Small Cap Value Report (Wed 24 Oct 2018) - ramblings, CAKE, ANG, YU., PHTM
Good morning, it's Paul here.
I rambled a bit off topic last night in the placeholder (Tuesday is stroll along the beach, followed by pizza and beer night), but seeing as it has 56 thumbs up this morning, I'll leave it in place. Sometimes I like to spice up the placeholder a bit!
In case you missed it, Graham kindly emailed me a piece about PCF (LON:PCF) after noting some reader requests here. So I copy pasted that into yesterday's report here. Apologies, but I didn't get round to looking at McBride yesterday. There seemed little point, as the markets were in freefall at the time, but later recovered in the USA with a strong late rally.
I see the American markets are all over the place at the moment - volatility is back. I've no idea what's going to happen to markets overall. All I can say is that I'm seeing some potentially nice buying opportunities in UK small caps - good companies, reporting decent figures & outlook, that are now 20-30% cheaper than they were a few months ago.
Eurozone crisis
On the other hand, I can understand people being worried about macro factors. To me, by far the biggest worry right now is a potential breakup of the Euro. The so-called single currency is of course, not a single currency. It's actually 20 different Euros, pegged at parity.
All currency pegs eventually snap, because economic imbalances build up over time which make artificial currency pegs impossible to maintain. The Euro is no different to the Gold Standard, Bretton Woods, or the ERM. It's only a matter of time until it breaks.
The capital flows under the Target2 system look close to breaking point. I'm not an expert on this, but I can see a big problem is emerging. 10 times the size of the Greek Eurozone crisis, as Italian national debt is over E2 trillion - although much owned domestically, apparently.
Who knows how it's all going to pan out? The EU has a knack of cobbling together temporary fixes for these problems.
My worry is that, if/when the Euro peg snaps, then 20 years of economic imbalances would instantly reset. So the Greek Euro would instantly devalue maybe 50%? The Italian Euro might devalue say 25%? The German Euro would revalue say 30%.
That would then leave the nightmare of how to work out many trillions of contracts all over the world, denominated in Euros, but now subject to re-interpretation by many countries' Courts.
It would also leave nobody knowing which banks had made huge profits, and which had made huge losses. So like 2008, but on a much bigger scale.
A breakup of the Euro doesn't really bear thinking about - it would probably be the biggest financial crisis in history. Realising this, maybe the Germans would compromise, and give Italy's populist Government some accommodation after all? Things have a habit of sorting themselves out. It is worrying though.
Brexit pales into relative insignificance, in my view.
In a sea of woes, when we're all so worried, I think it sometimes helps to stop and think how lucky we are. We live in a world that is incredibly safe, comfortable, and affluent. Previous generations lived in cold houses, with little food, no protection against disease. They lived short, and often painful lives. Our lives are very much better.
Here's a picture I took last night, of the sunset in Bournemouth, isn't it beautiful? We are so lucky. Every now and then it's worth taking a moment to appreciate that. We're standing on the shoulders of previous generations, whose sacrifices made our lives so relatively comfortable. I would have loved to thank my Granny's brothers for their sacrifices in WWI, but sadly they had all died long before I was born.
(sorry, can't get the pictures to work)
It's not about glorifying war. It's about wanting to spend a moment to think about people who went before us, and gave up so much, to let us enjoy this peaceful and decent life - that we take for granted.
Patisserie Holdings (LON:CAKE)
Share price: suspended
No. shares: 135.3m
Market cap: unknown
Corporate update - the financial scandal at this chain of cake/tea shops continues.
Like many other investors, I'm still reeling from the turn of events here. This was not some dodgy overseas junk on AIM. Instead it was probably seen by most investors as one of the highest quality shares on AIM - highly profitable, expanding, impeccable growth track record, and with a Chairman and major shareholder who was one of the most highly respected businessmen in the UK, Luke Johnson.
There weren't any red flags. The only issues I had doubts about, was how the company managed to maintain such a high operating profit margin, and seemed unaffected by the downturn in High Street footfall that other retailers are complaining about. That didn't seem to make sense, but it never occurred to me that the figures might have been fiddled.
If the shares had been on a cheaper rating, I would have bought some. It was only the high valuation that kept me away.
What's the latest then? It's a brief update today, saying that the winding up petition has been dismissed by the court. That's just a formality, as the company had been refinanced, so the debt would have been paid.
Clarification regarding LTIP scheme - a second RNS today, the company seems to confirm recent press reports that some share options were not correctly disclosed;
The Company¸ as part of the ongoing investigation, is seeking to understand why the grant of options relating to 2015 and 2016 have not been appropriately disclosed and accounted for in its financial statements.
My opinion - doesn't really matter at the moment, because the shares are suspended. They're not likely to come back until corrected, audited accounts are published. We obviously cannot rely on the previous accounts at all, as there was a massive black hole in them.
My hunch is that there's probably plenty more dirt to come out. Other people inside the company must have known, or at least suspected, what was going on - one person alone cannot fiddle the figures to this extent.
I feel very sorry for investors here. They thought they were buying into a quality outfit, and this situation was unforeseeable. It's a reminder though that risk can come at us from any angle, at any company.
Angling Direct (LON:ANG)
Share price: 96.5p (down 3.5% today)
No. shares: 43.0m + 21.6m placing = 64.6m
Market cap: £65.6m after placing
Placing - I wouldn't normally mention a placing, but this is noteworthy because of its size.
The company is raising £20m before costs, to significantly expand the business. 20 new physical stores are to be opened, plus further expansion online. It also mentions potential M&A opportunities.
My opinion - this is an interesting company, which I quite like (but don't currently hold). It seems to have out-performed FISH, whose shares have been suspended pending clarification - which usually means it's bust.
Because ANG is going down the route of having physical stores, as well as an online presence, then perhaps its shares may not command such a high premium as online-only companies. There's also the risk that the company might make mistakes in signing leases that turn out to be onerous. I would like some reassurance that the company is not signing any leases over 5 years, or for big rents.
Yu (LON:YU.)
Share price: 123p (down 79% today, at 12:58)
No. shares: 16.3m
Market cap: £20.0m
Trading statement & accounting review - the title of the announcement alone is enough to send a shiver down the spine of anyone unfortunate enough to own shares in this electricity and gas supplier.
When I saw that the share was down almost 80%, I initially assumed it must have been a 5 for 1 share split. That's usually the case when you see such a large price fall. Sadly not. It's actually a horrendous profit warning, caused by the admission of over-optimistic accounting.
These are the specific problems;
- Over-accrual of income - i.e. estimates which over-stated both revenues & profits
- Inadequate bad debt provisions - bad debts are "significantly above" previous estimates
- Lower gross margins, due to competitive pressure - another "significant" adjustment
What's the damage? It's horrendous basically;
The Board estimates the combined adjustments will lead to around a £10 million reduction in profitability when compared with current market expectations, with the Company reporting a loss for the current financial year.
The company thinks that it should bounce back into profits next year (but its reassurances are probably worthless, given the turn of events);
The Board are confident that the Group will achieve profitability for the year ending 31 December 2019, albeit at a lower margin than previous expectations, and is in the process of preparing detailed budgets.
Is it likely to go bust? probably not, I reckon. The company reassures today on its cash position. Although I note that this is a month end balance. I would have preferred to be told the current cash balance - which could be significantly lower intra-month, who knows?
The Group has significant cash reserves (£11.5 million at 30 September 2018) and has no debt outstanding.
Note that the company raised £12m in Mar 2018, through a placing at £10 per share! The share price is now down 88% on that level. My worry is that legal action could follow, since that fundraising clearly relied on false accounts.
I've just reviewed the most recent balance sheet, dated 30 Jun 2018, and it looks pretty solid actually - a decent cash pile, and no bank debt. Although we have to adjust it to reduce receivables by c.£10m, but it still looks pretty solid even after that change is made.
Therefore, I doubt the company is likely to go bust, providing more horrors are not discovered.
Directorspeak - the CEO eats some humble pie, and points out that he personally is the biggest loser;
"As founder and majority shareholder, nobody is more disappointed in this development than me. Our booked revenue from new sales remains strong and contracted revenue for 2019 is already £67 million as at the end of September 2018.
We have improved internal controls around working capital management and the Board is absolutely focused on restoring the profitability of the business."
My opinion - the net profit forecast shown on Stockopedia is £3.2m, so before tax that would be c.£4m PBT. To have to make £10m of adjustments to that, suggests a loss of about £6m.
Worse still, it looks to me as if the historic profit was probably fictitious too. Therefore, this company has probably never been profitable at all! The whole basis for its IPO, and roaring share price previously, therefore looks to have been based on false accounting.
A friend recommended this share to me previously, but I quickly dismissed the idea. Energy supply is a competitive space, with tight margins. Therefore it simply didn't make sense to me that a new entrant could come in, and deliver extremely rapid growth, and surging profits.
Also, I have a blanket rule to never invest in any companies which operate within a regulated sector, as this caps the profits, and is subject to political interference and posturing.
So I'm afraid Yu is completely uninvestable, as far as I'm concerned. It's filed in the "too good to be true" dustbin as far as I'm concerned. Often situations like this can be avoided by simply applying some common sense - do these numbers look reasonable, given the sector it's in? Bad luck to holders of this share.
Photo-Me International (LON:PHTM)
Share price: 115p (up 15.7% today, at 13:51)
No. shares: 377.7m
Market cap: £434.4m
Photo-Me International plc (PHTM.L), the instant-service equipment group, will hold its Annual General Meeting at 2:00 p.m. today. Ahead of the meeting, the Group announces the following trading update covering the first five months of its financial year.
The year end is 30 April 2019.
I'll summarise today's update;
- Trading in line with expectations
- Discussions with Dutch & French Governments (Brexit risk perhaps?)
- Japan restructuring going better than expected
- Laundry division expansion
- Kiosks division - profit expected, due to restructuring last year
- Banking booth - pilot starting in Paris
- H1 profit expected to be flat vs last year (excluding one-offs LY)
Valuation - the PER looks modest, and the dividend yield is astonishingly high, but only just covered by earnings. Is the big yield sustainable? It might be - after all, the company has a very solid balance sheet. It would probably be prudent to work on the basis that future divis might need to be pared back, if trading were to deteriorate.
My opinion - this looks a solid company, performing reasonably well, at an attractive valuation. So it gets a thumbs up from me.
I'm increasing coming to the view that this market correction is throwing us some nice opportunities, to pick up good companies at reasonable prices. PHTM could be one of them perhaps?
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52 comments
Paul, I'm in accord with your analysis of Photo-Me International (LON:PHTM) .
Yes it does look attractive, but think you may have overlooked that it's working it's way through the first year of a company profit warning which it issued on the last day of May (I think) this year (notice how the net profit estimate for this year ending is out of synch with the prior 6 years of cumulative increases - due to a big miss with Japan) but is in line with the profit warning forecast issued earlier this year. So all ticking along nicely. Hence the 8% divi. But it's all genuine, I believe.
The markets drop a few points, and everyone here is talking currency collapses, nuclear wars and Armageddon in general! Cheer up folks, it’s nearly the weekend :)
Europe might be a large strong economy to counterbalance Russia, however European armed forces would be completely incapable of repelling any Russian attack, without the use of either nuclear weapons or with US support. All it needs is a slight change of policy by the US and we are back to 1939, where the US did not want to join in & the president could not get the backing to join until 1941, when the Japanese forced the issue.
As for currencies, I take the view that hardly any of them last for ever. Decades & hundreds of years, yes, but not for ever.
If Italy insists upon borrowing beyond its means, then their debt will just spiral out of control and they cannot use the typical government tactic of printing money to resolve the situation. That is why the EU had rules limiting borrowing. The borrowing may go on for a few years, or even a couple of decades, until it gets out of control
However, when taxpayers in another country are eventually asked to bail Italy out, they will start voting for parties that oppose this. Tensions build unless there are EU rules that all parties are happy to follow.
I don't see the Euro as a 500 year currency & doubt it will get to 50 years.
Dreadful that there will never be a 'post-war' period in this country.
For anyone interested, there's a day by day account of WWI in letters and diaries at acenturyback.com
On Image Scan Holdings (LON:IGE), the trading statement makes the right noises, but what is glaring is the omission of the order book ££, which has consistently featured in previous updates.
Something to hide there?
A very good point - I don't find Image Scan Holdings (LON:IGE) remotely investable at this point so had rather skimmed over the announcement and not noticed that.
It was the lukewarm comment on orderbook that accompanied the results announcement which alerted me to the likelihood of the February trading statement. Not mentioning the order book at all is surely worse?
I would conjecture this is linked to the very terse statement "the European sales manager is being replaced", that's so impersonal as to be effectively a direct insult to the person concerned.
That in turn leads me back to the preceding paragraph : "In order to return the company to the growth path seen from FY 2015 to FY 2017 a number of changes will be made". Future tense! The return to growth is still in the planning stage!
I would love for them to be able to turn this around, but at the moment I cannot see any investment merits whatsoever. Stocko rates it as a "value trap" , but I'm sorry to say that the "value" only exists until they publish the results in December.
regarding a potential 'snapping' of the euro peg - this feels like a fear that on an intuitive level has some logic to it but in reality doesn't. I am not a fan of flying so when there is turbulence during take-off it feels like the plane is going to get blown into a spin and break up but this is not realistic. of course the euro has constituent members and in their own jurisdiction they legislate that the Euro is the legal currency with successor language in place to grandfather contracts featuring pre-Euro currencies. they could in theory leave - and would have the legal ability to change the currency within their own jurisdiction. so - for instance - spain could legislate that at some point and later all Euro contracts would be peseta contracts with a fixed exchange. they would then be able to print away but with all the dangers that that poses (and they are considerable - we are just too used to looking at USD or GBP or JPY which have much bigger status in the world) including but not limited to catastrophic losses in the banking sector which in turn would prob lead to massive capital and trade controls.
I guess what I'm saying is that as tempting as it is to picture the Euro as something that can shatter apart the reality is really otherwise. hence why Greece didn't leave even when most thought they were about to when Syriza got elected..
Another food outlet goes for CVA Gourmet Burger Kitchen
Interesting that the Stockopedia algorithm had £YU classed as a “sucker stock” with a Stockrank of 16. Whether I would have bought it is moot but with a Stockrank of 16 and a Sucker Stock class, I would have needed some convincing. That is what I really like about Stockopedia. It makes me stop and think before pressing the buy button
That said for my two biggest duffers IQE (LON:IQE) as a High Flyer with SR of 54 and XLMedia (LON:XLM) a Super Stock with an SR of 97 when I bought in!
I think it would be great to be able do research on where stocks were in terms of Stockrank and class x years ago. For example did all stocks that have doubled in the last 2 years have a stock rank of over 50 two years ago and did the stockrank never drop below say 25? Yes I know about the PDF’s but it is a bit laborious.
I am sure the daily Stockrank and class is in the database I wish we could have access to it or is that information too proprietary?
Today I learned something completely new: the Euro is a series of pegged currencies.
I am surprised that the Euro has lasted this long.
Today I learned something completely new: the Euro is a series of pegged currencies
It's not. The currencies which the euro replaced were abolished when it was created.
timarr
This may be of interest: it's an analysis by EY of profit warnings issued by listed companies in Q3 2018. I haven't read the full document, but it appears to be saying that whilst there are fewer profit warnings than the prior year, the impact on the share price of a warning has been severe with an average 21% fall.
I doubt this analysis takes into account the recent issues uncovered at Patisserie Holdings (LON:CAKE) & Yu (LON:YU.) but interesting analysis worth bearing in mind for private investors.
https://www.ey.com/Publication/vwLUAssetsPI/ey-uk-profit-warnings-q3-2018/$FILE/EY-000075476-01%20Profit%20Warnings%20Q3%202018_7.pdf
"Unprecedented peace" - I wish our politicians would remember that the next time they want to take an axe to defence spending. We are now woefully under-resourced in that area....
defence spending is worthless if we prosecute soldiers for taking pictures or for doing their jobs.
The UK has 4 frigates that haven't left port this year because there aren't enough sailors to crew them... not much point in building new ones until that problem is solved, and money won't fix that partisan political idiocy we have today.
Besides we seem to be invaded by foreign cultures (no, not Islam... I meant communism) without a shot being fired :-)
(as for the EU being responsible for peace, people forget it was the EU's actions that caused Russia to invade Ukraine too quickly)
To be fair to politicians, this is a reflection on the electorate. If we had a war of the kind I very fortunately have never experienced, I understand the UK has enough amunition to last a week (notwithstanding post brexit border delays!)
But a vote winner would speak about the environment, Grenfell and the NHS, as opposed to the sorry state of our military (who like nurses have also suffered from pay freeze and austerity).
That said, pretty sure canning democracy is not the best way to win votes either!
"I understand the UK has enough amunition to last a week (notwithstanding post brexit border delays!)".
Astonishing that, if true, the information was made known. How did you learn this ?
It was on newsnight a while back when Gavin Williamson was asking for more money for defence - didn't verify but hopefully Beeb did.
My comment was somewhat sensationalist to be honest - the purpose of the military is very different to the 40s (when most British military bases were given to US anyway), and a lot of that responsibility is with NATO (notwithstanding trump!)
But if NATO (other allies) didn't help and Russia attacked UK would have to go down the nuclear defence or lose.
The story did make clear that other than US, China and Russia, not many armies would last very long in a traditional war.
"In a sea of woes, when we're all so worried, I think it sometimes helps to stop and think how lucky we are. We live in a world that is incredibly safe, comfortable, and affluent. Previous generations lived in cold houses, with little food, no protection against disease. They lived short, and often painful lives. Our lives are very much better."
Beautifully said, Paul! I try to convey this to my children on a weekly basis. Things could be so much harder for them not only if they had lived during previous generations but also in a different country/continent in present times.
Paul's comments ring true, its easy to forget the past few decades have experienced unprecedented peace across Europe for the first time
But Paul, yes the EU has many faults and your comments on the Euro are correct but I worry that the notion that peace in the continent will continue automatically or would have existed without some form of 'EU' hard to accept. There are many dimensions to geopolitics that influence regional policy. Russia needs a strong counterbalance in Eastern Europe, some form of unified front has to exist.
So well put pwozzy
Nato
Eu has done little.
Any thoughts on English sparkling wine producer Chapel Down?
Harvest update....in a word "Exceptional"???
Any thoughts on English sparkling wine producer Chapel Down?
Yes... drink the product, don't touch the shares! :-)
All the best, Si
Yu (LON:YU.) another fast-growing business in a competitive market with Utilitywise (LON:UTW) style accounting for deferred income. Looking for red flags here, accounts receivable were nearly 50% of revenue - always risky if you fail to collect the associated outstanding debt. Providing the cash exists (can't take this for granted post Patisserie Holdings (LON:CAKE) !) then there should be some support for this at 80p. But, as has been seen so many times with other new issues, their credibility is destroyed for a long time, possibly irreversibly, The CEO retains 53% so what he decides to do / is able to do will determine the outcome for minority holders.
Paul wrote:
"The so-called single currency is of course, not a single currency. It's actually 20 different Euros, pegged at parity.
All currency pegs eventually snap, because economic imbalances build up over time which make artificial currency pegs impossible to maintain. The Euro is no different to the Gold Standard, Bretton Woods, or the ERM. It's only a matter of time until it breaks."
Perhaps I've misunderstood what Paul meant by this, but I don't understand how the pegs can change relative to each other without a country abandoning the Euro and changing to another currency (perhaps its old one). A particular Euro banknote might be issued by a particular country, but it looks the same as every other Euro banknote of the same denomination in circulation in the Euro zone, and at present it is accepted as legal tender for the same number of Euros by every country in the Euro zone.
the currency pegs cannot change, what happens is the economies become under such strain that they have to be 'bailed out'. eg Greece and Germany, where before the exchange rate would fluctuate to help prevent strong economy from dominating others (ie a strong economy would find its goods becoming a bit more expensive to export, that acts as a brake, and vice versa - remove that and strong economy gets stronger at the expense of weak ones that only get weaker)
Italy is already suggesting they create a parallel currency called the "mini-BOT" (the BOT is the Italian treasury 'currency') which would become an alternative to trading in Euros for government and taxation purposes, which also leads them to be able to increase their deficits without affecting the official euro so the EU wouldn't have a say in it. If it worked, other countries would want to adopt this, and next thing you know, they're all using different currencies again (only in electronic, banker-only kind of way) that could easily turn into using their national currencies again. What that will do for the euro is beyond my understanding, but I doubt it'd be pretty.
https://www.forbes.com/sites/johnmauldin/2018/06/07/italys-proposed-parallel-currency-is-the-biggest-threat-to-the-eurozone/
The parallel currency was yanis varoufakis thought too during Greek dramas - a parallel system of IOU to settle tax payment/welfare.
Adults in the room - fantastic book worth a read.
Very smart mab - warning he makes some rather compelling arguments against capitalism (try not to read his work too often!)
Hello pka. With reference to your post relating to Euro banknotes, I believe that although these notes superficially look the same, there is a code letter on some, if not all, notes which identifies which country's central bank commissioned the note. In other words there are Greek euro notes, German euro notes, Italian euro notes etc. If the worst came to the worst it would therefore be theoretically possible for these euro notes to trade at different values according to which Central Bank issued them. For example, if it became apparent that Greece was about to crash out of the euro system then perhaps the value of notes commissioned by the Greek Central Bank would fall in value in anticipation of them being converted into drachmas. In practice I do not think this would be likely as I am sure the European authorities would somehow manage to issue a guarantee of some kind which would stop this happening.
Yu shares are still falling.
Not sure there is a future for them. Looks like an incredibly tough business to be in - selling a commodity where it is difficult to add value long-term for customers (many of whom just switch for the cheapest deal).
Didn't Iresa go out of business recently? Not sure these smaller firms have enough to beat the big boys in an industry like this.
brutal on Yu (LON:YU.) - i was fortunate to sell out when the shares didn't budge on the interims, small loss. I have found if the market doesn't agree with me - the market is right.
I've had some good exits this year, would say this is 50/50 between luck and judgement, (Flybe (LON:FLYB) , Image Scan Holdings (LON:IGE) , IQE (LON:IQE) , Yu (LON:YU.) ), what i have learnt is that momentum works both ways, things often get worse, and limit my bottom fishing. When results and momentum are going well, ride it, if there is a change - then get out (Symphony Environmental Technologies (LON:SYM) being prime example after their detail-less trading statement at 30p). It has meant a couple of premature exits (French Connection (LON:FCCN) , GYM (LON:GYM) ) but this slightly more nimble attitude has saved me a lot of money. Anyone have similar stories?
Good evening mrosbiston
"Anyone have similar stories?". Yes, just as an exercise this evening on the back of how poor the stock market is doing right now, I looked back at my trading since January 2016. Out of around 24 trades I bought only 4 are now trading above what I sold out at, despite perhaps a majority of them trading higher at some time. I find that particularly worrying, particularly those I sold out of earlier in that period. Luck?, judgement?, like you, a bit of both. What is clear is had I held all those stocks I would be significantly worse off. Things look pretty grim at present. Maybe there will be a Santa rally to help out, but from what level?. And when we come to open that box at Christmas.......will there be anything in it?, will it be an i.o.u.?.
Good luck all
CM
Brutal reaction to the Yu (LON:YU.) mea culpa with the shares down over 80% this morning at the moment and a spectacular fall from the 1117p level they were at when last commented on in the SCVR report at the end of January and a peak of 1345p in March. Real Hallowe’en shocker for holders but a latent fear there may be other skeletons out there in other companies’s cupboards. Who’s next - YouGov (LON:YOU) have been picked up in the past here for some “creatively aggressive” accounting. Plenty of bargains appearing, but if you can’t trust the numbers are they too good to be true?
Gus.
Hi Paul
Really enjoy your writing.
Please could you share your thoughts on the announcement re LTIP from Patisserie Valerie ( Patisserie Holdings (LON:CAKE) ) and the significance of the comment that it wasn't reported in the accounts.
https://www.investegate.co.uk/patisserie-hldgs-plc/cake/clarification-regarding-ltip-scheme/201810240855010163F/?fe=1&utm_source=FE%20Investegate%20Alerts&utm_medium=Email&utm_content=Announcement%20Alert%20Mail&utm_campaign=Patisserie%20Hldgs%20PLC%20Alert
Thanks
Nico
This is a very interesting statement in the CAKE RNS
"The Company¸ as part of the ongoing investigation, is seeking to understand why the grant of options relating to 2015 and 2016 have not been appropriately disclosed and accounted for in its financial statements."
What does that say about the board, and the Chair in particular, since the LTIP scheme must have been approved by the board. Did none of them bother to read the accounts? What exactly were they doing for their remuneration?
Peter
Patisserie Holdings (LON:CAKE) The auditors should have been onto this also, as it is effectively Board remuneration. If there was an RNS (as is required) then it was effectively part of the public record.
Its this lack of reporting and comment from anyone that probably inspired the alleged fraudulent activity, as there was never any comeback or query.
I can't see Luke Johnson surviving the findings of any enquiry. There is also a move to take him away from heading the current internal enquiry. I personally don't doubt his ethics, but he is technically quite conflicted.
Great way to start the day, thank you Paul.
It would be good to hear your thoughts on which particular stocks you think have ben oversold over the past few weeks. And if you can face it, your thoughts on the Image Scan Holdings (LON:IGE) update would be interesting. I used to hold but have decided that the recent debacle concerning their failed acquisition makes management un-investable.
cheers
Francis
What an excellent and considerate person you are Paul, made me feel good reading your words this morning.
Henry
Paul I appreciate your sentiment but I also believe it is about respecting those that are to come. The most recent IPCC report gives us a decade to start putting things right in terms of Global Warming. I really do think that this will become the investment theme of coming years. Unfortunately it is going to be a cost but in any major change opportunities exist as the accepted norms get compromised.
Cloudy with drizzle in Cambridge so a bit grumpy this morning.
BW
Paul, excellent way to start the day. What a splendid observation without being too sugary.
Thank you Paul, this is why I read you. I like your personal touches that you add to the fiscal wisdom. We are one of the luckiest generations and it is good to be reminded of that and be thankful. I sold everything on the 11th because I thought the big correction had started, it is quite cathartic. Now I will be much more careful what I buy, mainly safe stuff but the odd potential multi bagger thrown in for a bit of excitement and hopefully profit.
Keep up the good work and keep up the personal commentary as well, I love it. See you at Mello. Charles
Hi Paul please can you take a look at the Patisserie Holdings (LON:CAKE) style trading update from £YU this morning? Another example of a highly-rated business in a low-margin market where the valuation was based on false information
My morning smallcap tweet: Yu down the loo.
Impact Healthcare REIT (LON:IHR), Premier Veterinary (LON:PVG), Autins (LON:AUTG), North Midland Construction (LON:NMD), Challenger Acquisitions (LON:CHAL), Image Scan Holdings (LON:IGE), Angling Direct (LON:ANG)
Impact Healthcare (IHR) plans £150m raise to buy property portfolio in next few weeks.
Premier Veterinary (PVG) FY trading. Rev up 24%, sounds like a miss. Excluding new possible UK contract and US contract (pilot not started) guides growth slower rate than expected.
Autins Group (AUTG) FY trading: challenging conditions (as guided in Sept) has led to rev only £29m.
North Midland Cnstrn (NMD) Guides FY rev above mgmt expectations at £340 - £345m.
Challenger Acquisitions (CHAL) New York Wheel Project dead in the water (sky?). "Since our company was not expecting a return from this investment for several years, we are continuing to seek out, evaluate and review a potential project that can utilise the public company platform."
Image Scan Holdings (IGE) guides poor (as expected) FY rev £3.5m (£5.0m). Brave face " our order pipeline is strong, and I am confident the changes to our team and the re-focus of our research and development efforts can return us to our previous growth path"
Angling Direct (ANG) £20m placing at 92.5p, an 8% discount.
STOB: H1 results released today. Here's an overview by Warwick Brady, CEO
https://www.piworld.co.uk/2018/10/24/stobart-stob-h1-results-overview-november-2018/
Commercial highlights – 00:21
Stobart Aviation – 00:46
Stobart Energy – 02:17
Stobart Rail & Civils – 02:28
Outlook & Summary – 03:22
Stabart results video - No mention of Brexit ...
Yu (LON:YU.) RNS titled Trading Statement And Accounting review caught my eye. The company has identified issues in the following areas:
· Recognition of historic accrued income;
· Impairment of Trade Debtors; and
· Gross margins being achieved against prior expectations.
All of this is going to impact profits by £10m. There does appear to be a few companies announcing aggressive accounting policies causing issues. I wonder what has prompted the Board to announce this now when interim results were released only a month ago?
https://www.investegate.co.uk/yu-group-plc--yu--/rns/trading-statement-and-accounting-review/201810240700029669E/
Morning Paul,
Nice words to start the day - Have a great day.
The question is merely WHEN the Euro peg snaps.
3 months, 3 years, 3 decades, 3 centuries ? Eventually it will go.
Or the countries enter a fiscal (and political?) union - which is presumably the intended direction of travel.
The rivalries, and self and vested interest within the EU, are such that there is little (in my view nil) chance that there will be full political and fiscal union in any foreseeable future. The euro is an intractable problem and should never have been introduced before there was full political and financial union. It was a vanity project which has stultified European economic growth and caused immense harm to many of the citizens of Southern Europe. Mario Draghi, President of the European Central Bank, said he would do what it takes to save the euro during the Greek crisis. In the likely, impending Italian crisis he will not have the "firepower".
Yes I think that this (the Euro surviving) is much more likely for reasons (only my opinion) which I wont go into here because to controversial and I havent got the energy to discuss as I am on holiday in the South of France.
And certainly if it has gone in three decades it won’t go at all. The EU morphs and adapts and compromises but it has been around for nearly 70 years if you include the ECSC. Nearly a quarter of the time the US has been an independent nation.
I personally think it will survive because at the very top in most of the major nations there is a will for it to survive and at the grass roots level amongst the young there is a strong desire for it to survive. They WANT the EU to survive.
"I personally think it will survive because at the very top in most of the major nations there is a will for it to survive and at the grass roots level amongst the young there is a strong desire for it to survive. They WANT the EU to survive."
If that is the case, the irony is that in the Eurozone countries of southern Europe, the Euro and the consequent inability to devalue their currencies are the main causes for the huge percentage unemployment levels amongst the young.