Small Cap Value Report (Tue 31 Jan 2023) - CNIC, COG, BAG, MAB1, TPX, SOM

31st Jan '23 by Paul Scott

58 comments 9619 reads

Good morning from Paul & Graham.

It's the last day of Dry January today, so I'm looking forward to celebrating a friend's birthday at the weekend. In the meantime, we've got lots of companies to report on, so I got up early today to try to catch up on 2 stragglers from yesterday - Porvair (LON:PRV) and CentralNic (LON:CNIC) [CNIC now done].

Explanatory notes -

A quick reminder that we don’t recommend any stocks. 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 up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

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.

It's another huge list of announcements today. We'll not be able to cover all of these, but will try to report on the most interesting (above or below exps take priority). If updates are just in line with exps, then they're lower priority & might not be covered. Please do add your own comments on any companies, it's a team effort, especially on busy days! -

Paul’s Section:

CentralNic (LON:CNIC)

145p - mkt cap £416m

Trading Update

CentralNic Group plc (AIM: CNIC), the global internet platform company that generates recurring revenues selling online presence and marketing services, is pleased to announce its trading update for the full year 2022.

Continued positive trading momentum, with record revenue and EBITDA for 2022

These guidance numbers look impressive - it’s another ahead of expectations update on EBITDA -

The Company now expects to report record gross revenue of c.USD 728 million, and net revenue and…

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Michael C

31st Jan '23

Tpximpact Holdings (LON:TPX) This was discussed 4 months ago here with very helpful comments from mainlydown, and I commented that I had looked into the background of the new CEO, Bjorn Conway, with the result I put this company on my bargepole list. I am tempted to open a spreadbet account with IG just so I can do the next best thing to going short on this. It seems to me the situation can be summed up in this comment by mainlydown: 'There have been plenty of these types of groups in our market (see Be Heard and The Marketing Group) all of them have seen a similar fate....'

iamflimflam1

I wouldn't strongly disagree with this, but I would slightly disagree.

We've recently seen a lot of progress in training networks off data scraped from the internet (e.g. the recent wave of image generation models - which have been trained on a lot of online artwork, and the GPT-based models - trained off huge amounts of text - ChatGPT being the current popular one).

These have all worked amazingly well because the data they are being trained on is readily available and is either already classified in some way (images with tags and descriptions) or in the case of the large language models doesn't need to be classified as the model is learning the structure of language.

Getting access to high-quality data that has already been classified by an expert - then cleaning and normalising it is still a bit of a problem.

sharw

Michael - I find the easiest way to open the 'proper' RNS is to left click and highlight the link (that is supposed to be clickable but isn't) and then right click and chose from the menu to open, or in new tab thus:

Mark L.

Seconded:-)! I usually go to investegate.co.uk if I need to read an RNS highlighted on stocko.

It would be nice if making RNS links easily readable was put into the pipeline of ongoing Stockopedia system improvements.

Rusty2

Yes this has been an issue for some time now, not sure when it started, was it the move to the cloud?
Some are illegible.

How would you do that if you don't have a mouse? I use an ipad most of the time.

Cuddlesticks

(LON:NWF) (I hold) issued a positive set of interim results today for period ended 31 November 2022.

Operating profit was split pretty evenly across the three divisions: Fuels – oil distribution (£2.6m), Food distribution (£2.1m) and Animal feeds (£2.1m).

This translated into £4.6m profit after tax for H1 which, for me, means its well on track to beat year end Stocko estimates of £9.0m.

The fuel and animal feeds business are much stronger in the winter months which is good for FY profits but means there was a £12.6m working capital outflow in H1. Excluding leases NWF still had a period end net cash position, albeit only £1m.

Management explained that £4m of that WC has flowed back in the first 2 months of H2 confirming this is a very cash generative business.

For H1 management reported 28% ROCE which wont harm NWFs strong stock rank ratings.

A key challenge for management has been negotiating volatile commodity prices. I think this makes it difficult to gauge underlying business growth although I was pleased with how management articulated its growth strategy, combining organic growth with industry consolidating acquisitions.

A downside to the share is its wide spread, even though the market cap is over £100m.

In summary, I think this is a well managed, high quality company that’s compounding profit growth nicely.

For those interested management have posted slides from this morning’s analyst/shareholder presentation. This includes analyst forecasts which is handy as there doesn’t seem to be anything posted on Research-Tree recently.

https://www.nwf.co.uk/application/files/3216/7515/6878/NWF_Half_Year_Results_presentation_final.pdf

Michael Tee

Cambridge Cognition (LON;COG)

I asked Matthew Stork CEO about the issue of IP protection a little while ago. He directed me to their IPO document which I seem to have difficulty attaching here and also the following:

Copyright in the look and feel of the different tests/test batteries that forms the basis of CANTAB™ products
Copyright (and database rights) in the software which provides the functionality and operation of CANTAB™ as a touch screen interactive technology
Publicly available journal articles that form a bibliography of more than 1000 articles - at the time, now over 2500 - which reference the use of CANTAB™ products and outcomes derived from their use
Registered trade mark protection of the CANTAB™ name and of CAMBRIDGE COGNITION which has been obtained and is being sought in additional countries.

Additionally COG use APIs to send and receive data to their clients. This means that the source code is not provided but a response is sent when a partner sends a request via an API to a service. As in all situations, software and systems are only as good as the people operating them. It is also important to note that the many of the employees of COG are specialised scientists who understand what the data actually means.

BnB

Porvair (LON:PRV) Another vote for a look if you get a quiet moment, Paul. I like the exposure to environmental factors and the track record of growth. But I found the outlook statement more cautious than other high quality industrials within my research universe and that, coupled with the lower returns and margin profile, kept me from jumping on the slump in the SP.

Monty Carlo

I tend to agree & hopefully CANTAB will become the default option in the sector.

You only have to look at the statistical software that is used in academia. SPSS was bought up by IBM years ago and even now has the look & feel of something predating Windows XP.

And yet i's reputation is so firmly established that it rolls on (no doubt spinning off obscene amounts of cash), and you see papers attributing simple statistical analyses to SPSS when you could run them in Excel.....

Once you get a foot in the door as the recognised standard nobody can be bothered to take the risk of straying from the familiar...if you are submitting a paper you just want to tick the box with as little effort as possible.

Harry Hindsight

Bouden54

Thanks FREng, although I access Stocko via mobile and can't seem to see that option, unless I'm looking in the wrong place.

I can open it but there is no pdf and the formatting is all wrong, especially if there column of figures on it.
If it is formatted correctly, why does it not show on Stockopedia correctly. This started last year, before never had this problem.

timarr

The problem for Belvoir (LON:BLV) is where is the growth going to come from over the next 12 months?

Well, as you say, it depends on your timescale. Mine is (give or take) five years providing there are no management shenanigans, stupid misapplications of capital or bombshell black swans. Other peoples' will be different as they have different (and hopefully better) judgement than I have.

My personal experience is that most of my short-term buy decisions turn out to be largely random so, for me, the opportunity to "deploy cash more effectively elsewhere" tends to turn into "making less money than I would have if I didn't do anything". I have a very long list of good short term decisions that turned into terrible long term ones.

But everyone needs to find a process that works for themselves, it's the diversity here that keeps it interesting.

timarr

WarrantStar

I eventually found that it is possible to do almost anything on a touchpad that could be done with a mouse. I am on a Windows 11 laptop. I don't even have any buttons at the bottom of my touchpad. The solution for me came when I found out that the bottom section of my touchpad contains two virtual buttons, left & right. I just pretend that the physical buttons are there, and it works, a bit like magic! (The touch pad was always programmed that way. I just had to learn how to use it.)

Sorry but I have an ipad, not touchpad, yes I can get some options to come up on the screen but not any use it seems.

Caduceus

And colour highlighting lists of specigic words different colours the same way advfn do. Super useful.

Daniel Smith

8th Feb '23

Hello,

Just wanted to let all our news readers know that we have heard the feedback about having to copy and paste the URL link at the top of news announcements in order to open the correctly formatted document. From this, we have made a change to our systems to make this link clickable, so you won’t have to copy and paste it anymore. We’re still looking to improve the news document formatting, but we hope this change will make your life a bit easier for now.

Kind regards

Daniel

ISAallowance

Thank you! This makes it so much less hassle to go direct to the source on the PC when required.

9th Feb '23

You have just doubled the life of the CTRL, C and V keys on my keyboard.

Small Cap Value Report (Tue 31 Jan 2023) - CNIC, COG, BAG, MAB1, TPX, SOM

Paul’s Section:

CentralNic (LON:CNIC)

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Paul Scott

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