Small Cap Value Report (Mon 24 June 2024) - SHI, THG. Briefs: PRU, BVIC, BELL, SUP, TPX, DWHT

24th Jun by Paul Scott

92 comments 8149 reads

Good morning from Paul!

It's quiet again for news today, so hopefully I might be able to enjoy some sunshine later! Isn't it strange how the media today see a heatwave as a desperate threat, and give us alarmist warnings - keep in the shade, drink plenty of fluids (what else would I drink, gas?!), and the weather charts are angry shades of red. Whereas back in the 1970s, the weather charts were shiny, happy bright yellow, and the forecasters told us to get out and enjoy ourselves. What went wrong? When (and why?) did common sense disappear?

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Boon

24th Jun

Maybe the next set of consultants will see fit to shorten it further in exchange for a 6 figure engagement fee.... SG maybe?

Like what happened at abrdn....

Monty Carlo

In reply to jamesalastair.

Thank you for the contributions today - it is the sort of tangential expertise that I love discovering on this forum.

Cranswick (LON:CWK) is one of my long-term core holdings. I'm aware they're still dealing with one cessation of pork exports to China, but the Spain/China situation shows the geopolitical angle isn't really improving.

One part (and only part) of my rationale is that our beef consumption needs to moderate, and pork/chicken are the obvious beneficiaries of this. Would be interested to hear more of your thoughts on the stock.

Thanks for the links and the detailed reply! I'm going to dig and read more.

It definitely has been a quiet day for me... nothing notable in the RNS for my portfolio or watchlists. In fact, its been that way for 2-3 weeks now... eerily quiet on the news front (at least when it comes to my portfolio and watchlist).

Nevertheless, I have a passing interest as I have a whole bunch of fixed rate savings maturing in the next month or so. Been taking more of a (casual) interest in UK inflation.

SIG (LON:SHI) trading update had a bit of an interesting nugget.

I don't know enough about the company to exactly know what the two phrases means in terms of products....

But they were clear to point out that why "UK Interiors" had a disappointing performance, "UK exteriors" had a good performance.

Given the context (SIG makes insulation and other building products?) it seems like maybe new construction rates/volumes are recovering nicely. However, renovation activity on existing homes, as well as the final renovation of new homes (last stage of the build) has not yet recovered.

Which could have all sorts of interesting read-across to other "interior" and "exterior" companies.

Eurocell (LON:ECEL) , Topps Tiles (LON:TPT) , Headlam (LON:HEAD) , Likewise (LON:LIKE) , DFS Furniture (LON:DFS)

GloucesterBob

Quiet day on the RNS front for me to, however, my stocks all over place.

Metals Exploration (LON:MTL) digging deep and up 10%, chains come off at Renold (LON:RNO) down 6, CMC Markets (LON:CMCX) good bet on this one, up 4 then fell to ONLY 2, and even Card Factory (LON:CARD) had something to celebrate up 4% at the close, funny old day.

planetx

Supreme

Seem to have paid a high price for their acquisition .

They bought a company with 3 million assets losing circa 300k a year for 15 million .

Not saying it’s a bad deal As they will absorb a lot of the operating costs .

But definitely a great exit for Clearly directors / shareholders who will be breathing a sigh of relief having managed to exit a loss making / break even company for a tidy sum.

Supreme have overpaid in my opinion but if the numbers add up for them then probably an ok deal .

KevinS1

The water industry's next 5-year investment period announcement was delayed from 12th June to 11th July due to the election.

This will be the draft determination and will sign-post the water companies likely scale of investment over the following 5-years. Whilst things can still change between July and the final determination in December it will certainly be pretty close the final outcome.

I suspect that all contractors working for water companies will get significantly more work over that period as the level of investment is huge compared to all previous periods.

I suspect that there will be a number of winners with the likes of Kier (LON:KIE) Costain (LON:COST) Galliford Try Holdings (LON:GFRD) and many others all benefiting.

Have you looked at any of these as well Yiannos? I'd be interested in your thoughts. I am still looking at some of the others, so haven't completely come to a conclusion yet, but I agree with your thoughts on Kier.

yiannos1

Have looked at them briefly Costain (LON:COST) and Galliford Try Holdings (LON:GFRD)-nothing wrong with them.

Went for Kier (LON:KIE) for its biggest revenues , has rejoined the FTSE250 so obviously more established funds will be involved and better covered by biggest institutions. Also Kier (LON:KIE) FCF’s over the next 3 years make more appeal to me.

All the best

Lefty99

Interesting read and I work for one of the companies mentioned in the replies. The pipeline of work and opportunities is massive, especially the infrastructure work. The contracting world compared to 10 years ago is very different, especially for the tier 1 contractors mentioned here. Certainly the company I work for is trying to rebrand as a specialist infrastructure company rather than a builder, and hopefully a premium share price will follow. Hope the investment pays off.

BnB

I agree on the infrastructure theme, Yiannos1. But how about playing the theme via the plant and equipment hire companies? To my mind, they are less risky and offer higher margins and returns. VP (LON:VP.) and Speedy Hire (LON:SDY) are still not far off lows despite recent strength. Interest rates are more of an issue today for equipment hire firms, but could provide more upside if they start to drop.

Kier (LON:KIE) is the theme!

BnB ,

What’s your opinion on the Bitcoin miners and the role they will play in AI and the use of their data centres?

Core Scientific (NSQ:CORZ) was a takeover target from NVIDIA (NSQ:NVDA) but they have rejected it. Then an announcement was made that they have signed an agreement with AI hyperscaler CoreWeave expected to generate more than $3.5B in revenues over the 12 year contract.

Today there seems to be aggressive buying on the $15 and $20 January 2025 calls.

Yiannis1

I never go near anything bitcoin-focused - more fool me, perhaps - so I can’t offer an opinion.

Pad Harrison

Thank you

Db47

Michael, ‘the societal goods’ that come from vaping is a persons better overall health compared to smoking plus far less cancer / breathing complications thus less NHS spend treating smoking related diseases - that’s quite some societal good IMO

on flavours - plenty of adults have a sweet tooth too, however my favourite flavour and extremely popular is Red Astaire (cherry menthol) made by a company Supreme (LON:SUP) acquired - a very savvy move.

G Morris

One and only beneficial affect of smoking is helps prevent flare ups of Ulcerative Colitis and keeps it in remission. Vaping dosn't seem to have an effect.

rmillaree

25th Jun

Michael, ‘the societal goods’ that come from vaping is a persons better overall health compared to smoking

For anyone who has swapped from smoking to vaping that’s brilliant - we are at a point where the vast majority of newer regular high use vapers would not have been long term smokers - the long term decline in smoking rates is clear and waaaay pre dates the vast explosion in vapers.

So if 80% of younger vapers had no material long term smoking issues and only vape because they can we are creating a national long term addiction and health issue that would have not existed to anything like the degree we have had vsoing been limited to prescription only.

these so called responsible companies all take advantage of our lack of planning. Perhaps it’s too late now to get the masses to stop but it’s all also sad when the % of long term smokers was always going to decline further.

jamesalastair

Thank you ... I always learn something, whether from Paul's analysis, or the entrepreneurs like PlanetX. I'll maybe approach stock and do a stock pitch for Cranswick (LON:CWK); maybe a whole sectoral review might be of some interest? So little of quality is available for retail investment across European bourses. Cranswick (LON:CWK) stands out.

Fire Juggler

Yiannos1 BTC mining is all over the place. Best given a wide berth. Proof of Work moved over to Proof of Stake over at Ethereum (greener than youtube now) Layer2's promised but undelivered too - but PoW is still poor with no BTC roadmap out. As a previous maximalist (BTC since 2016) And having waited for the killer app; I now realise the killer app is us. As they say - if you don't know what the product is YOU are the product. (Or now horror of horror. BTC Eth ETF investors). Buy Gold instead. Or anything. Best of luck

6th Jul

Just seen this and to be honest I haven’t got a clue on what exactly are you on about and personally not interested about sentiment opinions about different products (unless backed by numbers and/or fundamentals).

I am interested about the data centres of these Bitcoin miners and not the mining itself. Mining on its own at the moment is not profitable -But the mining data centres WILL play a crucial role on the AI development/advancement. That’s why NVIDIA (NSQ:NVDA) tried to acquire Core Scientific (NSQ:CORZ) recently.

All the best

Small Cap Value Report (Mon 24 June 2024) - SHI, THG. Briefs: PRU, BVIC, BELL, SUP, TPX, DWHT

Explanatory notes -

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Paul Scott

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