Small Cap Value Report (Wed 16 May 2018) - SOS, BOTB, LOOP, MOSB, CRST

Tuesday, May 15 2018 by

Good morning, it's Paul here.

To get you started today, I added some more sections to Tuesday's report in the evening - the full report is here. It covers updates from: Cenkos, Sprue Aegis, Gear4Music, Zytronic, Patisserie Valerie, Accrol, and Lookers.

Timing of these reports

I'd like to respond to a critical reader comment yesterday, which I think was a bit of a misunderstanding.

So this is just to clarify, re timing of these reports. We asked readers a while back whether they wanted a report out every day at a certain time (e.g. 1pm), or whether they were happy for me & Graham to take our time, and go into more detail. Much to my surprise, the reaction from readers was overwhelmingly that you are happy with us taking our time, and that people would rather see more detail & thought going into the articles, than us rushing to meet a deadline. So that's what we do.

People also need to bear in mind that (by far) my main living is from my own investment portfolio - capital gains, and dividends. So to a certain extent, these reports are a sideline, or a by-product of what I spend most of my time doing - researching individual companies, reading broker notes, etc.

There's a lot of background reading, fact checking & thought that goes into each report, each day. That takes time, and sometimes after a very intense 6 hours work from 7am, I'm mentally drained by lunchtime. So I tend to down tools, and have a long lunch, then resume working later in the afternoon, and often going right through into the evening. I finished yesterday's report after 10pm, for example.

As a reader pointed out in yesterday's comments, these reports are free to everyone, and are not part of the Stockopedia subscription. Therefore, whatever arrangements that Stockopedia & I have re remuneration, are nobody else's business really.

Sosandar (LON:SOS)

Share price: 16.5p (up 7.5% today, at 08:35)
No. shares: 106.8m
Market cap: £17.6m

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

Trading update

Sosandar is an online women's fashion brand - targeted at the under-served 35-55 year old demographic, who still want fashionable clothing. It's an early stage (hence loss-making)  company, having only started…

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Sosandar PLC, formerly Orogen PLC, is a United Kingdom-based company that operates an online women’s wear platform. The Company’s clothing categories include dresses, jackets and coats, knitwear, shirts and blouses, tops, skirts, trousers, jeans, leggings, footwear, leather and suede, occasion wear, work wear, autumn trends, velvet and holiday shop. Its footwear products include Pewter Metallic Chelsea Boot, Red Leather Ankle Boot, Velvet Cylinder Heel Ankle Boot, Black Leather Stud Detail Ankle Boot, Black Suede Closed Toe Mule, Grey Velvet Court Shoe With Jeweled Brooch, Black Suede And Pewter Metallic Court Shoe, Black Leather Front Zip Ankle Boot, Leopard Print Leather Chelsea Boot, Steel Blue Leather Snake Print Ankle Boot And Black Suede Knee Boot. It also offers latest edit of day-to-night dresses, on-trend separates, luxe leather and outfit-topping shoes through its platform. more »

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Best of the Best Plc runs car competitions. The Company displays luxury cars as competition prizes in rented retail space within airport terminals, at shopping centers and online. The Company is engaged in selling tickets to passing airport passengers, as well as from online customers through its Website. The Company operates from approximately eight United Kingdom and over two international airport sites, as well as approximately from three shopping centers. The Company operates from various airport sites located at Gatwick North, Gatwick South, Birmingham, Manchester Terminal 1, Edinburgh, Dublin's Terminal 2 and Westfield shopping center located in London's Shepherds Bush. The Company's Indian franchise trades under the BOTB brand from Hyderabad airport. The Company carries out its principal operations in the United Kingdom. The Company's subsidiary is Best of the Best ApS. more »

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LoopUp Group plc, formerly LoopUp Group Limited, is a software-as-a-service provider of remote meetings. The Company's product, LoopUp, is designed to eliminate frustrations associated with conference calls and deliver a remote meeting experience for mainstream business users. For hosts, the LoopUp meeting includes ability to create a meeting invite directly from Microsoft Outlook in over two clicks; a call start alert to their desktop and mobile/tablet devices as soon as their first invited guest joins the meeting; ability to identify who has the distracting background noise and mute their line, and ability to allow other guests to share their screen at the host's discretion. For guests, the LoopUp meeting includes clicking-to-join the meeting from a link in the invite, entering their name and phone number and LoopUp calls out to them. LoopUp plans include outlook integration, and one-click screen-sharing. Its data centers are located in London, Chicago, Hong Kong and Sydney. more »

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

76 Comments on this Article show/hide all

JonBirdy 16th May 37 of 76

Hey Paul

D’you have a photo of you in your dress?!

Couldn’t result asking ;)


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TMFMayn 16th May 38 of 76

In reply to post #364469

"The main message from management is that they're just getting on with running the business & trying to make a success of it. Then positive things should flow from that, in due course, if they're successful."

The topic of liquidity was raised during Paul's interview with BOTB here from January 2016:

The same answer was given. 

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Lgarvey 16th May 39 of 76

Hi Paul.

Just wanted to say I am one of the people who look forward to reading yours and Graham's reports what ever time they come out. I think most of us realise how much effort and most importantly time these really take.
How you manage to fit it all in I will never know.
Anyway thanks again, and If I ever meet you I think I owe you both a pint for some real good reccomendations


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iain1234 16th May 40 of 76

Great write ups Paul, many thanks – always look forward to reading these reports.

I think Paul is correct in his initial view of Sosander being very high risk. Being male, I’m not their demographic but neither I nor my wife(51) have ever heard of them despite their near 2 year birthday and ‘successful’ marketing campaigns. Part of the problem is with their easily forgettable brand as they sound more like an energy/finance company than a Next competitor (they’d be better off with just their ticker ‘SOS’ as a brand!). It just doesn’t have the memorable appeal of White stuff or Jigsaw and without the High street history, it’s going to be a tough fight to win over the customers that originally shopped there or still do....

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Piledriver42 16th May 41 of 76

In reply to post #364283

JD Sports dropped on news that Odey Asset Management has declared an 8.2% stake in Finish Line, prompting fears that it's trying to block JD's proposed acquisition of the US sportswear company.

From leadersoffice on the advfn JD thread.

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JASPERTHEDOG 16th May 42 of 76

Paul and Graham,
Just to add my voice, again, to the chorus of those wanting Quality over speed. I thoroughly appreciate the hard work that goes into these reports and prefer you to consider your opinions with care. Speed is not the game for most of the commentators and, therefore, readers, on this site, there are other routes to gain those sorts of reaction. The thoughtful comments column provided here is proof of the investment prudence that the majority of your faithful readers want.

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MarkOR 16th May 43 of 76


I tried to replicate your research taking heed of DYOR. The only way I can make the revenue numbers work is if Sosandar's reported Order Value (£94.19) includes VAT and is before returns.

For the FY, when you take out VAT, and include the returns (44.8% in FY17), net revenue per order is £42 and GP at 49% £21 (and that's before counting the cost of having to fund a return on half the orders). Still much better than Boohoo (GP per order of £14) but quite a way below "£50".

I wonder whether customers in this age range order two sizes and then return the one that doesn't fit. Boohoo's customers behave differently (17% returns rate). Perhaps the younger demographic can stomach squeezing into something a bit too small. In my experience, middle age spread is a little less forgiving!

I only wish they had included marketing cost per order because the re-ordering rates look great! But that's a side show for now. What really matters is how much it costs to get new customers to look through their shop window in the first place. On this their CYQ1 rates of ordering to visitors at 2.63% are decent and improving but still not, for my money, drop-dead gorgeous.

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andrea34l 16th May 44 of 76

In reply to post #364519

Just saw that now on Hargreaves Lansdown midday roundup.... but thanks for replying :-)

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Scuddy69 16th May 45 of 76

In reply to post #364484

Be sure to post a picture when it arrives and you try it on Paul!

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doublelutz 16th May 46 of 76

Sosander - not edgy enough for my wife (although she is 69 next month she goes for really way out gear) but says they remind her of and L K Bennett. She doesn't buy from them either but she says that Sosander is way cheaper and perhaps for similar stuff. So that must be one thing in their favour. With regard to returns my wife lives on the internet with clothes arriving every day of which more than half are returned. I don't think internet shopping is very environmentally friendly with vans going up and down the country taking clothes backwards and forwards but that's the way it is. She says that a lot of women of all ages looking for something cheap go to Zara.

Moss Bros - have bought a few things off them myself and they seem good quality and very efficient in returning your money (John Lewis are very slow in making refunds) but as Paul says they have the possibly expensive shops holding them back. I am very happy to use them for online shopping so they may have a future if they can develop this area. My son says he knows young people who buy from Moss Bros. I hope they can survive.

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Zipmanpeter 16th May 47 of 76

In reply to post #364529

Re Sosandar (LON:SOS) ....(edit) You are right in that I took the total order order value inc VAT and pre-returns. Forgetting to remove VAT was a mistake so thanks ! But seeing the order value as relatively high for a fashion site I still think is fair and reflects relatively high priced items.

Over time, the company can work on reducing the returns figure and I think it will fall a bit naturally as the customer base includes more regular, repeat customers who understand the house style. Re fashion and fit, I think given BooHoo's pricing points and strategy of selling to what was on the red carpet the night before, a lot of BOO consumers will simply throwaway vs return as return is too much hassle. At $15.dress I might squeeze and accept, at $70 not so much!

Marketing cost transparency would help tell us at what it is costing to achieve the growth but cost/order will change significantly as they scale up and get efficiencies. More important might be absolute spend so we can see how much of loss is due to marketing vs other costs like staffing.

But I agree that on (even more back-of -the envelope calculations I am afraid to share !) re-order rates for a start up look good and this is what makes me optimistic.

Repeat buyers at high prices = good business (somehow)

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Splode 16th May 48 of 76

It seems pretty clear today, as it was last time that timing of the SCVRs was discussed at length, that Paul and Graham should fit in the Reports around their other work.

I wonder whether people who want the Reports published early may be using them as advice on how to react to news rather than to consider another (highly respected) point of view - and Paul, Graham and especially Ed are very keen to avoid that because the site is not regulated. That is why they keep stressing DYOR. 

What ever you Report writers do, don’t burn out!

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Paul Scott 16th May 49 of 76

In reply to post #364509

Hi Lloyd,

Thanks for your kind message, however I must correct one point;

Anyway thanks again, and If I ever meet you I think I owe you both a pint for some real good reccomendations

We never, ever recommend shares! We just give our personal opinions on the day's small cap results & trading updates. Sometimes we're right, sometimes wrong. But it's designed to stimulate discussion & for readers to do their own research.

The whole ethos of Stockopedia is all about helping to empower investors with a suite of tools, and some pithy opinions, and then it's over to the individual investor to research, and take their own decisions.

I don't want the hassle or responsibility of telling people what shares to buy or sell, that's why we never do so. I think the way some magazines & tipsters give buy or sell recommendations is totally irresponsible.

Just wanted to clarify this, I'm not having a go at you!!  :-)

Best wishes, Paul.

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Andrew L 16th May 50 of 76

To be fair to that bloke from yesterday (John) he may not have known the situation. He my have come on as a new subscriber and saw these SCVR advertised along with Stockopedia (it is in the advertising brochures). I may not have know that the SCVR is actually free to access. I didn't know this myself until recently and was surprised.

So in his shoes if you had joined and seen this SCVR report and assumed it was part of what you were paying for (it isn't as it is free).  Stockopedia don't really advertise that SCVR report is free as far as I can tell so it is an easy mistake to make.  If I had picked up some marketing material and it had a subscription service and something the company did I would assume the service was part of the subscription and not free.  Then he probably thought the idea is for SCVR to be out early on (it isn't).

It is easy when things are written down to interpret them too harshly. John may have been making what to his mind was a reasonable point.

Hope I don't end up with 77 thumbs down!!!! SCVR is very good and I very much like Paul and Graham's insights. It isn't really overly relevant what time they appear. The key is that we have proper investors writing them and not journalists. I am sure Stockopedia could hire a University student to write them but it wouldn't be the same.

My two cents worth. Good to keep this a positive place!!! Like Mello and not like the UK Investor Show.  I know one website that does employ uni students to just write 500 words on the big news stories.  I would personally never go to that website.

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bongo 16th May 51 of 76

Just to add to the appreciation for the reporting and that these are well worth the wait...

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Lgarvey 16th May 52 of 76

In reply to post #364569

No problem. My sentiment was correct. my words slightly wrong :-)

Your research allows me to have a good look at companies that are normally very easy to overlook. From this I can decide to buy/sell or sleep. (or even have that beer)

many thanks


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IGotPoesJacket 16th May 53 of 76

In reply to post #364319

Ok, I see my mistake now, in my excitement to address the point of there only being a limited market for Sosander I forgot that there is a BooHoo man, for which I apologise, I had no intention to mislead.
The point stands though - the market segment is not as limited as some think. Very roughly, the market for women 30-60 is 3 times the size of the market for women aged 16-24.
It is "only" > 1.5 times the size of the market for men and women in the 16-24 age group. In very loose maths 30x400K - 12M.
And those of more mature years tend to have more disposable income.

I hope that clarifies what I meant. Once again apologies for my error - I usually include a "please check my maths" disclaimer, like I did on Matylda's post this morning.

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Howard Marx 16th May 54 of 76

In reply to post #364604

No need to apologise IGotPoesJacket!

As you mention, the Sosandar (LON:SOS) target market is in some ways more attractive than that of Boohoo.Com (LON:BOO)

Targetting such a narrow age group as 16-24 means that Boohoo.Com (LON:BOO) will in theory lose 9% of their customers each year. For Sosandar (LON:SOS) the loss is a more manageable 3%

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rustle2 16th May 55 of 76

Great report today Paul. Much enjoyed reading the mix of general market and sector commentary as well as the company specifics.

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DJCP 16th May 56 of 76

Regarding timings:

There's often been criticism (Graham's bug-bear IIRC) about some RNSs being issued during trading hours. Having an SCVR early, but incomplete/erroneous would surely be as bad.

I imagine many readers do not get chance to (properly) read the SCVR until after the market has closed, so being able to DYOR in the evening/night without rushing could be advantageous. Possibly missing initial spikes (up or down), but giving more confidence with longer-term investments. I have (in the past) bought after reading an RNSs headline figures, only to wonder why the rising SP starts dropping mid-morning, then I get to the 'bad' part and realise my mistake - lesson(s) learned.

Slightly off-topic, but I believe the late Stephen Hawkins' memorial service was open to people born up to 31st Dec 2038 (i.e. Time Travellers). With this in mind, I'm sure readers would prefer it if you could write the SCVR a few days early ;^) - I look forward to reading next Monday's results analysis tomorrow ! lol

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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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