Small Cap Value Report (Weds 18 Aug 2021) - ANG, TCN

18th Aug '21 by Paul Scott

43 comments 7891 reads

Morning all, it's just Paul here today, with the SCVR for Wednesday, on an exceptionally quiet day for news.

Today's report is now finished.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to cover trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

Agenda -

Paul's Section:

Angling Direct (LON:ANG) - decent revenue growth in H1 of +19.5%, although online sales in the EU have plunged due to supply difficulties re Brexit. Guides to >£4.0m EBITDA for this financial year ending 31 Jan 2022. Tons of cash in the bank, so expansion self-funding. Looks quite good to me, worthy of deeper research I think.

Tricorn (LON:TCN) - announcement today indicates that business likely to be put into administration & sold to the highest bidder. Hence a 100% wipeout for shareholders is likely.

Angling Direct (LON:ANG)

72p (pre market open) - mkt cap £56m

Half Year Trading Update

ANG produced a record profit, in its results for FY 01/2021. Jack reviewed the numbers here.

No doubt fishing will have been stimulated by lockdowns, and receipt of Govt support measures, so it will be interesting to see if stronger performance is sustainable in more normal conditions in future?

Today’s update -

Angling Direct plc (AIM: ANG), the leading omni-channel specialist fishing tackle and equipment retailer, provides an update on trading for the six months ended 31 July 2021 (H1 2022).

The table (below) for H1 revenue growth raises a few questions. Online growth shot up 47.6% in H1 LY, as I would expect from the…

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GN100

18th Aug '21

Wilbraham

I don't hold Novacyt Sa (LON:NCYT) and would not have found the dedicated thread. I thought the different and well-reasoned opposing viewpoints quite interesting.

rmillaree

Novacyt SA (LON:NCYT)

Please! Why all the discussion of Novacyt Sa (LON:NCYT) here when someone set up a dedicated thread just a few threads below? Why bother when people degenerate to the bad old ways.?

Errrr Wilbraham you seem to be missing the point that this company has updated the market today and is in the market cap limits to be discussed here - i wouldnt expect the discussion to veer anywhere as its all on point today.

Novacyt SA (LON:NCYT)
davidjhill
" I think 2 years worth of testing at existing revenue levels is conservative (ie no growth but no major drop off in next 2 years - average flat)."
Why is at that current market expectations* are that turnover will drop to £70 mill next year. How come your "conservative figures" are 50% higher than the company is guiding us towards at present?
*I have taken forecasts from stocky.

Perhaps its a way of flagging up the over 50's - must admit i will use the old format till the day it dies then mourn its loss till i realise the new format actually may not be so bad after all. One thing i miss on the old format is that next year broker forecasts don't show up - so perhaps there are other gems to experience when we do get pushed off the diving board.

davidjhill

I wouldn't rely on stocky for this one. Their estimates for this year are way too high as well.

Company guidance on the call today was very comfortable with £100m for this year (ie likely to beat was my read across) and too early to put numbers on 2022. Lots going on, so there is no company guidance. New LTF product for foreign markets launched and US testing launch strategy coming soon.

My take is that I'd expect there is another year of some revenue consistency and maybe growth in the private sector (sport, films, events etc) and foreign markets (where covid levels and vaccination rates are much lower) coupled with the new products. Then I can see a big drop offset by some new business the following year.

BnB

Can anyone account for the big fall in Renalytix (LON:RENX) at 14:30 today? Clearly a case of the Americans pulling out - seems to be the fashion this week.

I've been tracking this one since a respected US analyst described this as the "the new Exact Sciences". Whether he meant a company with potentially 15 years of shareholder pocket-dipping and no profit to show for it, or a future massive multibagger - he wasn't clear.

No RNS or news story on my Refinitiv so I assume a rumour regarding product trials or similar.

Thanks

Snowbum

Yawn, tired of hearing all the bleating and moaning about this tbh, if you don't like the new Stocko format then you can vote with your feet

Novacyt SA (LON:NCYT)
Company guidance on the call today was very comfortable with £100m for this year (ie likely to beat was my read across) and too early to put numbers on 2022. Lots going on, so there is no company guidance. New LTF product for foreign markets launched and US testing launch strategy coming soon.

Ok i guess the forecasts are outdated that makes sense as the they have flatlined which is often the best sign that they have beeen removed . I guess though if they aren't happy to give any numbers for next year i would take that as a really bad sign rather than a good sign or neutral sign. If they won't tell us anything - to me that suggests they don't have enough in the bag to provide a reasonable guess. However unreliable figures are i would rather know their best guess rather than they simply keep that info close to their chest and the chests of their best buddies. Just look at LoopUp (LON:LOOP) for an example of how quickly the wheels can come of the wagon when sales dry up - and to be fair to loop management they told us 8 months ago plus they weren't gonna make any profit this year. I guess you can see i am not impressed with any management that will say nowt about next year when they have company valuation is over £200 mill.

gus 1065

Nothing I can see on the news channels about Renalytix (LON:RENX) . Comments on another chat board suggest a sale of 80,000 at NY opening (against daily average volume of 40k) indicating the possibility of a big short seller (maybe with a shock horror „Research“ report to follow) or, someone with some inside scoop (insider dealing, heaven forbid, on AIM, surely not!) ….. or something else - discounted fundraise? 22% down at one point, sort of recovering now to 15/16%.

Gus.

They didn't say they wouldn't, just that it was a bit early. If they had strong levels of visibility it wouldn't be on 2* earnings, so we can't have it all!!

I'm not advocating that I think this is a high quality stock (it might be but I'd say the jury is still out on that, at least for me).

What I am saying is that the special situation throws up an interesting trade where the risk to my capital from the low 300p mark looks to be relatively small given the net cash position and todays confirmation of trading being £100m+ for the full year (and seems like it will be closer to £110m). ie if revenues dropped through the floor immediately after the y/e I reckon I'd still have 75-80% capital value left and I view that scenario as being highly unlikely. It's all about risk / reward of the trade and this appears to be one of those unusual situations where I consider the trade mis-priced and I like those as they've tended to serve me well in the past.

pka

cmpeckham wrote:

"I suspect you are right about Novacyt SA (LON:NCYT) but in answer to your question of whether you are missing something, I would point to the DHSC dispute. You seem to be assuming that this is as far as it goes. How do you know that? If the client that accounts for 50% of revenues is this unhappy with Novacyt, it seems quite possible that other clients may have similar concerns and be watching closely. What about further claims and reputational damage? What would it mean if there was evidence released in the dispute to show that performance is not as claimed?"

I do not know this for certain, but I suspect, from following Novacyt (which I hold) closely for the last year, that the DHSC dispute arose because the original PCR testing product which had been ordered in the DHSC contract was not easy to use by inexperienced or busy staff at NHS hospitals, because it required a number of different processing steps to be followed to get correct results. Novacyt responded to criticisms by developing a new PCR testing product called Promate that required just one processing step. I suspect that the DHSC refused to pay for the unused original product in the contract and asked for it to be replaced by Promate, which Novacyt delivered. I suspect that Novacyt is asking the DHSC to pay for both the unused original product and the Promate.

The fact that there has been an announcement today that the DHSC has entered into a new, but smaller, contract for Promate suggests to me that the DHSC is happy to continue using Novacyt's products, and so are the NHS hospitals which have the right to buy from Novacyt independently of the DHSC.

Rambo

I entered Novacyt SA (LON:NCYT) at 418p on the downward trend so took a hit of 25% odd as it dropped to its lows but thought there was still value in the company so kept holding.

Based on the presesntation I noticed two points that I thought worth mentioning:

1) The new contract they have announced for £4.5kk is for agents that are used in the equipment sold in Contract 2 which is being disputed. - I thought this was a strong indication that this dispute would be resolved in favor of NCYT considering the DHSC are actually using the test equipment they purchased but apparently have not paid for.

2)I felt NCYT dodged the question on what diseases they were focusing on for the future. (what will maintain momentum after covid) instead they largely focused on what Covid developments they were working on, which will take the company over the next 2/3 years. New platforms were also mentioned although I did not understand this element of the answer.

- IMHO NCYT still has everything to play for and more upside than downside so I am inclined to agree with davidjhill.

- The fact they have won a new contract with DHSC should help their public relations ( as well as revenue) and a strong indication of resolving thier initial dispute.

- They have loads of cash and if they spend it wisely should grow and expand the business (CFO spoke about M&A as part of a strategy - although they dont seem to have an M&A strategy yet)

- Covid going to be a round for quite a while yet even if the need for testing is diminishing (decreasing by 50% annually according to presentation)

Big questions is what they can do to maintain growth and momentum over the longer term.

Boon

I see over at Fulcrum Utility Services (LON:FCRM) the last remaining board member from the old guard has now been pushed out, Stephen Gutteridge. All the board members now are new, appointed in either 2020 or 2021.

The catalyst was Harwood Capital and Bayford Group, owning 25%-ish combined, taking two board seats last year.

There's also a new CEO, and CFO too (from Harwood Group).

I'm intrigued as it looks like Harwood and Bayford are being activist investors and successfully changed management and board.

Anyone have a view on Harwood Capital? Are they predators and PIs likely to end in tears here? Or do they normally do a good job turning around companies?

I note that a business contract worth quite a bit was announced a few months ago... with no other than Bayford Group.... talk about arms length...

JohnEustace

My thoughts are that Harwood are very good at making money for themselves and their investors. I am looking at buying in to their trusts Oryx International Growth Fund (LON:OIG) and Odyssean Investment Trust (LON:OIT), both of which have performed very strongly indeed over the past year. They also run North Atlantic Smaller Companies Investment Trust (LON:NAS) which is doing very well. I think I would do that over following them into one investment.

UK_Investor_8888

19th Aug '21

Something I already knew... I'm in the 3%.

From Stocko's point of view, if only 3% of users are using an entire (old) platform... its logical for them to pull the plug and concentrate their resources on the (new) cash cow.

I'll go down with the ship and on 13th September then I will try to live with the new site.

It needs to be put into context that The Stockopedia and StockRank TM based strategies appear to be increasing my personal wealth by 25 to 35% year on year, with records broken again this month.

One would be an idiot not to focus on the data not the delivery.

Rusty2

I'm surprised by the 3% figure, judging by comments on the forum it is far higher than 3%, maybe the old site users post far more comments than the new site users.

You have to remember that newer members don't have any choice and are forced to use the new site.

My biggest issue with the new site is it is sooo slow on both my PC and ipad, on the ipad it unusable at times. Looking at my folios last week on my pc, switching to the chart view on the new site still could not work even after 6 minutes, switching back to the old site it worked within 5 seconds. I have tried this several times and the new site is always much slower, often around 1-2 minutes, the old site is 4-10 seconds.
Hope things improve when the old site is switched off.

GrahamF

I agree Herbie. I don’t have quite such a performance issue with the new site on the iPad as you but it seems worse not better.

I was surprised by how low the percentage of users on the old site is. Perhaps that’s a reflection of the subscriber churn (users of the old site who leave are replaced by new users who have no choice) and general expansion in subscribers.

I remember being highly annoyed by an iPhone update one time where they had tinkered around with fonts, colours, layout etc and made it significantly poorer. But got used to it in time. So, I guess that we will get used to the new Stocko site in time and our memories of how much we loved the beautifully clear appearance of the old site will fade away.

20th Aug '21

Hi Graham,
It is still much slower on my PC as well. The Folio chart view was on the PC. I use my ipad for travelling and the wifi is often much slower than my home wifi, so it is a concern the site will not work on my ipad.
I don't understand why the new site is so slow on my systems.

I just hate the new site... They can take the old site from my cold dead hands...

Reality check: the old site is going and if we want the useful data, we are going to have to get used to it. The new site may become better once they've moved to their Cloud hosting and they can concentrate their spend on it.

I will re-evaluate my options when my subscription expires.

Small Cap Value Report (Weds 18 Aug 2021) - ANG, TCN

Angling Direct (LON:ANG)

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Paul Scott

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