Goldplat ($GDP:LN) released very positive preliminary results yesterday which I think are noteworthy given the share price barely moved. This is quite a sizeable position for me and the results were very positive in relation to the market cap of £10.3m.
Northern Bear is a small company in the UK providing “specialist building services”. Segments include Roofing activities, which provides a range of roofing services, including slating, tiling for domestic, commercial and public sector properties; Materials handling activities, which includes supply, service and maintenance of fork lift trucks and warehouse equipment, and Building services activities, which provides things like fire protection and asbestos removal.
It has a market cap of £9.5m and trades on London’s AIM with a trailing P/E ratio of 5.9. My initial thought was that it was in some kind of trouble, or had warned on profits, but that isn’t the case. It simply seems to be a case of the market overlooking a small cap to me.
I have made a number of purchases in my portfolio over the last couple of months and haven’t gotten around to writing them up properly. Here I’ll briefly detail what I’ve bought and will have posts to follow with a bit more detail on some of the stocks.
Cambria Automobiles is a retailer of new and used cars, commercial vehicles and bikes. It operates through four segments: New Car, Used Car, After Sales and Internal Sales. Through its subsidiaries, it has over 30 dealerships, representing over 40 franchises and 10 brands. Its market cap is £60m.
The market is very pessimistic about their prospects with the economic uncertainty over the UK, so it trades at a forward P/E of just 6.4. It is “debt free” (cash covers debt, but seems like it’s needed for operations) and boasts an impressive ROIC of 22% (which the board actually monitors – important for an acquisitive company).
Still cleaning up my portfolio after a year of not paying much attention to it. I sold HOS:US and BXP:LN last week, and opened a new position in Cambria Automobiles ($CAMB:LN) which brings my portfolio cash up to 46%. A full post on CAMB:LN will follow later next week.
United Carpets is a small UK based retail chain that sells carpets and beds. Usually retail is highly volatile and in this case very linked to the property market which is doing quite well at the moment (and that could change). But United Carpets is different in that it franchises, and only has a handful of its own stores. But still, margins are low and administrative expenses high. Operating margin has been improving in recent years but still sits at just 7%. The hook is, it made £1.2m net profit in 2016 and the current enterprise value is £6.8m, or 5.7x. Its profits are not declining and are in fact increasing slightly.
Yesterday was quite a dramatic day for Craven House Capital ($CRV.L), the company announced it would delist from AIM and join the Specialist Fund Segment of the London Stock Exchange, along with securing funding for $150m of new capital priced at 1.25p per share. The stock exploded from around 1p to a high of 1.8p and has now stabilised at 1.4p.
Logicamms is a company that provides consulting and engineering services to the mining, construction and oil & gas sectors in Australia. As you may expect, the market is very pessimistic about its prospects given the collapse in oil prices and the bear market now apparent in commodities. When I first looked at Logicamms I didn’t feel I could properly judge the level of profitability it could sustain going forward, but now there is a further year of accounts to peruse and also management have guided on 2016 performance. In short it expects to make $4m in the first half of the year, and claims its pipeline of work is stronger for H2 2016 than it was for H2 2015. Even if the company makes no profit for the rest of the year, it is trading at a P/E excluding cash of just 9 at this low point in the earnings cycle.
I mentioned in my portfolio half year review that I had taken a new position in Softbank and here is the full thesis. Softbank (TKS:9984) (ASE:SFT) is a Japanese telecoms company and is one of the largest in the world. Investors may know the company because of its 36.3% holding in Alibaba (NYSE:BABA) and 80% ownership of US telecoms company Sprint. The investment thesis for Softbank is relatively straight-forward. It currently owns a stake in Alibaba worth ¥9.6tn, yet its market cap is only ¥8.8tn. In addition to the Alibaba stake however, you get an 80% stake in Sprint, a 43% stake in Yahoo Japan, and operating businesses with net income of ¥720m per year.
Kobex Capital has net cash of $28m, a book value of $34m, yet a market cap of just $21m. The upside is obvious, but I have some reservations about whether these shares are worth an investment or not. For investors that like a wide range of net-nets this could be a decent addition to the portfolio though.