Small Cap Value Report (Weds 9 June 2021) - BLTG, VP., GPH, DWHT

9th Jun '21 by Paul Scott

25 comments 8567 reads

Good morning! It's Paul & Jack here with the SCVR for Wednesday.

I didn't finish yesterday's report until 16:30, so there were 6 companies covered in total. Here's the link, in case you missed the extra sections added yesterday afternoon.

Timing - I've got 2 company zooms to prepare for later today, and it's quiet for company news. So we're aiming to rattle through everything & have this report finished by 10:30 - tough target, let's see if we can actually do it! Today's report is now finished.

Agenda -

Paul's Section:

Blancco Technology (LON:BLTG) - FY 06/2021 trading update. Revenue meets, profits beat forecast (not stated). Cost-cutting related to the pandemic drove this out-performance. I'm not keen on the aggressive accounting at BLTG, and the patchy track record. Although it is now demonstrating growth, and meaningful profits, so could become interesting if growth continues. High PER (c.45) looks too pricey to me.

Vp (LON:VP.) - today's companies look generally dull, so I've gone back to this equipment hire company's update from yesterday. It looks good to me - a reasonable forward PER of 12, divis coming back, soundly financed & seems well run (apart from a fine from the competitions watchdog). Thumbs up from me!

Jack's Section:

Global Ports Holding (LON:GPH) - quarterly update light on financial data. The sale of Port Akdeniz helps the financial position but it's still too early to point to any meaningful improvement in trading.

Dewhurst (LON:DWHT) - interesting family-owned industrial company, but one whose share price has more than doubled recently and now finds itself facing some potential trading volatility in the short term. As with other companies, supply chain issues are flagged.

Paul’s Section

Blancco Technology (LON:BLTG)

270p (pre market open) - mkt cap £204m

Trading Update

Blancco Technology Group PLC (AIM: BLTG, "Blancco", the "Company" or the "Group"), the industry standard in data erasure and mobile device diagnostics, is pleased to provide the following trading update for the year ending 30 June 2021 ("FY2021").

Revenues - in line with the Board’s expectations. Significant growth in H2, despite sterling strengthening (bad for US denominated revenues)

Strong structural tailwinds (e.g. ESG)

Sales through channel partners has driven growth

Higher profit margins due to cost-savings, driven by the pandemic (e.g. less travel)

Overall…

Unlock with Email

Unlock with Google

Already have an account?
Login here

Cairo

9th Jun '21

Yes you are pretty much correct. I would say they are clever in what they do from a marketing point of view. I work in this area for many years and I would hold the shares but I am (or try to be) a long term holder. IMHO Part 2 of the Review will damage their business. The question is how much damage will be done? Part 1 stopped lawyers getting any costs for a standard whiplash claim and changed what would have been say £2500 in damages to a fixed £900. The lawyers only get a slice of this £900 now. The insurers are a powerful lobby voice! So now the most expensive head of claim after a road traffic accident is the credit hire element. Part 2 will look at this. Of course there is a chance that Part 2 never comes to fruition but Part 1 was still implemented during the pandemic. Part 2 suggests to me that the shares cant be a long term hold and the outcome of Part 2 would send the shares freefalling. But until then it may be ok…

UK_Investor_8888

SCS (LON:SCS)

Shareholder The LORD Almighty himself has reduced his holding from 3% to 2.4%.

https://www.stockopedia.com/share-prices/scs-LON:SCS/news/scs-group-plc-notification-of-major-holdings-urn:newsml:reuters.com:20210609:nRSI3065Ba/

Bullygig

That very much made me chuckle.

Paul Scott

Hi joshwood,

You probably need to read the 100 Baggers book again, because Itaconix (LON:ITX) is nothing like a coffee can stock! Tiny company, loss-making, making big promises for new products. Hence to me it looks a highly speculative jam tomorrow, story stock type of share - which proliferate in bull markets, then fizzle out over time usually. Hardly any of this type of share succeeds as promised.

Why on earth is it valued at £54m when revenues in 2020 were only $3.3m, and it made a $1.6m loss for the year?

Very much at the speculative end of the market, and I've learned from experience that this type of share is very rarely a long-term winner. They're often good for short-term trades though, as waves of speculators pile into sexy sounding stories. Then they crash when reality bites some time later, usually.

Definitely not for me. I hope you've also got some better quality stuff in your coffee can! I'd call this own-brand instant coffee, at best! Or maybe the dregs from a used filter? ;-)

Alternatively, you might have found the proverbial needle in a haystack, possibly. Very occasionally, a jam tomorrow stock does well long term, as opposed to short term spikes which can be lucrative for nimble traders, who get out before they crash.

Regards, Paul.

Chris1011

Paul/Jack,

Thank you both for your excellent reviews of SCV companies - an excellent read each and every day.

As it’s particularly quiet today, would either of you mind reviewing the final results from ZPHR, published on Monday. I know this is a tiddler, but it appears to be on the cusp of something bigger with decent revenue streams starting to come through on tap (pun intended) and some serious Carbon-Neutral intentions announced yesterday. The SP has steadily increased by c.35% in less than 2 months.

Many thanks

Zephyr Energy (LON:ZPHR)

Fegger

I wondered what cardinal sin SCS had committed

garbetklb

Dewhurst (LON:DWHA), Dewhurst (LON:DWHT)

Very useful write up by Jack. I like conservatively run family companies like Dewhurst holding net cash & being run for the long term.

I can understand the objection to dual share structures - the NV shares are very much at the mercy of the (family) holders of the voting shares.

However, if you become comfortable with the concept, company & main shareholders, which shares to hold? Personally, I nearly always hold the NV shares :

Typically, the family have control via the voting shares - so, to a fair degree, you either trust them, or you don't.
Typically, the NV shares trade at a significant discount to the voting shares (To buy DWHA 730p, DWHT 2110p) & with greater liquidity
However, just occasionally, voting shares become cheaper than NV - opportunity for an arbitrage as the prices realign.

Jack has reservation about value for DWHT - DWHA is a lot more attractive in this respect. IF you're comfortable with holding NV shares.

We hold DWHA

jesseowens

The coffee can case for Itaconix (LON:ITX) would be that its speciality chemicals are being designed into an increasing number of consumer products, and therefore there is a long runway of virtually certain growth as these formulations have long life spans. Combine that with a megatrend towards more sustainable and natural ingredients and there is a sensible case for some spectacular revenue growth here for years to come . Speciality Chemicals companies like Croda International (LON:CRDA) are sneakily brilliant businesses that trade at very high multiples, so an emerging small cap chemicals company with an ESG tailwind with triple digit revenue growth is worth paying attention to .

gus 1065

Hi garbetklb.

I also hold Dewhurst (LON:DWHA) in preference to Dewhurst (LON:DWHT) for the reasons you outline. While I like the company and am happy with it as a long term hold, it seems hard to justify an 11% bid/offer spread given the reasonably high (45%) level of the free float. Makes it a bit of a lobster pot share.

Gus.

bottomoftheheap

Would that be the Zephyr Energy that used to be Rose Petroleum and was Vane Minerals before that, it has total value destruction writ large (joined the 99% loss club) and still continues... It is a lifestyle company for the directors.

rmillaree

I heard even God needed to do a bit of topslicing on his/her day off , so it may not be a bad reflection on the company.

Indie

Presumably Sloth, on the comfy sofas.

Sorry, I don't look at anything with the words "Resources", "Mining", or "Energy" in the name, because that's a specialised sector, where I have little to no expertise.

Sorry about that.

JCPr

That's the trouble with omniscient dieties - you're always worried that they might know something you don't.

jonthetourist

Caution is always sensible, but ITX is currently my loss making story stock of choice. Why? Well unlike tiddlers announcing "partnerships", you can plot the future with ITX because every time one of their ingredients is included in a product formulation it becomes visible via the FDA product codes.

it inevitably takes time for product adoption to turn into revenues, but they are winning serious clients. Long term, substituting organic for petroleum derived ingredients looks like a hot spot to me.

But yes, tempest any interest with extreme caution.

Jon

Harry Hindsight

Thought where had I heard of Dewhurst before, butchers came to mind from old adverts -

Dewhurst, the chain of butcher shops that disbanded in 1995, is set for a return to the high street after the rights to use the brand name were bought by a marketing start-up. ... The company has acquired 9 other brands, including Glen Rossie Whisky and Zorbit, the original manufacturer of towelling nappies.

Presume another branch of the family who liked electrics.

Anexo (LON:ANX) - thanks. Up today so doing the 'run your winners' thing but now with a more careful eye.

Will S

For one minute I thought you meant Michael Burry (Scion Asset Management) until I read the RNS... he owns some stock in SCS.

Details of the Cambria Automobiles (LON:CAMB) MBI emerged late this afternoon.

https://www.investegate.co.uk/...

In addition to the previously flagged recommended cash offer of 80p a share there is also an alternative (with strings attached) that will allow investors to convert into shareholders in the bidco. The strings are, at least, that the conversion shares are non-voting and limited to not more than 20% of the new share capital of bidco. Also the new shares will not be listed/readily tradeable (at least initially). At face value it’s not an especially attractive alternative but there may be more to it when full details emerge.

Small Cap Value Report (Weds 9 June 2021) - BLTG, VP., GPH, DWHT

Paul’s Section

Blancco Technology (LON:BLTG)

Unlock the rest of this article with a 14 day trial

About the Author

Paul Scott

25 comments

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

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