Small Cap Value Report (Wed 1 June 2022) - BOO, MEAL, OTB, VIC

1st Jun '22 by Paul Scott

75 comments 10068 reads

Good morning, it's just Paul here today, as Jack is sick - get well soon Jack! Today's report is now finished. Wishing you a delightful very long weekend!

Agenda - it's quiet today, but I'll look at a couple of catch up items, so there should be a full report up by 1pm.

Missguided - has been bought out of administration by Frasers (LON:FRAS) not Boohoo (LON:BOO) (I hold).

Parsley Box (LON:MEAL) - revenue guidance for this year is reduced, but little change to guidance for heavy losses. This looks a basket case to me, but probably has enough cash to keep going for maybe another 2 years?

On Beach group (LON:OTB) - I check out its interims to 3/2022. Still impacted by omicron, it only reached breakeven in H1. The future's looking more bright though. Could be quite good, but lots of travel shares look cheap now, so I'd be inclined to look at a few, and maybe buy small positions in several? Balance sheet is adequate, but it's good to see customer deposits ring-fenced in a trust account.

Victorian Plumbing (LON:VIC) - I have a quick look at recent interims for this bathroom supplies eCommerce business. Can't make up my mind whether it's any good or not.

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.

Paul’s Section:

Missguided update - according to the Retail Gazette here, Frasers

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ridavies

1st Jun '22

Well found marcusb for Unbound (LON:UBG) on that. Thanks for that. In the meantime, they offer 30% off ladies and 40% off mens shoe range.....for the immediate time at least. Maybe hopeful get a new pair for the Jubilee! Certainly a wider ladies range, if not adding much to the mens.

Epsilon

Planetx

The most recent Unbound (LON:UBG) accounts are a throwback to its former Investment Trust days. The comment "net asset value of £23.1 million reflects closing market capitalisation on 31 January 2022" is nothing more than a multiplication of the 37.9million shares in issue by the 61p share price at the end of January 2022.

However, the Unbound (LON:UBG) website reveals a CMD presentation from September 2021 which includes the following table:

So at the end of July 2021, the NAV was £7.8million, and 100% tangible. Obviously this number will likely rise as the company continues to move from red to black profit-wise.

abtan

Victorian Plumbing (LON:VIC) (no position)

Hi Paul,

I thought I'd share some of my workings for you or anyone else interested.

I listened to the recent call and these are a few of my notes:

No real slowdown in activity or return rates (YOY revenue was down, but they say it was against strong comps).
No-one should be surprised by supply chain issues now unless they're useless.
Increased focus on Trade.
Group gross margins more impacted by less own-brand sales, where GM declined back to pre-pandemic levels.
Increasing CAC - worrying.
They want things to get more difficult so that it removes weak competition.

Cheers

Cleeve

Thanks Paul - my broker gave me the figures over the phone this morning but am in Cyprus on a beach for a week so probably misheard so thanks for clarifying - still not bad money though for not much

mojomogoz

This is a lead indicator

Paul Scott

2nd Jun '22

Hi abtan,

That's fantastic information, thank you. I normally don't have time to go through these tables, but being a long weekend, have spent 10 mins looking at it, and there's much useful info.

Suggestion - maybe you could put the abbreviations below, for people not familiar with them all? I worked out all, apart from "People excl SBP" - it'll be obvious when you say it, they always are! ;-) Appreciate you're doing this table for yourself, so you know what the abbreviations mean. It's good of you to share them with us, very useful indeed.

It reinforces my main point, that VIC has a strange business model, where they're spending what to me seems a wildly excessive amount on marketing, to win mainly one-off orders. If they could lower marketing spend, and reduce selling prices to be more competitive, then that might improve repeat orders, and make it a better business. Low repeat orders perhaps suggests quality of product might not impress customers to make them return, which would be a worry? Do we know what the returns rate % is? Although customers might not want to return bulky heavy items, so might just accept product even though not wowed by the quality perhaps?

Market cap still feels too high to me. Important not to anchor to the ridiculous IPO price.

Thanks again, great post from you :-)

Regards, Paul.

rhomboid1

Agreed great post..SBP Share Based Payments…an unfortunately familiar acronym nowadays

BnB

Re Victorian Plumbing (LON:VIC) Surely the only market for repeat orders is bathroom fitters rather than normal punters who probably do up their bathroom less than once a decade. And, if that is true, then can't they find a more targeted, less expensive marketing strategy? They know who their repeat customers are, don't they? Or could work it out quite easily.

Dragon

Victorian Plumbing (LON:VIC) I would say it's brand reinforcement rather than repeat orders that they are attempting. A bit like Barrett homes and the helicopter in the 70's adverts.

My point entirely. Paul is keen for them to shift emphasis.

Boohoo (LON:BOO) -> Shein allegedly worth $100bn…

https://www.forbes.com/sites/j...

Boon

3rd Jun '22

It looks like my initial fears of huge cancellation disruptions for OTB isn't as large as feared.

FT had an article today quoting OTB CEO:

Simon Cooper, chief executive of the online travel company On The Beach, said difficulties at airports meant “the whole industry is suffering”, with contact centre staff having to deal with high call volumes from worried customers.

“It’s very difficult to put someone on an alternative flight with 24 hours notice so [customers have to rebook],” he said.

On The Beach had been forced to cancel holidays but only into the “hundreds”, Cooper said, as it was not reliant on Tui and easyJet, which have experienced the most cancellations.

JimMcLad

Angle (LON:AGL)

Having watched a very interesting programme on cancer treatment broadcast on the Beeb yesterday evening the following article was in the FT today. [I cribbed from the post by asdb9 on another BB].

Pharmaceutical companies are lining up to use a pioneering cancer test developed by UK start-up Angle after it received a first-of-its-kind US regulatory clearance. Angleâs liquid biopsy test captures live cancer cells in the blood that clinicians can use to personalise treatment by understanding the mutations and gene expression in each patientâs cancer. Shares in the London-listed company jumped almost 60 per cent on the day the Food and Drug Administration gave the test clearance for use in metastatic breast cancer. The Surrey-based start-up already works with US drugmaker Abbott to use its test to identify patients who will respond to its treatment Herceptin. It is working on a trial in ovarian cancer and this week signed a deal with Philadelphia-based MidLantic Urology to study its test in prostate cancer. Andrew Newland, chief executive, said other companies had approached Angle since the clearance last week because the test enables them to follow their progress as the drug tackles tumours. Ultimately, it hopes they will develop diagnostics as companions to each drug. âOur vision is that weâre going to transform the way that cancer is diagnosed and treated for every cancer type worldwide,â? he said. âSo we either have to be a very, very large company, or as weâre currently planning, we have to have many deals with very large companies to achieve that.â?Â He said Angle wants to help clinicians who are âflying blindâ?, trying to work out which treatments a patient will respond to. In metastatic breast cancer, over half of patients do not have a biopsy at the secondary site, or repeat biopsies. âThe cancer changes over time so the tissue biopsy becomes out of date,â? he said. Until now, harvesting these cancer cells has been a huge challenge because there is roughly one to every billion blood cells. The company, which grew out of a consulting business helping commercialise intellectual property, acquired the patents behind the test fromÂ George Hvichia, a scientist at the University of Pennsylvania. Investment has been pouring into the nascent liquid biopsy market, funding scientists who hope that a simple blood test can replace more invasive ways of detecting and monitoring cancer. Gene-sequencing company Illumina is acquiring cancer-testing group Grail for $8bn, while other businesses such as Thrive and Freenome have raised large sums in private funding rounds. Rivals are focusing on developing tests that could be used to diagnose patients with early-stage cancers, before they begin to experience symptoms. This could be revolutionary but is fraught with risk because the tests must be very accurate to avoid false positives. In contrast, Angle is focusing on tracking already diagnosed cancers to enable more personalised treatment and is selling a testing product to labs rather than offering a service. As demand soars, Angle plans to expand its workforce by 50 per cent this year and to double the size of its headquarters. But Newland said there had been far more appetite for the test in the US than from the UKâs NHS, even though it has the EU CE mark. The company has worked with top UK cancer research centres such as Barts Cancer Institute but would like to roll it out more extensively across the health service, where it has been âvery, very difficult to gain tractionâ?. âUnfortunately, we failed miserably. We tried. But weâre finding all the traction is coming on the United States side, which is very disappointing,â? he said. âWe can even provide this test at relatively low costâ.â.â.âbut itâs just impossible to find anybody whoâs able to make a decision.â?

Shame about the lack of enthusiasm so far from the NHS.

stanislawski

4th Jun '22

I hear the same thing from different contacts in health tech. The NHS is just not very good at handling change and development. If you look across the OECD basically we spend about average (the half-assing exception being the USA which has a massively inefficient system) but are at our close to bottom in terms of outcomes in many areas. There is no political support for major structural change so the message to health innovators is simply go and sell abroad and don't waste your limited time trying to interest the NHS.

Mark B

DeBoohnamsoo :-)

Tortoise investor

Very good points Boon. And yes, regarding the FT article, the travel chaos is particularly centred on certain companies as Jet2 (LON:JET2) has been boasting that it started hiring more staff last September so hasn't experienced the same kinds of problems as £EZJ. On Beach group (LON:OTB) has a closer relationship with Ryanair.

Re On Beach group (LON:OTB) valuation and comparing with pre-pandemic numbers, it is important to remember that the pandemic obscured the impact of the collapse of Thomas Cook (autumn 2019) which you would have thought would have benefited On Beach group (LON:OTB) pretty massively because Thomas Cook had such a large market share. I see Thomas Cook is now back in a different form under the same brand but I don't know how much of the previous business they have held onto.

AJC0504

5th Jun '22

JimMclad

Would it be possible for those who contribute their thoughts on Angle to also paste a copy on the share site of Angle .

(Otherwise it may be simply taken as a ramp. This is a point I made two years ago)

Yes I am very excited about the future and want other members to be aware, but I believe that if you want to research a share you should go to the company page and see what other members have posted.

This is a loss making company which will have to do a rights issue ,to expand in a meaningful way.

I believe ,as a shareholder who has held the shares for over six years, and started to invest heavily over the last 12 months ,that this has the potential to be a multi bagger with its defensive moat, its scientific intellectual property , and my analysis that this is the start of personalised cancer care.

How the company commercialises this will be the key, including the rollout of testing for other cancer types, the future listing on Nasdaq, and the high likely hood of it being taken over by USA drug companies like Abbott.

But I believe given patience ,and in a minimum of three years ,that this will be an extremely profitable company .How its share price behaves in this market of fear on ,I have no idea, but I am happy to hold for the long term.

I think I have posted on Stockopedia four times in three years ,(three times about Angle)and never on any other site.

This is my last post on the general discussion page, and I am thinking of posting only on the Angle page from now on to educate our fellow investors.

DYOR and good luck

I’ve no objection to double posting. Are you referring to the thread ‘Angle-£AGL-Momentum Trap V Multi Bagger’ which you created with a last entry of June 21 ?

Perhaps we should start a new thread entitled ‘ANGLE post first FDA Clearance’ ?

6th Jun '22

A new thread would be excellent, and I agree with your suggested title. The PIs are those who add liquidty to the shares .To say that I am excited about the future of this company Angle is a vast understatement, and as it gains recognition and marketing agreements will surpass all our expectations. But lets make it easy for fellow investors to read the comments,otherwise they will get lost

Best of luck

Johnnycomelately

Where's the golden cross? Trying to learn.

Small Cap Value Report (Wed 1 June 2022) - BOO, MEAL, OTB, VIC

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Paul Scott

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