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 LON:EHG fundamentally strong or weak? Find out More »

67 Comments on this Article show/hide all

dgold 9th Jan '18 8 of 67

Given the seemingly excellent results from Games Workshop (LON:GAW) the market (non) reaction seems surprising - does anyone have any thoughts?

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Ramridge 9th Jan '18 9 of 67

In reply to post #294898

dgold - Games Workshop (LON:GAW) There was a trading update on 1 Dec not that long ago when the excellent headline numbers were posted.
Since then the sp has gone up some 30%. So I would say that the sp had already factored in today's results.
Anyway, that's my story.

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vik2001 9th Jan '18 10 of 67

Stock Spirits (LON:STCK) please. slightly ahead of expectations.

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Damian Cannon 9th Jan '18 11 of 67

In reply to post #294898

Well the price has performed pretty strongly in advance of these results? So I imagine that a breather is in order for people to digest the results.

On a different note Robert Walters (LON:RWA) put out a solid trading statement this morning. There's very positive momentum in all of their markets and fee income is really growing with a stack of cash on the balance sheet. They're my pick of the recruiters at the moment but I'd be interested in hearing Paul's thoughts given his past history of investing in this sector.

Blog: Ambling Randomly
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dgold 9th Jan '18 12 of 67

In reply to post #294903

I think you're absolutely right - my mistake for not spotting that and thus buying at the opening - I think I wasn't the only one to make that mistake. I (would like to) think there is probably still a bit of upside though as given the growth in profits the shares are still not too expensive (2019 pe of 19).

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shanklin100 9th Jan '18 13 of 67

Re Games Workshop (LON:GAW) there is quite a lot of commentary in today's H1 results about how the company is interacting with its customers. One thing I hadn't realised until very recently was how dreadful GAW have been over the last twenty years on this front with improvement only having started in the last year or so.

This is described in great detail, by a member of the GAW user community, in a 14 minute video posted on YouTube:

Clearly this improved interaction is not doing and will not do GAW any harm in terms of improving sales and revenue.

Cheers, Martin

P.S.This link was provided by martinthebrave in a post on ADVFN on 01-Jan-18

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iwright7 9th Jan '18 14 of 67

In reply to post #294928

Yes I agree with RAM that the results are already in the Games Workshop (LON:GAW) price. I did go though the H1 announcement today looking for any sign of negative sentiment and the closest I could find was this rather apposite comment:

"The greatest risk is the same one that we repeat each year, namely, management. So long as we have great people we will be fine. Problems will arise if the board allows egos and private agendas to rule. I will do my utmost to ensure that this does not happen".

GW is a classic PEAD (Post Earnings Announcement Drift) type share where the market takes a while to come to terms with good news, so I have little doubt (at least short term) that further upward drift is yet to come.   Ian

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FREng 9th Jan '18 15 of 67

Carr's (LON:CARR) and Ilika (LON:IKA) have updates today. CARR looks good and the market thinks so too, but I can't see how IKA can make it through to break even without raising more funds.

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Edward John Canham 9th Jan '18 16 of 67

Bit of an unusual request.

Today is the start of the housebuilder's update season - Persimmon's Persimmon (LON:PSN) out this morning looked good - but the market seems to be unimpressed. (I don't hold)

Do you think the market is totally down on this sector?


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Ramridge 9th Jan '18 17 of 67

In reply to post #294948

Hi Ian - re. Games Workshop (LON:GAW)
That's an interesting comment to make in a half-year financial report. It is almost as if he is firing a broad salvo against certain managers who are not toeing the company line.

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Cockerhoop 9th Jan '18 18 of 67

In reply to post #294948

Ref  GAW

I wouldn't read too much into's repeated every year!

From the 2017 finals from Tom Kirby ex CEO/Ch

'In my opinion the greatest risk is the same one that we repeat each year, namely, management. So long as we have the right people in the right jobs we will be fine. Problems will arise if the board allows egos and private agendas to rule. I will do my utmost to ensure that this does not happen, especially in the year when Tom steps down from the board. Thanks Tom.'

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Paul Scott 9th Jan '18 19 of 67


Another reminder - please can people remember to always put the company name or ticker into every comment here There are a couple of stray comments above, where I don't know which company you're talking about. The way the comments are listed, it's not threaded, so not always clear. Remember that each report will cover multiple companies, so it makes life much easier if people specifically state which company you are referring to in every comment.

Thanks, Paul.

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iwright7 9th Jan '18 20 of 67

In reply to post #294968


Games Workshop (LON:GAW) has made this type of ego comment before, but he is a CEO who is bringing in new external senior managers, so you may be right about sending out another veiled warning to those who do not fit.

Kevin Rountree the CEO is reported to have said, "Games Workshop is in the business of fixing itself from the piece of s..t  Tom Kirby (his predecessor) left me with. I mean, have you seen our stocks lately?"

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InvestedGeordie 9th Jan '18 21 of 67

In reply to post #294968

Re: Games Workshop (LON:GAW), it is an interesting comment, but has been used before, so nothing specific of note. I suspect he's just keeping people in line. 

I'm imagining this scene from Star Wars:

"I find your lack of faith disturbing!"


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Andrew L 9th Jan '18 22 of 67

Elegant Hotels - The dividend cut is disappointing and in reality the company appeared to have floated with a dividend yield that was designed to "get the IPO away." The last sales pitch for a poor IPO it seems is management/IPO brokers hyping up the dividend yield. Elegant Hotels also has a growth strategy so the high dividend payout was incongruous with that. Two hotels have been bought since the IPO.

Results - This is for the year from October 2016 to September 2017. It should be remembered that Elegant gets most of its business in the winter months when people travel to Barbados to escape the gloomy weather. The bulk of Elegant's visitors are also from the UK. So this financial year included the post-Brexit vote impact and the slump in sterling against the US dollar. Sterling is currently higher than the US dollar than it was in winter 2016/2017.

In other words the financial year just gone was an annus horribilis for Elegant Hotels. Things should get better from here. This winter's trading 2017/2018 should be better given the recovery in sterling against the US dollar. However, while luxury travel is a growth area it is also cyclical.

A previous poster highlighted the fall in revenue per available room over the last two years. The group has had to cut prices to stay full. The opportunity is that at some point this should stabilize. I don't see Elegant as a fantastic investment but you do get a reasonable dividend yield, even after the cut, just for holding on. If the company rejected a cash takeover offer they must be confident that the shares undervalue the potential.

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boothbym 9th Jan '18 23 of 67

Hi Paul

Could you take a look at ILIKA(IKA). Their results are out today. Do you think the will need refinancing in the next 18 months?

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pippasfan 9th Jan '18 24 of 67

Having a long position I’m trying very hard to find something negative in the news today. Just can’t see it ? I always try to put myself off if I can, which can prompt a sensible sell, but I can’t see it. There must be something somewhere hidden, but every time I walk passed our town centre shop, it’s full of youngsters having fun. I look around from there, and the rest of the town centre shops are empty, the rows of charity shops, and bookies.

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bsharman 9th Jan '18 25 of 67

In reply to post #294983

A suggestion for the boffins at Stockopedia - is there a way to embed a drop down list at the top of each message so that people can select or list the companies they are going to be talking about? Then each message will have the company ticker and name(s) at the top.

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doublelutz 9th Jan '18 26 of 67

Elegant Hotels I was in early at above the current price but added considerably when it fell so I came out first thing today at a reasonable profit. I sold because I am not sure that the forward dividend of 4.4% at 90p will not come under pressure and I think it only reflects the fact that the share price is not likely to be going anywhere for a couple of years. Longer term this could be a good business but I think there are better shares to be in for now.

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Cockerhoop 9th Jan '18 27 of 67

In reply to post #294993

Games Workshop (LON:GAW)


Do you have a reference for your Kevin Rountree quote? I've met Kevin and it doesn't to me sound like something he'd come out with.

I do believe though he has transformed the business from the Tom Kirby days by positively engaging with the customer and giving them what they want from the hobby rather than the 'buy it or f*** off' attitude that was perceived to exist in the past.

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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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