Small Cap Value Report (Tue 18 June 2024) - NXR, MOTR, IGP, STEM

18th Jun by Paul Scott

70 comments 7016 reads

Good morning from Paul (early shift, posted overnight from Washington DC), and Graham (UK shift).

Just FYI, we'll be switching on Weds, with me (Paul) giving you my undivided attention back in the UK, whilst Graham takes a little time off. As I think we've already demonstrated, we can juggle things just fine, and get a decent report out each day!

Graham says: all done for today. See you in a while!

Explanatory notes -

A quick reminder that we don’t recommend any shares. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps (usually) between £10m and £1bn. We usually avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech, investment cos). Although if something is newsworthy and interesting, we'll try to comment on it. Please bear in mind the "list of companies reporting" is precisely that - it's not a to do list. We typically cover c.5 companies per day, with a particular emphasis on under/over expectations updates, and we follow the "most viewed" list of readers, so if you're collectively interested in a company, we'll try to cover it. Obviously with the resources available, we can't cover everything! Add you own comments if you see something interesting, and feel free to discuss anything shares-related in the comments.

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to, if they are using unthreaded viewing of comments.

What does our colour-coding mean? Will it guarantee instant, easy riches? Sadly not! Share prices move up or down for many reasons, and can often detach from the company fundamentals. So we're not making any predictions about what share prices will do.

Green (thumbs up) - means in our opinion, a…

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Brothersinarms

18th Jun

In their presentations Intercede (LON:IGP) have also said they have 2-3mm repeating professional services revenues (from supervising upgrades, client requests etc.). It's not recurring revenue per se but it's pretty solid so really the forecast license sales for the year ahead are about 4-5mm.

Bouden54

Eurocell (LON:ECEL) spiked up a few % right at the end of yesterday for no apparent reason so probably just a reversal of this. Share price pretty flat over a few days.

Daniel

Paul - Apologies if I have missed the link, but could you share the Google Sheets data which demonstrates the performance of the colour coding system. Many thanks, Daniel

Michael Tee

Much has been written here about Equals (LON:EQLS) recently. I am a long term holder since September 2020. Like many of you, I would have liked the strategic review to have finished ages ago. During this time, my experiences have led me to hold management in high regard. Equals have consistently demonstrated impressive revenue and margin growth and consistently beaten expectations. Last year the company was throwing off £1 million cash every month and this figure will be higher now. MDP pulled out after 7 months. I do not think they would have remained interested for so long, if there were some nasties lurking, but pulled out much sooner. I think the issue is price. Pembar, original investors, are looking for a decent exit or they will not sell, say 165p. I suspect MDP made an indicative offer around the 130p/ 140p mark which is too low. As a shareholder I am pleased that they will not sell for price they deem low. I suspect that the Consortium have offered more than MDP so MDP pulled out. It is also of note that MoneyGram owned by MDP are talking to Equals about a tie-up for 'B2C and their technology platform' which I think encompasses B2B as well. MoneyGram are massive in comparison to Equals so this could prove significant.

Compliance has been raised as an issue. Equals have always stated they invest heavily in compliance, regular training and external audits. All payments are across Tier 1 banks who know what Equals are doing and are subject to external audits.

These are just my views and I do not know what will happen but I think the share price has suffered due to the length of time taken and the information vacuum which accompanies these situations. I continue to hold the shares.

I noticed that Equals have recently published some important dates:

Important Dates | Equals Group Plc (equalsplc.com)

sharw

"Eurocell (LON:ECEL) Down 4.3% today"

Rubbish! This is the distortion that particularly affects small caps and everyone should be aware of - namely taking the UT price as the closing one, and what happened at Eurocell (LON:ECEL) is typical.

At 16 29 yesterday the price was 132.5 (132/133). It opened this morning at the same and then moved to 131.5 (131/132). As far as I am concerned that is down 0.75%.

What causes the alarm is that in the auction last night 13,437 shares changed hands at 138p thus setting that as yesterday's price. I have seen the same happen with a very small number of shares. Indeed, this morning's auction saw just 9 shares traded at 134p so that became the official (not actual) opening price - the highest buy since has been 133p.

turbo

Thanks for the helpful (although somewhat supercilious) reply. I was misled by ADFN:

Paul Hill

Great comments Michael & totally agree. I remain long & strong too

Eurocell (LON:ECEL)

turbo - thanks for your reply. If you felt my post was 'somewhat supercilious' please be assured that the 'Rubbish' was not aimed at what you had written but at the system that dictates that it is down 4.35%. I have been panicked many a time by that and have learned to check the 16 29 and UT prices as a first line of enquiry.

It is not just ADVFN - it is standard from the London Stock Exchange down:

Monty Carlo

They did go down from 10% to 9% the other day (from memory - look it up for precision). We just need to wait another decade or two and they will be out.

Maddox

Hiya Michael, I share your views . EQLS is at the end of a period of investment and strategic developments from which they are only just beginning to reap the rewards. I believe that they had their hand forced into this strategic review. So, in short I concur that the price offered by MDP probably fell well short of EQLS' Management's expectations.

As shareholder it is easy to foresee the value of EQLS doubling and more at their current clip of growth - so if we don't see an offer giving a decent uplift - I'm happy to be patient.

BenHazz

Really good discussion on Intercede (LON:IGP) today with both bull and bear cases being put forward by a number of different contributors, all done so in a polite and considerate manner. A great write up from Graham on Intercede (LON:IGP) also. Thanks to all involved, these types of discussion are why I'm more than content to keep paying the subscription every year!

Patrickmylnetrade

Could Intercede (LON:IGP) not also then be considered a Defensive stock in terms of investing sentiment RE : security. thinking out loud ?

if you scroll from the top Daniel, there are four links in the heading post everyday, to Paul's sheets :p

i see Argentex (LON:AGFX) (i hold) are probably a leaky share, they post results tomorrow and are 6% down as of today even thou the chart sentiment said othewise yesterday.... :(

eParo

As it's end of play I thought I'd put a BBC job application typo :-)

StrawberryDreams

They had an online investor meet today this morning i think.Folk bought in for it.Folk watched it.Folk got disappointed as the stragey update/potential turnaround is going to be longer than thought.I hold too but didn't watch it.Just repeating what i read off another board regarding the timeframe.Postiive,..the share price did bounce off the 32.5p a share level!

The Phoenix

Just seen most house builders off at the close anyone know any reason why the sector is down today other than interest rates staying higher for longer ?

Thanks for the link. Good they are getting some research out there, although I didn't really glean anything new from the note. No mention of what might be weighing so heavily on the share price (whether the Telios overhang or something else). However, they are forecasting further increases in the DPS to 5.8p in 2025 and 6.4p in 2026 - this is presumably what Card Factory (LON:CARD) has guided them to say, which suggests a nice yield of around 7% in a couple of years.

19th Jun

Patrick - Yes, I'm aware of those links. The one I was referring to was the numbers Phil Hanson crushed on the colour coding system. Paul discussed it during this (https://www.loom.com/share/75e...) video and indicated he would share the spreadsheet, but I have missed the link somewhere along the way.

20th Jun

TY SD

Small Cap Value Report (Tue 18 June 2024) - NXR, MOTR, IGP, STEM

Explanatory notes -

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