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We are well oversold on this news for sure. The scaremongering has successfully taken money off some poor PI investors and they have lost some fair value as a result. As I said the professional price one year ago is the best placeholder today at c 250p due to massive strides of the company in 13months offset by this growth related little bump in the last few days that still will likely inform more positively on diversification advancement very soon...when we get all the rationale amd news that John has to say something about in coming days
Would not be surprised to see a bunny appear out of a hat here....
There are two sides to every negotiation, we've only heard one side, let's be clear on that.
The share price drop is quite understandable, probably now at a reasonable level given the change in circumstances. But always very hard to come up with a valuation for startups that aren't profitable, revenue multiples are unfortunately one of the alternative valuation options in those circumstances.
Love the optimism in this group (generally at least!), now all we can do is sit back and wait for more clarity on the plans.
Hopefully this is either a negotiation tactic (which I doubt) or the company perhaps wants to (and sees a bigger opportunity to) pivot it's focus to other higher margin products.
Who says we are not competitive? Recent RNS' and presentations have said we are lower cost and better performance than the alternatives.
This was about a commercial deal where a customer was trying to chip the price and reduce our profits! John took the view that the deal wasnt something they could accept. I can only assume he did that as he is confident about the future, not because he wants to destroy his business.
The big question for me is; if we are not competitive in the N. American detergent market then why does John believe we can be competitive in Europe. In a recent interview John described the European market as "larger but more competitive". John needs to explain why we are investing in European manufacturing capacity when atm, the whole business model seems flawed. There's a lot of cope going on here with "diversification". This is still a start-up situation; diversification and exploring new markets is a given. What is more concerning is whether we are even competitive in our existing market.
Hi Thordon, welcome back. I think John has to reveal more of this cards in the next few weeks during the full year financial discussion and I agree things don't add up at the moment. We have an ITX puzzle to solve => “when does -1 equal +1 for ITX? The timing of this arguably very preventable customer loss decision by the BOD is intriguing, counter intuitive and strange all at the same time. After sleeping on it, I have come to the view that there must be a key strategic business reason for the BOD decision and it’s a reason that can only make sense from a major ITX product diversification opportunity perspective (e.g. functionality / value added product v’s price competition lower value added product supply). The company must be on the verge of something important that is yet to be revealed in its diversification journey is my take on whats ahead otherwise it was so easy to offer the marginal customer another 6 months of GM positive product supply.
This news is extremely bad for both sides , in the end a resolve will be implemented.
Why investment in product and then going back to old ingredient's.
Its a stand off and poker faces are ready to who moves first , in this case ITX made first move.
More i read the more can see that this is near term.
Good Luck
Good luck with investing outside the world of ITX SI. If you miss some pivotal diversification news you know how the share reacts so may miss out. At least you are knowledgeably abstaining until post January. As you say you want to keep an eye on things so maybe you will be tempted back sooner should John have another curve ball in his pocket in the next 9 months!
> Canaccord advised it was our largest customer worth half the 2023 revenue.
How do Canaccord know who the customer is, or the size of it?
We look forward to a nice break until January then.
Elsol - happy to disclose that yes I sold out at 190p as soon as I learnt of the disastrous news. You can paint the decision any colour you like but the bottom line is the board FAILED to renegotiate acceptable terms with its largest customer.
- no I don’t want a re-entry. The company is not investable at present.
- maybe if there is positive news next January I will re-enter. Until then I will monitor developments.
- lovely company but not a lovely investment
SI - that's just because you sold out and want to re-buy at lowest entry price and I disagree with your assumption no news will be forthcoming upside to change to SP materially upwards until 2025 - thats a crazy suggestion given that small buyer runs can change the SP markedly.
Adding point 7 just come to mind for completeness; in John's recent share soc presentation (I recall but could have been another one) he openly stated and discussed with a delegate that he more often than not cannot reconcile the share price performance to the BOD's view on underlying business performance characteristics/market opportunity/progress. The risk situation of the existing leaving customer was known at the time clearly since many rounds of negotiations had been taking place and a stand-off was in place. So for him to say he has never seen a better outlook for the business over the last 3-4 years then this must be a strong factor to consider in his positive state of mind and ability to push out a under-performing customer relationship. Im sure John will provide more background and context in coming days/weeks.
Sadly I tend to agree that the share price will continue to fall - potentially back to 120p. My logic for this is as follows:
1. The trading update will just repeat the bad news. Canaccord advised it was our largest customer worth half the 2023 revenue.
2. Canaccord confirmed projections have moved back a year. We are now looking at 2026 for positive EBITDA.
3. The money markets move money from minute to minute. They are not going to leave money sat around waiting until January 2025 which is when the next likely positive trading update will occur.
Unless there is unexpected positive news I can’t see any significant improvement in share price until early 2025
They admit that they are not competitive in their main market. I'm not sure what you were expecting. This has a lot further to fall once the gravity of the announcement is fully understood.
With hindsight, the focus on the N. American market was wrong. This used to be a UK based operation, they shipped everything over to US and now I'm afraid it's back to square one as it seems only the European market can sustain their price point.
It seems like we've wasted the last three years and in some respects this is true but perhaps this was a lesson that needed to be learnt the hard way. We still have the other 50% of revenues that are hopefully more sustainable on both sides of the Atlantic and we now have a better understanding of what we can't do as well as what we'd like to do.
We are well equipped for success in Europe, much wiser and with a cash pile to spend prudently. Super absorbents? Leather? Coatings? One of these simply gas to hit the mark and that's where the risk lies.
Lets not kid ourselves, this has much further to fall and much longer to reach JS $100m business, Still hopeful, albeit with a 5 year rather than a 3 year horizon.
With respect to your comment Paris as ever there are many deeper details on this matter and it is not all due to the BOD (and may in fact not be a BOD contribution issue at all). There may be a contribution from any of the below factors amongst other things that I am sure others may comment on:
1. Limited free shares that are being traded sometimes with 'group think' creating bigger dips of oversold and peaks of overbought around the mean and at the moment there is a greater possibility of the former;
2. Some PIs/investors not knowing (a) the wider value of longer term R&D strategy and sum of the parts of the ALL the
company's commercial investment assets and (b) Mgt's tradeoffs when dealing with portfolios of products and R&D assets (ITX is not quite as long an R&D gestation period as pharma, my subject matter area, but obviously has similar features and traits squashed into a series of, say, 2-3 years $ investment cycles).
3. UK general short termist share investment culture - it looks like this is at a height currently, just before interest rates relax to longer run norms again (that's one of the reasons why we now have access to N American PIs through the share restructuring efforts, so await future benefits from that as and when the coin drops on our undervalue situation here State side).
4. UK PIs - overly focused on here and now revenue / profit metrics and some sellers throwing the baby out with the bath water over-selling. Also not helped by BoD not wanting to over - guide the market on upside potential (prudence that lends itself from traditional accounting practices).
5. Lack of consideration of most here of the last rather solid professional investor round given these professional guys had access to more inside knowledge of future outlook/opportunity. Arguably, the 250p (5p old money) more than a year ago is still a good benchmark now due to good diversification progress since then, offset clearly by the leaver marginal customer profit impact in recent days.
6. ITX cannot be held hostage to shareholder fragility to run their day to day business - they have to focus on long term shareholder value / creation and that is what they appear to be doing and John and his team have just proved it to you - if the BOD had not ejected this 'marginal' customer in 6-12 months time some here would be annoyed and frustrated that key diversification customers failed to order due to supply chain resilience concerns/capacity. We just dont know all the facts right now. The BOD have full knowledge on the business we do not as small minority investors; we need to trust their decision making and read the tea leaves as insightful outsiders.
Other thoughts welcome Paris - I dont mean to cut you off in order to get the best of all of us on our ITX BB which has been very good to date
Hmmm it never takes negative news well , but it is very volatile anyway never much volume needed to move it either way , still going to plummet from here I think 120 maybe , that's ok , if it's hads good has they say someone will buy it out .just an opinion dyor
I have not either bought or sold any but just watched my worldly wealth go up and down, I do not blame the company for kicking non profitable work into the dustbin. It can often prove a clever move. Time will tell but in the meantime I will just keep a watching eye here.....
Been here since 2016, and never seen such bad price reaction … The BOD need to do something or else this is going to get really bad
IMO The bottom line is that we deliberately dumped a marginal customer for reasons explained re: profitability. The fact the Board did this indicates a position of strength in the wider portfolio and progress for diversification. We have yet to see how that plays out in coming days in the announcement but for me the intrinsic worth of ITX assets is above current share price, but do your own research, on the science , patented chemistry and recent data/CEO messaging.
Hi. I did not first call out Dr Greg, it was another person on this BB. The product range is quite diverse and seemed to fit circumstances but others can comment if the customer was another one.
Hi JD
That was me who put that forward as a likely candidate, based on the length of time we have dealt with them and the current state of play on their website, looks a bit chaotic?
Have had a look at the proactive interview again and the RNS, but cannot see any mention of a dishwasher tablet customer being mentioned?
"it has been unable to reach satisfactory commercial terms with one of its major existing merchandizing customers in North America for supply in 2024"
I have only put this forward as a very possible candidate for consideration/Investigation.
ATB
AJT
Hi Elsol - how confident are you identifying DG as the lost customer?
Perhaps I've missed something here, but his company product range doesn't include dishwasher detergent, only laundry detergent and definitely no tablets whatsoever to be found anywhere.
Rest of your comments great! - thank you and keep them coming....
Thanks Bod, small caps are a massive gamble either way. Probably like you, always thinking ITX is less of a risk compared to the rest.
Smart.
My top ups on drops are always conservative, no one knows when the falling knife has reached its destination.
I will keep the majority of my top ups for post trading update, and pile in if prudent.
ATB.
Takes a brave person to catch a falling knife. I’m waiting on the sidelines until we bottom out which may not be until a few days after the trading update.