Small Cap Value Report (Tue 9 Jan 2018) - EHG, TPT, JOUL, NEXS, TAST, GAW, CARR, BQE, WINE, FOUR

Monday, Jan 08 2018 by

Hello, it's Paul here.

It's busy for updates today. Please see the header above for the stocks that I shall be reviewing today.

Elegant Hotels (LON:EHG)

Share price: 85.5p (down 10.9% at 08:32 today)
No. shares: 88.8m
Market cap: £75.9m

(at the time of writing, I hold a long position in this share)

Results - for year ended 30 Sep 2017. This company is;

...the owner and operator of seven upscale freehold hotels and a beachfront restaurant on the island of Barbados.

It listed on AIM in May 2015. This is a rare exception to my usual (personal) blanket rule not to invest in overseas companies on AIM. The reasons being that it's profitable, has freehold property assets, pays divis, seems to have sensible management, and operates in a country which seems to be politically & economically stable.

Its major shareholders list is pretty impressive too;


Results today have clearly underwhelmed some people, as the share price down 10.9%.

Dividends have been reduced today, which could have upset some shareholders. Although as I flagged here on 12 Oct 2017, the company was clearly over-paying, so a cut in the divi was to be expected. The final divi this year will be 1.75p (PY 3.5p). The 2018 divi will be 4.0p, split one third: two thirds between interim & final. That will still give a pleasing yield of 4.7%, and looks a much more sensible level of payout. So personally, I'm absolutely fine with this. I'd much rather the company sensibly balances its divis and capex, rather than paying out too much in divis and starving its hotels of capex.

Some key numbers for 09/2017;

  • Revenue up 5.1% to $59.9m - with one additional site.
  • Adjusted EBITDA down 7.6% to $18.1m - so nicely cash generative, but we do need to take into account maintenance capex, which is heavy for hotels.
  • Adjusted profit before tax is down 22% to $11.1m
  • Adjusted basic EPS is down from 13.1c last year, to 10.1c this year (converts to sterling of 7.5p). Note that there doesn't seem to be any potential dilution from share options, since the basic & diluted EPS figures are the same.
  • At 85.5p share price, the 7.5p EPS results in a PER of 11.4
  • EPS seems to have…

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Elegant Hotels Group plc is a holding company. The principal activity of the Company and its subsidiaries is the ownership and operation of hotels and restaurants on the island of Barbados. It owns and operates six freehold beachfront hotels and a beachfront restaurant in Barbados. Its hotels include Colony Club, Tamarind, The House, Crystal Cove, Turtle Beach and Waves. It operates Daphne's restaurant, which is located on platinum West Coast in Paynes Bay, adjacent to The House and Tamarind in Barbados. Its Colony Club hotel is spread across six acres of tropical gardens with approximately 300 feet of beach frontage on the Caribbean Sea and lagoon style pools. Its Tamarind hotel is on the Platinum Coast. Its Crystal Cove hotel has three freshwater lagoon pools, two restaurants, two bars, two floodlit tennis courts and a fitness center. Its Turtle Beach property is on the south coast of Barbados. Its portfolio consists of over 550 rooms. more »

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Topps Tiles Plc is a United Kingdom-based retailer of tiles. The Company is engaged in the retail distribution of ceramic and porcelain tiles, natural stone, and related products. It operates in the Topps Tiles stores and online business segment. It supplies tiles and associated products to both trade and retail customer base, primarily for the refurbishment of the United Kingdom domestic housing. Its product categories include new products, bathroom wall tiles, kitchen wall tiles, mosaic tiles, kitchen floor tiles, bathroom floor tiles, ceramic tiles, porcelain tiles, underfloor heating, wet rooms, outdoor tiles, fireplace tiles and metro tiles. Its brands include Tile Adhesive, Tile Grout, Tile Preparations, Hardiebacker Board, Rubi Tools and Accessories, Warmup, and Homelux Tiles Trims. It offers tiles in various colors, such as beige tiles, black tiles, blue tiles, brown tiles, cream tiles and gold tiles. It has over 350 stores across the United Kingdom. more »

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Joules Group PLC is engaged in the design and sale of lifestyle clothing, related accessories and a homeware range, through the multi-channel business structure embracing retail stores, e-commerce, county shows and events and wholesale. The Company has three segments: Retail, Wholesale and Other. The Retail segment includes sales and costs relevant to Stores, E-commerce, Shows and Franchises. The Wholesale segment includes sales and costs relevant to the sale of products to other retail businesses or distributors for onward sale to their customer. The Other segment includes income from licensing. The Company's products include womenswear, menswear, Little Joule, Baby Joule, Wellies and homeware. The Company operates 97 the United Kingdom and Republic of Ireland stores (including five concessions) and three franchise stores. Joules branded products are sold through selected wholesale partners, primarily in the United Kingdom, North America and Germany. more »

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  Is Elegant Hotels fundamentally strong or weak? Find out More »

67 Comments on this Article show/hide all

dgold 9th Jan 1 of 67

Further to yesterday's announcement by Deltic of 8.2% like-for-like sales increase and some comments yesterday about how other pub companies had also reported good trading and potential read-across to Revolution Bars (LON:RBG) the FT now report further confirmation of the trend:

"Based on purchases made using their cards, Barclaycard says nominal spending was 4 per cent higher between November 19 and December 23 last year than over the same period in 2016 — a span that included Black Friday and Cyber Monday at the end of November. This was faster than price growth over the year to November, which was 3.1 per cent, according the Office for National Statistics. Spending in pubs and restaurants grew particularly rapidly, rising more than 8 per cent against a year earlier."

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Johnny2509 9th Jan 2 of 67

Hi Paul,

Games Workshop (LON:GAW) results look very good.

Elegant Hotels (LON:EHG) seem a little tricker to gague - revenue up 5% but other key metrics dropping. Also dividend has been trimmed. Welcome your views. 

I hold both.

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iwright7 9th Jan 3 of 67

Another great set of results from Games Workshop (LON:GAW) driven by a +54% increase in sales and fantastic operational gearing. GW customers may be a niche market, but those that play their games are very committed. A key growth driver seems to be the GW on-line support activity:

We've supported these customers with daily content for Warhammer: Age of Sigmar and Warhammer 40,000, and increased our video output to more than one video every day, reaching over 100,000 people per day. We've also continued to develop and created new brand content sites. In the last 6 months alone, our content has had 16.3 million views from 2.5 million users, and this increase shows no sign of stopping.

Astonishing!   Ian 

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MrContrarian 9th Jan 4 of 67

My morning smallcap tweet:
Totally smug.
Topps Tiles (LON:TPT), Games Workshop (LON:GAW), Bioquell (LON:BQE), John Lewis of Hungerford (LON:JLH), Totally (LON:TLY), 1Spatial (LON:SPA), Carillion (LON:CLLN)

Topps Tiles (TPT) Q1 LFL +3.4%. 'Pleased' but retaining prudent view of FY.
Games Workshop Group (GAW) H1 rev up 54%, EPS 97.6p up 187%. December sales "have also shown good growth trends."
Bioquell (BQE) Guides FY rev beat £29.3m. Pre-exceptional pretax expected to be significantly ahead of market expectations.
John Lewis of Hungerford (JLH) FY to end Aug. Who knew that kitchen supply was such a complicated business? Rev up 1%, EPS 0.06p (-0.21p). Trading: Q1 despatched sales and forward orders £2.3m (£1.8m) - reflects "a higher level of building projects completing in early Autumn months than we would normally expect. For this reason, we caution that it is unlikely to be an appropriate basis from which to extrapolate a full year forecast." 18w sales and order book £3.7m (£3.3m). Moves FY end from August to June "in order to address unintended, and unnecessary, challenges presented by the current reporting cycle."
Totally (TLY) Business Update. Wins £3m PA GP Out of Hours contract for a number of prisons Staffordshire. "Totally is pleased to report that 15 of the 21 sites inspected by the Care Quality Commission (CQC) have been rated Good demonstrating Vocare's continued commitment and focus on providing a high standard of care and quality." And the other 6? I found that Paddington was rated Inadequate overall and placed into Special Measures in Oct. Somerset Doctors Urgent Care was placed into special measures in April, must make further improvements to its NHS 111 service and its GP Out of Hours service following a recent re-inspection in Nov. Nothing to be smug about IMO.
1Spatial (SPA) wins $766k contact over 5 years in USA.
Carillion (CLLN) on share price movement - not aware of any material developments that support this share price increase.

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abtan 9th Jan 5 of 67

In reply to Johnny2509, post #2

Trends for Elegant Hotels (LON:EHG) below that may be of interest to readers.

Note the decreasing Average Daily Rates (ADR) & Revenue per Available Room (RevPAR).

Though it's not listed below, the high levels of debt will not, in my opinion, allow the dividend to be maintained going forward.


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PhilH 9th Jan 6 of 67

For a sense of the Games Workshop (LON:GAW) community development see

Professional Services: Sunflower Counselling
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jonno 9th Jan 7 of 67

Elegant hotels ...a bit of a curates egg. There is no denying that business has been challenging, in particular foreign exchange issues and the severe hurricane season. The latter although not affecting Barbados will I suspect have deterred visitors to the Caribbean. The dividend cut and rebalancing going forward is in my view the right thing to do. The business strategy seems sensible and the rebased dividend gives a yield in excess of 4%. Also the discount to NAV is attractive as evidenced by the recent bid approach. Finally Luke Johnson, although not infallible is a smart operator and continues to hold more than 12% of the equity. I continue to hold.

Good luck to All

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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 »


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