Stock Picks | Small Cap Value Report (Thu 27 June 2024) - PZC, AO. Repeats: VLX, MSI, W7L

27th Jun by Paul Scott

114 comments 7561 reads

Good morning from Paul!

The more important backlog items from yesterday (Volex, MS Intl, and Warpaint) are now in yesterday's updated SCVR. Sorry it was delayed. Actually, I've just had a good idea, I'll repeat them in today's report, as most subscribers may not have seen updates on VLX, MSI, and W7L, all of which I think are cracking shares, and long-term favourites of ours here. So here they are again, below.

Obviously as always, you need to make up your own minds, as many of our ideas will be wrong, and some will be right. Why? Because we're not time travellers from the future, so it's your job to predict the future. We're just doing basic reviews of the 3 Fs - facts, figures, and forecasts, as of today. Things then change, from tomorrow.

Companies Reporting

Summaries

Volex (LON:VLX) - down 6% to 334p (£604m) - FY 3/2024 Results - Paul - GREEN

Good results for FY 3/2024, slightly ahead of broker consensus. I run through the detail below, and come away happy. This share strikes me as good value, so I'm very happy with GREEN.

MS International (LON:MSI) - up 7% to 1,100p (£180m) - FY 4/2024 Results - Paul (I hold personally) - GREEN

Fabulous results, with profit tripling. Defence division generates almost all the profit. Order book up again. Balance sheet strong. Ageing owner-managers likely to sell the business at some stage I suspect. With such good figures, and "excellent prospects" for the defence division FY 4/2025, I'm inclined to let my winner run.

Warpaint London (LON:W7L) - unch 588p (£458m) - Trading Update (AGM) - Paul - GREEN

Strong growth continues at this makeup company. It doesn't refer to performance vs market expectations, but does say H1 revenue is rising faster than forecast. H2 weighting as usual, due to Xmas. Share price looks up with events, but with a positive outlook and tendency to beat forecasts, I'm inclined to remain positive on W7L, although top-slicing after a 6-bag rise also looks prudent, but that's up to you!

Paul's Section

Volex (LON:VLX)

Down 6% to 334p (£604m) - FY 3/2024 Results - Paul - GREEN

Volex plc (AIM: VLX), the specialist integrated manufacturer of critical power and data transmission products, announces…

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Helvellyn

27th Jun

yadi,

Whilst I would agree with you from an anecdotal experience ( very few of my children's age group 20-30 have or even want a car living in London) do you have any data to back that up?

If that is the case there will be some collateral damage. Pastimes where you need to cart a load of gear around will suffer from drop out or take up. Off the top of my head fishing would be one but there must be other examples ??

rmillaree

TT electronics (LON:TTG)

Possibly another one to add to the list of declining shares with no news (do we need separate thread?)?

i put price alert in back in March and its just been triggered - march is that long ago not even sure why i put alert in but pe is shwoing up as being just over 7.

- does anyone have thoughts on this company?

StrawberryDreams

Large share price appreciation last 6-9 months for a business which you wouldn't traditionally necessarily expect it from.Perhaps commercial and political headwinds are strongly aligning with thier business, developing brownfield, industrial sites in the midlands and north.Wasn't that part of the conservatives, 'levelling up' agenda?

Pimlico on Thames

I assume the same applies to Polar Capital Holdings (LON:POLR)

Good to see 14% increase in AUM and net inflows. Stonking yield while I hold for further continued recovery.

Hopefully, Graham might have time to circle back to cover Time Finance (LON:TIME) and Duke Capital (LON:DUKE) on his return (I hold both - SP growth v yield)

jonno

Hi rmillaree

TT electronics (LON:TTG) is a bit of a conundrum. I have a modest holding bought at around 145p. The shares are clearly very cheap based on current expectations The new CEO, Peter France has been in place for about 6 months and has reorganised the company on a geographical basis, previously it was organised as three separate divisions, Power & Connectivity, Global Manufacturing Solutions and Sensors & Specialist Components. The reorganisation is intended to provide better communication, cross selling etc. See the recent RNS.

New Reporting Structure | Company Announcement | Investegate

There has been some issues with destocking hence the second half weighting scenario, which is no taken kindly by the market. On the positive side the book to bill was reported at 102% in the AGM update and operating margins are projected to hit 10%; also debt is starting to fall.

From the AGM update on 10th May.

"Whilst there is continuing global macro-economic uncertainty, the outlook for our markets remains good. The significant orderbook coverage and our prompt actions across the business underpin the Board's confidence in an unchanged outlook for the year and the delivery of the 10 per cent operating margin target.

Project Dynamo is progressing at pace and the new organisational structure is already helping to optimise resources, drive operational standards and increase customer intimacy as we remain laser focused on efficiency, growth and innovation."

The company's expertise in electrification and connectivity are disciplines that logic suggests should be in demand, but the share price performance like that of many UK small caps has been pants. There should be a trading update in early August and unless there is any negative news in the interim I shall continue to hold.

I would add that the company's recent Capital Markets day presentation is available on the company website.

All the best.

FREng

Camping? Surfing? Canoeing? Caravanning?

Serica Energy (LON:SQZ) predictable drop on going ex today. (I hold)

Loved the very unapologetic AGM statement in this morning's RNS

Implies they will start expanding outside the UK due to tax treatment.

Stonethecrows

Not sure if anyone has asked already, but would you be into having a look Time Finance (LON:TIME) . They reported ahead of expectations and rose 16% today. Great GARP share and very cheap. Thanks Paul if you do have time for Time!

planetx

I’m not even sure you can lock in / hedge freight rates .

And even if you could if there just isn’t capacity you aren’t going to get a place on the ship .

Trident

Ok. Wasn't sure if I was missing something :-)

Wimbledonsprinter

Shoe Zone (LON:SHOE) reports after the close a cyber incident involving unauthorised access to its systems but says "At this stage, any financial impact resulting from the incident is not expected to be material". A few more details in the RNS.

davidjhill

Cyber attacks are becoming a way of life I’m afraid. The key is no longer “if” it happens to companies but how adept and resilient their processes / recovery are when it happens. encryption at rest, partitioned networks, multi site cloud recovery etc. ie to avoid loss of key data or susceptibility to ransom demands.
recent NHS hack a case in point!!

From the RNS sounds like Shoe Zone (LON:SHOE) have reasonable resilience. Of course they also have the benefit of most sales being in store.

Dragon

If you want an example of how even experts get hacked, look at the Linus Tech Tips YouTube hack. An employee was working on a computer which had the browser logged into the YouTube account, the employee opened an email with an attachment or link, which immediately ran a program to copy the browser session cookie and transferred it to the hacker. The hacker then applied the session cookie to their browser, giving them access to the YouTube account without having to login, as the session cookie keeps you logged in.

unbelievablejeff

I'd welcome a pre and post market like the US.

sevenmonks

Spare a thought for people who work late - I'm not even awake by 9am, evening releases would be great for me!

Harry Hindsight

A 70m GBP co gets hacked but is this a state backed operation or some spotty nerd in a basement. The latter and soon to be suited and booted head of IT. Otherwise what other motive - because you can ?

Let’s forget food establishments and clothes sellers and focus on the stuff that keeps the light on.

Does it not come through Scotland. Sorry forgot apparently part of the UK.

Soap.

28th Jun

cheers jonno thats a really useful summary of where the company is.

Small Cap Value Report (Thu 27 June 2024) - PZC, AO. Repeats: VLX, MSI, W7L

Companies Reporting

Summaries

Paul's Section

Volex (LON:VLX)

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Paul Scott

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