London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Interesting, BodRuncie. Thanks for posting. Agree this is a fantastic LT investment. Maybe ripe for TO too. Let's see...
Share price rose in recent months because this is a fantastically well-run company with great prospects and 2024 will see great improvements to the balance sheets.
The share price fell recently because of the joint-broker announcement, and that tends to be a self-fulfilling prophecy leading to a falling share price.
REAT don't need to raise cash to keep the lights on, but they might want to raise dosh for an acquisition. Or there might not be a raise at all.
Short-term this is difficult to trade because it's so illiquid. Long-term you'll be fine because there is only tremendous potential for upside to REAT from here.
There are wild fluctuations in this company's SP, for no obvious reason. Maybe rumours of TO or pending TU ?
Dartron - similar thoughts, however I have sold for a modest profit; now waiting to see if there is a raise. Like you, there is that thought 'I need to do something with this'... I'll be back in probably sooner rather than later no doubt as Doak & Co are solid and doing a good job here. The frustration is that no matter how many good updates, good acquisitions (ladders etc) the price stubbornly refuses to shift out of what is a long time trading range.
I sold my position in Eckoh (ECK) after they sent an RNS for a joint broker on the 9th March 2023. To date they have not raised funds, and went on to put out several positive updates. I would be more sceptical here if it was one of the market maker brokers like Cavendish etc. But you dont often see Dowgate as a broker, so maybe this is just due to their stake in the company. Just checked, and Eckoh appointed Investec alongside Singer. React has appointed alongside Singer, perhaps the reason is related to Singer?
This link (from 2018) is saying that joint brokers could be used to help find more investor clients such as II. (hopefully without a placing!!)
https://www.accountancyage.com/2008/07/17/aim-companies-why-two-stockbrokers-can-be-better-than-one/
Or another that came up from a google search is EQLS, who appointed a joint broker Peel, (almost on the same date to ECK 30th March), never raised capital, and are now under offer. Not sure we can say Joint broker goes hand in hand with a placing, but like I said I did sell a position due to that worry.
I need to do something with REAT, hold a very small position here from a momentum trade that fizzled out at 1.6p. Lol.
As announced in today's RNS, Dowgate Capital are appointed Joint Broker for REAT.
https://www.lse.co.uk/rns/REAT/appointment-of-joint-broker-c40tf0wff8806fp.html
Most likely a placing to raise funds for expansion or acquisition because REAT don't need the funds for working capital.
Dowgate Wealth recently upped their stake in REAT to 11%, so they have a dual interest here, probably looking to increase the Dowgate stake and possibly take shares in lieu of payment.
I just hope it's not at a ridiculous discount.
Good to see the finance department being strengthened, with the current CFO being moved up to FD and a new CFO appointed who has lots of experience.
The share price is still in a long-term uptrend from the Oct'22 lows but has slipped along with the recent poor markets.
The current year forecast from Singer appears to be for 0.168p EPS, which at the current 1.45p is a P/E of only 8.6.
And REAT should now have approaching £1m net cash to support growth and and perhaps make a further acquisition.
EV/annualised EBITDA is 5-7 (dyo work, lads)
Bit pricey relative to other plays, but the growth here is tempting
tp 1.2
Unfortunately, that post about that phone call, and the mentioning of Paul Scott has lesd to a near 20% drop in sp. Although the Chair dismissed the idea of a cash raise to fund future expansion plans, the Cat is out of The Bag. It has got investors worried. Well done for mentioning Paul Scott and his thoughts. And no, I do not see falls as buying opportunities, I'm full loaded thanks.
Cheers TaltBong, nice post and thx for the info on your chart with MB. Mangement here have done an excellent job since they came in, and I have every confidence that the current share price is good value and that they intend to grow the company seriously from here.
Great to see Dowgate Capital buying and increasing to 11.2% too.
Firstly, nice to see Dowgate increasing their stake again today. They’ve done their research and like what they see.
React have an impressive list of major shareholders with the recent slight reductions by Helium and Harwood a bit of profit taking/fund redemptions probably - to be expected and of little concern
Why I contacted Mark:
To discuss analysis of the company by Paul Scott last week on Stocko after I contacted him to get his views on last week’s pleasing trading update (and hoping to highlight React as a company of possible interest to Stocko subscribers)
Although Paul thought the update looked good with a strong rise in profits, upbeat commentary and the chart showing good progress over the last 6 months (rising from 1p to 1.6p) he voiced concerns with regards to React’s ability to make more acquisitions without either issuing more equity (at a cheap price) or taking on debt.
(He also noted liquidity issues and that it might be a good idea for React to do a 100:1 share consolidation to give the company more credence)
To be fair to Paul he was pressed for time, was only able to have a quick look and so he may not fully up to speed with what’s happening at React. Anyway, after mulling Paul's comments over the week-end I felt the need to contact the company to get their comments before having another go at championing React on Stocko.
Mark was very generous with his time and we a had a good chat noting some items missing from the analysis such as the cash being generated by React (which could be used to fund or help fund future acquisitions), the 20% like for like organic growth, minimum requirement for any future acquisitions to be earnings enhancing, accretive and strategically meaningful etc.
There’s still a job to be done here but they are on with it and I my current intention is to stay invested for the long term.
Also, Mark keeps an eye on the bulletin boards but he won’t respond on the boards (which is as it should be)
Hi Bob,
Yes, called Mark this morning and had a very nice chat (had his grand daughter with him gurgling away in the background which was very amusing) I'll write more probably this evening but have to rush (building an extension and concrete is due shortly)
Hi Talt, I just saw your post. Did you speak with Mark? How did it go?
I emailed Mark Braund this afternoon and he responded almost immediately asking me to call him to discuss. Pretty impressive I thought. I'll aim to call him mid-morning tomorrow (Monday). Let me know if you have any sensible questions and I'll add them. (short notice I know)
Singer's update nore retains their Buy and 2p target price based on a forward P/E of 8.1 at the current price.
I only have access to the front page of the research, which unfortunately shows only rounded figures for EPS, and it's impossible to see the progression.
So EBITDA and PBT is the way to go, which are:
Y/E 30/9/22 : £1.0m EBITDA, £0.7m PBT (actual)
Y/E 30/9/23 : £2.2m EBITDA, £1.9m PBT (minimum as "in excess of" £2.2m)
Y/E 30/9/24 : £2.8m EBITDA, £2.4m PBT
Y/E 30/9/25 : £3.2m EBITDA, £2.9m PBT
A great update and I added again today.
What the RNS doesn't tell you, but you'd know from listening to interviews with/about the company, is that their payments for the Ladders Free (iirc) buy out will come off the books in June 2024, causing a healthy boost to the bottom line even if nothing else changes in the business.
I am anticipating 2.50 in 12 months time.
The year end update makes pretty good reading in the current climate.
£19.6m revenues and "in excess of" £2.2m EBITDA (up from £0.95m last year) is just a touch behind Singer's forecasts, but most importantly the outlook is very positive with a "healthy" pipeline and "strong demand for all of our divisions".
This equates imo to likely around 0.13p-0.14p EPS, which at 1.575p is a historic P/E of around 11 or 12 and which should fall again in the current year to only around 9.5 based on Singer's forecasts.
I note that REAT now have £0.7m net cash, which is well ahead of Singer's £0.1m forecast. This is almost 5% of the m/cap in itself and represents an even lower ex-cash P/E.
Terrific results and a 'healthy pipeline'. Have said before, hopefully a matter of time before a Rentokil / other snap this up at a premium. Doak must be thinking about his next venture also. Lets get above 2p anyway in the short term.
Yes, amazing results. This company is set to grow and grow, and will loom large on investors radar.
Nice update. Asking price on LSE just flashed up to 1.8p ahead of the market opening.
Good to see a 500,000 buy at 1.656p this morning causing an uptick.
Remember that Singer's are forecasting 0.1645p EPS for the year which has already started on 1st October.
That's a current year P/E of only 9.7.
Last year's year end trading update was on 26th October, so not long to wait. The outlook from the interims was confident in achieving expectations, as "All three divisions have traded well in the period and this momentum has continued into the second half".
It's a biggie :o))
The doubling in value to a whopping £3.8m over 3 years makes this "the Group's largest single annual contract to date".
A great validation of REAT's abilities and strategy:
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Contract-Win/92232138
That level of institutional ownership will also prevent REAT being taken out on the cheap, like so many other UK companies at the moment
The major shareholder list as at Oct '23 now looks extremely impressive for a micro cap - the list below now represents almost 70% of the shares in issue.
And Onward Opportunities PLC also own £800,000 of REAT shares, i.e 4.6% of the current m/cap but haven't issued a holdings RNS presumably for technical reasons (do they have to declare when they get to 5%?), taking the major shareholder list up to almost 75%. So REAT is pretty tightly held now:
Shareholder Number Ordinary shares %
Octopus Investments Limited 163,344,667 15.45%
Canaccord Genuity Wealth Management 103,333,333 9.77%
Dowgate Wealth 99,426,699 9.40%
Harwood Capital LLP 95,750,000 9.05%
Helium Rising Stars 95,329,362 9.01%
Premier Miton Investors 75,114,393 7.10%
Hargreaves Lansdown Asset Mgt (Bristol) 49,851,226 4.71%
A J Bell Securities 33,689,126 3.19%
The Onward Opportunities Fund's September results presentation is available. They own £800,000 of REAT stock, and slide 13 is specifically on REAT as follows:
"Case Study - React Specialist Cleaning Plc
React is a B2B specialist cleaning group in the UK, with 3 complementary divisions across reactive cleaning, specialist glass/cladding and public sector facilities
Valuation – an 80% contracted (1-5yr) revenue business growing at 17-25% per annum purchased by ONWD at a P/E of 6.5x-8.5x
Timing – New management team have transformed the group, reached a scale of cash conversion and operational gearing
Catalysts – Ongoing contract win momentum from new head of business development, completion of deferred payments unlocks FCF for growth CAPEX and returns to shareholders"
Https://onwardopportunities.co.uk/wp-content/uploads/2023/09/Onward-Opportunities-Half-Year-Update-September-2023.pdf