Small Cap Value Report - Wed 26 Jul 2017 - LOOP, MYSL, QTX, VTU, JOUL

Wednesday, Jul 26 2017 by
46

Good afternoon, it's Paul here.

I woke up with a stinking cold, so am running late today. Therefore, this article will gradually take shape throughout this afternoon.




LoopUp (LON:LOOP)

Share price: 175p (up 8.4% today)
No. shares: 41.0m
Market cap: £71.8m

Trading update - this is a SaaS company, which provides conference calling software/telephony. It's an excellent product, which I have tried out myself. It allows a greater level of control, and enhanced features, compared with conventional conference calling systems.

Today's update covers the 6 months to 30 Jun 2017. These are the highlights;


597883e56efdaLOOP.PNG


That's impressive stuff. Gross profit being up 50%, through organic growth, is really excellent, and justifies a premium rating for this share.

One complaint is that the company only presents EBITDA. That's annoying, because it now means that I have to check what development costs the company is capitalising, to arrive at a more meaningful view of profit. EBITDA is of interest, but it is absolutely not the only measure of profit that companies should give us. I very much dislike the current trend to steer investors towards EBITDA only.

Checking the accounts for y/e 31 Dec 2016, it turns out that EBITDA was £2.1m, yet operating profit was only £0.4m. So EBITDA certainly seems a misleading number here. The reconciling items were £246k in depreciation, and £1,419k in amortisation of intangibles.

In 2016, the company capitalised £3.2m into intangible assets. I've checked note 15 of the 2016 Annual Report, trying to find more detail on the intangible assets, but nothing more is given. So I can only presume that this is capitalised development spending.


Outlook - this also sounds positive;

"Looking ahead into the second half of 2017, we continue to see strong demand for the LoopUp product and we remain confident in our ability to deliver future growth."


The company seems to have settled at an organic top line growth rate of c.40% p.a.. Combine that with very high gross margins, and there is very powerful operational gearing here.

My opinion - this is a very nice company. I visited their Shoreditch HQ last year, and was really impressed. The people & the place had a real buzz to it. It's a young company,…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way

Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


Do you like this Post?
Yes
No
46 thumbs up
0 thumbs down
Share this post with friends



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 »

LSE Price
262.5p
Change
-3.7%
Mkt Cap (£m)
110.4
P/E (fwd)
41.3
Yield (fwd)
n/a

MySale Group plc is engaged in operating online shopping outlets for consumer goods, such as women, men and children's fashion clothing, accessories, beauty and homeware items. The Company's segments include Australia and New Zealand, South-East Asia and Rest of the world. It operates with flash sales Websites in Australia and New Zealand (ANZ), South-East Asia (SEA) and the United Kingdom. Its Websites host time limited flash sales in each of its territories. These flash sales are focused on fashion, apparel, health, beauty and homeware categories and are undertaken on a consignment inventory basis. Its retail Websites also focuses on these product categories using drop-shipped inventory. Its flash sales brands include OzSale and BuyInvite in Australia, NzSale in New Zealand, SingSale in Singapore, and MySale in Australia, New Zealand, Malaysia, Thailand, the Philippines, the United Kingdom and Hong Kong. more »

LSE Price
120.25p
Change
0.4%
Mkt Cap (£m)
182
P/E (fwd)
72.0
Yield (fwd)
n/a

Quartix Holdings plc is a United Kingdom-based supplier of vehicle tracking systems and services. The Company operates in designing, development and marketing of vehicle tracking devices and the provision of related data services segment. The Company offers subscription-based vehicle tracking systems, software and services in the United Kingdom. Its vehicle tracking systems incorporate instrumentation to identify and transmit location, speed and acceleration data to the Company on a real-time basis. Its vehicle tracking software system provides business critical reporting, and analysis of vehicle and driver data, including timesheets and other customer Key Performance Indicator (KPIs) to customers via any Internet-enabled device. The Company has an overseas branch in France and an overseas subsidiary in the United States. The Company's subsidiaries include Quartix Limited and Quartix Inc, which are engaged in the business of vehicle tracking. more »

LSE Price
367.5p
Change
0.7%
Mkt Cap (£m)
174.8
P/E (fwd)
29.2
Yield (fwd)
3.5



  Is LoopUp fundamentally strong or weak? Find out More »


24 Comments on this Article show/hide all

andrea34l 26th Jul 5 of 24
1

Results out today from JOUL look great (price only marginally up though at 303.5):

* Group revenue increased 19.6% to £157.0 million (18.6% constant currency)
* International revenue increased by 36.2% (now 11.5% of Group revenue), UK sales increased 17.8% to £139.0m
* Underlying PBT £10.1m + 34%
* Underlying basic EPS 9.2p + 33.3%
* Retail sales increased 19.4%
* E-commerce sales up 29.4% - 34.8% of total retail sales
* Store sales up 17.5% - supported by 11 net new store openings
* Wholesale sales increased 20.3% (17.6% constant currency) - reflecting the growing appeal of the Joules brand...
* Active4 customers increased by 14% to 907,000


There's no mention of LFL, which is a bit disappointing; the fairly small currency hit seems reassuring. Personally I only went into a store once, and although it looked quite smart and cheery, I thought the women's clothes seemed quite expensive for what they were and there were far too many striped items.

| Link | Share
gsbmba99 26th Jul 6 of 24
2

I saw the LoopUp (LON:LOOP) CEO present earlier this year at a conference. He presented something he called "negative net churn" or words to that effect of 6% which sounded rather a lot like subscriber growth of 6%. Does anyone understand the business well enough to say if my interpretation is correct and, if so, how a company generates 40%+ revenue growth on a subscriber base growing in single digits? I have a theory but wanted to canvas first.

Also, how does a company with about 50% of revenue coming from the US not report a constant currency growth rate? Other companies like StatPro (LON:SOG) or Quartix Holdings (LON:QTX) give you the equation for revenue and the growth of each of the individual variables.

| Link | Share
tic_tac_toe 26th Jul 7 of 24

In reply to paraic84, post #2

although (LON:MARS) also put out an RNS today and this hit the price by 3% IIRC.

| Link | Share
herbie47 26th Jul 8 of 24

In reply to Paul Scott, post #4

I would generally agree, however recently after large founding directors sales, some shares how shot up, for example: IQE (LON:IQE), Purplebricks (LON:PURP), Fevertree Drinks (LON:FEVR), accesso Technology (LON:ACSO). I did sell after accesso Technology (LON:ACSO) sales ' 950p, since then the share price doubled.

| Link | Share
bestace 26th Jul 9 of 24
4

In reply to paraic84, post #2

They might not be on the same level as Fullers, but a lot of the Revolution Bars (LON:RBG) sites do have outdoor space.

A quick google search turns up plenty of pictorial evidence e.g. Richmond, Cambridge, Aberdeen, Bristol, ManchesterBattersea and Huddersfield.

Targeting sites with outdoor space is a stated part of their expansion strategy, so you would expect them to see some benefit from the good weather:

...in keeping with its historical focus on tailoring each of its bars to the characteristics of the building, the Group will look for sites with distinguishing features, including outdoor areas, as the ideal targets of its planned expansion.
The Marston's (LON:MARS) update today also mentions the weather as being the main reason behind their 2.4% growth over the last 12 weeks.
| Link | Share
herbie47 26th Jul 10 of 24
1

Paul, Bioquell (LON:BQE) half year report is out today, profits are well up, it's one you thought looked interesting last year, shares are up 14% today.

| Link | Share
FREng 26th Jul 11 of 24
2

In reply to Paul Scott, post #4

Thank, Paul. I have decided follow your example in BMUS and move this investment to IQE (which I already hold and have added following the Trading Statement on Thursday). Israeli companies on AIM make me nervous ...

| Link | Share
guyrendell 26th Jul 12 of 24

Any thoughts on Quartix Holdings, Paul, in light of their interims?

| Link | Share
unwise2 26th Jul 13 of 24

In reply to Paul Scott, post #4

Paul

I have to agree with Herbie, one of the founders of Fevertree sold £73m worth of shares @ 1625p in May, look where the price is now. How many companies have net cash and are growing profits at 40%+ on a P/E of 13.5?

| Link | Share | 1 reply
Laughton 26th Jul 14 of 24

In reply to unwise2, post #13

Surely that must be a typo (Fevertree on a P?E of 13.5%).

| Link | Share | 1 reply
unwise2 26th Jul 15 of 24

In reply to Laughton, post #14

I was referring to Taptica

| Link | Share
dahokolomoki 26th Jul 16 of 24
6

Guys and girls, I don't think Paul is saying that a big insider sale is the 100% certainty that the share price will fall. Just that it is a negative signal that needs to be taken in consideration with the hundreds of other signals.

Paul just happens to place alot of weight on that signal. 

| Link | Share
paraic84 26th Jul 17 of 24

Paul - I agree with your comments on MySale (LON:MYSL). The last broker estimates I saw a couple of months ago put it on 1.9p EPS for 2019 - so you're paying a lot today for pretty modest growth for an internet business. Like you, I held but sold earlier in the year. In the UK its competitor Brand Alley has much better marketing visibility (at least in London) and I have wondered whether this whole discounted online sales business will be continually low margin as brands play competitors off against each other to get the best deal? It's also had at least one abortive attempt to develop its own fashion label.

I'd like them to be a bit clearer with what they plan to do with their shed load of cash. That's the bit worth keeping an eye on in case they develop a new, more exciting, venture.

| Link | Share
Investor2015 26th Jul 18 of 24
1

Cheers for updating on MySale, Paul. Get better soon

| Link | Share
Gromley 26th Jul 19 of 24
6
My moist recent notes

Ooo, erm, err, no sorry , I can't think of anything to say that wouldn't lower the tone.



| Link | Share | 1 reply
Paul Scott 27th Jul 20 of 24
2

In reply to Gromley, post #19

Gromley,

LOL - someone messaged me about my unfortunate typo, which I've now corrected!

Regards, Paul.

| Link | Share
sminers 27th Jul 21 of 24

Paul, best wishes in the world you are not the demographic for Joules lol

| Link | Share
Jeremy Grime 27th Jul 22 of 24
1

Please can we have a picture of you in a Joules polo shirt and one in a Primark polo shirt. ?

| Link | Share | 1 reply
Edward Croft 27th Jul 23 of 24

In reply to Jeremy Grime, post #22

Grime is in the house :-) Welcome !!!

Blog: Follow @edcroft on Twitter
| Link | Share
Dieselhead2 28th Jul 24 of 24
1

Good morning Paul, I wondered whether you had seen Staffline's interim results for Wednesday? Naturally the Brexit effect is probably weighing down the share price. Any chance you could take a quick look?
Many thanks.
Dieselhead2.

| Link | Share

What's your view on this article? Log In to Comment Now

You can track all @StockoChat comments via Twitter

 Are LoopUp'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 Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

Follow



Stock Picking Tutorial Centre



Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis