Saturday, July 14, 2012

Snoozebox (ZZZ) - speculative share idea

I usually focus on value type investments, but every now & again something more speculative crops up which fires up my interest.

Snoozebox with the imaginative ticker ZZZ, is a recently Listed (1 May 2012) small cap. The Placing price (it raised £11m after expenses on Listing) was 40p, and the shares have since risen nicely to about 54.5p. With 51,295,000 shares in issue, the mkt cap is £28m.

The concept is really clever in my view. Snoozebox creates temporary hotel accommodation from standard size shipping containers. Check out their website here;

Moreover, they have patents pending on the concept of using standard shipping containers for accommodation. The big advantages are that they are easily stacked, transported using standard trucks, can be sent anywhere in the world easily, etc. They're also cheap, robust & long-lasting.

The product is in demand, and working, so it's now simply a roll-out. Each unit (a small, en-suite hotel room in one quarter of a shipping container) costs about £27k to fit out, but can then be rented out for £200+ per night at events. 

The rooms look stylish, and have wifi, a safe, an en-suite wet room, power & light of course, keycard doors, etc. Services are provided by Snoozebox using mother units with their own generators, and storage tanks. They do NOT need connecting up to any mains services, so can genuinely be supplied anywhere.

Sales have had an impressive start, with Snoozebox already securing these events: Queens Diamond Jubilee (256+ rooms at Windsor Home Park), Isle of Man TT race, 80 rooms at Download Festival, 160 rooms at Hop Farm Festival, 144 rooms at Goodwood Festival of Speed, 240 rooms for Silverstone Grand Prix, 320 rooms for London Olympics, etc.

So it's clearly working! The beauty of the roll-out is that they can add more rooms quickly & easily, and finance them on leases. So I doubt there will be the need for further shareholder dilution.

Management are experienced leisure sector people, quite old at 60, so maybe their last throw of the dice? The one question mark is over the CEO, Robert Breare, who is being sued by the administrator & liquidator of a company he was formerly CEO.

The house broker Panmure Gordon is forecasting £3.8m EBITDA for 2013, which would surely attract a very high multiple due to the growth potential? So I can see potentially big speculative upside here. Although the shares already price-in a good amount of optimism.

As usual this is not any kind of recommendation, just a report of something I find interesting. I hold a very small number of shares in ZZZ. As always, do your own research! This share is by its nature more speculative than most.

Please post any comments below, I would be interested in your views.

Friday, July 13, 2012

Mon 13 July morning report

Good morning, yes I'm back, having been able to drag myself out of the sick bay for the first time in ages. Battling a chest infection, but I seem to be winning at last.

A very quiet morning, but here are a few RNSs which caught my eye this morning.

Dunelm (DNLM) the homewares retailers which recently announced excellent sales growth, is hosting an analyst presentation -

Very good, but I hope they will also follow best practice by making the slides available to everyone on their website, or even better to put up a webcast of the presentation part of the meeting.

Yes the company is trading very well, but it looks pretty fully priced to me now. Let's hope HOME are looking closely at what Dunelm are doing, and making notes.

Capital & Regional (CAL) notes a fall in the value of it's The Mall fund. Hardly surprising, given that high street rents are now completely out of kilter with trading, and need to fall substantially. HOME indicated at their latest AGM that lease renewals are seeing average rental falls of 16%, so this is a timebomb for owners of retail property - who are squeezing tenants dry through their use of the awful, antiquated, 5-yearly upward-only rent review system. This consigns us to many more years of pre-pack administrations, allowing weak retailers to shed their loss-making shops with impunity, whilst the financially strong retailers are forced to bear the brunt of massively over-rented shops. All of which stifles innovation & new life coming through. No wonder our high streets are such dreary places these days, with the same boring identikit chains of shops everywhere. There's more of that to come I'm afraid, so companies like CAL are best treated with a bargepole in my view. They need to prop up the freehold values for the sake of their own balance sheet, but in doing so they are killing off the high street.

The high street needs a radical overhaul, with shorter leases, monthly rent payments, and rent being pegged at a percentage of turnover, flexible both up and down. That would give us back the vibrant and interesting high streets we want!

Nothing else to report, have a good day all!

Oh, if you haven't already seen it, check out my post from last night about company videos.

Thursday, July 12, 2012

Company videos


Just a quick note to apologise for radio silence this week, I came down with a nasty chest infection on Friday & have been confined to bed for 5 days with a fever & general feeling awfulness. Unfortunately I was staying with friends, so turned into their worst house guest ever, lying in state demanding soup all the time!

On the mend now thankfully, so my morning reports will resume tomorrow.

One interesting project that I couldn't miss happened today. Some time ago my old friend David Stredder, who has probably done more to help private investors than anyone else I know, asked me to get involved with an idea he had to make some videos of meetings with company management. The idea came from the success of his "Mello" investor evenings, where up to 80 investors come along to meet management of a number of small caps, and then eat/drink/network afterwards. They're excellent events, but for every person who can make it to such a meeting, there must be dozens more who are not able to attend.

So Dave came up with the idea of him & I going to meet management of companies we think are good investment ideas, taking a small film crew with us, videoing the meeting, and putting it on the internet for anyone to watch. Thus disseminating useful info about good quality small caps to all investors or potential investors.

We decided to give it a go, and did the first one today. I have no media experience, so was pretty nervous, but as soon as I start talking about shares, all nerves disappear, and thankfully that happened today. The video should be ready in about 10 days we hope, so I'll put up a link here to it (and other interesting videos we see out there that others do - there are several people active in this space).

Where I think Dave & I have a unique edge is that our videos are real, experienced investors, having an informal meeting with a company Director(s), and just chatting about the company - so it's a fly on the wall situation of an actual investor meeting, rather than PR fluff. We're not soft-soaping them, but neither are we doing a Jeremy Paxman either - it's just how we would be in reality - i.e. courteous, but asking the questions which seem pertinent to us. Dave also asked in advance on the company bulletin board what questions other investors wanted to ask.

It went really well. As our first attempt, I'm sure people will criticise elements of it, and we will welcome all feedback, and ideas for improvements once it's published.

As regards fees, Dave didn't want any payment at all, but I wanted a very small fee just for my time & travel costs (as it was not a company I already held shares in), plus of course we had to hire the film crew, so we charged the company concerned a very small fee, but it was on the understanding that we ask the questions we want, and we edit the video how we want. So as independent as you can get hopefully - both Dave and I value our reputations far too highly to put anything out there which compromises us.

We hope investors enjoy the videos, as we've got a couple more planned, but the vital element is that WE choose the companies! So we're turning away anything that isn't something we would personally invest in. That's the key point of difference, compared with the PR spin for rubbish companies that you may find elsewhere.

I became cynical about meeting management of companies, as after all it's their job to be likeable and believable, so in the past I've maybe been too gullible in believing stories that were weak. But these days I'm a bit more cynical, and think providing you avoid the temptation to get pally with Directors, then it should be possible to remain objective.

With the latest micro cap trying to De-List, and therefore destroy shareholder value, Lighthouse, it's a real minefield looking at micro caps. Hence one of the questions I asked the Chairman of the company we met today (Plastics Capital) is whether he was committed to retaining the Listing. We got an emphatic confirmation on that point, so that point alone was a useful outcome. We also cleared up a point over another Director's departure which had caused consternation amongst private investors (when it needn't have done). So a very useful day.

I'm still feeling pretty groggy, but will get up at 7am tomorrow to resume my morning reports.