Small Cap Value Report (Wed 15 Nov 2017) - ABDP, GMD, WEY, WGB

Tuesday, Nov 14 2017 by

Hi, here's the usual placeholder article for use in the morning.

Just a quick reminder - I'm only really interested in commenting on small caps which have issued trading updates or results statements on the day.  Regards, Paul.

Good morning! Thank you for the reader comments today, requesting me to look at particular companies. Thank you also for mainly keeping them on topic - i.e. small caps, which have issued trading updates or results statements. I don't comment on day-to-day share price movements, just to be clear, only on significant announcements.

Ab Dynamics (LON:ABDP)

Share price: 732p (down 4.0% today)
No. shares: 19.2m
Market cap: £140.5m

Final results - for year ended 31 Aug 2017.

The company is;

... a designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry

There's a very good recent video here, of ABDP management presenting at a ShareSoc growth company seminar, which is well worth watching.

As you can see from the Stockopedia graphs below, there's been a good progression in sales & profits. However, the PER has become very warm now - see the 4th graph below - the PER has inflated considerably. A lofty PER may not be sustainable, and very much requires continued out-performance. This looks a small company for £140m market cap. So I'm approaching today's results with an initial view that this share might possibly be too expensive after big rises? It's almost 5-bagged since Jan 2015.


My fears are already receding, as the highlights section below shows strong growth;


Outlook comments - light on specifics, but the order book & visibility comments are reassuring;

Since its formation in 1982, Anthony Best Dynamics has gone through many changes to establish itself as a market leader in its targeted segments within the automotive R&D market. Our customers remain very active in introducing Advanced Driver Assistance Systems and in the development of semi and fully autonomous vehicles.
Our order book is at a record level and we have visibility into the third quarter of our new financial year. Alongside our enhanced facilities and the potential of our new product pipeline, the Board remains confident…

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AB Dynamics plc is a holding company, which is engaged in the provision of testing systems to the global motor industry. The Company is a designer, manufacturer and provider of testing and measurement products for vehicle suspension, brakes and steering to the global automotive research and development sector. Its geographical segments include the United Kingdom, Rest of the European Union, North America and Rest of the World. It designs and manufactures specialized testing systems to produce equipment for its customers to develop suspension, brake, chassis and steering systems; evaluate vehicle dynamics and safety systems on the track; employ driver in loop simulation for prototyping; develop and evaluate the next generation of safety systems in vehicles; test and evaluate the technology for use in future driverless cars/autonomous vehicles, and carry out end-of-line noise/vibration (NVH) testing of power train assemblies. more »

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GAME Digital plc is a retailer of video games. The Company operates approximately 580 stores across the United Kingdom and Spain. The Company's segments include UK, Spain, and Events, Esports & Digital. Its UK and Spain segments are engaged in the sale of hardware, software, accessories and digital. Its Events, Esports & Digital businesses include SocialNAT and Ads Reality Limited (Ads Reality). The Company's activities include multichannel retailing and merchandising; supply chain management and distribution; software and technology development; marketing and customer relationship management (CRM); sourcing and procurement from suppliers, as well as range of individual customers; event management and production, and training, development and employee engagement. The Company's subsidiary undertakings include Game Retail Limited, Game Stores Iberia SLU, Multiplay (UK) Limited, Game Esports and Events Limited, and Game Digital Solutions Limited. more »

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Wey Education plc is a holding company. The Company, through InterHigh Education Limited (InterHigh), operates online independent secondary school in the United Kingdom, offering The International General Certificate of Secondary Education (IGCSE), AS Levels and A Levels. The Company's subsidiaries include Wey ecademy Limited, Wey (Newco 1) Limited, Wey (Newco 2) Limited, Wey (Newco 3) Limited and Wey (Newco 4) Limited. more »

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  Is LON:ABDP fundamentally strong or weak? Find out More »

75 Comments on this Article show/hide all

rhomboid1 14th Nov '17 1 of 75

Evening/Morning Paul
Can I put in a request for Avon Rubber (LON:AVON) which I hold, and Ab Dynamics (LON:ABDP) which I used to hold both reporting results ..thx

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pck76 15th Nov '17 2 of 75

Hi Paul, 

Can you give us your opinion on £IDOX? They issued a Trading Update yesterday (during market hours, rubbish)

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Henry Walpole 15th Nov '17 3 of 75

Hi Paul,
Please could you cover Final results from GAME Digital (LON:GMD). Thanks.

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Carcosa 15th Nov '17 4 of 75


£WEY Wey Education Proposed placing to raise up to approximately £5 million at 22 pence per Placing Share. Yesterday's COB price was 33p giving a mkt cap of 34.3m. 

Since you have this in your BMUS portfolio, any comment especially as there has been a significant price rise recently on the back of a 'maiden profit' announcement (with 'massaged' numbers)

Carcosa (no position)

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fwyburd 15th Nov '17 5 of 75

GAME Digital (LON:GMD) and Wey Education (LON:WEY) please

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runthejoules 15th Nov '17 6 of 75

Your thoughts on the general market would be appreciated. I have hit a few stops recently... thinking of shorting FTSE but of course Brexit trauma could weaken the £ further. Wey Education (LON:WEY) & GAME Digital (LON:GMD) seconded, Blue Prism (LON:PRSM) requested if £837.8m is within boundaries. I'm wondering if they're heading for a placing as well.

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FoolishBen 15th Nov '17 7 of 75

In reply to post #240883

Hi Paul

I would also appreciate your views on Wey Education (LON:WEY)

I was a little horrified this morning when I noticed the intended placing at over a 30% discount to yesterday's closing price. The dilution to current shareholders is quite significant.



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lemonjar 15th Nov '17 8 of 75

+1 for GAME Digital (LON:GMD) , thanks! :)

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MrContrarian 15th Nov '17 9 of 75

My morning smallcap tweet:

Motif Bio (LON:MTFB), Koovs (LON:KOOV), GAME Digital (LON:GMD), Blue Prism (LON:PRSM), Walker Greenbank (LON:WGB)

Motif Bio (MTFB) gets $20m secured debt at 10% PA, with warrants. Plans to submit iclaprim (for the treatment of acute bacterial skin and skin structure infections) to the US FDA by and Q1 2018.
Koovs (KOOV) will be seeking a renewal of permission for the issue of up to £18.9m of convertibles. In addition to the £8.9m which has previously been received, the Company remains in advanced negotiations to secure a term sheet from an investor committing to invest. Super bargepole.
Game Digital (GMD) FY rev down 4% (on 52w basis). EPS -7.1p (+1.5p). Trading for the first 15 weeks of the year has been ahead of Group plans.
Blue Prism Group (PRSM) FY trading: rev comfortably ahead of current consensus expectations of £21.8m and an adjusted EBITDA loss broadly in line with a f/c of £7.3m. Expects revenue for the current financial year to be above the upper end of the current analyst range. CFO leaves in Jan.
Walker Greenbank (WGB) warns FY profit likely to be ~10% lower than its expectations. Brand sales in the UK, excluding Clarke & Clarke, have weakened significantly against management's expectations.

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mammyoko 15th Nov '17 10 of 75

Avon Rubber's results are ahead of expectations with comfort for the future DoD contract replacement. This looks like a good long term hold and I would appreciate your thoughts

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JASPERTHEDOG 15th Nov '17 11 of 75

Good Morning.
I have been watching my little position in STM shrink away. The stream of RNS seems to indicate the company has annoyed the powers that be in Gibraltar. Does anyone know what's going on ?

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Carcosa 15th Nov '17 12 of 75

In reply to post #240958

JasperTheDog, A useful summary can be found here. Personally this is one of the most   disliked companies I know because, being a long term expat, I am very familiar with their primary customer and their scam activities around the world. 

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ACounsell 15th Nov '17 13 of 75

Comment on Ab Dynamics (LON:ABDP) results would be welcome particularly on impact of share based payments and at more macro level likely benefit from moves toward autonomous driving cars.

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mieowmarcus 15th Nov '17 14 of 75

Morning Paul,
Could you please cover GAME Digital (LON:GMD) . Many thanks

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tic_tac_toe 15th Nov '17 15 of 75

Paul, would you have a look at Falanx Falanx (LON:FLX) , a cyber defence and intelligence service provider. £11.2m MCAP, today releases interims, 'on track to deliver against markets expectations of achieving profitability in the year'. Group sales up 18%, cyber division up 40%, this division used to make £0.9m so now on track for £1m+

Has been buying a few smaller complimentary co's Cloudified and AuditSec. Incoming legislation around GDPR should drive more requirement for its in house cyber services for "the forseeable future"

In the 6 mths to Sept 30 it capitalised £225,286 as development costs, an increase on prior year, but it is a software company so this seems legitimate and proportionate.


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 Are LON:ABDP's fundamentals sound as an investment? Find out More »

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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