Small Cap Value Report (Tue 5 Mar 2019) - BILB, SWL, SBIZ, DEB | Paul Scott

5th Mar '19 by Paul Scott

47 comments 15814 reads

Good morning, it's Paul here!

Here's today's usual placeholder. I'm making an early start today, in order to cover today's news, and then circle back to finishing off yesterday's report, plus telling you about my meeting yesterday with management of Revolution Bars (LON:RBG) which went very well. There was so much to take in, that by the time I got home yesterday, I'd used up all my mental bandwidth for the day. That's the trouble with trying to write a report, and have meetings on the same day.

Taking a quick look at the day's top % movers (at 09:10) which fall within my remit;

Bilby (LON:BILB) - down 39% on a trading update - must be a profit warning, I'll look into that below

WH Ireland (LON:WHI) - down 29% to 45.5p on news of a discounted £5m placing

Swallowfield (LON:SWL) - down 13% on interim results - I'll take a closer look below

Looking at risers, the ones that interest me today are;

Netcall (LON:NET) - up 14% to 34.5p on interim results

SimplyBiz (LON:SBIZ) - up 6% to 192p on full year results. I've reported positively on this company before, so will review these results below

That's my initial to do list, so let's get cracking.

Bilby (LON:BILB)

Share price: 40p (down 39% today, at 09:42)
No. shares: 40.5m
Market cap: £16.2m

Trading update

Bilby Plc, a leading gas heating, electrical and building services provider, announces the following trading update for year ending 31 March 2019.

Checking back through my notes here on 11 Dec 2018, this contracting group put out a mild profit warning.

Today it warns again, due to problems with various contracts. That's the Achilles Heel of contracting type businesses, and why I avoid this sector altogether now. The work tends to be low margin (due to competitive pressures), and sooner or later something awful seems to go wrong with contracts, leading to cost over-runs, disputes, etc.

Helpfully, the company does today quantify the likely outcome for the year;

As…

Unlock with Email

Unlock with Google

Already have an account?
Login here

ls2g08

5th Mar '19

Craneware (LON:CRW) reported HY19 today, market doesn't seem to have liked the results much. Very optimistic tone from management. Highly rated share (PE of 45) - I imagine 15% revenue and 7% PBT growth wasn't enough.

jonesj

I read the Begbies Traynor (LON:BEG) statement as being in line with expectations. I am considering adding to my position at this price.

derekwb

Paul/Graham
I suspect along with many others I would appreciate your views on Taptica and Revolution Bars.

doug2500

I have minor concerns on XP Power (LON:XPP) but had already decided to top up on results unless there were real problems

Cash flow could be better, but I accept their reasons - inventory build, acquisitions
Needing to build inventory is a small concern too but hopefully this will unwind.
Moving up the value chain is positive, but pressure on the cheap end a negative.
All in all, a solid, long term, dividend paying, built in demand, good company.

I also notice Montanaro have now got a notifiable holding, although I don't know if it's all new or if they've just topped up. They seem to be well regarded small cap wise.

cholertonandrew

Hi Paul, can I ask whether you’re still invested in Intercede? I continue to hold.

Thanks
Andrew

JamesrWilson1989

For Swallowfield (LON:SWL) :

2017 Half Year Report - £39.7M Revenue £2.2M Op Profit.
2017 Full Year Report - £74.3M Revenue £3.3M Op Profit

2018 Half Year Report - £40M Revenue - £3M Op Profit
2018 Full Year Report - £73.9M Revenue - £4.7M Op Profit

So for the last 2 years - the H2 Weighting has actually been less than H1. Today they announced a miss for the half year, but confident of a pick up in H2. Evidence on previous years suggest otherwise, but who knows?

Dogon

GOCO's Chairman Peter Woods has raised his stake to 29.9% after buying 17.8m shares. Shows confidence from a successful entrepreneur, also once he has finished selling esure I wonder if he could try to buy GOCO? This is the floor for the share price in my opinion.

Paul Scott

Yes, I still hold Intercede (LON:IGP) - I don't have anything to comment on, as there haven't been any results or trading updates. The last interim figures looked OK & reasonably positive outlook.

It's one of those annoying micro caps, where the share price just drifts down relentlessly on absolutely tiny volume. So there's no way of knowing if there's something wrong, or if it's just background noise. Institutions don't go into the market to buy in such tiny size. Equally, there's no overhang of stock out there, my broker tells me. So even if insiders wanted to buy, they probably wouldn't be able to either.

We're completely in the dark basically.

It's high risk/high reward. I hold because I'm told the product is world-class, and the client list confirms that. Also it's a potential turnaround, under new management, which has slashed costs.

As we know, turnarounds sometimes work, but often don't. So this is (and always was) a calculated high risk position.

Regards, Paul.

Hi derekwb,

I don't have any view on Taptica International (LON:TAP) - it's in the "too difficult" tray, and in any case I'm really not a fan of Israeli tech shares on AIM. They're too accident-prone - as indeed are many overseas companies which list on AIM.

I'm struggling to get back into work mode at the moment, so am afraid you'll just have to bear with me on Revolution Bars (LON:RBG) . I'll get round to typing up my notes as soon as I can (hopefully later today).

Best wishes, Paul.

Thanks for the comments on Intercede Paul.

Regards
Andrew

runthejoules

I too would appreciate a look at Begbies Traynor (LON:BEG). I have some and should obviously have sold out when it failed to clear 75p a second time recently, but those chunky divs are tempting and I am thinking of planting another small tranche of hedge. After all, this is one business that should never go bust, right?

Tortoise investor

More bad news today I see for Debenhams (LON:DEB) and by extension QUIZ (LON:QUIZ) shareholders. Even if Debenhams (LON:DEB) limps on, the store closure programme is bound to have a negative impact on QUIZ (LON:QUIZ) unless it can grow its online revenue fast enough to compensate for the loss of income from its concessions.

barnetpeter

MIRI, an advertising company, crashed by 60 per cent at one point today. Never heard of it? Me neither. Another victim of City Financial who are dumping holdings at almost any price to raise cash. Always the problem with illiquid stocks; if a forced seller wants out look out below.

CF seem to have 3 to 5% in dozens of small and micro caps so sudden and huge drops are likely all over the place. I think this will be a buying opportunity; I dont set stops on this type of stock for this very reason.

sharw

With regard to your concern about inventory at XP Power (LON:XPP) this is explained about 6 mins. in to the results video here:

http://fast.wistia.net/embed/iframe/n5277g4mzh?popover=true

Basically this is to protect against the shortage of incoming components, The FD says it cost about £200k in extra interest but the upside is that no deliveries to customers have been missed.

Lion Tamer

Thanks Share
I'll watch that asap. Since seen clues to the same fact in the narrative to the RNS. Actually it's just good management so I'm reassured.

TamzinPiworld

If you're interested in what's going on in blockchain technology, listen to our interview with Erik Townsend from Macrovoices.com , discussing how Government and Central Bank might adopt digital currency. The technology is not there yet, but Erik likens now to the 80's and the internet. At that time, the masses did not believe the internet would be the norm in the future - and the rest is history.

Erik's comes from a tech background. On selling his company for $36m, he started investing, with a particular interest in macro. For the last 10 years he's run a hedge fund (well till mid way through last year). If you've heard his macrovoices podcasts, you'll know he's a great font of knowledge on the macro picture for investors.

Erik is NOT a fan of cryptocurrencies, and was the first to pour scorn on the ICO's and bitcoin bubble. However, at some point, he realised the technologies being developed were too good not to be adopted by Governments. The big question is who will get there first?

This interview covers the main issues in Erik's book:Beyond Blockchain - The Death of the Dollar and the Rise of Digital Currency. The book itself takes the different elements of money supply: Government, Central Banks, Sovereign Debt, Fractional Reserve Banking etc; it discusses the motivations and technologies developed by the cypherpunks; and brings it all together to give a picture of how an International Digital Currency could become a reality. It's a fascinating read.

Anyway, enjoy the interview. We were flattered to get such a 'big' speaker on piworld, and he didn't disappoint.

simoan

Blockchain technology is just hype. From an investment perspective it should be totally ignored. I fundamentally disagree with what Erik says although I appreciate it is how he makes his living. But don't take my word for it, so do many of the world's most respected security experts. See:

1. https://www.wired.com/story/theres-no-good-reason-to-trust-blockchain-technology/

2. https://arstechnica.com/information-technology/2019/02/researcher-counts-the-reasons-he-wants-cryptocurrency-burned-with-fire/

3. https://queue.acm.org/detail.cfm?id=3305265

4. https://www.technologyreview.com/s/612974/once-hailed-as-unhackable-blockchains-are-now-getting-hacked/

Erik doesn't make his living from this? (Books do not make a lot of money). He just believes passionately that technology will enable a mass adopted digital currency, and that is going to make a big difference to the world and society.

I guess only time will tell if you are right, or he is right.

In the meantime personally, I've learned a lot from the book, which is a mastery in explaining money supply, central banks, sovereign debt, FRB, etc, simply. Ironically only about 25% of the book is discussing digital currency. On the premise, the reader has to understand the monetary system, to be able to conceive how and why an international digital currency might be adopted.

Whether it will or will not, the book is still a fascinating read, (or listen, as in the case of this interview.)

Yes, and in that time lots of people are going to lose lots of money if they invest in this pointless over hyped technology. I have been involved in this area through my work since 2010. As such, I have probably as much, if not more, direct experience of the realities of the practical uses of blockchain than Erik.

As I said, you don't have to believe me just read the articles I linked to including the thoughts of the likes of Bruce Schneier and Nick Weaver, two of the greatest security and trust thinkers of our generation.

mrosbiston

is a list of their holdings available anywhere? thanks in advance

Small Cap Value Report (Tue 5 Mar 2019) - BILB, SWL, SBIZ, DEB

Bilby (LON:BILB)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

47 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...