Beeks – No news is bad news…

…for their FY 2020 revenues and profits. But, like any growth company, the majority of its value is based not on the current or next years profits, but those in 5 or 10 years time. Nonetheless, with their ability to repeatably win large contracts unproven, and a track record of missing targets as long as their lifetime as a listed company, it this doesn’t bode well for the future. You can read more about Beeks here.

I now see revenues of £10.0m for FY 2020, with £4.7m of those in H1. This compares with a consensus forecast of £10.7m which has not updated since September. Given the lumpiness of orders at this stage (and recent history) anybody predicting FY 2021 is braver than I – the consensus is £13.5m.

I plan to update ahead of the H1 results with an EPS forecast.

7:59 cut – GAW

Games Workshop – Trading Statement

“Oh no, an unscheduled trading statement from Games Workshop, I hope it isn’t too bad!”, thought nobody this morning.

[Added: Games Workshop own / develop the IP of the Warhammer hobby which they monetise mostly by selling fantasy miniatures. Last time I covered it I reported selling. Happily I saw the error of my ways and bought back in October for little more than I’d sold at.]

Games Workshop today guide sales and profits ahead of last year, with licensing income “significantly ahead”, giving H1 sales of not less than £140m and PBT of not less than £55m.

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7:59 cut – WPCT, DSM

Note: Overwhelmingly my interest is in small-cap shares. It has been very quiet in October but I am expecting six announcements from my significant holdings over the next two weeks. In the meantime, today there has been some fund news.

Woodford Patient Capital – NAV adjusts

The write-down of Industrial Heat, known for its research in cold fusion, should not come as a surprise. The 5p NAV reduction announced today corresponds to 2/3rds of the value as at 30/6/2019, which, according to my model, now only leaves a further 2.5p write-down to reach fair value.

The valuation write-up of another holding following a successful third-party fund raising is however excellent news. There has been widespread and justified concern that any company touched by Woodford, regardless of merits, would have problems raising follow-on capital and so this news may have read-across to other holdings.

For close followers of the trust today’s news is positive, however the effect on the share price will be dependent on the view of retail investors which in turn will depend on press coverage.

Downing Strategic (DSM) – H1 Report

The Chairman’s statement starts by referring to a poor investment backdrop as background to the underperformance of this trust, but in truth cheap markets create opportunities as well as challenges and in the investment game you need to make your own luck. While the chairman’s statement then goes on to show some humility, it remains in contrast to the fund manager’s statement which strikes the appropriate tone right from the start.

Irrespective of the journey that got them here, as a portfolio I now consider their current investments to be exceptionally strong. Investors will need to form their own opinion on a fair valuation of the loan notes held.

Given the historical performance of the fund the current discount of 10-12% is relatively modest, but this reflects the high regard with which the fund manager is held and their engagement with the investment community.

7:59 cut – Sosander (SOS)

Sosander (SOS) – H1 Update

I am currently working through the numbers in detail and will update this article once I have completed them, but initial indications are that this has been another disappointing period for Sosander. Even taking September’s revenue growth (when tube advertising was in full swing), current revenue guidance looks difficult to meet given the results so far.

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