Small Cap Value Report (Weds 17 Mar 2021) - ANP, TRB, SIS, HSW

17th Mar '21 by Paul Scott

83 comments 13617 reads

Good morning, it's Paul & Jack here with the SCVR for Wednesday.

Timing - I'm taking a break for lunch now, and will try to do some more sections this afternoon.

Agenda -

Paul:

Anpario (LON:ANP) - good final results, but shares look pricey after a strong run up recently (like so many other things).

Tribal (LON:TRB) - Preliminary results - an earnings miss at adj EPS level, which is glossed over. Weak balance sheet. I'm not keen any more.

Science In Sport (LON:SIS) - 2020 results - in line with the January trading update. Reduced losses, and looks potentially interesting now breakeven is possibly within reach.

Jack:

Hostelworld (LON:HSW) - Covid disruption continues but cost controls and June 2020 share placing should see this OTA through

Paul’s Section

Mello Tuesday was very interesting last night, a 3-4 hour investment webinar all about gold & other miners. I never invest in this sector, because it’s so difficult to pick the winners from all the dross. Also I feel that some sector knowledge is needed, which I don’t have. That said, I found the presentations by Caledonia Mining (LON:CMCL) and Afritin Mining (LON:ATM) very interesting.

For me (Paul) though, I think too much of it is guesswork, and having a business with lots of capital (it’s very expensive to start, and maintain a mine), which sells a product with an almost random selling price, subject to wild swings from boom to bust, just doesn’t appeal to me.

All very interesting though, and I can see why a lot of subscribers here like low PER producers (as opposed to speculative explorers). Plus of course so many shares in the natural resources sector have done tremendously well in the current “everything rally” as one commentator describes it. I’ve probably missed the boat, so think I’ll stick to my knitting, rather than branching out into the resources sector.

Anpario (LON:ANP)

612p - mkt cap £142m

Final Results

Anpario plc (AIM:ANP), the independent manufacturer of natural sustainable animal feed additives for animal health, nutrition and biosecurity is pleased to announce its full year results for the twelve months to 31 December 2020.

Like practically everything it seems, Anpario shares have risen strongly. Results day is crunch time,…

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Rusty2

17th Mar '21

I reported the missing results for TM17 and indeed there is an issue which which they reported to their suppliers.

Kenny Powers

To answer Pauls’s £SIS question on expansion capex here are details from their website: ”Consolidate Nelson sites and 3PLs into single site
• Capacity to deliver £200m revenue with limited additional capex
• Installing new Gel filling and packing line
• December occupation, Q1 FY22 completion
• £4.3M Factory & Gel line total cost
• £2.2M from cash, balance lease financing

And re. the question on the product and whether there are repeat customers, I started looking at Science In Sport (LON:SIS) on the back of their products (I rate) and the fact that all my friends use them and they seem a top seller on wiggle/well used at triathlons. Considering their massive growth online, flat sales compared to 2019 despite retail closures and gyms and mass sporting events largely closed/cancelled, together with growth plans online/overseas/football backed by investment in capacity and the decent balance sheet, I think there is (very) good upside potential here. I’m holding onto this one., but did buy in some months ago.

rmillaree

As for non-issue, perhaps that could mean 10,000 to 20,000 deaths per year, which would mean it was comparable to flu.

No i was pretty much talking at the level of cow related deaths before we could really say its gone practicably speaking - anything at the levels of flu and i would say we are still either papering over the cracks or it mostly certainly isnt gone away - even if it is deemed to be at acceptable levels then or levels we will have to deal with.

p.s. I am surprised you imply that John Campbell would disagree with what I said above. Can you refer to a specific day where he talks about this so I can check it out?

Its tricky as he has soooo many vidoes - taking a quick look if we look at the long term immunity labelled one from 18th november right at the end he does cut to the chase - obviously thats before the new more strains turned up late december and before the manaus second wave - so its possible he may have toned down his thinking after that date , although i have been avidly watching and cannot recall him having changed his tune later on.

Gromley

But it is quite possible that:
“Any of those pools could give rise to a variant that continues to be controlled by exisiting vaccines, is much less dangerous to the general population as a whole etc”

I think some of the key scientists have done us a significant dis-service by attributing some kind of sentience to the virus. "Immunisation will encourage the virus to mutate" I heard something or something similar to this recently.

Virus development is just evolution in double (plus some) quick time compared to what we normally consider. Viruses throw off a huge number of mutations very quickly; the rubbish ones die out quickly, the more effective (in terms of their ability to procreate and spread) will flourish.

So whilst there no doubt will be lots of variants that are less harmful or less contagious, those are irrelevant. The important consideration will be whether any random mutations occur that happen to be resistant to the immune response prompted by the current vaccines; those would be the survivors.

I do actually feel quite optimistic for where we are currently, but I just think that some of the views that "they think it is all over" are not really based in science.

On the subject of things that are not really based in science, here's my left field "win win" scenario (for us and the virus.) Imagine if a mutation emerges that :

Can evade current vaccines.
Provokes only moderate non-fatal symptoms.
Provokes an immune response that 'immunises' against the more fatal variances.

I am being a bit "SciFi" I will confess but it is a scenario that could happen and would allow us to co-exist with this virus. Great for biodiversity surely?

Just as a random example : Wolves were essentially eradicated from the UK because of the threat they posed to humankind.

Boon

Interesting comment from Lpa (LON:LPA) that their sales are being deferred as their customers can't source other parts for their manufacturing, so having to delay/pause until those parts come in...! Due to Brexit.

Quote from profit warning: "Other parts of our customers' supply chains have not performed so well and, as a consequence, our customers have production issues caused by lack of supply of parts needed to run their production lines. Following programme reviews by customers, further supplies of many of the parts we manufacture are now not expected to be required for several months."

Doesn't bode well for any company that does extensive manufacturing in the UK, especially complex ones (cars for example?)

It looks like Brexit as well as the shipping congestion is a perfect storm for UK manufacturing...

timarr

18th Mar '21

More practically, the market reaction to the "they think it is all over view" looked very optimistic even before the vaccine supply chain issues that emerged late yesterday. The models and the words coming out of SAGE clearly indicate that they expect a fourth wave when restrictions are lifted - the difference this time is that they expect less deaths.

We should note that pandemics do "just go away". The fact that we are all here and weren't permanently plagued before last year is evidence of that. But the death rates to get to that point are probably not acceptable in a society in which we have the science to prevent them.

Beyond that, this is a coronavirus - and we have never managed to eliminate any of those, ever. There will remain vast pools of unvaccinated people in other parts of the worlds for many years where the virus can circulate freely - possibly forever.

Take-up of the vaccine in India, for instance, is relatively low - but the average age of the billion plus population is under 30, most of them aren't at any risk. The vaccine supply to Africa is nowhere near the need - and that's before you consider the challenges of rolling it out on minimal healthcare infrastructure - and then doing it again every six months. And Brazil - well, that's a disaster in technicolor.

This also makes a point that I've been pondering for a while. Countries with younger populations - India, much of South East Asia, all of Africa - ought to suffer less economically than countries with older populations while posing a health threat to those same countries. We need vaccines to function, they don't.

peterg

”Any of those pools could give rise to a variant that is not controlled by exisiting vaccines, could be more dangerous to younger people, etc”

But it is quite possible that:

“Any of those pools could give rise to a variant that continues to be controlled by exisiting vaccines, is much less dangerous to the general population as a whole etc”

Of course, Michael. I didn't suggest otherwise. However I was responding to post suggesting there was no point in speculating about the possiblity of a further lockdown. My point was simply that the possiblity exists. As I said hopefully that won't happen, and there's a good chance it won't, but recognising the possibility in a company's forward risk planning seems a sensible approach.

I will be honest I have no idea but do hope that the “learn to deal with it”/live with it comes quicker than most people seem to wish.

I'm not clear why some people who disagree about the potential risks of covid assume that those disagreeing, or in fact anyone, "wishes" for the pandemic and the consequential effects to continue!

Timarr
Beyond that, this is a coronavirus - and we have never managed to eliminate any of those, ever.

Errr what about SARS?

Errr what about SARS?

It's a fair point - there have been no cases of SARS reported sinc 2004. On the other hand it was far less transmissable than CV-19 (becauses it infects the lower respiratory tract rather than the upper one).

And, of course, it was contained. CV-19 quite clearly isn't.

cmpeckham

Thanks for the John Campbell reference. I watched the video. He makes a number of claims around immunity and reinfection that are contradicted by the evidence we now have from Brazil. Then at the end he says it's his belief that the virus will be eradicated without offering any evidence as to why. If the only evidence is the prior contents of the video then, given what we have subsequently learned, it can be discounted. I'm sure what he says about general immune response is true, but the conclusions he draws from that appear now to be contradicted by the evidence.

Even if everything in the video was still true, it doesn't address issues such as vaccine effectiveness and limited take up (in the UK 77% of adults say they will take the vaccine which is good by international standards). There are a number of other factors that count against the eradication of the virus.I dont wish to disparage him that's just where we are.

If you read this, I have a suggestion. As you watch him regularly, how about contacting him and asking him the question directly: is it realistic to hope that the disease might just go away?

Thanks for taking the time to come back to me cmpeckham - there are other videos i think where he has gone into things in more depth - i just dug out the obvious one last night - there is probably 365 to trawl through altogether

I think his main thrust is that the people who got sars are still showing good antibody or t cell response many years later - the basic form of covid is sort of stable in that the mutations are not raeally anything along the level of what happens with flu or ebola or aids (as evidenced that the virus is mostly workuing for now agaisnt different strains and if it turns out they don't work hopefully is formulaic tweeking that is needed) , the maths can work in your favour - if R0 remains below 1 then in theory a whack a mole attack should be able to target out of existence so there is always that simplt track and trace route to success, natural herd immunity possibilities - in some countries we have already proved that rate of transmision can be kept at next to zero and finally the old chesnut that pandemics do turn to burn out - albeit we may be left with undesirables.
So i have well more than 0.00000005% or lee westwood hope (0.01%) hope that we can find a plan -or get lucky - i have no expecatations than the outcome will be good anytime soon but i disargee with those who say there is no hope.

If you read this, I have a suggestion. As you watch him regularly, how about contacting him and asking him the question directly: is it realistic to hope that the disease might just go away?

He is a busy man woth 1 million subscribers i did contact him once and didnt get a reponse - being honest his vids are contstant reavaluations of the overall state of play so if we keep an eye out probably not to long to wait to see what his current thoughts are - i suspect its fimly in the wait and see category and any speculation is simply idel speculation - i suspect if you emailed and asked directly current odds of us making this something less than a cow killer in 3 years i guess he would say 25% plus - thats idel speculation on my part tho.ugh

Totally agree CV-19 is a different beast entirely - The fact that the R0 number is higher makes it a harder job to tackle - but i would start from the viewpoint that the principle for tackling should and could be the same - get the R0 below 1 for long enough in every area of the planet and in theory we could have the same end result - perhaps we won't be able to do this if its core charatceistic is that it will always find a way to get R0 above 1 - perhaps it will always mutate enough so we are alawys chasing the tail each year - i have no idea how it will pan out but there is a decent precedent set here set with SARS that this is not an impossible task IMHO.

What is slightly annoying is that if we had learned the lessons of SARS and not buried our heads in the sand ref plan of attack in the intervening period things may have been much less bad with regard to proetcting the vulnerable - the WHO and political posturing of countries combined that delayed the confirmation this was even a pandemic for possibly a couple of months was a complete disgrace IMHO. I think we were ranked second in the world behind us ref preparadness for this - that glossy brouchure of PR spin was also a complete disrace - although perhaps thats an execution issue that we should lay the door firmly at the goverment - possibly to easy to compain with hindsight here as there was a whole chain of obscurification when we needed the opposite.

there is a decent precedent set here set with SARS that this is not an impossible task

Well, you'd hope so but in practice I don't think we can put this genii back in the lamp. There are huge swathes of the world's population with little access to healthcare and lots of younger populations who don't need it for themselves. How do you vaccinate Africa? Repeatedly?

The lesson from SARS is go hard and go early but even then there was luck involved, because it was relatively hard to transmit and, in particular, didn't spread asymptomatically. But let's face it - the UK saw this coming - China, Italy and then Spain - and still didn't react. Are we in any position to criticise other countries for failing to react?

For the UK the main problem is that the NHS is underresourced. When it's already running permanently at 95% with the lowest number of intensive care beds per head of population in Europe it doesn't take much to cause a crisis. To the extent that the reason for lockdown was protecting the NHS then the economic downturn can be traced directly to the governments of the last ten years systematically underfunding it.

Perhaps the recognition that economic growth depends on having surge capacity built into the NHS will lead to a proper long-term funding plan for health and social care. But frankly, I'm not counting in it.

" with the lowest number of intensive care beds per head of population in Europe"

I don't think that is correct, do you have a link to those figures?

The ones I'm seeing say the UK has more ICU beds per 100,000 persons than Ireland, Slovenia, Netherlands, Finland, Sweden, Greece and Portugal has the lowest number.

The ones I'm seeing say the UK has more ICU beds per 100,000 persons than Ireland, Slovenia, Netherlands, Finland, Sweden, Greece and Portugal has the lowest number.

Ack, yes, I was thinking of is the "accessibility index" which is a combination of the number of beds / 100,000 people plus the physical access. On that basis the UK is ahead only of Sweden (which is twice the size of the UK with a sixth of the population).

I think you're at least partially right - this article suggests that we're ahead of Sweden, Ireland and the Netherlands at least:

https://www.health.org.uk/news...

The other points it makes are also relevant, though - the UK is at the bottom end of international comparisons for beds and doctors per head of population.

Overall the NHS has done a remarkable job, given the pressures, but the price in terms of waiting lists and lowered quality of life for people who haven't been treated is yet to be calculated. The latest squabble over wage rises for the NHS isn't likely to help matters, this government does seem inclined to pick fights it's bound to lose.

I don't hear any discussion about capacity in the NHS, but it's something we need to be acting on now. The key point being that in a normal year, it is seasonal illness (primarily flu) that gives us capacity problems. This year seems to have been the best year ever(?) for seasonal illness - there basically wasn't any. I guess the jury's still out on whether CV-19 is seasonal.

If we assume that we are opened up next winter, then we have normal seasonal illness making a return, which in a normal year without CV-19 pushes us to capacity. Some say that next year will be bad for flu because we're now more of an open goal for the viruses. So that would take us over capacity and that's before we even start thinking about CV-19. So how exactly will current plans protect the NHS without needing another lockdown? Let's not forget about the backlogs of other treatments and surgeries that have built up and the higher level of urgent surgeries that will presumably happen going forward as a result. I can't quite see how all of this is supposed to work. That pattern would then repeat every year (unless CV-19 goes away). Lockdowns 4 and 5 next winter??

I guess we have to hope that the power that be co me up with a cunning plan , i couldnt underrstand the lack of use of the nightingale hospitals - to me i would have tried to ensure these were suitably staffed (is there enough emergeny capicity with retired bods / students and people doing other stuff / arm medics etc ??) so that as many normal hospitals within those localities remained covid free - check all the covid bods into these nightingale hospotals - i would preume that would have helped mitigate the amount of vulnerable people catching covid in the main hospitals - and make a paln to have more of these places available if needs be. I know nothimng about the nhs though so my random musings simply may be too much to put into practice and may have more downsides that positives eg if the level of care in the nightingales was always going to be substandard compared to your hopefully efficient local normal hospital - i guess practicably speaking everything stretched to breaking point before anything goes wrong so it can't be easy finding the solutions without the combo of well targetted extra wonga and waiting for that investment to deliver.

GrahamF

Is there any correlation between spending on healthcare by European nations and the level of deaths or mortality rate from Covid? I think it is probably a rather poor correlation.

"i couldnt underrstand the lack of use of the nightingale hospitals - to me i would have tried to ensure these were suitably staffed (is there enough emergeny capicity with retired bods / students and people doing other stuff / arm medics etc ??) "

I think the simple answer to the staffing question is no, there were not enough (latent) staff to fully do that - I think most of the deployments you suggest were utilised. I was working on a project for a Community Healthcare Trust during the first wave and a lot of the community based clinicians (and admin staff) were redeployed in to Hospital settings.

However, based on what we have learned I think there could be a smarter solution in terms of redeployment, but the 'next time' might be sufficiently different as to invalidate that.

And in relation to cmpeckham's mention of the next round of seasonal illness, I have seen quite a few references to the fact that the next flu season could be particularly bad. I don't share those fears to be honest - I think flu vaccinations will again be offered to the younger cadre in the coming season, some of the mitigating habits we have learned will stick for a while (hand washing in particular) and many of the people that would be particularly vulnerable to a worse flu season are sadly no longer with us.

Small Cap Value Report (Weds 17 Mar 2021) - ANP, TRB, SIS, HSW

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