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sold out yesterday. Great company and looks cheap. Always done ok on this. But it is a cleaning company. Little volume and limited interest. Will always do steady work. Bought in before at 0.95 a few weeks ago and reckon I will get it again unless we have news.
I got in here at 0.95 and again at 0.75 in April , and sold out at 1.76 - just exceeding a bagger - bought back in a much smaller amount at 1.53 , tbh hoping for a dip as the impatient leave , hoping for 1p t which point I will add , if it does not come , no problem , this is not a share I would put a lot into , at this stage, but one I consider to be a good risk reward and one I would add if any of the events you describe occur , especially if I can get them at 1p , I will probably end up regret not buying at this level , but hey ho , que sera sera - Once again thank you for sharing your considerable knowledge with us less informed investors , it is very helpful
Cheers Jaykey, appreciated. I'm similarly patient, as I also held ODX for a long time at an average cost of around 10p-11p - it's doing rather well now though!
As you say, REAT is a tiddler. But it has high recurring income at 50% and many long-term, blue chip clients in differentiated sectors, so that minimises the downside. Whereas the current COVID-19 environment is perfect for REAT and should pertain for the next couple of years at least imo. Plus the new management team have proven themselves very capable in turning the company round, growing sales, increasing margins etc - and that was happening well before COVID.
With a mere £6.5m m/cap and £1.8m in cash, REAT looks cheap to me. It only needs one press or share magazine tip, or another contract win or two, and there should be good short-term upside. And we know that the CEO is on the lookout for acquisitions. In the medium/long-term I'm hopeful that we could see a £20m-£25m m/cap here, i.e 200%-300% upside.
Rivaldo
i do enjoy your posts , very informative , i guess as REAT are relatively small , profits could turn to losses quite easily , and vice versa , one decent size repeat contract , profits could boom - is that a possible explanation for the tepid response to the very positive results ? or just the market slow to catch on ?
I was hoping to clean up here lol , guess I'llhave to wait , I am good at being patient , held ODX , from 20 down to 10 and back up to 60p must have been a few years ? , and EUA from 0.4p 5 years ago , I do like the way things are developing here and happy to hold
If you recalibrate for the current year, with a rounded £400k PBT, the P/E falls to a very reasonable 16.5. If you strip out the £1.8m cash pile, so with the current £4.8m EV, the ex-cash P/E falls to just 12.
The PEG (based on a P/E of 16.5) falls to a mere 0.14. As we know, any PEG below 1 is deemed to be good value.
A PEG of 0.14 is therefore an out and out bargain. And of course, if you strip out the £1.8m cash - almost 30% of the m/cap - then the valuation looks even cheaper.
A couple of additional points...
- I note that today's RNS mentions specifically a couple of times that REAT have experienced increasing business with new customers in residential care homes. In the past it's not been possible to confirm that REAT covered care homes, and imo this could be a large source of new business given the pandemic and the need for cleanliness
- the new/current year should benefit from both COVID-19 related new business and non-COVID workplaces and sectors returning to normality or nearer normality as the pandemic waxes and wanes and lockdowns reduce or are more targeted.
(Sharecast News) - Cleaning, hygiene and decontamination company React Group said on Wednesday that it had continued to make "strong progress" in the year ended 30 September.
React reported organic revenue growth of 42% to approximately £4.4m for the full-year, with the group now expecting pre-tax profits to be ahead of market expectations.
The AIM-listed firm said its outperformance was driven by both strong trading in its core business and heightened demand for Covid-19 decontamination services.
React also highlighted that its financial position was "robust" and said underlying cash generation remained "strong", leaving it with a net cash balance ahead of market expectations at £1.8m.
Chief executive Shaun Boak said: "Whilst we have seen a level of disruption from Covid-19, we have also experienced incremental demand. Core sectors of the business performed well alongside net new customer relationships that have evolved in areas of development such as education and residential care homes.
"The new financial year has started well with momentum continuing. The immediate outlook is positive, although we are mindful that the seemingly ever-changing environment in which we work can bring with it both opportunities and challenges."
Hopefully once the news is digested will see SP back up around 1.75p
Allenby have a new note out and have increased their forecasts accordingly. They now go for:
EBITDA : £220k, up from a loss of £182k last year - a £402k turnaround
PBT : £182k, up from a loss of £178k last year - a £360k turnaround
Net cash : £1.8m
Once again, it's likely that Allenby will have been guided conservatively, so I'd guess that the final EBITDA will be say £230k-£240k and PBT around £200k (no tax payable).
REAT now have a £4.8m EV (m/cap less cash). For the current year a similar upswing would see PBT at well over £500k - am ex-cash P/E of under 10 and an extraordinarily cheap PEG.
At only say £350k PBT the P/E would be only 13.7.
And there's also the likelihood that REAT will make an earnings-enhancing acquisition from the cash pile to jump-start earnings further.
Grate news.
Pumpky, the audited results will be released in January
The revenues have landed comfortably above the worst case scenario figure I had in mind (£3.75m) but also comfortably under what I was hoping for (£5m) a few weeks back.
Having said these are still great results. You cannot argue with 42% organic growth through to end of September, and the new FY started well with "momentum continuing" which suggests they will reach £5m+ in revenues soon enough.
AND the net cash amount of £1.8m is far higher than the £1.25m I had predicted.
So bringing it all together, I believe a re-rate to 1.75-2.00p is on its way!
Why have they delayed the full results until January?
Excellent news today:
- PBT ahead of expectations
- net cash also ahead, at £1.8m against the £5.9m m/cap
- revenues 42% up year on year to £4.4m (also ahead of expectations)
- and "The new financial year has started well with momentum continuing"
Lovely stuff.