Small Cap Value Report (Wed 13 Feb 2019) - SOS, CWD, MLVN, SDI, OPTI, CER | Paul Scott

13th Feb '19 by Paul Scott

50 comments 18906 reads

Good evening/afternoon, and indeed morning, it's Paul here! (that sounds like a 1970s TV programme introduction, I like it, let's use that again!)

Tuesday was busy, as I had to interview management of Sosandar (LON:SOS) (which is my largest personal shareholding). As usual, questions were crowd-sourced from readers here - many thanks for lots of interesting questions, and sorry we didn't manage to cover all of them.

Here is the finished article;

Link to Sosandar audio interview

ZANE

I'm getting ready for an important mission to do some charity work, next week.

As some of my friends here might know, I've become an increasing admirer of a tiny charity called ZANE which achieves a lot of good things, with very little money, helping people who might otherwise die, without medical help, in Zimbabwe.

Many of you already know about it, but if you don't then please do check it out.

To cut a long story short, I have been invited to join ZANE in a trip to Zimbabwe for a fortnight, from next week. The purpose is to experience first-hand what ZANE is doing on the ground, to help people there in desperate circumstances. On my return, I hope to help raise money for the people there, through ZANE.

I will be paying for my own flights, etc., and am already a monthly donor to ZANE, personally. Plus it's nice to bung the occasional £500 to them too, when something goes well on the markets.

Anyway, my feeling is that many readers are already incredibly generous with your own charity projects. So this is very far from virtue signalling. Going to Zimbabwe just seemed a once-in-a-lifetime opportunity, and hopefully when I get back, I might be able to do some good. And maybe appreciate my own, comfortable life, a bit more? (instead of complaining all the time about things that don't really matter).

Let's see how it goes. Graham will be looking after you here, and I'll chip in as I can over the next 2 or 3 weeks. Should be interesting!

Countrywide (LON:CWD)

Share price: 10.15p (up 3.7% today, at 10:34)
No. shares: 1,638m
Market cap: £166.3m

Trading statement

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Paul Scott

13th Feb '19

Hi ezlifeme;

Re. Sosandar (LON:SOS)

- Your page shows 2 out of 3 garments with sleeves!

That's right. Most of Sosandar's dresses do have sleeves, that's a key point of difference for them. So I was perplexed when a couple of readers here commented that they didn't do enough dresses with sleeves! Bizarre.

davidelliott52

Ive never been tempted in countrywide, I think even at this price the debt is too high. Im much more interested in belvoir lettings, id love to hear your thoughts on belvoir?
Also the podcast you uploaded the other day was absolutely brilliant and id love to hear more of those, very good!!! Im looking forward to listening to your interview with SOS which ill hopefully listen to this afternoon, thankyou.

rjmahan

On Optibiotix,
I agree with you that the share is well ahead of achievements.

On probiotics / prebiotics. They have made a significant difference to a digestive issue I had and there is lots of evidence they work. Anecdotally I know a number of people they helped.

A better way to play this might be via 4d Pharma. They are quite cheap and are getting papers published in Nature etc...

Neil Woodford invested - though I am not sure if that is a bull point.

Toyin

Hi Paul

Your writeup on OPTI is positively shocking! I know you like going toe to toe with TW but I suggest you look into the company a bit more next time. I may be wrong but I cant think of any other reason you would attack it like you have.

Enjoyed the SOS interview.
Thanks
Chris

Will Marsh

On Opti, very unusually for me on a stock which is, as you say very expensive I feel myself being relatively bullish. I came across this as it has been very heavily tipped and have been to see Steve O'hara speak twice now, which I have not done before. I see the lack of earnings visibility as a big problem but I do get the impression earnings growth is coming. As you say it will need a big up tick in revenue to justify the share price but worth a small punt in my opinion. (I've a modest share holding)

Martin C

Toyin, instead of having a moan why can't you simply put your side of the argument and say where/why you think Paul is wrong?!

mmc071

1. Revenues paltry £541k although revenue growth is expected in 2019
a. 2018 Revenue H1 £80k H2 £461k. So 5.8x growth in second half.

2. Paul tried the shakes and it didn't work.
a. My wife tried SOS and didn't like it. Not much of a survey!

3 He googled some of the companies, really!!!
a. Updated partner/products list including today’s deal:

Recent, current and potential future revenue streams confirmed:

- GoFigure: shakes, bars and muesli pots
- CholBiome (x3 and Daily Maintenance)
- Sacco/CSL
- HLH BioPharma Vertriebs GmbH
- Nutrilinia (LD-LDL and Slimbiome Medical)
- Pharmabiota
- Galenicum Special Ingredients
- Knighton Foods
- Cereal Ingredients Inc.
- Fine Foods & Pharmaceuticals
- Trigen Pharma
- Cambridge Commodities
- Akums Drugs and Pharma
- Seed Health
- John Morley’s
- Alfasigma
- Unnamed global corporate ($100B+ turnover) for SweetBiotix manufacturing & distribution.
- Unnamed US pharma partner (cholesterol strain)
- Bened Biomedical
- Bulgarian CholBiome distributor (Velinoff Pharma)
- CTC Group
- Formulation Creations
- US Pharma Lab Inc.
- Unnamed Greece and Cyprus CholBiome distributor
- Unnamed Greece and Cyprus SlimBiome Medical distributor
- Zeon Lifesciences
- SilvExpo - CholBiome
- Biolat - RMS CardioPro
- EIWA Trading Co. Ltd

Revenue not confirmed yet:

- Tata X 2 (Slimbiome and LPGOS)
- Mystery US Slimbiome customer
- Paradise Fruits (Slimbiome)
- Beijing Duoite Biotechnology Co., Ltd (LP-LDL distributors via CSL)

Products on the market already but not RNSed:

- MuscleForm (Aviform Ltd) - Ultra MR Ultimate Meal Replacement
- Olliscience - Ollibiotic
- Aragan - Biotic•P3
- 39ytu - Capsa Food

List by Parob (advfn)

If you google these I think you will find some not so small companies. I think that's enough to be going on with. I pay a subscription to this website and expect a level of service, hence my moan.

brballs

" I pay a subscription to this website and expect a level of service, hence my moan."

I feel you should be reminded that this SVCR is free- and damn good value for (no) money it is too!

I'm not a fan of either Sosandar nor Optibiotix, and will remain that way until higher revenues start to feed through to the bottom line.

At least Paul's arguments for and against, are original. Yours is a copy and paste job from a questionable bulletin board.

brballs

That was very good.

1. I do pay a subscription for this site. So if I want a moan I will.
2. What does it matter that it's cut and paste, all the deals are factual and have had RNS's.

Paul's arguments are not original they are factually incorrect! That is my point!

LeoInvestorUK

WYG (LON:WYG) 2:30pm profits warning (the 4th one?):

we will not meet either of the net debt to EBITDA or interest cover covenants within our facility agreements for 31 March 2019 and we have opened discussions with our lending bank with a view to securing a deferral or waiver of the relevant covenant tests

I also note regarding International Development:

we continue to incur high bidding costs

Sounds like a dirty business.

I bought after the 3rd profits warning (on the basis there would be no more), but after reviewing the investment later I sold out, purely by chance for a small profit. My notes at the time say "Debt ridden people business. Forward PE of 11.x is just too high.".

Edit: This is another example of where the market was quite slow to react and an agile holder could have got out at 20p nearly a quarter of an hour after the announcement, whereas a larger or slower investor is now looking at a 10p bid (vs 38.5p yesterday).

iainc

You say that "Paul's arguments are not original they are factually incorrect!"

yet your two examples of Paul's column (shown below) do not appear to be factually incorrect - revenue was £541k and I doubt he's lying about the shake not working for him

"
1. Revenues paltry £541k although revenue growth is expected in 2019
a. 2018 Revenue H1 £80k H2 £461k. So 5.8x growth in second half.

2. Paul tried the shakes and it didn't work.
a. My wife tried SOS and didn't like it. Not much of a survey!
"

davidjhill

OptiBiotix Health (LON:OPTI)

It takes multiple opinions to have a market :) Nothing wrong with that.

I am mildly intrigued by OptiBiotix Health (LON:OPTI) and I equally get why others don't like it on valuation grounds.

I think any personal experience is valid, good or bad, and inevitably it will influence a persons leaning towards a stock. I remember liking Apple products when the stock was $60 and realising my whole family was Apple connected (iPhones/ipads/imacs). It struck me that if I was that way inclined the probability of many more families being equally minded was high and thus the whole Apple ecosystem had legs!
My experience doesn't make a survey, that is true, but it does serve as useful personal experience I can factor in to my stock picking decisions since I can't/shouldn't buy every good idea!

I'm not sure Paul is right on OptiBiotix Health (LON:OPTI) though, or perhaps being overly harsh.
1) Revenues on these product licenses have only just kicked in. H2 was close to 500k so we are just seeing the acid test of the deals. Up until now it was pre-revenue, so this is actually big news. Key to watch though now is the growth over next 12 months.
2) There are some small licenses, that is true, but also some very big ones with potentially game changing revenue potential
3) The market for cholesterol and blood pressure reducing products, especially those that are free from side effects/drugs is enormous worldwide and growing with ageing populations/western diets. £95m market cap for OptiBiotix Health (LON:OPTI) could be a bargain assuming a chunk of these bigger licenses generate revenues.

But.....it is still in its infancy and not without risk. Patent protection is key and revenue ramp up speed important. For those reasons alone many will not touch, which is also fair enough.

I have a smidgeon. Enough to keep me interested but not enough to hurt.

gus 1065

At risk of a severe “red thumbing”, I tried the OptiBiotix Health (LON:OPTI) shakes after a back op put me in limbo for a few months and piled on a load of weight. I found them surprisingly palatable and substituted one single shake pepped up with some fruit and nuts in a smoothie for breakfast and lunch combined without feeling the hunger burn of other fad diets. I was also on a reasonably active exercise program (cycling c. 150-200 miles a week) and didn’t have any problems with “bonk” i.e. running out of gas in the latter stages of the rides. Over a month I lost just over 14lbs and have continued using the shakes daily (I’m probably a fair chunk of their increased 2018 turnover LOL) albeit with a less restrictive diet for the past 6 months and cumulative total weight loss is now over 2 1/2 stone. By no means scientific, but another data point.

I think it’s a mistake to see this leg of the OptiBiotix Health (LON:OPTI) story as being a quasi-Pharma stock requiring loads of labs and medical accreditations. The company has specifically avoided going down this route and is able to sell their stuff on the basis it does no harm rather than its proven to be doing good - a much quicker and less expensive way of getting to market. To my mind they’re in the lifestyle/ingredients business where success will be more about word of mouth recommendation and media/celeb coverage and endorsement. Still a story stock but happy to hold a few shares in the “mad money” section of the portfolio.

Gus.

JohnEustace

I agree on OptiBiotix Health (LON:OPTI). It seems odd timing to do a hatchet job on them when the jam has actually started arriving and income is ramping up. As far as I can see they are executing exactly as Stephen O’Hara has planned and communicated.
I’ve been a patient and interested holder of a few shares for a few years and see no reason to sell them now.

Jetman100

Re OPTI

I used the shakes two summers ago for 3 months to replace my usual bkfst of scrambled egg & 2 bits of toast. I lost 10kg and found them very palatable & appetite suppressing. My weight has since slowly increased again & I started replacing my bkfst again, this time with their Muesli & a shake. After six weeks, I am down 2kgs. I confess to being an insignificant shareholder having made my purchase in the teens (from my fallible memory). I've sold & bought along the way & today bought again on the drop.

iainc

Paul said

1. "revenue growth is expected in 2019." That statement is factually incorrect. The revenue growth is here now, fact! H1 £80k H2 £461k
2. The shake didn't work for him, he says "So any weight loss from using this product comes entirely from a shake having fewer calories than a regular meal." Again factually incorrect.

Now I can straight bat this all day, but I believe Paul has got into OPTI because of TW. That by the way is my opinion and not a fact, see the difference.

red thumb away

Santawani

Hi Paul
Thank you for bringing Zane to our attention. Zimbabwe has so much, but the people have had such a rotten deal over the last 15 + years (I'm not meaning to sound political).
I hope you have a fascinating trip and feel inspired by all the work Zane does and enjoy meeting the people and seeing the country.
Really worthwhile
Santa

tony akram

"I believe Paul has got into OPTI because of TW. That by the way is my opinion and not a fact, see the difference"

Not sure why Paul would , I am sure he has better things to with his time like produce his excellent reports !!

Tony

Tony, the OPTI report was anything but excellent, it was lazy. See my point?

rmillaree

Toyin
OptiBiotix Health (LON:OPTI)

1. "revenue growth is expected in 2019." That statement is factually incorrect. The revenue growth is here now, fact! H1 £80k H2 £461k

i am not sure if english is not your first language but your statement that Paul's statement is factually incorrect is in fact factually incorrect from my reading of the situation - Paul's statement is factually correct as far as i can see.

when one says "revenue growth is expected in 2019" all one is saying is exactly that - that 2019 sales will be higher than 2018 and nothing else.

You seem to think Paul said there was no growth in 2018 when he did not say that anywhere - all he correctly highlighted was the low level of sales for the size of the company for 2018.

So perhaps a retraction is in order - all IMHO

You also seem to be Criticising Paul for the lack of thoroughness in the posting with regard to opti - virtually everyone else here seems to understand what the daily reports are - a free quick comment on companies that have released information today, to go into the full chapter and verse of a companies prospects would take far more time. Simply flagging up some comments and the triggering the useful replies such as yours enlightening us like the Ori is surely what its all about and thats all good.

Hey ho back under the duvet for me :) and keep up the good work Paul and Graham.

Small Cap Value Report (Wed 13 Feb 2019) - SOS, CWD, MLVN, SDI, OPTI, CER

ZANE

Countrywide (LON:CWD)

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Paul Scott

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