Small Cap Value Report (Wed 29 Apr 2020) - DIA, NWF
Good morning, it's Paul here with the SCVR for Weds.
Estimated timings - there's not a great deal of small cap news today, so I should be finished by 1pm.
Today's report is now finished.
Dialight (LON:DIA)
Share price: 199p (up 10% today)
No. shares: 32.6m
Market cap: £64.9m
Dialight plc (LSE: DIA.L), the global leader in sustainable LED lighting for industrial applications, is today issuing the following update relating to its manufacturing footprint further to its announcement on 21 April 2020.
Today's update comes just 8 days after its last update, so I need to look back at that first. I'll summarise the 21 April update below;
21 April update - summary of key points -
- Temporarily suspended production in Mexican & Malaysian factories - applied for "essential business" orders
- Order intake normal until softening in late March
- Order by region - USA (largest market) resilient, EMEA "significantly impacted" by lockdowns, APAC "more resilient"
- Cost cutting - usual stuff e.g. suspending capex & discretionary spending, furlough (number not stated) & pay cuts
- Board - taking 20% pay cut, Chairman waiving fees for now (impressive leadership/commitment, good for him!)
- Net debt slightly down from 31 Dec 2019. Now £16.2m - unwinding working capital (worth noting, as once business improves, likely to suck cash back into receivables & inventories)
- Bank - £25m facility to Feb 2023. Talking to bank about enlarging facility & relaxing covenants
- Expectations for 2020 significantly reduced (no figures given). Confident about longer term
That all sounds fairly much as I would expect. The funding position looks potentially problematic, if bank not prepared to be flexible. Dialight has not performed very well in recent years, hence bank support may not necessarily be a given, if things get seriously bad in 2020. Depends if it is able to qualify for a Govt loan guarantee scheme? Clearly that would help greatly.
29 April update (today) - summary -
- Mexican factory can now re-open, in phases starting today
- Malaysian factory also re-starting (underway)
- This means all facilities will be operating, albeit at reduced capacity
Balance sheet - at end 2019 looks OK, but inventories look too high.
My opinion - it's impossible to value at this stage, as there's no visibility on sales/losses.
Relying on bank support for now is OK, but Dialight would probably need to raise fresh equity once business is recovering, to fund increased working capital, and reduce bank debt. Plus remember that losses in 2020 (which seem likely as it wasn't making much profit even before Covid-19) would lease a permanent scar on its balance sheet. This is a theme I keep referring to. I suspect some investors are not factoring in that, even if trading returns to normal in 2021, many companies will be left with a hole in their balance sheets from the substantial losses likely to have been incurred in 2021. That's likely to require an ongoing tidal wave of equity raises, for some time to come. So far so good, with decent companies apparently having no trouble tapping shareholders for fresh equity. But what happens in say 6 months time, when lower quality companies try to raise more equity? That could prove difficult, and lead to possible deeply discounted fundraisings, for survival. Especially if the markets overall drop back again from the recent, large rally.
Overall then, I'm cautiously avoiding stuff like this, which wasn't a very good company before Covid, and might need to raise more equity from the likely big losses in 2020.
.
Nwf (LON:NWF)
Share price: 200p (up 21% today)
No. shares: 48.75m
Market cap: £97.5m
NWF Group plc ('NWF' or the Group), the specialist distributor of fuel, food and feed across the UK...
This is a strong update today, key points (not comprehensive) -
- Maintaining operations well, despite Covid-19
- Staff treated as key workers, some working from home, nobody furloughed, and no Govt support sought
- Managing costs & balance sheet flexibility
- Strong position - plenty of headroom on £65m bank facility (only £17.4m drawn down at end March)
- Strong H1 (to end Nov 2019), Q3 (to end Feb 2020) in line, and Q4 so far significant increase in demand.
- Fall in oil price helping profits
- FY 05/2020 significantly ahead of last year
That's all great, but the outlook doesn't sound as good;
Uncertain outlook, activity levels expected to reduce in May 2020. No guidance for FY 05/2021
My opinion - I think the market might have jumped the gun on this, and the share price hitting a new 12-month high today seems incongruous, given the uncertain outlook. It seems to me that there could be some one-offs in the surge in demand from Mar 2020 - nervous customers stocking-up as Covid began to bite, maybe? The boost to profits from oil price volatility is also a one-off.
For that reason, I definitely won't be buying into the 20% spike today.
All done for today.
Best wishes, Paul.
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67 comments
just having a look round interested in Oxford Biomedica cos iv got a few of there shares
just taking it all in at the moment Oxford biomedica is of interest to me cos I have a few shares
Maybe it's been an issue of trust. Managers don't really sometimes fully trust their employees. But now that they've seen how most people aim to show how well they can do without close supervision, perhaps they will trust them to WFH from now on
Afternoon Interim update from £SHOE. Interesting points that I am sure will be a feature of other companies policies ongoing: Dividend policy withdrawn and will be restated . And cash balances to be held at higher level in future: .https://www.stockopedia.com/share-prices/shoe-zone-LON:SHOE/news/shoe-zone-plc-result-of-gm-and-interim-update-urn:newsml:reuters.com:20200429:nRSc3671La
Problem with companies increasing their cash reserves is higher cost and lower demand.
The market has always been awful at pricing risk which is why PE makes its fortunes overloading businesses with debt.
BoE already trying to instruct banks not to make provisions because they are worried about loans being limited.
The whole level of the worldwide economy is predicated on high debt. Everything now pointing to recession at least into medium term - except for habitual behaviour, which says it will go back to normal quicker than we think.
Very Useful appraisal
When Judges Scientific (LON:JDG) issued its Final Results on March 18, it reported:
Pandemic will affect scientific conventions and our ability to travel safely to our customers and therefore impact order intake, sales and installations.
· Effect on current year trading performance will be limited if the outbreak only lasts a further two months and will have a progressively growing and more significant impact thereafter.
I bought 1000 at 3450 that day but today, with the restrictions on meetings and travel likely to last longer than mid May, I have sold them.
It seems to me that holding shares where the story has changed is risky, especially when the directors have already told the market that their forecasts depend on the pandemic restrictions being over soon.
Good Afternoon,
You have mentioned Nwf was not doing well previously .Therefore it may not be a good idea to invest right now .Pebble beach system is in a similar position but the rank is really high.Is it because it can do well when normality returns.Should we invest.
DYOR
Markets soaring again. One small bio company said it was taking part in an online Covid conference yesterday; its share price promptly went up over 400 per cent at one stage today. Bonkers
Went out today first time in a while (mainly work from home); I live in a small town on the South coast near Brighton. Very strange. Empty roads and few people around and they avoided me like I had the...well, you know. Usually a bustling town with many older people. The government has certainly done a good job here; people are scared and very pleased to be behind their front door. Plenty here have a small garden. Neighbours are also delighted to have been furloughed and still getting paid. They don't want to go back to work and some have said they never will. Many have said they are much better off financially having cut down drastically on expenditure. No travel costs, no lunchtime takeout or expensive coffee, no overpriced restaurants or throwaway fashion and so on. Which all suggests to me it is going to be a very long time before the economy is going to be back to normal here even if and as restrictions are lifted by the government.
barnetpeter, your first paragraph is so true. Held Avacta (LON:AVCT) on and off many times, for example, share price has had a rocket’s rise recently, on covid-related hopes, and as you say, same with many others. Reminds me of the time when anything with .com went up, or blockchain, or internet of things etc. Most of these companies have never made money, many never will.
One company I continue to hold is Ekf Diagnostics Holdings (LON:EKF), who, apart from the covid hype as they make the tubes the test samples need to be transported in, also have a solid business in testing and diagnostics, are profitable and have cash on the balance sheet.
London / Canary Wharf. HSBC key tenant. Worked at home for many years now, ok if can get out say two days a week visiting clients etc otherwise start climbing walls (as now). And need quiet space (very hard). Contrarian view on London - could become a far nicer friendlier and less congested place - pretty much overcrowded on roads, cycle lanes, tubes etc so a reduction a positive for me. As for Pret etc. bought a Nespresso - another home working necessity.
It always troubles me when I hear of people waiving their fees. Yes on one level "very generous" but he is the CEO it feels like he isn't part of the business. I am old fashioned, I like to hear that the decision is made by the business so it survives not by some extraneous genius who clearly believes he is bigger than the business. It is all about ego really. Maybe I am just feeling a little tetchy this morning.
Are you referring to the non executive Chairman of Dialight? If so he is not employed by the company and is not involved in the day to day management of the company.
I have been looking at tandem £TND. Maker, designer of bicycles and leisure stuff. Will more people take up commuting by cycle because they do not want to get on trains busses etc? Possible. Gets a great Stock Rank too.
Cycles are quite a small part of Tandem (LON:TND) business, I think. I only have a tiny number of shares... but have been interested by changes in holdings in the company. Also they after paying a special dividend, which seems confident. But time will tell...
However much people claim home working to be effective, I don't believe it's as effective for most as working in an office. Assuming you don't count commuting time.
Making it work better would require better software and much better internet. So worth looking to invest in the see sources of one of the betters? Large parts of the country still have abysmal broadband. I can't see Huawei being sent away soon however much we resent China. Amazing how fast people found Zoom despite the number of apparently established alternatives.
And one advantage of London is that it's straightforward to travel anywhere in the country. That's not true for anywhere else.
Over the centuries London has waxed and waned. The waxing over the last few decades has been supported by immigration, the desire of younger people to socialise, travel, caffeinate and avoid settling down - and willingness to pay the price of living in rabbit hutches - and it's strength as a financial and technical centre.
Complaints about housing have been increasing exponentially rather like commuting costs. Strength as a financial and technical centre seems unlikely to reduce, EU or no EU, working in the office or working mostly at home.
The travel advantage as an international airport hub, must be less important.
We know there are plans to move the HoL, and other aspects of government, out of London. The government has a policy of 'levelling up' the rest of the country.
Betting against London has rarely been the right call financially, but it's certainly looking more sensible now.
Just in terms of what the new normal will look like there are some interesting comments from the Barclays' CEO today:
“I think the notion of putting 7,000 people in a building may be a thing of the past. And we will find ways to operate with more distancing over a much longer period of time."
And there will be knock-on effects. As commented in the Investor's Chronicle:
"Working from home is clearly working rather well. Also, banks are no doubt looking at this and thinking they can cut costs by closing offices, call centres and branches.
Nevertheless, it highlights how bosses and government have a very hard task in exiting lockdown. Moreover, what about the Pret or the pub that depends on lunch trade from the City workers filling up these offices every day? The impact on the economy will be permanent".
I would be wary of relying on property assets to underpin valuations until we get a more settled picture. If Barclays are considering abandoning Canary Wharf there are going to be one hell of a lot of asset writedowns.
timarr
It's not just employers who are plotting a shift to home work. I've been doing my job from home for six weeks with no problems. Already my wife and I are planning on moving out of London to a mid-size city (Sheffield? Bristol?) by the end of the summer.
As you said in a previous post, this will be a very interesting couple of years, if only it didn't come with thousands of dead attached.
It's not just employers who are plotting a shift to home work. I've been doing my job from home for six weeks with no problems. Already my wife and I are planning on moving out of London to a mid-size city (Sheffield? Bristol?) by the end of the summer.
I completely agree, many companies are now finding that the technology is robust enough for at the very least a large percentage of their workforce to work from home on a permanent basis. This will free up employees to potentially work from wherever they like, greatly improving their productivity and quality of life in the process. Of course, technology companies have been doing this for years but now the penny has finally dropped with more large companies, such as banks, that have always had a more traditional office based approach.
However, the penny does not seem to have dropped yet with commercial property landlords - only this week we got a very irritating letter from our rubbish landlord saying they would not be allowing any rent free periods and all rents and service fees should be paid in full and on time as usual. Well, they're in for a nasty shock!! We are currently on a rolling monthly lease with 3 months notice period to terminate, having told them to bugger off when they offered a new lease agreement a year ago, and they're going to have an empty office to let before the end of August. Good luck with that! It's very gratifying to be able to stick two fingers up to them after receiving that letter :-). I suspect many other landlords will be in a similar situation. I will be avoiding any investments in commercial property in future.
All the best, Si
Morning IML, Great idea to leave the smoke for pastures new
- LARGE masses leaving will reduce Property prices in London (AT LAST!) ?? and proportionately Inflate green and pleasant lands properties??
Londoners have been relocating to Brighton for the last several years as the commute is bearable if you only have to do it 3 or 4 days per week. I think you're right in that the exodus from London will now become more general.
Sheffield? Bristol?
Both nice in their own ways, but surely not very similar?
I am in 2 minds about WFH as it is difficult to manage productivity and for certain industries you need to be on the ground and not at distance. I agree to some extent this is a new world. I also share the notion that it is evident that COVID impact is greater in areas of population density like London and this would always be the case for such a virus. More rural areas have had little impact from the spread of the disease. I can well see that extended families and those who can WFH would want to move out of London. Better quality of life and clean air would trump the facilities to me. I live in Devon have high quality fibre which makes connection not an issue . I worked in a London for many years and can see it from both sides.
I am in 2 minds about WFH as it is difficult to manage productivity and for certain industries you need to be on the ground and not at distance.
Barclays are suggesting that they may refit some branches to allow people to work locally rather than commuting. You'd probably end up with a mixture of home working, local working and occasional centralised meetings. Allegedly there are lots of enquiries with managed service companies about using their officies for meetings.
A lot of centralised working is due to habit - managers like to see staff working and executives, who tend to be older, are less comfortable with the technology around remote working. All of this relates back to working practices grounded in pre-computer, pre-web days where we had to gather together.
There was a similar transition around the introduction of electricity which took about 30 years to reap the expected productivity benefits because simply electrifying steam powered industries made little difference. You needed to re-engineering working practices and the buildings to make it efficient.
As it happens that transition finally happened on the back of the Spanish flu pandemic, although I've never seen any evidence that was a trigger (although people have suggested that electricty caused the Spanish flu, some things never change). Anyway, Tim Harford wrote about this:
When the electric dynamo was as old as the web is now, factory owners were still attached to steam. The really big changes were only just appearing on the horizon. The thing about a revolutionary technology is that it changes everything - that's why we call it revolutionary. And changing everything takes time and imagination and courage - and sometimes just a lot of hard work.
https://www.bbc.co.uk/news/bus...
timarr
Timarr
Do not disagree with you as I see this COVID as a catalyst to change which needs IT investment in structures that can support WFH in a manner that is not liable to failure which can restrict productivity. This may need upgrading IT systems at a cost which companies need to bear If they are serious about such facilities, rather than seeing them an adjunct to working from the office. Not sure I support the implication that the age of senior managers is to blame for not moving forward when IT investment for no obvious ( at the time) gain in productivity. Hi The needs of the client in some industries will mitigate against a complete work from home environment. The future is more likely that many non client facing can be WFH
Hi timarr - I believe the concept of remote working, virtual offices, etc has been around since the early 1980's, leading to several false dawns that it would become mainstream. Maybe this time it really is different! For anyone who wants a play in this area, try Iwg (LON:IWG) a group that owns the better known Regus company.
Working from home rather than travelling to and from the workplace, in my view, may have seismic economic implications. Especially for London. Many business models from pubs, restaurants and gyms to real estate development are based upon established patterns of consumer behaviour and predictable levels of traffic. Instead of changing over a lengthy period, the changes are happening literally overnight. In many cases, the established business model may no longer work. Simply a guess but I suspect that most investors have not taken on board what this dislocation means. It might also be worth considering that homeworking is probably just one element in a range of societal changes that are yet to fully play out.
“Especially for London. Many business models from pubs, restaurants and gyms to real estate development...”
And don’t forget retail (clothes, sports shops etc) in general who rely on passing trade/footfall. If WFH does catch on (and I cannot see why not, I did for 28 years, in fact I ran my business from where ever I was; the downside of course was no real weekends and no real holidays) then it is surely another nail in the coffin of the high street and positive for Boohoo (LON:BOO) etc?
All good points in relation to working from home.
However the big drawback is if lots are working in isolation, creativity and ideas generation are stifled big time.
Screen time is great but no substitute for the energy created when a group of great brains assemble together.
Think about how good the threads here would be if we could all assemble in the one floor or building building everyday?
Clearly, we would conquer global markets! ;-)
However the big drawback is if lots are working in isolation, creativity and ideas generation are stifled big time.
Screen time is great but no substitute for the energy created when a group of great brains assemble together.
I think this just needs a change of mindset. I work with multinational technology companies all the time where a project team is split across two different US offices, a team somewhere in Europe, and another team in Israel, India or China, many of whom are working from home. OK, it makes finding a common time for everyone to get on a conference call fun, but even that's becoming a bit old fashioned these days.
This is a very common way to work in technology; it doesn't hinder creativity and often greatly improves productivity i.e. the team in the US office can hand off modules to the team in India for testing ready for when they are back in the next day, or vice versa. In this way you get a much longer effective working day and improved productivity. This idea that everyone has to be in the same room standing round a whiteboard with marker pens from 9 to 5 to be creative is really outdated.
Only yesterday morning I was using the Circuit extension for Chrome to go through some data in a spreadsheet with a company in China - it was a very efficient use of time for everyone and given the time of day I assume, like me, many of them were at home. With collaboration tools like Microsoft Teams, this idea of working in isolation no longer need exist. And of course, you don't get the distraction of office politics, can spend more time with your family instead of 2 or 3 hours commuting to and from the office, and save on transport costs. I believe this lockdown is going to prove to a lot of previously reticent companies that have traditionally been office based with minimal home working, that they can save money, improve productivity and have a happier, less stressed workforce. Of course, we also end up with a greener planet. Greta will be chuffed :-)
All the best, Si
Working with others really stuffs my creativity. All my best ideas arrive while I'm alone, without distractions or having to explain everything to other people. Perhaps many others like me and WFH will catch on permanently?
However, I'm also capable of partying like an animal! But eveything has its place, maybe
Yeh, but it’s going to be more difficult for me now, to chat up Sally from HR at the photocopier! ;)
Yes indeed , how many romances were / are office based ! I married from an office romance as I guess did many others !
Hi Greenhat2 Nice idea but everyday is counter productive how about Fridays only when company news tends to be less, how about sharing ideas daily in a structured way remotely via the discussion threads?
I completely agree, we wfh at our peril, long term. Consider how much easier it is to bounce ideas and really work collaboratively when co-located. I wfh just now, but prefer the office; I work in IT. I also wonder how the next generation will collect new skills if everyone sitting at home, and indeed how many of them will even get employed; given what globalisation has shown us. isn't it equally likely employers will just employ more dispersed, cheaper staff thousands of miles away. And what is the city without networking? What is the Cambridge biotech hub without critical mass, or Silicon Valley?
Maybe working in IT has made me biased, but I've seen what happens when people start to think co-location, soft skills, networking doesn't matter and I can assure you the future is lower productivity, lower skills and lower salaries in this country if that's what we want :-(
I agree.
As a manager, training someone completely new to the job face to face is much easier than training them remotely and it’s much more difficult to build up a relationship with someone remotely. Dealing with staff problems is also much easier face to face.
A spontaneous chat with colleagues who you bump into in the office can spark ideas and creativity that you are less likely to get remotely. I seem to recall that Steve Jobs deliberately had the Apple HQ designed to ensure these random meetings occurred.
For a company to work effectively the different departments need to cooperate well together. Remote zoom meetings tend to limit the interaction with other departments and there is more risk of a silo mentality.
From a Reddit thread inspired by the Barclays analyst call:
'Downsizing our office footprint has been on the cards for a while but we
have had problems convincing certain senior staff that remote working
was viable (some old school who like to see bums on seats); something
that has taken us 4 years of discussion was largely resolved and proven
to work in less than a week and I doubt that we will ever really go back
to having everyone in the office.'
I have just been elected Chair of the board of a small, very old company where the previous Chair couldn't cope with the idea of remote conferencing or, really, anything to do with technology, and resigned his position. We have adapted within a few days. I see enormous opportunities for models including private hubs like Barclays have suggested and shared hubs/workspace like Iwg (LON:IWG) as suggested above. But there will be models that haven't even been thought of yet, and an enormous opportunity for serving the WFH market with innovative ideas some of which I am having myself. I think the existing tech to support distributed teams will look very dated within a couple of years. The time will come when the idea of having a team in one place all the time will just seem mad. I also think the demand for rural and semi-rural properties with garden space for drop-in office modules will be enormous. After the worst of the contagion phase is over accommodation providers may also benefit by offering facilities and packages for group bonding get-togethers if managers feel they really do need their team to meet each other physically occasionally.
Next (LON:NXT)
Another tour de force set of financial information realsed by next. They really are the Messi/Ronaldo/Davie Cooper of companies with regard to useful clear communication of information to shareholders.
By contrast i would say possibly 30% of listed companies communication to shareholders of financial information is more akin to something along the quality standards Gerard Ratner/Ali Dia / Thomas Brolin or Lookers PLC would produce.
I will repeat comments from £look yesterday where they have reported that not only do they not know details forsome of the items on their balance sheet at the last reporting date - but even after this fact was realised they haven't sorted that situation out yet.
Per lookers yesterday - proper Ali Dia stuff.
Initial indications have identified some operating divisions where certain non-cash balance sheet accounts have not been fully reconciled, in accordance with Group policy. These items are expected to give rise to a one-off, non-cash charge, however this part of the investigation is still ongoing.
Anyway back to next.
They have debt approx £1.0 billion so there are issues here if worst case scenarios come true for a prolonged period. They expect to able able to reduce net debt this year by £300 mill under worst case scenario. Note there are elements of one offness here sale of property and reduction in debtor book.However i would presume their actions are more than sufficient to ride out the storm - albeit with any similar company future covenant issues may be an issue. It looks like practicably spekaing they should have £600 mill headrom on debt facilities and they have taken backup covid funding a s areserve.
Note under worst case scenario losses are expected to be £150 mill this year. So they may be swimming against the tide if things stay that bad for long. Note worst case scanrio is 40% down and they are now at a worse place than they previously expected - so the worst case may not end up being the worst case.
In the scheme of things Next (LON:NXT) looks well prepared to see its way through the current crisis and should be well placed to at least get to sufficient profit pretty soon after general lockdown ends to be able to service their debt. No mention of fundraising today from shareholders that i can see - i am guesisng they have no plans tro tap sharehoklders at present - shame they didn't say it - but i can see why they wouldn't say it. Anything that avoids increase in share count i think is best for shareholders generally.
Would i buy back in at current prices? - i initially thought shares were a little toppy at 7200 a whole back but trading pre covid was so robust that my last pre covid thoughts were that 7000 was reasonable price to pay and enjoy the dividend income. Shares are down 30% from that level. Based on potential complete evaporation of profit and the debt i think the shareprice is about right - i think shares are more likely to go up than down short term - but i am more than happy to stay on the sidelines. Note they had an ever increasing % of profits coming from finance income (possibly the one item i am not 100% comfortable with -) possibly more profit from finance than stores going forward !!- so a material reduction in near term sales will probably create a future reduction in finance income as their finance book naturally reduces medium term. EPS 2019 was 546p - so i would guess even if 2021 and 2022 are back to normal i doubt Eps will much exceed 400p - who knows though they may end up this sitiuation with more dominant position than previously if competitors exit their buildings
Certainly this company stays on my watchlist and in hindsight the 3700p sales price of the shares not so long back looked like a bit of a bargain, although at present it would not massively surprise me if shares ended up back there if there is another general market sell off - or trading gets worse again at next update. If i had held onto the share through the crisis i don't feel i would be more inclined to sell than most other companies i own - unless the price were to spike back something above the 6k level.
Wholeheartedly agree with your assessment of Davie Cooper. What a player.
Wholeheartedly agree with your assessment of Davie Cooper. What a player.
Not worthy of being mentioned in the same breath as Messi or Ronaldo though. I suspect someone's tongue was firmly in their cheek when writing that :-) Closer to Ali Dia than those two!
Interesting to see Charles Rolls, one of the co-founders of Fevertree Drinks (LON:FEVR) announcing he is standing down today. What a business they built over 17 years. Not only that, they pretty much created a new capital light business model for their industry. I particularly liked this comment:
While I am stepping down from the Board, I remain a great supporter and significant shareholder in Fever-Tree and am as passionate about the business as ever. Fever-Tree deals in a world of best before dates and I am happy to be stepping down before I reach mine.
All the best, Si
Closer to Ali Dia than those two!
Let's not turn this into football argument, there are plenty of other chat sites for that. But I respectfully disagree with you: https://twitter.com/gullitr/status/1052171238599200768?lang=en
Certainly Ruud Gullit would agree with you. But I am afraid I would have referenced Ken Wagstaff. Its a tribal thingy majib!
Ali Dia - I suspect there a very few readers who know who he is - but I do - love the analogy!
I know Next (LON:NXT) is not a small cap but is often discussed in retail sector discussions on Stockopedia. The trading update this morning while inevitably pretty disastrous with huge fall in sales (40%+ ) is staggering in its detail & transparency. This was one of the very few shares I sold from my portfolio in the Covid-19 crisis. I just hope there is an opportunity to buy back in at some point in the not too distant future!
Anpario (LON:ANP) not only reconfirmed payment of the divi and announced an interesting-sounding new patent (as already mentioned by Mr C) but in my reading is also giving a positive trading update from Q1 (although not phrased explicitly as such); "the strong performance in first quarter", based on picking up market share and finding that their own remote sales approach proves (surprisingly?) effective. Interesting! I hold.
Large cap but worth reading for an overall picture is yesterday's post-close announcement from International Consolidated Airlines SA (LON:IAG) :
https://www.stockopedia.com/sh... - it knocks on the head any 'bounce back to normal' notion - Recovery to the level of passenger demand in 2019 is expected to take several years - and reminds us from Q1 figures how profits are made on the last section of revenue in industries like this.
it knocks on the head any 'bounce back to normal' notion - Recovery to the level of passenger demand in 2019 is expected to take several years - and reminds us from Q1 figures how profits are made on the last section of revenue in industries like this.
Gatwick announced last week that they expect it to take 4 years for air traffic numbers to recover. And that's assuming that the new normal looks like the old.
timarr
Hi
This is a sober assessment of the world picture for aviation as many fewer discretionary flights will be taken in future and the inevitable casualties will remove over capacity, thus driving up prices. Anyone with a slight knowledge of the industry is aware profitability is based on full flights and if these are as much as 3/4 full then the airline loses money. We are also facing a recession in most parts of the world which will be the least equal of the last one but central banks lack the firepower to kick start. This background is not great for air travel, along with the outcome of flights in a COVID world being quarantine when one arrives! Airline stocks have always been for traders. IAG will be a buy when the worst is over but at lower than the current price and when the dividend has been passed.
Hi
Re Airline stocks:
The read across for the world economy is terrible . This isn't really about a few airline stocks, the below figures are from the World Tourism & Travel Council. They may guild the Lilly here but even so...
A big reduction in travel is an indicator of what's to come and the knock on effect to so many business, and the businesses they support. weather you support lockdown or not, the economic & social consequences have to raise the question of proportional action.
My portfolio is doing amazingly well, after being smashed of course, some stocks hitting new high's, sunny uplands, future is bright, conditions for a V recovery, a new boom. Then I read the business headlines of any paper (ignoring the C19 test companies of course) and the news is terrible. I am now looking to sell into this rally. I many be wrong but the probability of not having a massive leg down looks very on the side of probable.
https://wttc.org/en-gb/Researc...
In 2019, Travel & Tourism’s direct, indirect and induced impact accounted for:
Then add in the impact from the disaster that is retail, leisure & entertainment, oil, property etc etc, pretty much every sector bar medical and online. The collective & global reduction in demand, & this is the main driver of recessions, looks unimaginable.
To quote:
Bear markets have three phases,” Richard Bernstein, the founder of the $9.5bn asset manager that bears his name and former chief investment strategist at Merrill Lynch, tells Barron’s. “The first is that investors view it as temporary, the second is that it’s worse than anyone could have expected, and finally, that it will never end.”
Still in phase 1 to me.
Being careful to couch this in terms of only being “in my opinion” and what I think is more likely not a certainty, I do feel it’s depends over what time scale one is looking at this. But in my opinion five to eight years out the world in general will have “bounced back to normal”. Yes there will be a lot of pain in the interim but I don’t think a lot will change.
We may have taken some things away from this crisis and kept them (more antifragility in balance sheets, both corporate and personal, more slack in health systems, better personal hygiene (hand washing etc), more appreciation for healthcare works and much more but I do feel it more likely that thing will, in general, go back “normal”: people will travel, go to the pub, party, go to concerts. I don’t see high street retail surviving but I didn’t think this before Covid19.
As the Americans are apt to say “this too will pass” whether through, immunity, vaccine, treatment or mutation.
That said please don’t think I am not pessimistic in the short term, I think too many people are underestimating the economic and financial impact. If what we are going through now does not cause a very deep recession, with or without all the government funny money being thrown around, what will?
Have governments really been able to do away with recessions or at least the impact of same on stock markets, so that it is only the work force who suffer? I would be surprised.
Sorry for the rant and sorry to those who don’t like off topic (small companies) comments.
One major thing imho that needs sorting for future plane journeys to be safe is how to stop the recirculation of air.
My morning smallcap tweet:
Mirada (LON:MIRA) Malvern International (LON:MLVN) Dialight (LON:DIA) NWF (LON:NWF) Novacyt SA (LON:NCYT) Stanley Gibbons (LON:SGI) Purecircle (LON:PURE) Anpario (LON:ANP) Image Scan Holdings (LON:IGE) Dev Clever Holdings (LON:DEV)
Mirada (MIRA) guides FY(March) rev up 6%, rev-cont up 11%, adj post-tax -$1.4m (-$3m). Progress toward several significant new commercial rollouts during the next few months. No operational constraints from covid. New gov't-backed 6 year €1.25m loan at 2%, confident that it will not need to rely on additional equity funding to continue its operations for the foreseeable future.
Malvern International (MLVN) some teaching has been successfully moved online but very significant drop in rev and cash inflow. Only has cash to end of May. Discussions with major shareholders and debt providers.
Dialight (DIA) phased restart of Mexico plant from today. Already already initiated a phased restart in Malasia, so all plants will be operational at reduced capacity.
NWF Group (NWF) Guides FY(May) rev significantly ahead of prior year. Co has not sought any gov't support nor furloughed any staff. Recent significant increase in demand in Food div, though some of the additional revenue offset by additional costs. "Confident that the Group is in a strong position to manage through this period of uncertainty."
Novacyt (NCYT) Primerdesign has sold, received orders for or has been contracted to deliver over £90m of its COVID test. Has signed manufacturing contacts with two further manufacturers. Plans to launch its new extraction technology in May. This remove the need for scarce reagents and is faster.
Stanley Gibbons (SGI) has traded better than initially planned. Cash only slightly down on pre-covid plan. Has liquidity for 3 to 4 months without any further mitigating steps and has further £2m unused credit. Physical shop is closed. Delayed May auction. Coin market has remained quite robust, "evidence of more people showing an interest in both coin and stamp collecting. The higher end of the stamp market has however seen a more pronounced impact." Material increase in users of websites and social media platforms after a marketing push.
PureCircle (PURE) new $33m bank facility to keep the lights on until proposed takeover.
Anpario (ANP) little disruption in terms of production and delivery. Will pay div. Filed patent for "a natural essential oil composition that could reduce the presence of certain antimicrobial resistant bacteria in the gut of young cattle."
Image Scan Holdings (IGE) H1(March) rev up 60%, ahead of mgmt expectations but expects H2 to be significantly impacted by COVID.
Dev Clever (DEV) as now formally entered into a three-year exclusive worldwide partnership contract with Lenovo, as mooted in Sept.
Proactis Holdings (LON:PHD) announced H1 2020 results today, here are the key highlights delivered by Tim Sykes, CEO. (We should have the analysts' presentation later this week.)
Tomorrow, please join piworld's Thursday webinar, with our guest David Buik, giving a Macro Market Commentary, and what that means for investors, with the opportunity to ask question. Register through this link. Following a City career mainly working for Spreadbetting companies, David has an MBE for his services to Financial Services. He's a regular commentator on BBC, Bloomberg and other international news channels. He should be an interesting listen.
"David has an MBE for his services to Financial Services"
Look forward to the day when someone receives an award for services to shareholders.
Too bloody true!
Will try to watch the webinar, David Buik is a legend!
Tamzin I have only recently become aware of your website.
Having watched your interviews with Michael Taylor and Spencer Crooks I found them really informative and enjoyable. I certainly will not want to miss David Buik.
Keep up the good work.
Hi Paul :-)
Any thoughts on Sylvania Platinum (LON:SLP) after yesterday's quarterly results?
JMx
I guess as it gets its product out of the ground, Paul may be less keen to comment but , I have held this share for a while. Yesterdays numbers looked great and there does not seem to be a huge impact from C19. With a lot of cash swashing around I am hoping for special divi to come.
Morning!
Sorry, but I don't cover any resources stocks here.
Regards, Paul.
Morning :-)
Ah, did not know that!
Well...wish me luck then :-)
JMx
There were a couple of comments on Sylvania Platinum (LON:SLP) in yesterday report comment section
Thanks for that, very useful :-)