Small Cap Value Report (Tue 4 Jun 2019) - LGRS, CALL, AO., GHH

Tuesday, Jun 04 2019 by

Good morning, this is the placeholder for Tuesday morning. It's Paul here.

Many thanks for the positive comments about my video review of the AIM admission document for Loungers (LON:LGRS) - hopefully this might encourage subscribers here to delve into these large documents, which can seem quite daunting. I tend to get about half way through reading them (if that!) normally, and then abandon them on any flat surface in my office. Never to be completed.

To properly read an admission document is quite a big time & effort though. I'd estimate that to properly read, and think about the LGRS AIM admission document probably took me about 5 hours of quality time - i.e. time when there's nothing else going on - so it has to be outside market hours, TV switched off, and nobody else in the vicinity making any noise. In practice then, unless you're superhuman, the only time to properly immerse yourself in an admission document is at weekends, and only if you're a hermit, or an insomaniac!

No wonder that, very often, many of us make quite significant investments, without having properly read the admission document, or not having read any of it.

I finished off reading the rest of the LGRS admission document yesterday afternoon. So I'm aiming to record Part 2 of the video at some point in the next few days. That seemed a better use of my time than reporting on Kier, or Fulcrum, which were on my to do list, but seemed things where I didn't have any value add.

See you in the morning!

7-8am quick comments

Cloudcall (LON:CALL)

 (I hold a long position in this share)

Contract win - "significant new contract with a major U.S. staffing firm".

Contract value is for a minimum of £1.1m over 3 years, so almost £400k p.a.

That's say £367k next full year FY 12/2020, which is 2.4% of £15.3m forecast revenues. So not material in terms of revenues, but being a high gross margin business, there's a leveraged impact on the bottom line from new business. Revenues are mostly recurring, and customer churn is low.

Buried in this announcement is an upbeat-sounding trading update;

This major contract win continues what has been a strong start to 2019

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>

Do you like this Post?
54 thumbs up
0 thumbs down
Share this post with friends

Loungers PLC is a United Kingdom-based company that is an operator of cafe and restaurants. The Company operates under the Lounge and Cosy Club brands.

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

Cloudcall Group plc is a United Kingdom-based holding company. The Company and its subsidiaries are engaged in software and unified communications business. The Company provides a suite of cloud-based integrated software and telephony products and services under the name cloud. The Company is a full-service communication provider. The Company designs, develops and operates integrated communication services for customer relationship management (CRM) systems. The Company's CloudCall portal enables to manage organization’s call profiles, configures all settings and manages user and service accounts and access real time activity reports and call recordings. Its automatic call distribution (ACD) feature routes the callers directly to available team members in the organization. The Company’s subsidiaries include Cloudcall Ltd, Cloudcall BY. LLC and Cloudcall, Inc. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

AO World Plc is an online retailer of electrical products. The Company operates through two segments: online retailing of domestic appliances to customers in the UK, and online retailing of domestic appliances to customers in Europe (excluding the United Kingdom). The Company offers over 5,500 stock keeping units (SKUs) in the United Kingdom, approximately 2,000 in Germany and over 600 in the Netherlands. The Company offers a range of ancillary services, such as customer finance options, an unpack and recycle service, product care packs, and disposal and connection services. In the United Kingdom, the Company operates in approximately three categories: Major Domestic Appliances (MDA), Small Domestic Appliances (SDA) and Audio Visual (AV). The MDA market offers built-in appliances, such as dishwashers. The SDA market comprises small appliances, food preparation and floor care. The AV market includes television, audio, set-top boxes, digital versatile disc (DVD) and Blu-Ray players. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

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

45 Comments on this Article show/hide all

Wimbledonsprinter 4th Jun 26 of 45

Mello perennial Eservglobal (LON:ESG) has announced mid-morning the long-awaited sale for c Eur 2 million of its core business, which will leave it holding just its stake in HomeSend. Looks a fairly clean transaction - the RNS interestingly goes into some detail of the warranties it needed to sign. (No position.)

| Link | Share
johnsmith68 4th Jun 27 of 45

Re Woodford Equity Income Fund

Reading the full list makes me feel like I know what I'm doing! It's an astonishing array of long shot punts. He really should read Paul & Graham more. I mean, he even has Purplebricks (LON:PURP) in both his Woodford Patient Capital Trust (1.48%) and also in his LF Woodford Equity Income Fund (1.87%). The stand out component of his LF Woodford Equity Income Fund, that I'm sure many readers here may have a holding in is, Burford Capital (LON:BUR) which is his 2nd biggest holding at 5.78%. I notice that Burford Capital (LON:BUR) are 6% down as I write this which may or not be related.

| Link | Share | 2 replies
tomps3 4th Jun 28 of 45

Eservglobal (LON:ESG) proposed sale of eServeGlobal core business and name change announced today.

Here's an interview with John Conoley, Executive Chairman who gives us a little narrative.

ESG signed a conditional sale and purchase agreement to sell the core ESG business & associated assets to Seamless Distribution Systems AB, leaving just HomeSend.  Purchase prices is Eu2m.

| Link | Share
sharmvr 4th Jun 29 of 45

In reply to post #480536

I expect Woodford focus has come under a lot of selling pressure as well - especially since HL took it of their top funds and I imagine their multi manager will also need to redeem it's holdings in income focus.
Looking at Woodford holds that are taking a hit, it seems Newriver Reit (LON:NRR) , Redde (LON:REDD) , Burford Capital (LON:BUR) and £TEn are taking a hit and I am not aware of anything stock specific.
I expect he has been a fairly persistent seller of British American Tobacco (LON:BATS) and Imperial Brands (LON:IMB) and the homebuilders.

I sold out of focus this morning, several mornings too late - fortunately didn't hold the flagship. Tempted to take a punt on Woodford Patient Capital Trust (LON:WPCT) . Was hoping Strix (LON:KETL) would take a battering to initiate a position. And considering an addition to Burford Capital (LON:BUR)
Hold above mentioned stocks except Newriver Reit (LON:NRR), Woodford Patient Capital Trust (LON:WPCT) and homebuilders.

| Link | Share
Cisk 4th Jun 30 of 45

In reply to post #480536

Omg what a punters list of holdings. Just shows what these supposed experts buy!

Agree that he should read Paul & Graham’s reports. It’s almost like Woodford chose mostly long shots in an effort to try and get a few multi-baggers in a vain attempt to make up for the rest of some of the dross he holds. And surprised it’s called an income fund when many of the holdings don’t even pay a dividend!

I’ve only one crossover - Breedon (LON:BREE), which probably explains why they’re off today.

Personally I would rather buy an ETF than pay his charges, or buy into a much smaller fund like those run by Mark Slater.

| Link | Share
sharmvr 4th Jun 31 of 45

In reply to post #480481

I hold and have thought long and hard about adding over the recent days and even today - may still do once I have had a chance to read the capital markets presentation.

Their investment in marketing might hold back results, but gives them a bigger customer base for next year which is a busier sporting calendar - same would apply to their expansion in Europe where they can take advantage of customer base. Good balance sheet, earnings growth on a 2 year view, brand name, excellent return metrics and cash generation with limited CapEx, growth on the top and bottom line on 10x earnings with a covered 7% yield - other than the chart what's not to like

Would be keen to understand why poker took such a big hit

| Link | Share
pka 4th Jun 32 of 45

I decided that I would never invest in any of Woodford's funds when I read that his Patient Capital Investment Trust has a large holding in a firm called Industrial Heat:

Industrial Heat claims to be developing cold fusion, but any competent physicist could have told Woodford that the probability of that ever being successful is very close to zero because it is against all our current knowledge of physics. It really made me question his judgement.

According to the above article: 'Link Fund Solutions, the trust’s appointed alternative investment fund managers, dramatically upgraded the value of Industrial Heat by 357% to $112.9 million (£85.2 million)'. As Industrial Heat is an unquoted firm and has, in my opinion, zero probability of ever making a profit, I don't understand on what basis they did that.

| Link | Share
sharw 4th Jun 33 of 45

Any views on Driver (LON:DRV) ? Poor interim results today but "...whilst activity levels during the fourth quarter will be critical to the outcome for the year as a whole, we currently expect to deliver underlying* profit before taxation for the year broadly in line with the guidance set out in our March trading update"

The problem with this one is that the flow of opportunities (contract disputes) is very lumpy.

After the trading statement in March Keith Ashworth-Lord reduced his fund's stake from 19,68% to 15.99%

The sp was down 10p earlier but now 7p following a noon announcement that the share buyback programme would be resumed (net cash £5m)..

| Link | Share
Graham Fraser 4th Jun 34 of 45

Raven Property (LON:RAV) Looks interesting to me, Russian warehouses at a reasonable discount to NAV. Woodford I think has a large stake. It is a bet on the Russian economy with good odds, after my recent trip there I thought the economy appeared stable.

| Link | Share | 1 reply
Gromley 4th Jun 35 of 45

In reply to post #480356

I've quipped in the past that the Vianet (LON:VNET) management seem to live in a constant state of excitement.(exciting features 5 times in today's announcement!)

Although only a modest 'beat' I'm tempted to get a bit excited myself.

I need to run through the numbers later and watch the, but my initial thought is that the 2020 forecast is significantly low.

Any broker updates today?

| Link | Share
Carcosa 4th Jun 36 of 45

In reply to post #480451

Re The Copyright discussion

Laurie, the extract you quote is practically on all websites (google the phrase). It's standard boiler plate prose. It is even on the RNS website! Just agreeing to T&C's does not make those T&C's enforceable.

There is no doubt that copyright and associated 'laws' are not fit for purpose in the digital age.

What still holds true however is defamation and slander. Bulletin board postings more likely slander than libel. Proving either is somewhat onerous and the short term nature and audience of bulletin boards makes it highly unlikely that anything will be taken that far. If it was, ADVFN would have been closed down years ago!

Nonetheless if you feel uncomfortable posting links and comments then that is your right.

| Link | Share
alpha2 4th Jun 37 of 45

Thanks very much for the Loungers video. Very enlightening.

| Link | Share
rwalford 4th Jun 38 of 45

In reply to post #480616

I think that Raven Property (LON:RAV) is rather more than just a punt on the Russian economy: it is (or certainly was a year or so back) invested in warehouses with rents denominated in US Dollars. So it is also a punt on the USD-Rouble exchange rate (and I was concerned that if the rouble weakened, those rents would be increasing for the tenants, who would have to pay a lot more for their dollars just to pay the rent.) Then add in the politics - sanctions, oil potentially weakening with Trade Wars etc.
Good luck if you decide to risk it. I wouldn't!

| Link | Share | 2 replies
Laughton 4th Jun 39 of 45

In reply to post #480671

Raven Property (LON:RAV) - I think those days of tenants paying rents in dollars have been and gone, or at least in many cases.

I do hold some of their prefs - Raven Property (LON:RAVP). Glutton for the yield.

| Link | Share
Anthony Ashworth 4th Jun 40 of 45

In reply to post #480401

It will be interesting to see how this pans out in the longrun. When the Woodford Patient Capital Trust was set up it indicated a 10 year time horizon. I was already invested so when the price fell by almost 20% this morning and was at a record discount to NAV I just felt it was a good time to buy.

| Link | Share
Graham Fraser 4th Jun 41 of 45

In reply to post #480671

The hit has been taken and NAV has been substantially lowered. Borrowings are now in Roubles. If the economy is ok then so should the Rouble be.
I only own a few waiting for Woidford outcome.

| Link | Share
Paul Scott 5th Jun 42 of 45

In reply to post #480356

Hi johnsmith68,

I had a rummage through the Vianet (LON:VNET) figures, but didn't see anything in them worth reporting on.

It's more of the same really - not much growth, and lots of positive-sounding commentary that never really translates into improved financial performance - that's been the case for years now.

It's not clear to me why the group is listed. Management are lacklustre, in my view - I don't see them turning this into a major success.

Divis maintained again, so the yield is a reasonably good 4.5%

The share price looks about right, but I'm struggling to see any catalyst to make it go up meaningfully.

Regards, Paul.

| Link | Share | 2 replies
OsullivanB 5th Jun 43 of 45

I cannot claim to know why 888 Holdings (LON:888) poker took the hit it did. But I can explain why I stopped playing poker on 888 after several years as a near daily player.

They changed the system under which a player joined a table. It had previously been possible to identify players one considered relatively weak and then to queue to join the table(s) where such players were sitting and playing. The new system in effect removed this element of choice and allocated the arriving player to a seat on a take-it or leave-it basis. That radically reduced my edge (never huge, but I never added to my initial deposit). I wrote to them protesting at the change. On receiving no response, I withdrew the balance of my account and have not looked at the site since. It may be that I was not the only one to feel disadvantaged and to vote with his feet (or mouse). If that is the case, I doubt very much if they will get those customers back. That is a serious blow to their poker business, which is indifferent to the success of individual players and wholly dependent on taking a cut of the betting turnover.

| Link | Share
johnsmith68 5th Jun 44 of 45

In reply to post #480761

Thanks Paul, I appreciate the feedback. Thanks for the incredible time and dedication you put into these reports.

| Link | Share
Gromley 5th Jun 45 of 45

In reply to post #480761

I recall Paul, that it was you that first alerted me to the ‘merits’ of Vianet (LON:VNET), a good few years ago. Aside from the value credentials, at that time there was an interesting potential upside arising from their efforts to roll out the iDraught product to the much larger potential market in the USA.

It was ironic then to read in the latest results that, after all this time, they made some more modest progress in the US and expect to deliver a maiden profit in the US next year! Beer tomorrow as it were – I long since stopped expecting anything much from the US, so this is not part of my interest these days.

In fact the old brulines (now known as “Smart Zones” is ticking along pretty flat and makes up c. ¾ of the overall turnover, there are some potentially interesting developments but its not going to set the world on fire.

What is possibly of interest though is the Smart Machines business (including the Vendman acquisition of Sept 17).

Here they grew the top line by 50% to £4.68m and claimed they would have doubled it were it not for the effective headwind of moving from a sales to a rental model . I haven’t fully checked the numbers yet, but I think that “doubling” is flattered by the FY impact of the acquired vendman revenues; nevertheless things seem to be going well here. Plus they expect the “global coffee contract” (pretty sure this is Costa, but I cannot recall if this was formally confirmed anywhere) to add momentum over the near term.

So whilst somewhat a case of beer and coffee tomorrow, there’s still enough here to, just about, keep me interested.

I’ve been near to selling out from sheet boredom on a few occasions and perhaps I should have, although my quick back of fag-packet calculations are that I’ve made c. 8% pa (mostly in dividend) on holding here so if disappointing it at least has not been a disaster.

I’ll try and work up the numbers in due course and perhaps add to this, meantime though I still think the current year forecast looks light, we shall see.

| Link | Share

Please subscribe to submit a comment

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

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis