Small Cap Value Report (Tue 4 June 2024) - TIDE/CKT, GHH, CHG, ELCO, VLG

4th Jun by Paul Scott

90 comments 8468 reads

Good morning from Paul & Graham!

Graham writes: For readers who are interested in Ramsdens Holdings (LON:RFX), I have a management call with them tomorrow morning. Instead of asking my own questions as I did last time, I'd like to ask the community here for any questions you might like me to put them. Please let me know in the comments. Thank you in advance!

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rmillaree

4th Jun

Burberry (LON:BRBY)

you are correct in my haste i completely misread the stocky notes , my prior post was nonsense- lets have attempt number 2 here.

What is the definition of Free Cashflow ps?

Free Cash Flow Per Share is calculated from the Statement of Cash Flows as Cash From Operations minus Capital Expenditures, divided by the Diluted Number of Ordinary Shares Outstanding.

per page 26 of report 2023/24

1- Cash generated from operating activities £665 million in 2024

2- minu s capital expenditure £208 million

3- that leaves us with £457 mill free cashflow

As at 30 March 2024, the Company had 363,815,743 Shares in
issue, including 5,232,720 held in treasury

to get amounts per share

1- 665 mill divided by 359 mill shares = 185 pence per share

2- 208 mill divided by 359 mill shares = 58 pence per share

3- 457 mill divided by 359 mill shares = 127p per share

that still doesnt match stocky figure - doh - bad hair day here

ok the quoted £665 million cashflow is before Payment of lease principal and related
cash flows

that line item is £235 million - so if we were to include this line item as "operating activity expense" even though the acocunts dont do that

that would reduce 1 and 3 above by 65p per share each - that would be closer to stocky numbers - but lower than stocky - at 62p per share that is lower than the 81p quoted by stocky

perhaps i should give up here ?? - nothing would suprirse me ref any adjustments that may be deemed reasonable. what is the figure you calculated simoan out of interest ?

Poker111

I've held a small stake in Incanthera (OFEX:INC) since 2021 (13p) and first mentioned it here after the December RNS, when I topped up at 6p. There's clearly a risk, but the risk / reward seems to be getting better by the day and it has serious multi bag potential if all goes to plan. I've added several times this year from 10p to 18p and its now at my maximum investment size (8% of PF).

Today's interview by the Chairman is oozing with confidence. Lets hope its real and not misplaced.

https://audioboom.com/posts/85...

davidjhill

Don’t think the situation is remotely grim at Checkit (LON:CKT) Boon. The ARR and growth alone is excellent and they will be cash flow positive long before they run out of money. The projected low point still leaves them with a couple of years of runway.

The strategic logic is obvious to me - this is about two businesses that are too small to be on any radars and with Crimson Tide (LON:TIDE) they can cut substantial costs and accelerate profitability. So if you bolt them together and move to cash flow positive quickly you’ll have a £50m+ market cap which opens up a much richer array of opportunities. Do it now before the market turns any further upward. And really you are giving away 30% to achieve it. Assuming you consider the Crimson Tide (LON:TIDE) software good then that’s not a terrible idea.

yiannos1

A brief looks seems that you have missed the cash flow from investing activities (rather big one and one needed for the company to operate!) and also any exchange rate outflows.

Wolf of Small Street

Operating Cash Flow 665m

Minus- Capex - 212m
Tax Paid - 139
Repayment of Leases - 231
Interest Paid - 52m
Interest Received +32m

=Free Cash Flow 63m

Divide by 363m shares = 17.3p

I always Add back dividends and buybacks as these are distributed to shareholders

All the best

StrawberryDreams

I keep Watkin Jones (LON:WJG) in the part of my portfolio for companies which i think stand a good chance of multibagging back to nearer historical norms.But anywhere in the next 5 years hopefully.So backburners that i like but can't be bothered to try time and keep an eye on (ie. probably can't do it well and personally sometimes i totally lose interest in following markets as a hobby) and could move in fast spurts when/if they do.And if that happens i wouldn't say no to a potential couple of bags in a few years.

NeilS

And the chairman of Brookfield, a Canadian by the name of Mark Carney, knows his way around London I believe ;)

AcornInvestor

I would be wary of Tim McCarthy's positivity after having witnessed similar behaviour at Immupharma. Several years ago he made some very bullish public statements about their lead drug candidate which turned out to be worse than a placebo. The long term share price graph tells the story in all of its misleading hype and subsequent exposure.

ridavies

Hello Graham.

Adding to cheeky_minnows questions on Ramsdens Holdings (LON:RFX) I seem to remember the Ceo in some recent public forum that they were disappointed with the expectations on the money they make from punters bringing back foreign currency and cashing them in. Ramsdens Holdings (LON:RFX) apparently have made good money on this in the past, though the CEO seemed to eb saying that punters were spending all their currency purchases and £TFX were losing out on what had been a significant profit source.....so please add this to the questions you put to the CEO tomorrow.

Going back to Graham again, I would like to get to the bottom of why you are so positive on Ramsdens Holdings (LON:RFX) because the share price is going nowhere, the forecasts are going nowehere. I can understand that you consider them to be safe and have some holding qualities...but no more. Please put me straight if I am missing something.

PS I quite recently sold them at a significantly higher price than current, after having held them for some time hoping they were going to show a higher SP projectory.

I was simply trying to get back to the stocky cals and was following the very brief notes that stocky gave me to work on which seemed very specific (Cash Flows as Cash From Operations minus Capital Expenditures) - heck i dont even know what difference simoan had when they were trying to reconcile the figures. the problem with stuff like this is there can be any number of different ways of calculating metrics so i am shooting blind even if havent made any basic errors like i did in my first attempt - i would always say to anyone with doubts look at the annual report and that should somewhat clarify - i was working from annual report and i see wolf has been kind enough to provide all the workings i was trying to get back from so hopefully soem genius will work it be able to succceed where i have obviously failed . hey ho all good fun and games

JohnDoe2378

Hello gmtrader,

Wow 63% up in a bear market, that's some going!

Regards

I presume Stockopedia doesnt remove Repayment of Leases, as Simoan said, -231m so would come to free cash flow of 294m

Divide by 363m shares = 81p FCF ps which I think is the number on stocko

Timby

Surprised to see Michelmersh Brick Holdings (LON:MBH) going below £1 with ex div date on thurs… anyone got any ideas?

AimingHigher

Fitting that they missed off Marshall Wace, who seem to short anything with a pulse. 7 increases to short positions reported in today's short tracker data, including continuing to up their Burberry short to 2,31%, despite the shares being sat at 10 year support. I'd punt that Wace likely hold shorts in ~10% of LSE shares, perhaps even higher.

Thank you for the cautionary note. Will keep in mind.

Boon

5th Jun

I agree that on the current management plan, while break-even/profitable for Checkit (LON:CKT) is a few years away (2026? 2027?) they should have enough cash runway. But I am a pessimist, that there will always be something that comes along that derails the nice Powerpoint management plan....

And for me, that thing to derail could be this acquisition of Crimson Tide (LON:TIDE) . For this acquisition to make sense, I also believe it is about the synergies. That means some cost rationalisation (ie cutting roles) and also training each other's sales and marketing staff to sell both brands.

Growth / new acquisition of clients is already such a big time-consuming job for all divisions in a company. Now we add on the turmoil of a transformation to cut costs, rejig operations.... can they juggle both successfully?

Michael Taylor

Surprised ARB is not down more on these numbers (I am short).

I had modelled a best case scenario of $5.6 million, and based this on 3 EH/s (the company has 2.7 EH/s) and an average of $60 hashrate (the hashrate was well below $60 for the month of May).

Even at those numbers the company isn't capable of operating without the begging bowl, and revenue for May was $2.9 million. It's entirely possible I've missed something so certainly open to hearing it.

Graham Neary

6th Jun

Hi ridavies, your question regarding currency purchases/sales was covered in the interim report published on Wednesday so I didn't include it, but many thanks for the suggestion! I'm personally positive on RFX because I like the company and the industry and I like the valuation at 8x PER. Of course that doesn't mean the share price is going to go anywhere in particular. The weak share price is what has brought it to this valuation! Cheers.

Small Cap Value Report (Tue 4 June 2024) - TIDE/CKT, GHH, CHG, ELCO, VLG

Explanatory notes -

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Paul Scott

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What is the definition of Free Cashflow ps?

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