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

rhomboid1 16th May '18 1 of 76

I’m going to try something different this morning, Andrews Sykes (LON:ASY) were due to report interims last week (based on prior year's timing) by mentioning them here now I’’ll see if I can tempt them to report what I hope will be an excellent set of figures today...not sure it’ll work but I’m giving it a shot...

PS excellent report yesterday with lots to ponder about an interesting array of companies

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gus 1065 16th May '18 2 of 76

Morning Paul.

An overseas acquisition announced by cables specialist Volex (LON:VLX) this morning for €18m together with a larger £36m (roughly 50% increase in current number of shares) placement with II’s at about par price of 75p. Placement is pretty dilutive to PI’s albeit now in a larger group and the additional funds being raised hopefully strengthen what has been seen previously as a weak balance sheet.


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mercury61 16th May '18 3 of 76

A promising positive RNS from Sosandar (LON:SOS). Record revenues and growth across KPIs. Like for like sales for the 6 months ending 31
March 2018 showing a 268% increase against the prior year. Gross margin for the financial year 2018 is expected to be at 49.3% (37.8% FY2017). Demonstrating the growth in brand awareness,
Facebook and Instagram followings have increased by 181% and 888%
I hold.

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slopsjon 16th May '18 4 of 76

Paul in March

"I see that the company has also announced that it is appointing Numis alongside Panmures, as joint corporate broker. Could there be a fundraising/acquisition on the cards, I wonder? Also, I have a hunch that LoopUp itself could become an acquisition target for a larger US tech group, who knows?"

LoopUp (LON:LOOP) Proposed Acquisition of the MeetingZone Group, Placing to raise GBP50.0 million and Publication of Admission Document and Circular

The Acquisition constitutes a reverse takeover under the AIM Rules

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MrContrarian 16th May '18 5 of 76

My morning smallcap tweet: CEO name of the day: Brian Brick of Moss Bros.

Webis Holding (LON:WEB), Falanx (LON:FLX), Itaconix (LON:ITX), OptiBiotix Health (LON:OPTI), LoopUp (LON:LOOP), Volex (LON:VLX)

Webis Holdings (WEB) "welcomes Monday's landmark Supreme Court ruling which paves the way to legalizing wagering on sports in the United States, subject to individual State legislation. While the ruling will not have an immediate impact on revenue levels until individual State legislation is in place, the Board considers the announcement as a positive boost for our US operations. Draft legislation is in preparation in up to seventeen US states, most importantly including California."
Falanx Group (FLX) contract wins worth ~£0.9m since the acquisition of First Base at the end of March.
Itaconix (ITX) AkzoNobel's Chelates business intends to enter into a joint marketing effort related to Itaconix's bio-based chelates for use in the consumer and industrial detergents and cleaners markets.
Optibiotix Health (OPTI) five year agreement with Akums Drugs and Pharmaceuticals to exclusively manufacture and supply products containing OptiBiotix's cholesterol and blood pressure reducing strain LPLDL, in India.They are excited.
LoopUp Group (LOOP) placing at 400p, an 8% disc, to fund acquisition.
Volex (VLX) nil dicount placing at 75p to fund acquisition.

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JamesHolmes 16th May '18 6 of 76

In reply to post #364195

Brian Brick is clearly in the wrong industry. He should be working at Forterra (LON:FORT) !

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gus 1065 16th May '18 7 of 76

In reply to post #364195

Peter Crook, former CEO of Provident Financial (LON:PFG) would be my pick. Couldn’t make it up ....


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DJCP 16th May '18 8 of 76


Apologies for commenting on yesterdays report here, but was interested in your comment:
"In the case of Cenkos, I doubt it would de-list, because the listing serves the purpose of allowing staff to cash in their share options & sell them into a market."

Over the past weekend, I've been thinking along similar lines with regards to the Restore (LON:RST) staff SAYE share scheme recently announced.

If 1,000 employees invest £50/month (average?) assuming £5.00 per share for next 3 years, they'll build up 360,000 total shares between them all. If these are all sold on the same day, would this have an (negative?) effect on the share price ? This quantity would amount to >2x Restore (LON:RST) volume yesterday.

I understand not all will sell, and that £1.8m shares (at option price) 'may' only be a short-term pullback in comparison to Restore (LON:RST) £640m market cap.

If this were the case, and in an idea world, I'd know when these were about to be sold to the market, and sell in the days before, buying back in during/after this SAYE sale - hopefully at a cheaper price.

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JamesHolmes 16th May '18 9 of 76

In reply to post #364187

A nice update, though based on the figures provided and using the GM as a basis, that puts Sosandar (LON:SOS) on 25 times. Chuck the overheads in and could be atleast double that. While I have a small holding, the market segment they are targetting just doesn't feel racey enough to warrant a lofty valuation equivalent to other online clothes retailers.

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IGotPoesJacket 16th May '18 10 of 76

Well, they're ( Sosandar (LON:SOS) ) targeting a segment with 3 times the number of people in it as Boo. And those people are, generally more wealthy .

My professional wife very rarely goes to the shops now, does all her shopping online at the likes of Joules and Boden. I think Sos are entering at a good time.

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andrea34l 16th May '18 11 of 76

Anyone know (please) why JD Sports Fashion (LON:JD.) have suddenly dropped 5% today? Maybe too big for you to consider...

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JamesHolmes 16th May '18 12 of 76

In reply to post #364279

3 times the number of people sounds very aggressive! Please can you share the basis/source of that? Would like to understand it better.

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rikain 16th May '18 13 of 76

Would you mind taking a look at OMIP please. The recent NED appointments, positive outlook for streaming content generally make it seem interesting. They have rocketed 40% plus today which takes them just above the £10mil SCVP min.

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Paul Scott 16th May '18 14 of 76

In reply to post #364303

Hi rikain,

Would you mind taking a look at OMIP please. 

There hasn't been a trading update or results statement from OMIP today. Therefore it doesn't fall within the remit of these reports. We're reporting on each day's trading updates & results statements, and occasionally other significant news (like takeover bids or big acquisitions). We don't comment on random micro cap share price movements!

Hope that clarifies.

Best wishes, Paul.

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Howard Marx 16th May '18 15 of 76

In reply to post #364279

" Sosandar (LON:SOS) are targeting a segment with 3 times the number of people in it as Boohoo.Com (LON:BOO) "

This statement is misleading. And fallacious.

In the UK there are around 7.2million males/females in the 16-24 year age group. This is the UK target market for Boohoo.Com (LON:BOO).

By contrast, Sosandar (LON:SOS) are targeting females aged 30+. As the UK demographic table below shows, you would need to be targetting the 30-95 year old female market to get to 3x the target market of Boohoo.Com (LON:BOO) . I'm not sure that the company has such a wide target market?!


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rikain 16th May '18 16 of 76

Hi Paul

Thank you. I got carried away with the mkt cap. No news today so I'll descend back into my seat

Cheers Richard

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 Are LON:SOS'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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