Small Cap Value Report (Wed 19 Dec 2018) - BEG, 888, COG, YU, MANO

Wednesday, Dec 19 2018 by

Good morning!

Today is Fed decision day. President Trump has been tweeting unhappily about it, but it looks like US interest rates will increase toward 2.5%.

Away from macro, I have noticed the following RNS announcements:

  • Begbies Traynor (LON:BEG) - half year report
  • 888 (LON:888) - pre close trading update
  • Cambridge Cognition Holdings (LON:COG) - trading update
  • Yu (LON:YU.) - notice of appointment of FCA investigators
  • Manolete Partners (LON:MANO) - maiden interim results are in line with expectations. What a relief - it has been listed since Friday!

Begbies Traynor (LON:BEG)

  • Share price: 68.8p (pre-open)
  • No. of shares: 110.5 million
  • Market cap: £76 million

Half-year report

Begbies Traynor Group plc (the 'company' or the 'group'), the business recovery, financial advisory and property services consultancy, today announces its half year results for the six months ended 31 October 2018.

This company is useful as a barometer of financial distress in the economy.

The numbers show some modest progress against last year. There have been some acquisitions:

  • revenue +£2 million to £28 million
  • adjusted PBT +10% to £3.2 million
  • after amortisation of acquired intangibles and transaction costs, actual PBT reduces from £1 million to £0.6 million (see the debate on my previous commentary)
  • net down down, dividend up


Careful wording: the company is "well placed to deliver up current market expectations for the full year". There is a second half weighting, relying on contingent fees and higher activity levels.

Insolvency Market

Corporate insolvencies are up 6% on a trailing 12-month basis, to September 2018.

After a couple of very lean years, this means that business looks to be getting back to normal for insolvency practitioners.

Begbies has been involved with the administrations of a music festival, an estate agency and a menswear retailer, and has advised House of Fraser landlords on the CVA process.

These individual cases give us a sense for how a full-blown consumer recession would (counter-cyclically) produce a boom in the demand for Begbies' services.

My view

For reasons previously discussed, this share doesn't interest me as a potential investment - I don't invest in professional services businesses. 

Its announcements are useful, however, as confirmation…

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All my own views. I am not regulated by the FSA. No advice.

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Begbies Traynor Group plc is a business recovery and property services consultancy. The Company's segments include insolvency and restructuring, and property. It provides services from a network of the United Kingdom locations through two operating divisions: Begbies Traynor and Eddisons. Begbies Traynor is an independent business recovery practice that handles corporate appointments, serving the mid-market and smaller companies. It provides insolvency, restructuring and consultancy services to businesses, their professional advisors and financial institutions. Eddisons is a national firm of chartered surveyors, delivering transactional and advisory services to owners and occupiers of commercial property, investors and financial institutions. It provides professional services, such as business rescue options, advisory options, forensic accounting and investigations, corporate and commercial finance, personal insolvency solutions and services to banking, legal and accounting sectors. more »

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888 Holdings Public Limited Company is a provider of online gaming entertainment and solutions. The Company is the owner of software solutions providing a range of virtual online gaming services over the Internet, including casino and games, poker, bingo, sport, emerging offerings and brand licensing revenue on third party platforms. Its segments include B2C (Business to Customer) and B2B (Business to Business). The B2C (Business to Customer) segment includes casino and games, poker, bingo and emerging offering. The B2B (Business to Business) segment offers total gaming services under the Dragonfish trading brand. Dragonfish offers to its business partners use of technology, software, operations, e-payments and marketing services, through the provision of offline/online marketing, management of affiliates, search engine optimization (SEO), customer relationship management (CRM) and business analytics. The Company provides payment services, customer support and online advertising. more »

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Cambridge Cognition Holdings plc and its subsidiaries develop and commercialize computerized neuropsychological tests for sale, principally in the United Kingdom, the United States and Europe. The Company's segments include Pharmaceutical Clinical Trials, Academic Research and Healthcare Technology. The Pharmaceutical Clinical Trials segment includes products and services for use in regulated pharmaceutical clinical trials. The Academic Research segment includes cognitive test products for researchers working in a non-regulated environment, typically in academia. The Healthcare Technology segment includes medical software for use in healthcare delivery settings. The Company is a provider of validated touchscreen cognitive assessments for clinical trials. The Company's product, CANTAB Mobile is a Class II medical device, used to identify patients exhibiting the early signs of Alzheimer's disease. It also offers Cantab Insight for dementia assessment in secondary care. more »

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

32 Comments on this Article show/hide all

FREng 19th Dec '18 13 of 32

In reply to post #428638


How did you manage to add Manolete Partners (LON:MANO) to your portfolio? I can't get Stockopedia to recognise the symbol properly. (Maybe Ed is too busy with his survey to get the recent IPOs on the system!)

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Graham Neary 19th Dec '18 14 of 32

In reply to post #428678

Thanks James - fixed it. G

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JohnEustace 19th Dec '18 15 of 32

In reply to post #428693

There seems to be some delay or error on the part of the data provider in getting Manolete Partners (LON:MANO) set up. I missed getting my usual news email alert from Investegate because I wasn't able to add it to my alerts list there, but then I could add it from the link on the interim announcement. I think it's an issue upstream of Stockopedia.
I've added it to my real world portfolio buying through HL.

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barnetpeter 19th Dec '18 16 of 32

888 statement and USA sports betting deregulation etc. Thanks for views Graham!

In fact Washington DC voted to allow this late last night. That sets a real principle...if the capital will agree to it, who won't? Other USA states are certain to follow next year and the potential mkt is simply huge. My personal view is that this entire sector will be a star in 2019 and I see plenty of takeover activity. California will be the really big one; their turnover would be spectacular.

Been buying 888 and also hold GAN (who provide gaming software) and micro stock WEB (who own a racecourse in California and will thus be in a prime position when California votes). The latter is very volatile and often spikes heavily. It is majority owned by a well known billionaire and has not placed for over 5 years ...very unusual for a micro (I dont think he wants any dilution).

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grout123 19th Dec '18 This post is under review

Yu buggers

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Howard Adams 19th Dec '18 18 of 32

In reply to post #428713


I too just dipped into Manolete Partners (LON:MANO) through HL.

Interesting that the legal profession seems to be getting very keen to list.

I seemed to have acquired a mini legals portfolio. Now holding Burford Capital (LON:BUR) Keystone Law (LON:KEYS) Manolete Partners (LON:MANO) & Litigation Capital Management (LON:LIT). All very small holdings except Burford Capital (LON:BUR). I assume there are several others but I have not yet researched ideas from this angle, but might take a look out of curiosity.


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Chris Britton 19th Dec '18 19 of 32

The optimist's case for Cambridge Cognition Holdings (LON:COG) is put in:

I hold but that's perhaps because I can't figure out what's a fair price for a speculative business with a nice story. That said, thank you Graham and Paul - I've learnt a huge amount from your analysis.

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Steves cups 19th Dec '18 20 of 32

Hi Graham
I know I'm late but if you get the time can you have a brief look at FFI Holdings (LON:FFI).
On the up compared with last year's disaster.......

I hold


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JohnWigg 19th Dec '18 21 of 32

re Manolete Partners (LON:MANO), H1 2019 exceeded H1 2018 by 46% PAT, so applying the same uplift to FY would give PAT of £4.75m and therefore a 2019 PER of 13.3x ex-cash. (I think ex-cash of £16m is reasonable, as it added after the period end.) Three possible caveats -

1) Deploying the new funds and overdraft facilitywill take some time, then you have the approx. 12 months wait for settlement time. Maybe FY won't see the same growth.
2) There was slight seasonality last year: PAT H1 £1.69m, H2 £1.57m. Maybe not significant.
3) Regional offices, more staff will impact fixed costs, again suggesting 2019 H2 might fall short.

I hold a few, bought between 195p and 196p.

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Michael C 19th Dec '18 22 of 32

YU - Last time I looked this was a holding in Octopus VCT - along a with a few other duds.

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FREng 19th Dec '18 23 of 32

In reply to post #428713

Thanks. I managed to add it to my Stockopedia portfolio via the "add to portfolio" link on the (otherwise empty) Manolete Partners (LON:MANO) page.

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Graham Neary 19th Dec '18 24 of 32

In reply to post #428778

Hi Steve, thanks for the request but I'm out of time for today. Maybe will look at it another day if the RNS feed slows down, cheers. G

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ttjs4 19th Dec '18 25 of 32

Cenkos Securities (LON:CNKS) Trading update:

The Board of Cenkos Securities plc is pleased to report that since the announcement of our interim results on 18 September 2018, revenues have improved. Accordingly, the profit before tax level for the year ended 31 December 2018 is expected to be in excess of the current market expectations.

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Richard Goodwin 19th Dec '18 26 of 32

In reply to post #428533

If frs15 takes the revenue down then presumably the order book rises commensurately? If this is the case then the increase in Cambridge Cognition Holdings (LON:COG) order book is very unimpressive. Is my logic correct?

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AlanJenkins2 19th Dec '18 27 of 32

Curious about 888 .Stocko says that it has negative net debt of 143.6 million pounds - ie net cash of that amount - which is over 20% of its market cap.However,Stocko also gives its price to tangible book as n/a - presumably indicating negative tangible book value ? That apparent contradiction could be explained by liabilities not included in net cash such as a pension deficiit.What is the explanation in 888's case ?

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andrew guppy 19th Dec '18 28 of 32

Hi Graham,

Is 888 your preferred stock in the US betting sector? How would you rate GVC please? (LON:GVC)

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Steves cups 19th Dec '18 29 of 32

In reply to post #428813

Thanks for your note Graham. Perhaps if nothing occurs in the next few days you could return to it. Sorry again for the late request

I raise a glass to your continued common sense approach. Seasons greetings to you and yours


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nquaile875 19th Dec '18 30 of 32

Although Bilby's stock price never achieved the heights of Yu they are both looking very similar now! I wonder if father and son at Bilby (LON:BILB) knew about the MoD contract when they both sold out...?

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Metatron 19th Dec '18 31 of 32

I also play poker online but do not on 888 as they insist one has to email them a photo ID to play on their sites
I wish to avoid putting a photo ID online. Maybe it is paranoia about online security and identity theft but the other poker sites I use do not insist on a photo ID so why take an unnecessary risk with 888 poker?
888 would not accept a posted photo ID which seemed to me poor customer services .
Are other stockopedia readers comfortable with their photo ID online on their computer?
I would also tell any sports betters out there that the GVC chain of bookmakers have an appalling altitude towards punters - closing down sports betters accounts no matter how small the punters stakes simply because they identify that a punter only bets with their sites when they are offering the best odds on an market
i.e GVC only wants mug punters and nobody else .Until recently it was the case that that the only gamblers who had accounts closed were high stakes winning gamblers.Now with GVC it is anyone who is not a mug.

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Howard Marx 20th Dec '18 32 of 32

In reply to post #428833

There is no contradiction

For 888 Holdings (LON:888) Total Liabilities are greater than Tangible Assets, hence the negative Tangible book value.

The reason for this is because 888 Holdings (LON:888) has huge Current Liabilities.

Check out their Balance Sheet:

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About Graham Neary

Graham Neary

Full-time investor and independent analyst. Prior to this, I spent seven years in the financial markets as an analyst and institutional fund manager. I'm CFA-qualified, also holding the Investment Management Certificate and the STA Diploma in Technical Analysis.Away from finance, my main interests are recreational poker and everything to do with China, especially Mandarin Chinese. more »


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