Small Cap Value Report (Fri 3 May 2024) - W7L, AGFX, FLK, AGL, MIRI, TRN, MORE

3rd May by Paul Scott

88 comments 8006 reads

Good morning from Paul, near the end of another super-busy week!

We've now covered 440 unique companies in the SCVRs in the 4-months to date. Not long hopefully until we exceed last year's 609, now we're also covering some interesting-looking mid caps too. Someone queried why I'm also mentioning nano caps lately? It's because my new mid-morning movers section picks up some of the interesting news from nano caps. Also, it helps avoid banana skins when they're junk companies that need to raise fresh equity, as many are, but trying to ramp up their share prices with spurious good news releases. It gets something into the archive for quick future reference too.

I had a late surge, and did some more work yesterday afternoon, covering everything on the list (13 companies), even if only a brief comment in the colourful list at the top. Even if it's only a brief comment, I do have a proper look through the numbers for each company, although I don't have time to read all the commentary if it's a full set of results - hence the need to always do your own, more detailed research - it's not just a slogan or a disclaimer - time constraints mean our reviews are necessarily superficial.

Also remember we're only flagging relevant facts, figures, and forecasts. I see some people on advfn were personally attacking me over Concurrent Technologies (LON:CNC) but didn't actually say which facts I had flagged up that were wrong (hint: none of them were wrong!). They just had a different, more bullish opinion, which is absolutely fine. My review was neutral, and flagged up both the positives and some negatives, which is surely the right thing to do, and then let readers decide what weight you give to each factor.

List of companies reporting

Other mid-morning movers (with news)

Fletcher King (LON:FLK) - up 26% to 44p (£4.5m) - Trading Update - Paul - No colour

A strikingly good update from this tiny firm of chartered surveyors & asset managers. No idea why it’s listed, but it’s been on AIM for donkey’s years, which cannot be a good use of cash costs. So de-listing risk must be high, which is why I can’t really give it a traffic…

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jamesalastair

3rd May

I am a bit lost Snowdrop ... the tone seems perfectly okay to me and Mark's comment will be of value to someone.

RichardK

Ah, BnB, I know where you are now. I had imagined somewhere posh like Ripon, Thirsk, Skipton or Malton.

As a Friday afternoon aside, Sowerby Bridge has a good range of pubs with good beer comfortably < £4 per pint.

Richard

StrawberryDreams

Zoo Digital (LON:ZOO) was a great bottom recovery trade.I was thinking about buying in around 20pish level as it has no debt i think.Shame i didn't!Canaccord were selling down a fair quantity for a good while though and Liontrust bought 5% .Similar to Frontier Developments (LON:FDEV) 's nice recovery from near the £1ish mark.Nice to see the market 'allowing'/being more accomodative/'risk on' on these potential bottom fishing recovery plays more lately.I don't totally like the game of how low can he/she go........!The nerves can't handle it.

M48

For those bemused/frustrated by the Card Factory (LON:CARD) share price performance, it’s possible the cause might not only fall at the door of Teleios (real or just perceived overhang). I noted a relatively detailed, but bearish, substack write up on Twitter - it shouldn’t be hard to find but the core thrust of its stance to my reading centred on the threat of price competition.

On first reading, I dismissed it as a malevolent article written by someone with an agenda. There’s no way I’d walk far to buy a cheaper card from my favourite Card Factory shop where the average selling price is already only just over £1.

But looking more at the competition angle (main reference being to a company that has about 60 (and expanding) stores currently in the UK, Cards Direct), I realise I had a blind spot because none of those stores are near me. And said company has just posted its latest accounts at Companies House - it’s profitable and balance sheet seems sound - so a more worthy adversary perhaps than Clintons ever was.

BnB

Alternative beats posh any day of the week. To your aside, Sowerby Bridge is surprisingly good for food but the vibe is too ‘fax for us hippies in the upper valley.

Mark B

I kind of hope Warren looks to his right and asks "What do you think Charlie" and then proffers up some wit to tip his hat to the great man. Always a must watch for me.

Damian Cannon

Ingenta (LON:ING) results meeting on Tuesday has just been cancelled as the results have been delayed. No reason given but it does seem a bit late in the day to be postponing a results announcement? I have no position.

TamzinPiworld

Tracsis (LON:TRCS) H124 presentation given last week by management together with a helpful Q&A video & podcast. They're always very open. All eyes on the USA which could be a game changer over time. For now, a H2 weighting. The obvious question about Labour taking the railways under public ownership. They see this as a positive. To date investing to provide the infrastructure to scale. Highly cash generative.

FREng

Apologies. Reading RNS on an iPhone through varifocals.

Tombholliday

I have not though I see my question has been red flagged which is odd stock up again today so I guess the market at least is making a judgement call

Cancun

Voting machine / weighing machine springs to mind...

Bouden54

Thanks for highlighting. Cards Direct have a relatively tiny number of stores, so can't see it being a huge threat unless they start expanding very aggressively. As you say, I can't believe card buyers are particularly sensitive to prices - can't imagine people will shop around to find something 10-20p cheaper, especially as Card Factory already very cheap.

Huwster

Wetherspoons (The Barrel Vault) at St Pancras has an incredible array of craft beers from microbreweries sold by the can for drink in or take away at very reasonable prices if anyone ever fancies a sneaky one on the train. Digressing away from shares here but it is late on Friday and the bank holiday awaits us!

carmensfella

**Bank Holiday Weekend Offer**

For the whole of this long weekend any investor buying a ticket for the *Mello2024* event will be given the bonus of being able to bring a friend or family member completely free of charge. Worth getting a friend to join with you and halving the cost maybe...

Will end at market open on Tuesday as it is a bank holiday weekend so plenty of time to connect

Mello2024 investor conference takes place on the 22nd and 23rd May and Stockopedia will be there plus Paul Scott and all the BASH regulars. Do come and join us....another six companies added to the list today and another six to be announced on Monday.

We want to keep this important face to face engagement with companies going and it has been tough since Covid as many directors just want to do webinars as their only token offering to investors. If you want to ask private questions or check out body language it is impossible on webinars and investors need to network with each other too.

Please support us and encourage companies/ management teams you are in contact with to come along to Mello2024 in Chiswick on 22nd or 23rd May

Mello2024 – Mello Events

If you have never been to one of our two day conferences before then clearly you are missing a great opportunity to engage with management teams and also network with hundreds of likeminded investors so we are offering virgin tickets at just £30 for either of the days so that you can see what it is all about.....a big discount from £99.00 and if you do not agree having spent the day with us I will give you an annual pass to our virtual shows on top. I just want investors engaging with all these quality smaller companies. This offer is only if you have never attended before so please be fair to all those who pay much more.... Simply enter the code NEW2MELLO24 BUY NOW: https://www.tickettailor.com/events/melloeventslimited/1201351

Full info on this thread Stockopedia | Mello2024 conference...22nd and 23rd May | By carmensfella

Gimmers

And let's not forget that Card Factory (LON:CARD) design and print their own cards. Nice vertical for cost control and flexibility to respond to price competition. Long and strong

Monty9

LOL, I know exactly the problem.

My perspective on Transense Technologies (LON:TRT) (I hold) is different though. Bridgestone found they could exploit their earlier technology globally and TRT have exploited that to gain enough funding to invest in and develop their newer technologies until 2030. Not many AIM companies have that luxury, especially those with a £16M M/Cap. And, to me, the new technologies might have a similar potential, possibly bigger. Apart from the cash, the Bridgestone deal is also perfect PR as a means of demonstrating their technical acumen in the real world.

It is hard to look at growth rates and PEG rations, its all about developing the technology and finding a customer who can put it to transformative use. To me it is a buy and put in the drawer situation but with an outside chance of explosive success. Or possibly a takeover by a company who wants the IP. If I had to predict, I expect it to be in the range 50% 10 bagger to 50% -1 bagger! Good odds but not for widows and orphans

I might also try to go and visit their operation. The whole vibe of the recent investor presentation felt positive. Management determined to invest and make it work, not just suck up as much salary and other remuneration from investors as they could.

Agree it’s likely not a major threat, yet. But it’s the sort of thing that can just nibble away and gradually undermine growth, a bit like it seems Likewise (LON:LIKE) is doing to Headlam (LON:HEAD) - not sure if it’s the best analogy but it’s the first to spring to mind.

To be honest, I posted it mainly because I know how easy it is when the price is not moving as you expect to contrive all sorts of reasons why the price is wrong, and if you hold on things will fix themselves. Better I think to know as many of the things you’re up against to understand why the price is what it is. In this case Teleios seems to be most regularly cited as a drag, but no holdings changes are being disclosed so at some point things have to point to something else.

David Wordsworth

4th May

Smiths News (LON:SNWS) - it’s a good question and I’ve wondered it. I may be reading this wrong but isn’t it in terminal decline as people move away from papers/magazines etc and IIRC even its management admitted this?

Rusty2

This is in the summary in the NAPs post:

"Smiths News has done an excellent job of creating efficiencies and improving margins over the last few years, to mitigate the impact of the structural decline of sales volumes in the UK’s newspaper and magazine market. As a result of the changes it has made, which included the disposal of loss-making assets, it has managed to turn a profit in each of the last 3 years.

Despite a notable lack of forward-looking growth, the company looks exceptionally cheap on a variety of valuation metrics. A price to free cash flow of 3.8 and prices to sales of just 0.11, imply that there could be a unique value opportunity at play. Furthermore, a forward dividend yield of 7.94% might provide an added incentive for income investors."

l don't know why the ROCE is so high.

Magnus Houston

5th May

It wasn't the most recent podcast, but I'm sure I heard Paul mention something about Topps Tiles (LON:TPT) Topps Tiles, so I just wanted to flag up that the Zeus analysts have done an audio report on it, which you might like to hear https://zeuscapital.co.uk/log-...

Small Cap Value Report (Fri 3 May 2024) - W7L, AGFX, FLK, AGL, MIRI, TRN, MORE

List of companies reporting

Other mid-morning movers (with news)

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Paul Scott

88 comments

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