Traynor is an independent business recovery practice that handles corporate appointments, serving the mid-market and smaller companies. It provides insolvency, restructuring and consultancy services to businesses, their professional advisors and financial institutions. Eddisons is a national firm of chartered surveyors, delivering transactional and advisory services to owners and occupiers of commercial property, investors and financial institutions. It provides professional services, such as business rescue options, advisory options, forensic accounting and investigations, corporate and commercial finance, personal insolvency solutions and services to banking, legal and accounting sectors. more »

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  Is LON:LUCE fundamentally strong or weak? Find out More »

34 Comments on this Article show/hide all

InvestorJohn 30th Jul 15 of 34

In reply to post #498551

I have sold out of Xpediator (LON:XPD) this morning at the open... Have to be ruthless I don't want to hold this with a profit warning on it, forever wondering what will happen next and what actual figures will come out.

I would much rather be invested in a company with positive sentiment

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brucepackard 30th Jul 16 of 34

In reply to post #498461

Not a silly question at all. When banks have too much money* they can either i) increase lending ii) raise their dividend, or iii) buy back shares in the market. Ironically before the crisis 2005-7 many banks were growing loan books at double digit rates and also buying back shares, including HBOS, which subsequently needed to be rescued in the controversial takeover by LLOY. In the short term buy backs mean i) less shares trading on the stock market means that buybacks support the share price of a bank buying back shares ii) less shares in the denominator of the EPS calculation so it's an easy way for management to increase EPS. 

Longer term effect hard to say. See previous sentence about HBOS buying back shares in 2006-7, but maybe this time is different?

* too much money = report equity and subordinated debt funding ratios well above minimum allowed by the regulator

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xcity 30th Jul 17 of 34

The arguments for and against share buybacks are complex. I don't think they crystallise losses.
Personally i don't like them. I think that the principle benefit goes to selling shareholders.

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Gromley 30th Jul 18 of 34

In reply to post #498531

I see that the StockRank of Secured Property Developments (OFEX:SPD) (Sports Direct) has jumped from 72 to 91 overnight, according to the Upgrades panel on the new Stockopedia site "Today" page.

This is a classic example of where care is needed when reviewing the StockRanks.

The main change with the SR will be that the ValueRank is now showing as 93 (previously in the 70s I think). This has responded to the fact that the Share-price has gone down sharply, but that the fundamentals have not yet been updated.

Presumably once the fundies have been updated, the VR will drop back, but also potentially the QR & MR will both take a knock.

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dangersimpson 30th Jul 19 of 34

FA. off 15% on an inline statement and CEO leaving (assume that he was fired given lack of notice period) could be an over-reaction? I'm surprised he lasted this long tbh, given that during his tenure the shares have fallen from £3+ to eventually a 20p rescue funding underwritten by large shareholders (although not everything that has gone wrong could be laid at the management's door.) The timing seems a bit strange though, with the green shoots of recovery finally starting to be seen, maybe not all is well beneath the surface and this could well be spooking the market?

Book: Excellent Investing: How to Build a Winning Portfolio
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Julianh 30th Jul 20 of 34

In reply to post #498536

Hello Trident

Providing alternatives would be nice but unfortunately it usually can't work that way. Most share buy backs are carried out as open market purchases - agents working for company buying shares at the open market price. They don't usually buy your shares unless you happen to put on a sell trade. So giving individual investors a choice between a buy back or a dividend would not be practicable. Even with tender offers (where the company offesr to buy the shares directly from shareholders) might allow for this possibility but again the mechanism might be a bit complex.

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Trident 30th Jul 21 of 34

In reply to post #498576

Yes xcity. Perhaps I should have said, you may have to crystalise a loss to have the benefit of the money allocated to a buyback. As you say otherwise, the benefit goes to selling shareholders only.

Incidentally, on a general subject, I have always been interested to wonder whether we could have as public information, the make-up of issued shares by the bought price.

This may indicate a whole raft of issues about the liquidity or otherwise of shares in a particular price range.

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Edward John Canham 30th Jul 22 of 34

Volex (LON:VLX)

Upbeat AGM TU from Volex followed by what seems to be an excellent acquisition in the US.


I hold.

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FREng 30th Jul 23 of 34

In reply to post #498581

Thanks, Gromley. It's obvious now that you have pointed it out ...

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mammyoko 30th Jul 24 of 34

Great to have your no-nonsense and damning comments back today, Graham. Many AIM pomposity bubbles needing to be punctured and you do a great job of this!

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Trident 30th Jul 25 of 34


My understanding is that AIM companies have to announce their results within three months of their Close period (year-end). So, I am not sure where you get the six months from, unless the rule has been changed?

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LeoInvestorUK 30th Jul 26 of 34

In reply to post #498591


FireAngel / FA, maybe, but it was reliance on new contracts to meet H2 that was the final straw for me (or as Graham wonderfully put it: the "excitement in the pipeline.").

Great book by the way!

Blog: LeoInvestorUK
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rvm07000 30th Jul 27 of 34

Thank You.

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sharmvr 30th Jul 28 of 34

In reply to post #498631

You can also crystallise a profit - trying to be glass half full here!

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Emperor 30th Jul 29 of 34

In reply to post #498691


AIM companies have 6 months post year end to issue their Accounts and hold their AGM. Some leave it incredibly close... And for some reason I don't understand some overseas companies who are listed here seem to be allowed 9 months.

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Chasbas 30th Jul 30 of 34

Xpediator: Stockopedia's rank is 86 with 89 for Quality! I didn't think I was taking much of a risk with a small position!

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Trident 30th Jul 31 of 34

In reply to post #498596

Hi Julianh

I understand. Maybe the tender offer is a better mechanism in these circumstances.

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Aislabie 30th Jul 32 of 34

Something is happening at Orchard Funding (LON:ORCH) (I hold), a stock that normally has little or no daily trading suddenly has dropped 10% on a volume that represents 15% of the entire share issue. No announcement so far but this looks a bit alarming. Does anyone have any input?

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Andrew niven 30th Jul 33 of 34

Just came back from rome and sorrento graham .
We loved sorrento and amalfi coast .

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Splode 30th Jul 34 of 34

In reply to post #498581

(Unfortunately Stocko apparently interprets "£ SPD" as Secured Property Developments, an investor in commercial property, rather than as Sports Direct, a sports retailer.)

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 Are LON:LUCE's fundamentals sound as an investment? Find out More »

About Graham Neary

Graham Neary

Full-time investor and independent analyst. Prior to this, I spent seven years in the financial markets as an analyst and institutional fund manager. I'm CFA-qualified, also holding the Investment Management Certificate and the STA Diploma in Technical Analysis.Away from finance, my main interests are recreational poker and everything to do with China, especially Mandarin Chinese. more »


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