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Share consolidation approved at AGM today so should open at 67.5p on Tuesday.
Singer Capital retain their Buy and 1.9p price target.
They forecast 0.136p EPS to this September, i.e a P/E of only 9.9, and summarise as follows - remember that we're already halfway through the financial year, so today's AGM statement should presage a good H1:
"A brief AGM Statement from React confirms that trading is on track, with momentum continuing into FY24. Revenue for the first five months of the year was ahead of the prior year and the Board is cautiously optimistic about the outlook. We therefore keep our forecasts unchanged and remain at Buy with a 1.9p TP, noting React’s defensiveness, high recurring revenues and attractive margin"
The AGM statement looks very positive, with cautious confidence about trading. Revenues are ahead of last year, and in particular:
"momentum has continued into the current financial year and the Group is taking advantage of significant growth opportunities for its essential services"
And:
"Each division has performed well and the Group continues to benefit from cross selling opportunities which not only enhance our offering but also contribute to the organic growth"
1-50 consolidation CA sent by ( Wi )
Bought them there 18/5/22 chart shows must of been just over 1p
PLACING 14/4/22 at 1.2p 32% discount.
24/10/22 hit a low of 0.76p
Before I heard of them 0.25 April 2019 .
12/5/21 3.7p
Https://masterinvestor.co.uk/equities/small-cap-catch-up-time-reat-eman-and-foxt/
"REACT Group (LON:REAT) – Ready To Be Swept Away
In my Profile on this leading specialist cleaning, hygiene, decontamination and contract cleaning business on 12th February I made a concluding comment about the 1,067,648,507 shares in issue.
I clearly stated that –
“It would be sensible if moves were made to lose the current ‘penny share’ status, that could give it more investor credibility – which it certainly deserves.”
The shares, which I classed as a bargain for new investors, were then 1.25p, they have since been up to 1.50p, that was before yesterday morning’s announcement which I consider will go a long way to gaining the £15m valued group so much more credence.
The group has now proposed to consolidate its share capital with the aim of improving the marketability of its shares.
If approved, this measure will give 1 new share for every 50 currently held.
That will see the number in issue reduce following the consolidation to just 21,352,971 shares.
We will look to the AGM on Thursday 28th March and the group’s latest Trading Update for further comment on the current year Outlook.
The shares closed last night at just 1.38p."
....proposed in today's RNS is a very sensible, needed and welcome step on the journey here. Thanks to Mark & the team,
The Mello presentation is well worth a watch. I thought the management came across well, the outlook was generally very positive, and the particular advantages of the company were stressed:
- recurring revenues up to a whopping 87%
- free cash flows of £2.1m and £2.3m adjusted EBITDA against a £14.9m m/cap
- further acquisitions being considered
- REAT have the advantage as business purchasers due to their size and reach
- similarly REAT have the size advantage in being able to serve clients nationwide as those clients expand and grow
- REAT are installing systems this year in LaddersFree which will greatly enhance efficiency and enable cost savings
Plus we now know that "the first few months of FY24 have delivered a record trading performance for the Group", and "Momentum from FY23 has continued into the new financial year".
With 0.136p EPS forecast to this September, rising to 0.156p EPS for the year starting in only 7 months, REAT are cheap on a single figure P/E, let alone on the FCF as outlined or given the huge recurring income.
Watch from around 1hr 21m:
Https://www.youtube.com/watch?v=G257dlrOBXg
Currently right now
...and also tipped by h*tst*ckr*ckets today. Sure, it's the same lot, but these are people who can read balance sheets upside down and back to front. They have a very good track record, but their suggestion to buy up to 1.5p, with a minimum target price seem rather cautious for the good growth prospects and good visibility to earnings.
Good to see the share price repeatedly ticking up now. There are still shares available to buy online, but hopefully any overhang is now clearing fast.
If you were to tot up all the big sales every day in Feb and they are easy to spot it's over 60million so they must be on their last few days worth now. Hence it's getting harder to buy size and the price is edging up
Https://masterinvestor.co.uk/equities/currys-chemring-and-more/
Conclusion:
"The group has aims to get up to a £50m valuation within the next few years and I have a certain confidence that the REACT Group Management will achieve their target earlier than the market might be expecting.
The group currently has a £14.4m market capitalisation, with some £2.1m cash in the bank, its shares are well worth tucking away at these lower levels."
Let's be honest, this is a company that is obviously going in the right direction, but to talk about millions of shares being traded is meaningless, when its a penny share. I am in for the long haul, but I also see the possibility of the likes of Rentokil, looking at the React Group as a possible purchase.
One of the institutions is selling out Jux. Every day millions get bought then 2 big random number sales appear but when added together they total 2.5 mil, today 2 lots were cleared so 5 million. My guess is Harwood but until the seller confirms and they should be by now that they have dropped through another 1% threshold it's a guessing game.
I've been sitting on the sidelines too but I can see what is happening here, seller is dropping lots and fast, they might still have 30 million maybe 50 million but if you are clearing 2.5/5 million a day it will not take long then whoosh and the more people realise it's close the more buy in then instead of 2.5/5 mil you might have a day where 10-15 million gets cleared
All these tips and good investor relations updates etc continue the very positive noise around REAT, but as I have said before nothing ever seems to move the dial - just stuck in a range. I remain on the side-lines, but tempted to buy back in. Any opinions / thoughts out there on what will get this moving?
tipped by malcolm stacey on share prophets with 50% upside (can't verify as subscriber-only):
https:// *************.com/views/73050/sewage-on-the-loose-who-you-gonna-call-this-polished-cleaning-outfit-is-on-the-way-up
..now warming to REAT after a bit of prodding. He discussed them in his small cap podcast at the week-end. Listen from 27:58mins.
https://podcasts.apple.com/gb/podcast/small-caps-podcast-with-paul-scott/id1642339156
Hopefully the tip has helped clear out any sellers. I spent an evening pouring over the results, I guess the top line numbers are impressive, but I didn't like seeing that the 2 smaller groups were loss making. Having looked at the REAT website I felt that these guys don't really have much of a moat - maybe too many offerings, however they do have some specially trained staff etc. I was also a little concerned that these guys will attempt another acquisition and there may be possible dilution. The last placing was at a 30% discount, and Iv had one of those already this year. The Vox interview tempered this acquisition concern (they say small acquisitions this year). I thought the finance director came across well in the interview. He also covered my concerns about the moat aspect of the business and the growth prospects. React are aiming at consolidating a very large fragmented market, and currently have about 2 or 3% of the market. The tougher economic conditions may even play to their advantage if smaller operators can not offer the economies of scale. I cant link to the VM interview, as it will just get starred out, but go find it..
The other bull point for me, is that all of the deferred considerations and previous acquisition costs will be paid this FY, so if they keep their word (no large acquisitions), then they should be more profitable in future years.
I bought some more today, as I already had a bad entry up at 1.65p. Its got it down to 1.5p which will have to do. Its not a large position of mine, and I may even sell if I can get out at a small profit, iv yet to be convinced of the share price growth here. Though fortunately can wait it out if need be.
As an aside, I wonder if Franchised Brands could take this and run with it..? They could take this in to Europe.
Https://masterinvestor.co.uk/equities/react-group-ready-to-clean-up/
Extracts:
"REACT Group Ready To Clean Up
By Mark Watson-Mitchell 12 February 2024
A Cash-Positive business and operating on 87% ARR"
"I know that I haven’t featured my favourite ARR investment criteria for any stocks recently, but as regular readers will know I just love Annual Recurring Revenues.
It is any finance director’s key number and this group operates on a very high figure.
To know that your company’s revenue intake has certain fixed levels for the year ahead, surely makes the assessment of future capital expenditure that much easier.
So, when I alight upon companies where their business has high levels of guarantee going forward, it makes me almost salivate upon the assumption that ‘risk’ is being severely reduced."
Conclusion:
"Analyst Views
Greg Poulton at Singer Capital markets rates the group’s shares as a Buy.
For the current year to end September he is estimating £21.2m of revenues and £2.1m of adjusted pre-tax profits.
He has a Price Objective out on the shares at 1.9p.
In the middle of January, the group appointed Dowgate Capital as a Joint Broker to the company, I now understand that it will be issuing a note on the group shortly.
My View – 1.60p Target Price Holds Firm
This little group has achieved excellent organic growth over the last three years, running at an average 24% per annum rate in that time.
And that long-term growth in its 87% annual recurring revenue will also help to boost still further its operating margins.
I consider that this little group has sensible ambitions in its future expansion.
It has a declared aim to grow to a £50m value within the next few years.
Against its £13.5m market capitalisation, a positive point is that it ended its 2023 year with £2.1m cash in the bank.
The recent bolt-on acquisitions that it has completed have all been accretive and I am sure that other smaller to medium sized targets are being lined up, certainly as the group steps up its M&A expansion phase.
The group has a good pipeline of potential business and as it gets its digitisation completed, I can envisage even more cross-selling opportunities being presented and being worked upon.
It would be sensible if moves were made to lose the current ‘penny share’ status, that could give it more investor credibility – which it certainly deserves.
The group’s shares, which closed at just 1.25p on Friday night, are a Strong Hold for existing shareholders and should prove to be a bargain for new investors."
Great to see over 11m shares traded - and now the bid price up again to 1.35p, with buyers paying the full 1.4p offer price.
This share price should be at (say) 1.6p-1.7p imo in a relatively short timeframe, and hopefully back up to Singer's 1.9p target price.
For a bit more meat on the bone, REAT are presenting today on investormeetcompany.com at 1pm.
Should make good viewing.
Great to see the write-up in the Mail's Midas column.
REAT are simply very good value at these levels:
- they produced £2.44m of operating cash flows in the recent results, against a £13.1m m/cap
- recurring revenues are up to a huge 87%, i.e around £17m. Company valuations often value ARR at anything from 2 times up to say 5 or 6 - even at the lowest level this would still value REAT at £34m - itself a multiple of the current m/cap
- I calculate Singer's forecast EPS for this year to 30/9/24 at 0.156p, so at 1.25p REAT are on a current year P/E of just 8.0, never mind going forward on increased EPS forecasts
- cash flows and balances are more than sufficient to manage deferred consideration and are predicated to allow for further earnings-enhancing acquisitions
Simon.lol..yep,i would imagine it'll be nt to buy on the open.
but there;s fair few shares in issue,so some may get in at a low limit order price,say 1.30/35
but the mm's will take the highest limit order,on offer.
anyway gl
That's annoying, was going to buy into this on Monday but price will probably bounce now!
..........................................
https://www.thisismoney.co.uk/money/investing/article-13068567/MIDAS-SHARE-TIPS-nasty-job-crime-scene-tidiers-React-Group-help-clean-too.html?ico=mol_desktop_money-newtab&molReferrerUrl=https%3A%2F%2Fwww.dailymail.co.uk%2Fmoney%2Findex.html&_ga=2.105433603.1485882036.1707598107-829466088.1679172563&_gl=1*j29bf5*_ga*ODI5NDY2MDg4LjE2NzkxNzI1NjM.*_ga_XE0XLFFF16*MTcwNzYwMTcwMy42Ny4xLjE3MDc2MDQwODIuMC4wLjA.