Small Cap Value Report (Wed 27 June 2018) - FJET, CRAW, XAR, TAM, LIO, ULS, OPM | Graham Neary

27th Jun '18 by Graham Neary

34 comments 17134 reads

Greetings - we have a bunch of exciting updates today, making the World Cup Group F games at 3pm pale into insignificance!

Stocks of interest today are:

Tatton Asset Management (LON:TAM) - results
ULS Technology (LON:ULS) - results
Fastjet (LON:FJET) - funding update
Crawshaw (LON:CRAW) - trading update
Xaar (LON:XAR) - trading update
1pm (LON:OPM) - trading update
IWG (LON:IWG) - trading update
Liontrust Asset Management (LON:LIO) - results

Stories are presented below in order of the headline to this article!

Fastjet (LON:FJET)

Share price: 4.95p (-68%)
No. of shares: 522.4 million
Market cap: £26 million

Funding Update

Mentioning this first as it is the simplest story today. A bad business in a bad sector, listed in London but based in Africa, is running out of money again.

This had many hallmarks of a stock to avoid. The most obvious and important one being that it repeatedly ran out of money.

And it was remarkable that a few City fund managers kept putting fresh funds into it. I only wish I could have been a fly on the wall to hear their conversations and rationale in advance of each placing.

Perhaps they are about to throw in the towel at last:

The Company is currently in active discussions with its major shareholders regarding a potential equity fundraising, in the absence of which the Group is at risk of not being able to continue trading as a going concern.

Fastjet would never have existed if stock market investors had not been found to throw money at it. I continue to believe that it is worth close to zero.

The algorithms appropriately identify it as a Sucker Stock.

Crawshaw (LON:CRAW)

Share price: 5.25p (-25%)
No. of shares: 113 million
Market cap: £6 million

Trading and Strategic Update

Today's trading update from this chain of butchers strikes familiar themes: high street shops doing poorly, factory shops doing well. The macro environment is blamed (lower footfall on the High Street)…

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TamzinPiworld

27th Jun '18

OPM FY trading update interview with Ian Smith, CEO talking through today's RNS

http://www.piworld.co.uk/2018/06/27/1pm-opm-full-year-2018-trading-update/

What’s behind the improved revenue and EPS? – 00:28
The market – 01:27
What does ‘50% of current year revenue being held in unearned income’ mean? – 02:12
Costs? – 03:04
Borrow facilities and cost? – 03:55
Integration of acquisitions – 04:54
Outlook –

MrContrarian

My morning smallcap tweet: Brace, brace, brace! Farcejet flameout.

Fastjet (LON:FJET), Crawshaw (LON:CRAW), ST Ives (LON:SIV), 1pm (LON:OPM)

Farcejet (FJET) Despite the new loan agreements of 5 June it's critically short of cash. Discussing equity fundraising, in the absence of which the Group is at risk of not being able to continue trading as a going concern. If the fundraise is not successful the annual results won't be published and shares will be suspended.
Crawshaw Group (CRAW) High St trading still dire. Group LFL -13%. "There are numerous key sales-driving and cost-saving initiatives currently being undertaken." Should butcher that dead horse instead of flogging it. Factory shop format continues to perform well.
St. Ives (SIV) A J to replace the CEO who leaves in August. J Schwan, who has been with the Group for three years. "J began his career in Accenture's emerging technologies lab." So his first name is J!
1PM (OPM) guides FY rev slightly ahead of market expectations with profits in line following further investment in operations.

fwyburd

HI Graham,
Walker Greenbank (LON:WGB) gave an AGM update today which I'd appreciate your views about.

"Trading in the financial year continues to reflect a difficult marketplace though we have recently seen an improving trend in some geographies including the UK and the US, our two largest markets.

"Brand sales in the first four and a half months of the financial year were down 6.0 per cent in the UK and down 1.9 per cent overseas in constant currency, down 3.8 per cent in reportable currency. Our high margin licence income continues to perform strongly and we are encouraged by the potential of recent licence agreements.

"The out-turn for the full year remains in line with Board expectations and anticipates a further improvement in trading in our traditionally stronger second half and additional momentum in licence income generated from recently signed agreements."

Weak first half with optimism for the second. Not sure what to make of this but on balance not as bad as it could have been? Or was the SP fall yesterday an indication that that part of the market who was in the know doesn't like it?

Anyone else have views?

cheers

Francis

CliveBorg

Reference St. Ives. This is a classic case of J walking, attracts a prison sentence in some American states ..

RichardK

Graham, would you look at ULS Technology please? Underlying EPS of 7.2p apparently beats forecast in Stocko of 6.5p but shares down about 3%. Small dividend increase. Borrowings plus trade and other a/c payable looks high.

Cerillion (LON:CER) presentation by CEO & CFO at MelloSouth, just published

http://www.piworld.co.uk/2018/...

Also, worth looking at this with the write up by Graham back in May, when he interviewed management.

Wol

A second request for ULS Technology (LON:ULS) whose March 2018 final results are out today. Yet another example of their preferred EBITDA and adjusted EPS measures all looking good. If you have the perseverance to read down to the p&l (maybe 20 pages in) pbt has reduced because of a large increase in an expected deferred consideration for an acquisition. But if acquisitions bring in additional revenues and profits then the cost of those acquisitions should be counted too.
And most of their prior year numbers are reported as 2016, while some are reported as 2017. Is this just poor proof reading are a sign of lack of attention to detail?
I don’t hold but the story is interesting

Graham Neary

Farcejet - very good, MrC. Very good.

gus 1065

Morning Graham.

I see you’re looking to cover asset manager Tatton Asset Management (LON:TAM) in today’s SCVR. Reference my earlier post #1, although they are both High Flyers, at face value the Stocko algos suggest it is some way behind Liontrust Asset Management (LON:LIO) on most metrics which also reported today. Interesting to compare the two directly although clearly providing different services in their respective spheres.

Gus.

https://www.stockopedia.com/compare/?tickers=LON%3ATAM%2C+LON%3ALIO%2C+

re: Tatton Asset Management (LON:TAM) / Liontrust Asset Management (LON:LIO)

Thanks Gus!

xcity

Crawshaw (LON:CRAW) has been an interesting learning experience for me. The were very popular with PIs when I moved heavily back into the market in 2015. I looked at them, and the metrics were OK(ish) but growth was good. but I thought 'butchers shops? what sort of magic dust can be spread on butchers shops?' I even went and looked at one locally, which was basically a permanent market stall, doing a bit of unappetising hot food (Greggs they weren't), more freezer pre-packs than normal, and a smaller meat range. I didn't buy anything and saw no magic dust. And the price kept on rising. Now we have an inkling that the magic dust was over the contracts and accounts and expansion, though I still don't understand how LFL can be so poor.
When I review my duds, I can see that they were all popular at the time, all tipped by ST, and all had my own little red flags I should have acted on at the time. My own 'errors' where the price fell heavily were all a case of getting in too soon and came right in the end (often with me putting more in at the bottom). Teach me to stick to my last!

I don't know if ST recommended Crawshaw (LON:CRAW), and can't check because the site is down for 'maintenance'.

Camtab

Hi Graham, I am very interested in your thoughts on opm; 1pm. Lat time you were going to look at them but ranout of time. The numbers look sound and the multiple is attractive. Operating margin in 20s but ROCE and ROE not so . Stock I have had on my watch list for a while as seems interesting but ……….. all the best

wildshot

Excuse my ignorance but you say "all tipped by ST", who or what is ST please?

chrisgb

Thanks for your comments about Xaar. With an old market falling faster than expected and a new market difficult to forecast, it's hard to see how this will turn out. But could the Stockopedia team explain how a company where the share price has fallen from 500 in Nov 2017 to 233 today has a Momentum score of 51.

hayashi22

wildshot -I'm also wondering about that. Maybe ST is Sunday Times?. Also what is post \\378204? Are posts numbered? Maybe this weather has addled my brain.

rhomboid1

Simon Thompson of the investors chronicle....

Simon Thompson at the Investors Chronicle...or IC ..

leishylegs

I may be wrong but I believe ST may be a well known investors chronicle columnist!

It's just come to me -ST is the bloke who writes for the Chronic Investor. Simon Templar or something like that.
Problem for him is that he has too much space to fill so will invariably come up with duds.

Banzii

Hi Chris,

I was intrigued by this too. I drilled into the momentum ranking expansion and, under the geek section' it says "where the 50-day MA is much higher than the 200-day MA tend to perform better over the subsequent six months" or this case the 50-day MA is less bad than the 200-day so it's effectively starting to pull up from a dive. I do however suspect the numbers don't reflect today's fall so it should get worse when the numbers get crunched again. I'm not sure how frequently that happens on Stocko but would be interested to know.

I have no position in Xaar (LON:XAR)
cheers

Small Cap Value Report (Wed 27 June 2018) - FJET, CRAW, XAR, TAM, LIO, ULS, OPM

Fastjet (LON:FJET)

Crawshaw (LON:CRAW)

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Graham Neary

34 comments

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