Small Cap Value Report (Weds 28 Oct 2020) - SHOE, SLP, TRB, SAA

28th Oct '20 by Paul Scott

87 comments 12218 reads

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

Timings - should mostly be done by official finish time of 1pm. Let's revise that to 5pm, there's a lot going on in the markets that is distracting me, sorry about that. Today's report is now finished.

Agenda - this is what has caught my/our eye(s) today. Jack has come up with an idea for he & I to collaborate on file sharing in google docs, so we can both contribute sections to the same article. We’re testing that out today, let’s see what happens!

Shoe Zone (LON:SHOE) - I hold - as discussed in the reader comments below, a full year trading update

Sylvania Platinum (LON:SLP) - this section written by Jack - Q1 Report

Tribal (LON:TRB) - Trading statement - looks positive

M&c Saatchi (LON:SAA) - Half year report

Shoe Zone (LON:SHOE)

Share price: 38p (down 16% at 10:36)
No. shares: 50.0m
Market cap: £19.0m

(I hold)

Full Year Trading Update

Shoe Zone PLC ("Shoe Zone") reports on trading for the 52-week period to 5 October 2020 ("FY20"), prior to entering its close period.

Preamble - It’s remarkable to see the market cap of Shoezone down to only £19m, given that this business used to consistently make £8m+ profit per year, and paid out generous divis. It has entrepreneurial management, Anthony & Charles Smith, who together own 50% of the business. Its leases are short, and fit-out costs are low, so it actively manages the store estate, avoiding the long tail of loss-making sites that plagues (and often destroys) other retailers. Product is cheap & cheerful, and is manufactured in China.

The light blue blobs below look outdated forecasts, so ignore those. Otherwise you can see that, in normal circumstances, this is a decently profitable business. The big question is, can it survive, and recover from covid/lockdown? IF it can, then buying now could lock in a wonderful future dividend yield, and capital appreciation too. If not, then the company could end up going bust, or being taken private for a song.

0uQguuL9ytH17a3pyN87d3cLdVjsAjweWOB1sWZh7sCGy2WvjTDI-JDK-SVHWy_BimMhyBvI7cZD8Z01XubFwSfHXuoCcfMevWJ15h5ORhTp2CNs6_mLQZ_yyTwAaALNv7MSr4hy

I’ve just re-read my notes from 23 June 2020, covering SHOE’s interim results to early April 2020. I concluded that liquidity…

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mort1980

28th Oct '20

thanks a lot Paul for your comments as always!

Susan123

Ft HAVE published new article on Boohoo (LON:BOO) that quotes and summarises Levett report. It is not a picture of a well run machine over there....

MichaelFBS

Macron prooved that tonight.

UK not far behind.

Madness.

spglet

There is an opportunity to move universities off this stuff – I think Paul asked the same question, but I didn’t really answer it. The barrier to doing this is data migration from Tribal SITS to something new.

What Tribal does isn’t very complex – it’s just old fashioned data processing – but the issue is this: Tribal don’t publish their database schema, then they allow users to add a finite number of custom fields (to whatever it is) and define their own database links (relationships). This would make it quite hard to design/reverse engineer a universal SITS schema that would allow you import all the Tribal data for ANY institution’s implementation into a single standardised database schema on the new system. But, if you can crack this you are 75% there.

Then all you need to do is go to the Tribal user base and offer them a usage based, cloud hosted pricing model for a system that allows them to get off this Tribal stuff onto a modern easy to use web based system. The new system would have to come with some migration wizards so that each institution could cutover from Tribal between the end of one academic year and beginning of the next before the new students enrol, with minimum effort and cost.

If you could package this business offering up well, and get a few decent reference sites, that would be it for Tribal. When I was working in the university sector – and thank god I’m not anymore – this question came up a lot. Nobody likes Tribal, and it would be such an easy sell.

Whitbourne

Remember this moment, everyone...

When in a few years' time Phuntt-spglet Software is renowned as the system to have, dominating the UK Higher Education market with an easy-to-use, cloud-based student admissions and finance system... you can look back and say: I was there! I witnessed the coming together of these great minds, to create something better!

Thank you both, your exchange has cheered me up and I needed it.

I agree Snoo and this point (cheap footwear is a false economy) is also an important economic theory, best expressed by the great Terry Pratchett in the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.

Here's the full version for those that haven't seen it.

"The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

"Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

"But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet."

Phuntt

You are right Laughton - that is the definition of a switching moat and they can be a bitch to cross for new entrants. However, Paul asked the most pertinent question here - why are new universities still signing up? Thats what led to my somewhat tongue in cheek enquiry above - I know nothing about the company, sector or software but I have to guess there is some sort of advantage to signing up. My guess is there is some sort of network effect here - info sharing across platforms perhaps?

Thank you Tim.

Gromley

I will try not to clutter up too much with Covid stuff either, but the Huff Post article you refer to is pretty long-winded and the rebuttal is actually far simpler.

The assertion from Heneghan and Yeadon is that IF the test produces a false positive in 1% of instances, then if 1,000 people are tested and 11 people produce positive tests (a 1.1% reported test positivity), then 10 (1% of 1,000) are false positives.

So of the 11 positive results 10 are false - so 91% of the positives are false.

The maths is sound; although they don't explain how the test positivity rate could have been consistently below 0.5% of the summer with 1% false positives.

However if we assume that some statistical anomaly that persisted for over 60 days and move on.

So coming up to date in the last 7 days; there have been 2,178,983 tests (so "theoretically" 21,790 false positives) resulting in 153,050 reported positives. So on the Heneghan / Yeadon view now only 14% of positives are false.

It also means that the actual prevalence of the disease has increased by significantly more than the official figures suggest.

The important thing here is not so much debunking this particular theory. It is more about questioning the intelligence and/or integrity of Heneghan & Yeadon if they are still touting this line.

I know less about Yeadon, but Heneghan is a regular on TV & in press and comes across as a credible voice. Based on this, however, if he is still maintaining this line or even failing to confess "oh yes we got that one wrong" then frankly I would not trust him to tell me the time.

I do not necessarily trust everything the Government or SAGE tell us either, but at least to some extent they are accountable - if it can be proven they have wilfully lied or misled there will be consequences, I am not convinced the same is true for Heneghan & Yeadon.

Paul Scott

"new" LOL!!!!

It was all published in full here, previously. A report commissioned by BOO.

https://www.boohooplc.com/sust...

Old news, re-hashed over & over again, by journalists desperate for page impressions.

BOO is a shockingly badly run group, as the figures below demonstrate. Why on earth would anyone want to invest in this?!

PDiddy

29th Oct '20

This Share is not for me. It has had a recent surge in volume and often when Simon Thompson of Investors Chronicle (IC) publishes a subscribers only report there is enhanced chat on Stocko forums / LSE etc and thus the share price. This share got my attention a few days ago from IC but I will not be investing as it does not pass my screen.... I.e. ROCE to low, yield to low, operating cash flow yield to low, F-Score to low. Be wary of moving with the sheep as recommendations from magazines are often more wrong than right in my experience. E.g. JOG & LIT & Rosenblatt was recommended and look at the state of them. Go solely from multiple sources.

rmillaree

Boohoo (LON:BOO)
I thought the linking of the article was useful - most bods won't have read the full report so no harm in having specific points re-flagged that may have been glossed over as part of the summay picture. The report does highlight the somewhat chaotic nature of how the supply chain used to be - as far as doing bare minimum to avoid any issues with regard to hmrc statutory vat obligations i would say that is something of a spectacular fail - probably not so much of an issue if there are no fraud signals but there deffo are here - and it should be plainly obvious they are almost certain to have neafarious suppliers if they are dealing with 500+ local suppliers. Note i have held boo previously and would hold again so i have no particular axe to grind against boohoo.

https://www.gov.uk/government/publications/vat-missing-trader-fraud

simoan

This Share is not for me....

I'm sorry but these kind of posts are infuriating. What effing share!!!! Surely it's just as easy to type the name of the company than "This Share"!? I don't know how many times Paul and others have to ask before the penny drops. I worry about the intelligence of some contributors. Please make clear which company you are referring to.

Christ man it's a reply to a thread. Change the box to 'threaded'. Do I have to regurgitate everything from the OP of the thread????

epo001

I did some work for a training organisation which maintained their records on a Tribal system. The organisation saw this as a very peripheral activity and would have shied away from any migration which involved difficulty or uncertainty. Add to this that the staff operating the system are usually low level clerical personnel who would need extensive retraining for a new system and the lock-in is near perfect.

So yes, Tribal have a stranglehold on a market which is not huge, expensive to enter and expensive to migrate from.

So you have problems with basic comprehension too. Just name the bloody share for those people viewing unthreaded or using the old site. The onus should always be on the writer to make clear what company they are talking about in a post, not the reader. I imagine most people like me just ignored your post rather than go to the trouble of finding what company you were talking about.

Put it this way, it says 'in reply to' right in front of you which is an instant identifier of a conversation. Do you often jump into conversations when the full picture is not clear to you and risk embarrassing yourself / being irrelevant? Adding the ticker should definitely be mandatory in an OP or mention of a new company in a reply. Otherwise I simply do not agree with this policy.

Rusty2

The only issue with that is if the person you are replying to has not put the share then you don’t know what the share is unless you go back to the previous post they are replying and so on, sometimes it is still not clear what the share is. I have given up on a few and so has Paul.

Put it this way, it says 'in reply to' right in front of you which is an instant identifier of a conversation.

It actually says in reply to user, users may have made multiple contributions and so it instantly identifies nothing. Furthermore people reading these comments may do so in different ways, In an ongoing post we may save time by just looking at new or recent comments, in a historical post we may use threaded display to try and follow sub-conversations.

This is not a new problem and it is a long established convention that when responding to threads it is considerate to include enough context so that it is clear what exactly you are replying to (see above). This saves others from having to read or reread old posts just to make sense of yours. Quoting everything became as poor netiquette as quoting nothing. Again, just because you have just read something just before replying doesn't mean that others will have done the same when reading your piece.

The issue this clearly demonstrates is that we need to be able to filter out those users who are not worth reading. Anyone who is asked to make themselves clear and responds by doubling down with "well, I know what I was replying to" should be ignored and left to themselves. A good test of "a user not worth reading" is that even after all this back and forth we STILL don't know what share was being referred to and so this particular diversion has become almost comical.

codefluence

17th Nov '20

Thanks for sharing.

The best choice is to do everything else "outside" Tribal using standard industry software from Microsoft, Salesforce or whoever. But unfortunately that's not what happens. Universities are very political places, and many make poor infrastructure choices.

I always wondered about this, Microsoft / Google / etc already provide you with the required tools, it's not an out of the box solution but with little effort will get you flexible and personalized solutions, I would expect professors coming from new generations to be more tech savvy and exited about developing their courses their way. That's why I'm skeptical of the success of these educational software companies.

Small Cap Value Report (Weds 28 Oct 2020) - SHOE, SLP, TRB, SAA

Shoe Zone (LON:SHOE)

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Paul Scott

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