Small Cap Value Report (Weds 5 Aug 2020) - LGRS, LSL

5th Aug '20 by Paul Scott

51 comments 7505 reads

Good morning, it's Paul here with the SCVR for Weds. Please see the header for trading updates & results that I'll be looking at today.

Today's report is now finished. There's very little small caps news today.

As usual, this is initially a blank post (which we call a placeholder), for you to add your comments from the 7am RNS releases.

Top Tip - if you set a friend/family/your landline as emergency contacts on your mobile, then if an honest person finds your phone when you lose it, they can contact your emergency contacts when not possible to unlock the phone. Struck me as a good idea, so I'm passing it on.

Loungers (LON:LGRS)

Share price: 107.5p (pre market open)
No. shares: 102.4m
Market cap: £110.1m

Trading Update

Loungers, the operator of 165 neighbourhood café / bar / restaurants across England and Wales under the Lounge and Cosy Club brands, announces the following update.

All 165 sites now open
LFL sales from re-opening (4 July) to now (2 August) slightly negative, at -1.7% - this is really impressive in my view
Nothing said re costs, profitability, or liquidity
Fuller guidance to follow in late Sept, with full year results (19 April 2020 year end)

My opinion - this update is light on information, but the LFL sales number is the key one, and that's remarkably good. Given all the distancing restrictions, and lower footfall, to be delivering sales only a whisker below last year, is really outstanding. I see this as strongly bullish for the share price. It's a pity then that it's so illiquid.

There's a very helpful update note on Research Tree, which puts today's news into perspective - namely that LGRS is trading way ahead of industry average data of c.30% minus LFL sales. It benefits from having off-pitch sites, in suburban locations, rather than town centre sites. Also it points out that LGRS sites are outside London, and transport hubs. Therefore its community sites might be a beneficiary from work from home, and benefit from lack of competition.

Overall, very positive. However, the downside risk is that bars/cafes could be forced to close again, as we're seeing in some countries abroad. Therefore I can understand why many investors just want to avoid this sector altogether. My sector expert tells me that Loungers management are the best in the business.

Unlock with Email

Unlock with Google

Already have an account?
Login here

ACounsell

5th Aug '20

Not a great beer drinker and no fan of J D Wetherspoon (LON:JDW) but surely clientele prepared to pay Revolution Bars (LON:RBG) prices are a small target market. Particular when J D Wetherspoon (LON:JDW) is describing Rishi Sunak as a ‘legend’ and consequently advertising beer at less than £2.00 a pint.!!

kgb1953

This comment is under review

TamzinPiworld

Just published Panoply Holdings (LON:TPX) FY20 results presentation, by Neal Gandhi, CEO & Co-founder and Oliver Rigby, CFO & Co-founder

Revenue up 43%. Normalised adj EBITDA +62%.
Moved to £2.7m profit (FY19: -£0.2m).
Ajd diluted EPS 3.6p.
Cash conversion 91%.
Sales backlog at 1 April 20 £15m (to March 21).

Video or podcast

Separately, we have a piworld webinar tomorrow:

piworld Thursday webinar: Thursday 6th August, 1pm: Investor & Trading: Life in a Family Office. Richard Leonard (ex City) discusses how he managed money in Family Office, including, what he's learned from his mentors of the years. How it formed his investment philosophy. What he looks for. current markets. What he's buying. Where to spot red flags, and much more. Register here.

Lee Brown

Didn't wish to offend and certainly wasn't ramping. Intended as something for people to look at.

MichaelFBS

This article on the BBC (of which I am not normally a fan) is much more rational as to where we might well be:

https://www.bbc.com/news/healt...

Regards

Michael.

Thanks. With the UK market looking overvalued at the moment I feel it's madness not to look around. I'm not a gold bug, just the only investment which makes sense to me at the moment. But you got 56 thumbs down. The more that disagree with me, the more I know gold has a long way to run!

It was merely to highlight the opportunity. I don't see many in the UK market at the moment. Clearly if you don't wish to make big profits in another area then that is your call.

Thanks - did not mean to be rampy. Just trying to help out!! With gold at an ATH there is hardly any coverage. There is also the wider issue of the Fed (and other central banks) destroying the economy in my opinion.

Thanks. I deleted as did not want to offend/ get thumbs down. It was meant to start a discussion! Of course I got a bit gung ho with the post so apologies.

Trident

Saw that and surprised it was fairly balanced, and a slightly less heated view of the 'facts' or such facts as we currently have

Bluesky Ventura

Hi Lee,

Please don't be discouraged posting here. It was neither 'rampy' nor unwelcomed. I am very interested in this part of the market as well.

My grandpappy use to says 'only gold and land have any real value'. Gold has definitely kept its value over 400 hundred years so maybe he was right. Worth having some exposure in these times.

Kind regards

BSV

MiserableJacktPotato

Gold has nothing to do with UK markets, it’s all $ driven.

And who says UK markets are overvalued.

peterg

The point that the recent rise is, overall, statistically insignificant is fair (though that is certainly not the case in some localities), but the article ignores the issue that cases in the UK levelled out well above zero at the end of the initial stages of lockdown. Lockdown was eased in the UK at infection levels well above those in most other European countries, and as restrictiions are eased there is no likelihood of them falling further, and real risk of significxant rises. That is very concerning as we approach autumn and winter, with people spending far more time indoors and the probability of other infections like flu spreading, and hitting health care capacity.

The possiblity of much higher levels of infection under those circumstances is very real. And we may well need to see ongoing and more widespread and stricter local or specific restrictions which will continue to cause problems to many sectors of the economy. There is a clear argument that stronger action earlier, and not relaxed as quickly may in the end have reduced economic damage.

john652

Thanks for clarifying that Paul, those loungers results then are extremely good, just as well a lot of commentators on here ‘im never going out again’ are as suspected, not the majority, so far! And bounce those shares did!

Id love more on resource stocks but thats not this report & hole in ground and lies spring to mind.

But .... you just have to have money in the miners as part of a balanced portfolio......

Jeremy Grantham:
Well, the long-term argument is outrageously simple and unarguable. That is, you can't have compound growth on a fnite planet. I always lead very quickly, my quick demonstraton. Just imagine that the Egyptan Empire which lasted for 3,000 years by the way, with the same religion, the same pharaohs, and the same culture, same language. For 3,000 years, let's just imagine for a second that its populaton had grown at 1% a year. The world's populaton has grown faster than that during my lifetme, when it just tripled. 3,000 years later, that multplies by nine trillion tmes, the populaton of Egypt. There would be nowhere to put them on this planet or several other planets.
Jeremy Grantham:
If you do the same with physical output, a lousy 1% a year. 1% a year increase in physical outputs. You start with enough goods to fll one of the giant pyramids. You come back 3,000 years later and you've grown at one miserable percent, breaking all the economists' heart. You have enough physical goods to fll up the solar system. It doesn't take as long as you think, to compound into craziness.

Jeremy Grantham:
You can't have compound growth on a fnite world. Very quickly, you start to run out of this, that, and the other. When I grew up we had a coal fre. Since we were kind of middle class, the coal we aforded was anthracite which is denser than oil, it's relatvely clean, hasn't got much dust. Black shiny stuf they now use for jewelry sometmes. It's gone. It was burned enough in our North Country, England freplace in 1944 and it's now disappeared. It's all been used up. It happens. Most of the high-quality coal in the UK which drove the Industrial Revoluton has gone. The same in Germany. Their high-grade coal has simply disappeared.
Jeremy Grantham:

You develop the cheapest, shallowest, thickest ore mines frst, and every succeeding mine has lower quality ore. The copper mines today have 10% of the ore that you could fnd in 1900. It contnues as far as the eye can see. Each generaton of mines is lower quality. In the case of oil, a deeper, and ofshore, and more technical. In the case of fracking, you've had to develop ways of using energy to squeeze the solid rock into giving up its oil. That's the way it always goes, untl eventually the cost and the energy cost of getng that low-grade copper ore from a deeper and deeper mine, and shipping it around in these trucks where the wheels are bigger than a house, is simply too energy-intensive

Worth a read http://investorfieldguide.com/wp-content/uploads/2020/06/Jeremy-Grantham-Edited-Transcript.pdf

Rusty2

There are several gold posts currently at the moment, I suggest you post on those.

Wise words and thanks!

GloucesterBob

Don't understand the anti resource posts. If they are of no interest just ignore them don't spoil a potential debate for others. If they are small cap, released some new info, then they belong on a small cap blog, there may be a gem in there somewhere.

We all know Paul will not comment but Jack might.

Why all the nastiness all of a sudden, must be cabin fever taking over.

mark1308

6th Aug '20

Not share related but Crouch End has a great Lido AND its open !

HollandSmith

Good shout! Consider it done. :)

Small Cap Value Report (Weds 5 Aug 2020) - LGRS, LSL

Loungers (LON:LGRS)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

51 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...