Small Caps Live Weekly Summary
GLE IPX MPAC SPSY SYS1 VNET
Here’s a selection of what we looked at this week. (Remember this is a summary of many opinions, and isn’t the view of any one commentator; check out the actual discussion on Discord if you want the nuance of the different opinions.) To avoid spam, the only way for new members to join the Discord server is via the Small Caps Live website. This will be instead of direct invites via Discord. All genuine investors are still very welcome to join in the discussions.
MJ Gleeson (GLE.L) - Trading Statement
Seems good news, given the sector background:
The Group is expected to deliver an Adjusted Group Profit Before Tax1 for FY2026 in line with current market expectations, including a robust performance from Gleeson Homes and the previously announced delays to site sales in Gleeson Land.
However, a quick look at the forecast evolution suggests otherwise:
10 July:
Adj. PBT - £10.1m with a range of £8.9m to £11.0m
Adjustments - totalling between £11.8m and £15.0m.
9th June:
Adj. PBT - £17.8m with a range of £16.4m to £18.5m
Adjustments - £7.0m and £10.2m +£0.3m + £4.5m
1st May:
Adj. PBT - £18.2m with a range of £12.9m to £20.5m
Adjustments - £7.0m and £10.2m +£0.3m + £4.5m
It would be unusual for a company to warn again severely a month later, and now we have a roughly halving of Adj. PBT and similar adjustments, meaning a statutory loss. So these are in line, but the damage has already been done.
Impax Asset Management (IPX.L) - Q3 AUM
Continued outflows are offset by a very strong fund performance:
Ouflows have moderated compared to recent quarters. However, it may be too soon to call this a reversal of recent trends:
This brings their outflows back in line with peers:
And to be clear, the performance here isn’t particularly exceptional compared to a strong quarter for global equity returns. It is just very strong compared to what they and their peers have managed recently:
Having a guess of where we may be after the final quarter. Let’s say +1% market performance (+£200m), -£900m of underlying flows and -£200m of IEM flows, leaving £22.4m of AuM. Singer has £21.9bn, Cavendish had £20.8bn, and the always ebullient Equity Development have £22.8bn.
On this update, Cavendish has raised their year-end AuM estimate from £20.8bn to £23.3bn. It is a bit of a mystery how they got there, though, as they have not provided any detailed reasoning. They say they have raised their outflow forecasts, though it looks like they're still below our guess above. An even bigger unknown than outflows is market movements.
We can use IEM’s NAV performance to judge market movements so far this quarter. In the last quarter, it was 20% vs 11.7% for AuM. Up to COB on the 8th it has done -3.2%, so we would assume AuM is down 1.7% or so. Not a good start, although the S&P has rallied since.
Further out, the forecast AuM increase from Cavendish is higher still in absolute terms, but some of this will represent percentage market growth from a higher baseline.
They do not provide an average AuM, so we have to assume they forecast a reasonable growth profile to the forecast year-end figures. With those caveats, I think we can trust that their EPS calculation is correct, leading to EPS upgrades of 8%, 28%, and then 20%.
It is likely that it is these upgrades that have led to the 20% rise in the share price this week. However, there is a risk that Cavendish will be walking these back unless the trend for increasing redemptions really has reversed and the funds start to outperform their benchmarks.
Mpac (MPAC.L) - CFO Appointment
After an exhaustive search, Mpac decide the guy already doing the job was best placed to continue:
He has played a key role as part of the Group’s executive leadership team, leading the Group’s M&A function. Duncan began his career in financial audit prior to joining Mpac in 2000.
He presumably also played a key role in leaving the business over-leveraged into a downturn!
Spectra Systems (SPSY.L) - Sensor order update
$.4m is a small order but likely to be high-margin given all the development work has been done.
22nd May they said:
we have received an order to produce additional sensors, beyond the $39.6M contract (RNS June,2024), by our customer for use by an affiliated organization. The additional sensors, worth $1.3M, will be delivered between 2026 and Q2 of 2027. An additional order for another affiliated organization is expected later this year along with an additional service contract.
This week:
confirmation of a second order to produce additional sensors, beyond the $39.6M contract (RNS July 16,2024), by our customer for use by a second affiliated organization. The additional sensors, are expected to generate revenue of $1.4M and will be delivered between 2026 and Q2 of 2027.
So not entirely unexpected.
We suspect the expected revenue may include the service contract, and it is only the physical sensors rather than all of the revenue which will be fully delivered by the end of Q2 2027. Still, it increased recurring revenue, and further small sensor orders will likely still keep coming.
System 1 (SYS1.L) - Final Results
In isolation, PAT being down 71% in an industry where the narrative is that AI will eat their lunch, which is quite worrying:
However, this was largely expected. £1.3m PAT looks a miss on a £1.5m consensus, and likewise 10.3p vs 11.3p EPS in Stockopedia. It looks to be a combination of comparing broker-adjusted numbers to statutory and a slightly higher tax charge than anticipated. Even so, it doesn’t look great, especially given that they reported EBITDA materially higher than expectations in March, driven by a staff cull.
However, most of the damage was done in H1 when they were barely profitable, so H2 is certainly a recovery of sorts.
And the outlook reflects that positivity:
FY26 ended with strong H2 momentum leading to improved trading trajectory into FY27
However, this looks worrying:
The Group will now be updating the market twice yearly, therefore will not provide Q1 and Q3 revenue updates
This is presumably for Partridge reasons, “Lynn, to the untrained eye, Q1 would have looked a bit rubbish and that we hadn’t bounced back.”
Vianet (VNET.L) - AGM Statement
Revenue +was 3.1% in Q1 YOY. Ahead of management expectation:
Following the strong operational and financial progress delivered during FY26, I am pleased to report that FY27 has started positively. Both our Hospitality and Unattended Retail divisions have delivered recurring revenue and gross profit growth during the first quarter compared with the prior year, with trading ahead of management's expectations. Group revenue for the first quarter grew by 3.1% year-on-year, with recurring revenue being 5.8% ahead representing approximately 88% of turnover - early evidence that the operational leverage built during FY26 is coming through.
But you have to ask how low those expectations were when an effectively inflationary rise was ahead. The answer is 1.9%, at least for the full year, at least according to Cavendish.
If they keep it up, they could do £16m instead of £15.8m revenue. Although Cavendish don’t seem convinced and leave forecasts the same.
If they meet all the forecasts on that broker note, that would be a whopping revenue CAGR of 1.45% over the 4-year period. This time last year, they forecast £16.9m for 2026, but eventually mangeed just £15.5m, so no wonder Cavendish have doubts. Is the narrative convincing enough to put this on a forward PE of 17.8? The numbers don’t seem to support that.
That’s it for this week. Have a great weekend!