Small Cap Value Report (Tue 7 Nov 2017) - TRCS, IGP, FEVR, BLTG, JPR, IDEA, CTP, UPGS

6th Nov '17 by Paul Scott

29 comments 18992 reads

Hi, it's Paul here!

This is the placeholder article for Tuesday morning.

Tracsis (LON:TRCS) Interview

Early notice, for Tracsis results which will be published this Weds morning.

As is traditional now, I will be recording an audio interview over the phone with John McArthur, CEO of Tracsis. The interview will be recorded & published this Thu.

So if you have any questions to put to John, then please email them on Weds to both me and John, using these email addresses:

Me: QSCquestions@gmail.com

CEO of Tracsis: J.McArthur@tracsis.com

We're trying out this email method, to save me having to spend ages preparing for the interview.

See you in the morning!

Intercede (LON:IGP)

Share price: 34p (down 9.3% today)
No. shares: 50.5m
Market cap: £17.2m

Trading update (profit warning) - this announcement came out yesterday at 1:58 pm. This is most inconvenient, and unfair for investors. It gives city traders an advantage, in that they can sell quickly, before private investors (many of whom will be busy with their day jobs) have a chance to react. All trading updates should come out at 7am. Companies need to ensure that Board meetings (to decide whether to issue a profit warning) are only be held after the market has closed. Then the RNS can go out at 7am. This would comply with the stock exchange rules about issuing bad news without delay.

About this company - the description below sounds quite interesting, but unfortunately its financial performance in recent years has been considerably less impressive than the narrative (see Stockopedia graphical history below);

Intercede is a software and service company specializing in identity, credential management and secure mobility. Its solutions create a foundation of trust between connected people, devices and apps and combine expertise with innovation to provide world-class cybersecurity.

Intercede has been delivering solutions to high profile customers, from the US and UK governments to some of the world's largest corporations, telecommunications providers and information technology firms, for over 20 years.

There was a profit warning in Oct 2016, which I reported on here, concluding that the company was too difficult to value, due to erratic financial performance.

Profit warning - the…

Unlock with Email

Unlock with Google

Already have an account?
Login here

DarwenLad

7th Nov '17

Remember Boo.com. Its shares slumped from a 50p IPO price in March 2014 to low 20s at end of 2014 when several NEDs started buying shares. UPGS is less than a year old as a public company and, unlike Boo, is paying a healthy dividend which puts its shares on a yield of over 5%. Whoops. Just noticed that the chairman and a NED have invested a very healthy slug this morning. A very good sign.

tjl

The NED chap appears to have invested £375,000 of his pension into UP Global Sourcing Holdings (LON:UPGS). Now that's putting your money where your mouth is!

FREng

Paul,
I'd welcome your views on First Derivatives (LON:FDP) which reported today. TechMarketView's report this morning is positive and the outlook statement is positive too. It's currently high momentum (99), High Quality (80) and Low value (7) but has recent broker upgrades. The SP has fallen slightly today.

LeoInvestorUK

Yes, I remember boo.com, it was a poorly executed fashion dot com era company that was liquidated in 2000 :)

I couldn't understand why Boohoo.Com (LON:BOO) would associate themselves with such a failure by using a similar name and this put me off investing for a while.

daveinthelakes

Paul,

Re your comment on Intercede (LON:IGP) - " It's dawning on me that I don't have the expertise to invest in this sector."

I was discussing this very subject with a fellow investor this morning. If I don't understand the industry a company is in then I ignore it but if I believe the sector itself is a serious medium term growth story I will consider investment trusts or ETF's.

I therefore have 2-3% positions in each of-

Cyber Security- ETFS ISE CYBER SECURITY GO UCITS ETF (LON:ISPY)
Robotics- IS AUTO & ROBOTICS UCITS USD ACC ETF (LON:RBTX)
Biotech- Biotech Growth Trust (LON:BIOG) and International Biotechnology Trust (LON:IBT)

This way I cover what I think are potential huge growth areas without taking the risk on individual stocks I cannot properly assess.

Dave

WhaleHQ

Fevr have an excellent brand which I think will protect it in bars and social settings, but supermarket competition is certainly mounting. I’ve had a couple of G&Ts over the last few weeks and noticed when buying my supplies from the local Tesco that new brands are emerging on the higher echelons of Tonic shelf. Being a cheapskate, I plumped for a cheaper elderflower alternative and thought it was good stuff. Nothing new I know but having sold my holding a month or so ago I feel like I should jump on the train of doommongery.

pgs501

Just to add, Northern Bear Northern Bear (LON:NTBR) have issued a trading update (seemingly in the middle of tha day unless investegate have been really slow on my alerts). On the plus side it seems positive to me and we have the all important exceeded expectations.

As Paul always says it would be good if they could quantify this with what the expectations were, and what they are now. The only number they actually compare to is last year, saying they beat them and reiterating that this is a tough hurdle to beat.

But an update issued within trading hours that is vague is something that surely could have been handled better. If they had to issue it in trading hours due to a leak say so.

RichardK

Thank you for the alert, pgs501. I have bought some more Northern Bear. Like you, I am perplexed as to why the update should be issued at 2.45 pm.

Richard

Rusty2

There was an announcement scheduled today for the Half Year results, maybe it was not ready so they put out a trading statement instead? I agree it's rather bad form.

I think we should switch to the US system, these announcement should be made after market close rather than at 7am, then people have more time to study them before the market opens.

steviej

Agreed

The Phoenix

Cheers Paul your way ahead of me but all ways do a highlighted scan for the dreaded word "adjustments" when looking over results

pastysupper

But that would be too fair, and eradicate the occasional advantage of early risers like me :)

Aislabie

Northern Bear (LON:NTBR) give the impression of being a bit clueless about how to deal with the market, maybe their 49% float insulates them from having to talk about themselves.
They do not appear to ever make any presentations maybe because in Newcastle they feel too distant to bother. I think it is basically a good company but they could do with telling people about themselves and their PR company and broker need to get a sharp poke in the ribs.

Roger Lawson

Agree with your comments on Blancco and Intercede. Former accounts too complicated so uninvestable until the picture is a lot clearer. Intercede, and its Exec Chairman Richard Parris, I know well from some years ago. Needs a change of management in my opinion. Commented on both those and Johnston Press also on my blog here: https://roliscon.blog/2017/11/07/johnston-press-blancco-technology-and-intercede/

Paul Scott

8th Nov '17

Hi FREng,

Sorry, I don't cover First Derivatives (LON:FDP) - it's too big (nearly £900m mkt cap).

Looking quickly at the StockReport, it looks extremely expensive, on a fwd PER of 50.

Historic profit growth looks good, but not spectacular.

There must be expectations of strong future growth. It isn't the sort of thing that would interest me.

Regards, Paul.

Paul

Thanks for the quick look at First Derivatives (LON:FDP)

FREng

tic_tac_toe

wow, what an epic SCVR write-up! great effort, Paul!

JohnEustace

Re UP Global Sourcing Holdings (LON:UPGS), if retailers buy direct from China that options comes with costs too. There's a lot of work and travel and expense in finding the right factories and maintaining the relationships. It's not easy to do from 6,000 miles away so once you get to scale you need your own Chinese speaking people on the ground. And you'll need to pay for independent Quality Assurance people. You can get the quality you need in China but it takes effort. When people look at retailers they see the store fronts, but the supply chains they draw on are at least as critical.

Buying from UP Global Sourcing Holdings (LON:UPGS) is basically outsourcing that work and expense.

There's an entertaining book on Amazon called Poorly Made In China. It's a bit out of date but a cautionary tale nonetheless for anyone thinking of buying direct.

Trident

Tempted by a punt on UP Global Sourcing Holdings (LON:UPGS). Unusual to see such large share purchases by non-execs. I guess the execs are happy with their option awards, rather than purchasing in the market? The dividend yield looks like it will provide some temporary comfort, but the spread on the shares may take away my enthusiasm.

Hi John,

Yes, you're absolutely right about the difficulties of direct sourcing from the Far East.
Your comments triggered my memories in the 1990s of the rag trade. We tried direct importing, from India mainly. It was a total nightmare! We had to pay up-front for the goods, which caused cashflow problems. Then wait weeks for them to arrive by ship. Then of course all the hassle & paperwork of customs clearance (who had to handle all that - muggins here! None of the buyers had a clue, so they just dumped it on me!! I didn't have a clue either, so had to learn quickly). When the goods finally arrive at our warehouse, the quality & fit was usually all wrong, but there was nothing we could do, as it was all paid for. The factory didn't want to know.

So we went back to using small UK companies, that handled all the importing for us, and gave us 90 days credit. In return for their 20-30% markup.

I do quite like UP Global Sourcing Holdings (LON:UPGS) actually, the more I think about it. Might add it to my watchlist.

Regards, Paul.

P.S. The Chairman splashing out £102k buying shares at 93.25p yesterday, plus a NED spending £375k on shares at the same price, is a very good indicator in my view. That's not a PR stunt, it's a significant vote of confidence in the company.

Small Cap Value Report (Tue 7 Nov 2017) - TRCS, IGP, FEVR, BLTG, JPR, IDEA, CTP, UPGS

Tracsis (LON:TRCS) Interview

Intercede (LON:IGP)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

29 comments

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

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