Small-cap investing is never for the faint-hearted and amid the coronavirus panic, it is a brave individual indeed who piles into what, on paper, are attractive value plays. The latest small-cap pick from Simon Thompson is another great analysis of a business that, without the crisis, would be primed to re-rate due to unrealised asset value and a progressive dividend supported by free cash flow.
This latest Alpha report contains the full investment case and factors that Simon considers may mitigate the impact of coronavirus and help this company ride out the turmoil facing the global economy. But the situation with Covid-19 and the assessment of how much disruption it may cause has moved swiftly.
With simultaneous shocks to supply and demand in the world economy, as whole countries go into lockdown, industrial companies like this are likely to be placed under severe stress. This business is cash generative and has managed its working capital position well. These traits will hold it in good stead, but it is possible that cash earmarked for dividends and paying down debt will be needed elsewhere in tougher times ahead.