Small Cap Value Report (Wed 10 Jan 2018) - QUIZ, SDRY, MOSB, SHOE, TUNE, COG, ZTF

Tuesday, Jan 09 2018 by
92

Good morning, it's Paul here.

Please see the article header above, which shows the companies I intend reporting on today - quite a lot to cover, so it would be helpful if we could keep reader requests to a minimum.


FCA review of CFDs

This is an interesting RNS. It's the FCA's findings from its review of CFD/Spread Bet companies. The prices of spread bet company shares have dipped this morning in response to this report, which is critical of the sector, although it doesn't name the worst offenders.

What puzzled me is that, at the start of this RNS from the FCA it says;

We recently carried out a review of the CFD market. It looked at where firms offer these complex, high-risk instruments to retail customers on either an advisory or discretionary (including limited power of attorney) portfolio management basis.


As far as I'm aware, the vast majority of CFD/Spread Bet accounts are execution-only, hence would not fall within the scope of this review. Therefore, maybe it's a storm in a teacup, and could be a buying opportunity? There are some nice dividend yields available, e.g. with IG Group (LON:IGG) it yields just over 4.5%, and CMC Markets (LON:CMCX) (in which I have a very small long position) yields about 5.0% currently. These companies have very strong balance sheets too.

The FCA is very critical of the processes, but short of any draconian penalties, it's difficult to see how this will actually harm earnings at these companies.


Crypto-currencies (again!)

Spread bet companies must be coining it in (geddit?!!) with crypto-currencies. I know personally that I've handed wads of money to IG on a plate, punting unsuccessfully on Bitcoin (no current position). I've now given that up as a bad job.

The trouble with these ridiculous crypto-currencies, is that they're so volatile that you just constantly get stopped out, if you punt on them via spread bets. So they're ideal (i.e. highly profitable) instruments for the spread bet companies to offer to clients, as the provider is usually the big winner, scooping profits from people who are long or short, as prices violently spike up & down. Both long & short punters tend to have very strong opinions on the value (or not) of crypto-currencies,…

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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.


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QUIZ plc is United Kingdom-based global women's wear brand company. The Company is focused on providing occasion wear and dressy casual wear primarily for 16 to 35 year olds and offers clothing, footwear and accessories. The Company’s occasion wear provides maxi and mini dresses, matching tops and bottoms, and footwear, bags and other accessories that are designed to complement a particular outfit. The Company’s dressy casual is designed to provide the latest on-trend clothes, shoes, bags and accessories that have a glamorous edge. In addition, the Company’s products includes denim, playsuits, shirts, tops and skirts. The Company also provides a range of outerwear such as faux fur jackets, parkas and biker jackets. Footwear offers dune River Island, missguided and ASOS. The Company’s brand operates in 19 countries through 65 international franchise stores, concessions and wholesale partners. more »

LSE Price
149p
Change
-0.7%
Mkt Cap (£m)
185.1
P/E (fwd)
19.8
Yield (fwd)
1.2

Superdry PLC, formerly SuperGroup PLC, designs, produces and sells clothing and accessories under the Superdry brand in approximately 670 points of sale across the world, as well as online. The Company offers a range of products for men and women. The Company operates through three segments: Retail, Wholesale and Central costs. The Retail segment's principal activities consist of the operation of the United Kingdom, Republic of Ireland, European and the United States stores, concessions and all Internet sites. The Retail segment is involved in the sale to individual consumers of its brand and third party clothing, footwear and accessories. The Wholesale segment's principal activities consist of the ownership of brands, wholesale distribution of its brand products (clothing, footwear and accessories) across the world and trade sales. It offers a range of products, including t-shirts, polo shirts, hoods and sweats, joggers, tops, dresses, jackets, shirts, footwear, bags and accessories. more »

LSE Price
1822p
Change
0.1%
Mkt Cap (£m)
1,487
P/E (fwd)
16.9
Yield (fwd)
2.0

Moss Bros Group PLC is engaged in retailing and hiring formal wear for men. The Company operates through Moss Bros branded mainstream stores. The Company's segments include Retail and Hire. The Company offers various types of suits, skirts, jackets, trousers, coats, casualwear, ties, shoes and accessories. The Company offers clothing and accessories for various occasions, including weddings, prom, race day suit, tuxedo and black tie, interview attire and graduation. The Company also trades through Savoy Taylors Guild fascia. It has approximately 100 Moss Bros and Savoy Taylors Guild branded stores and over 20 Moss Bros outlet stores, which trade Moss Bros own brands and selected third-party brands, including Hugo Boss, Canali, Ted Baker, DKNY and French Connection. The Company has approximately 120 Moss Bros Hire outlets, which are contained within Moss Bros Retail and Savoy Taylors Guild Stores. The Company's sub brands consist of Moss London, Moss 1851 and Moss Esq. more »

LSE Price
67.5p
Change
1.5%
Mkt Cap (£m)
68.0
P/E (fwd)
12.8
Yield (fwd)
9.6



  Is QUIZ fundamentally strong or weak? Find out More »


59 Comments on this Article show/hide all

johnbush 10th Jan 40 of 59
1

Interesting article on Superdry, but have you looked at the PER on its Stock Report today?
John

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jsatchwill1 10th Jan 41 of 59
1

Regarding  Superdry (LON:SDRY) are the value metrics on the stockopedia page correct?

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ted1809 10th Jan 42 of 59
1

In reply to jsatchwill1, post #41

Superdry (LON:SDRY) Market Cap is reporting £166.50bn on the Stock Report, decimal point in the wrong place I believe.

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mercury61 10th Jan 43 of 59
1

stocko has Superdry (LON:SDRY) at zero value!? PER 1899

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actsofvolition 10th Jan 44 of 59
1

In reply to James RH, post #19

I too looked at Moss Bros. (LON:MOSB) and historically the figures look good, but having been to rivals like TM Lewin on the occasions I've needed a suit or trousers, I cant say there is much comparison ; the quality and experience at the latter is better, at similar price points.

I believe a previous trading update mentioned that they were suffering on the rental/hire side, which makes sense as you can now get a reasonably well fitting, half decent suit for around the 150-250 quid mark in the sales, so I cant see how hiring a tux is justified if you intend to wear it more than 1 or 2 in its lifetime?

Just better, more appealing alternatives in this area of the market IMHO.

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FREng 10th Jan 45 of 59
10

In reply to Trident, post #28

I gave a public lecture on bitcoin and blockchain in London last evening. he video is here: https://www.gresham.ac.uk/lectures-and-events/will-bitcoin-and-the-block-chain-change-the-way-we-live-and-work - or it will be soon. The written transcript (with all the references) and the slides are already on that page under "additional lecture materials".

Disclosure: I do not own any cryptocurrencies and I have never traded derivatives in them.

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Graham N 10th Jan 46 of 59

In reply to mikemorris, post #37

Cheers Mike!

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JohnEustace 10th Jan 47 of 59

In reply to mercury61, post #43

Superdry (LON:SDRY) just changed name, today I think, from £SGRP Supergroup and some data sources seem not to have caught up.

I wonder if that is responsible for the sell off as opposed to the trading update? If so it could be a buying opportunity.

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andrea34l 10th Jan 48 of 59

In reply to matylda, post #7

Re. Frontier Developments (LON:FDEV), agree, it's a bit of an omission to not mention the trading update in the RNS heading.

I have dumped my small holding, although there could in principle be much promise, I consider the revenue update disappointing with sales actually down on the previous half and up only 6.6% compared to the same period last year; I don't see how this justifies the rating; I also can't figure whether profits will be similarly moderate.

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daveinthelakes 10th Jan 49 of 59
1

In reply to FREng, post #45

Hi FREng,

The lecture does not appear to be there at present. I suggest you post again on tomorrow's SCVR assuming it is in place by then.

Thanks, Dave

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daveinthelakes 10th Jan 50 of 59
1

Plus500 (LON:PLUS) have issued a response to the FCA review of CFD's

Plus500 Ltd - Response to FCA's Dear CEO letter

It includes this extract-

The announcement highlights the FCA's concerns regarding firms who offer and distribute CFDs to retail customers on either an advisory or discretionary portfolio management basis.

Whilst the FCA issued this "Dear CEO letter" to all CFD providers, Plus500 did not receive any individual communication on the review findings as it does not and has never offered its products via these routes.


I hold Plus500 (LON:PLUS)

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Funderstruck 10th Jan 51 of 59

In reply to FREng, post #45

Thank you FREng for that concise description & the attached material; much appreciated.

Please add new information /explanations as new developments and adoptions become available.

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Trigger14 10th Jan 52 of 59

In reply to markfletcher, post #35

Thanks Mark I agree that the points you raised are possible explanations. Looking deeper into Superdry (LON:SDRY) results I think it could be all sorts of things - retail investments not yielding much in store growth, FX hedging leading to the headline fall in profit, lower margins in the retail division, concerns that the growth strategy isn’t focused enough, slowing growth not meeting over optimistic expectations, profit taking from investors that have enjoyed the recent rise... I guess probably the biggest concern would be that it is overexpanding retail space and this is not yet proving very profitable so could be quite risky. Ted Baker (LON:TED) investors are presumably just very happy at hearing growth is on track without having to worry about all the detail.

Blog: Quality Share Surfer
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Carey Blunt 10th Jan 53 of 59

In reply to JohnEustace, post #32

Your imagination is running away with you. I think maybe you aren’t understanding blockchains or crypto currencies or their exchanges.

A good place to start are the hash power documentary podcasts in the invest like the best series. You should be able to find them With any podcast software.

Cheers

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FREng 11th Jan 54 of 59
3

In reply to daveinthelakes, post #49

Dave

Apologies that the Bitcoin lecture video is not on the Gresham site yet. The slides and transcript are there (and the video will be soon) - until then the video can be found here: https://www.youtube.com/watch?v=_qkiojCfSvE&feature=youtu.be

Martyn

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matylda 11th Jan 55 of 59
1

In reply to FREng, post #54

Respect Martyn and thanks a lot, most useful and much appreciated.

You should consider emailing it to Clem Chambers :)

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ridavies 11th Jan 56 of 59

In reply to andrea34l, post #48

Frontier Smart Technologies (LON:FST) one of Small Company Sharewatch NAPs for 2018, published last Saturday.

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smatthews1 11th Jan 57 of 59
1

I saw this come up on Bloomberg the other day..."get set for petro, Venezuela's crypto answer to bitcoin, in a new twist to the crypto currency craze, Venezuela the south American oil giant in default on some of its dollar bonds, plans to issue it's own digital unit, named petro"

This should be be worded...an answer to their debt rather than bitcoin. I'm no expert on Venezuela, but I am aware it's very corrupt, massively in debt, and the US has stopped it's own citizens from buying their bonds. So creating their own digital currency is another huge red flag that unsuspecting victims will be buying up. Another one that will definitely end in disaster.

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ratioinvestor 11th Jan 58 of 59
2

Chambers comes across as sort of East End hustler: "We realized we was getting to the stage" . Know what I mean..... "absolutely, totally".... shakes head "can't imagine anybody thinks its a bad idea"......"the reaction in the market was amazing"... the interview starts smiling and almost laughing at the absurdity of it all.  "what we were doing was correct thing to do"

In an interview people should try and talk in reasonable English.  They have the opportunity to practice it and get feedback.  If someone can't even practice their message for an interview what hope do they have running a company.  Getting an interview right isn't rocket science.

The body language of Clem is also slightly odd.  It gives the impression that he doesn't believe what he is saying himself.  He seems to be amused with what he is saying and the absurdity of it.  Clem also blinks like crazy.

It reminds me of the interview that were held with Jeffery Skilling of Enron.  Someone would question Skilling about a bonkers announcement and he would start smiling and almost laughing.  As if to say you didn't take what I said before seriously did you.

This guy is literally bonkers.  I have often wondered why ADVFN is so bad.  The reason is pretty clear now.  To bad this Online Blockchain company is too small to short.

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hayashi22 Mon 2:03pm 59 of 59
1

Ceo's are often borderline nutjobs.I have observed many at close quarters -most have some serious deficiencies in the human development sphere. A common one is lack of empathy -this is almost a defining trait. Another one is control mania. There again similar characteristics are common in politicians though such is the level of public scrutiny very few people of high ability go into politics anymore. Both of these cohorts find it relatively easy to lie so that is a third trait.

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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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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