OMG! Tuesday 14 September: Summary of last week’s newsletter

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The OMG newsletter recommends at least 15 companies each month, using the writers’ experience of small caps to give you a winning edge. Last week they wrote about Stanley GibbonVR Education and CloudCall. Read about these Opportunities 4 Material Gains!

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Mid-week Tip

Stanley Gibbon (LSE: SGI) recently reported finals for the March year end showed an adjusted loss of £2.7m on £10.8m turnover. It’s been a tough Covid, but even before that it was not plain sailing for the world’s longest established stamp merchant and has a Royal Warrant.. After a board reshuffle the short-term strategic objective is to become cash flow positive and to build a sustainable business.  It retails from its flagship store at 399 Strand, London with online sales increasing. It’s team of experts provides   services for collectors of Stamps and Coins as well as publishing catalogues.  SGI also owns Baldwin’s coin auctions which is to be relaunched shortly, after being closed for Covid.

The collectibles business continues to grow with “dormant” clients resuming collecting interests and new customers being attracted.  Stamps and Coins have both made good prices this year particularly the rarer and higher priced items. Stanley’s have a highly regarded specialist teams helping clients with their collections, and this is a key added value. The revamped flagship store is busier, and the recovery should be underway.

Opportunity Knocks – there could be a steep step change Stanley Gibbon’s fortunes after its £5.8m purchased of the world’s most famous and valuable stamp – the 1856 1c Magenta from British Guiana – the only one in existence.  The unique 1c Magenta was purchased at auction in the USA for a total consideration of US$8.307m and is the world’s most valuable stamp.  The stamp is on display in the Stand store under a bullet proof case.

There is an opportunity for stamp lovers/ collectors/ investors worldwide to buy and own a slice of this rare unique stamp. It will be through fractional ownership such as an NFT (Non-Fungible Token) and so creating digital collections a whole new type of stamp book.  It could catch on a bit like music streaming and Kindle books.  The transaction procedure is being appraised with SGI’s technical and marketing teams. This will be an exciting first in the philatelic world and we anticipate an update with the AGM on 21st of September.

Phoenix Asset Management Partners (PAMP) are the CEO’s ultimate employer and hold 58.1%. The investment thesis is that Stanley Gibbons is a world class brand that can be revived, they also own Hornby.  The purchase of the rare stamp was financed by PAMP with an interest free loan and the investment must based on more than hope….

 

Results Preview

VR Education (AIM: VRE)  16.25p (16-16.5p) In June 2021 £7.7m was raised at 16p for VR Education, a Virtual Reality (VR) technology company to commercialise its Crossed Reality (XR) communications products. ENGAGE is the platform that is used to build VR training and virtual entertainments content. The Covid impacted full year to December reported an increase loss of Eu2.7m(£2.3m) on just Eu1.4m of turnover as the business cycle moves from development to commercialisation. The Net cash position after the funding at 16p is estimated at €9.2m (£7m). The valuation seems expectant, but the net cash gives some time to travel in hope of contracts being closed. Buy

 

CloudCall (LSE:Call)  56.5p (55-58p) ch 2021 raised  £7.5m in March at 81.5p and is aiming to become a  leading cloud-based  communications  integration software with a Customer Relationship Management (CRM) technology platform.  Call brings all messaging, conversations, and contract data bases together in products and services enabling organisations to leverage their customer data for more effective communications and improve performance. Easy said, but it has taken time and investment to achieve.

The interims for the six months to June are reported on Tuesday should show a 10.4% bounce back in revenue to £6.4m, with recurring and repeating revenues growing by 8.7%, to £6.0m, which represents 93.9% of total revenues. The products are built once and sold often, and gross margin improved to 81.2% from 80.2%. The cash balance is £8.4m with an additional £2.0m spare on its debt facility, and a further £1.0m R&D tax credit so this should be sufficient funds to break-even. The scalability of the business is attractive. Buy 

 

Reviews

CGH – 22.5p -Lending credibility

NWT – 1.1p-No more glitches

BLV – 275p – Impressive interims 

WJG – 243p – Institutional interest develops 

RNWH – 840p – Demand remains strong

MMX – 8.9p – Take up tender offer

BOKU – 204p – Identity improvement

LUCE – 380p – Efficiency offsets cost increases

MNO – 14.5p – Network Rail approval

HDD – 37p – Gas turbine coatings contract

CIZ – 5.05p – St George deal

DEST – 119p – Planning for phase III

NFT – 2.65p – Second investment 

IQG – 124p – Japanese contract

VCAP – 49.5p – In line with expectations 

 

Finally Slowly Back to normal

 

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