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I am not a fan of research notes. The information supplied generally comes straight from the 'researched' company. The difference being the company will not set a sp target. The forecast of .14p EBITDA giving a P/E of 7.7 is in line with company guidance. If these figures are produced in FY results, I expect, and would hope, for a significant rise in sp. Go React.
"All set to clean up"
Full report with audio summary (free & accessible) here: https://www.equitydevelopment.co.uk/research/all-set-to-clean-up
We see a promising outlook for REACT Group plc as a nimble, fast-growing business operating in a large, fragmented market with significant scope for rationalisation. Approximately 85% of revenues are recurring, with margins mostly high and on an improving path with a target of reaching 30% at the gross profit level by FY24. The cash generative LaddersFree operation is scalable and an important part of the Group’s growth profile. Cross selling of the Group’s services to a broader customer base is also expected to underpin expansion of both the top and bottom lines.
Our various valuation models suggest a fair value of 1.7p per share, which is significantly ahead of current levels.
Comprehensive new 21 page note out from Equity Development, with a DCF valuation of 2.1p and a fair value valuation of 1.7p.
They forecast 0.14p EPS for this year to 30/9/23 - a P/E of only 7.7....
Https://www.equitydevelopment.co.uk/research/all-set-to-clean-up?utm_campaign=REACT%20Group&utm_medium=email&_hsmi=253963081&_hsenc=p2ANqtz--62c0FxBYiXAbwc9zQ44_hVqLauU4EqTQnzE2CTxFxkbug2aCxa4zZ8ZTMklexbPp4tHb2Ut8JUBkdqscr9m02awwrir06V5SAQp-Cb1Sm2F9cPWE&utm_content=253963081&utm_source=hs_email
Yep, great to see Christopher Mills/Harwood pushing on and now owning 7.89% (83.5m shares).
Hopefully not many spare shares available now.
Harwood capital buying again!
Impressive collective. Now the question is... what is going to move the dial for the SP?
Good to see Harwood Capital buying again - around another 8m shares, and they're now above 5%:
Http://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Holdings-in-Company/90573106
REAT now have almost 50% of their shares in issue held by a selection of the great and the good. Pretty impressive for an £11m m/cap company:
Shareholder Number Ordinary shares %
Octopus Investments Limited 163,344,667 15.44
Canaccord Genuity Wealth Management 103,333,333 9.77
Helium Rising Stars 97,329,362 9.20
CRUX Asset Management 66,700,000 6.31
Harwood Capital LLP 55,000,000 5.20
Miton UK MicroCap Trust PLC 38,981,127 3.69
Increase in voting tights for Harwood
Great company, steady progress winning business in sectors with massive potential and seem to be managing speed of growth very well. SP not reflective of success imho. In my shares ISA long term hold. Added bonus is things will always get dirty regardless of economic factors.
The key statement is:
"This positive contract win momentum has continued, with good sales growth in all three divisions of the business"
The much larger LaddersFree appears to be booming, whilst Fidelis is now trading well and the smaller reactive business is "steady".
Overall then REAT appear to be nicely on course for the forecast 0.14p EPS and a P/E of only 7.7.
looks like a 27.5k but from earlier. II's adding?
The new major shareholder list is rather impressive for an £11.8m m/cap company - these six now own almost 50% of REAT:
Shareholder Number Ordinary shares %
Octopus Investments Limited 163,344,667 15.44
Canaccord Genuity Wealth Management 103,333,333 9.77
Helium Rising Stars 97,329,362 9.20
CRUX Asset Management 66,700,000 6.31
Harwood Capital LLP 47,000,000 4.44
Miton UK MicroCap Trust PLC 38,981,127 3.69
Great to see a stock market legend like Christopher Mills increasing his stake in little ol' REAT - Harwood Capital now own 47m shares in REAT, or 4.4%.
An incoming TR1 as expected, but an increase in a holding. The 'shareholder demand' in last holdings RNS must have been linked to Hardwood seeking to increase holding. Positive.
another TR1 incoming... looks like a huge sell off?
LaddersFree's results are interesting before and after their acquisition in May'22.
For the year to Nov'21 they made £3m revenues.
For the year to Sept'22 they made £4.04m revenues and £1.08m net profit.
For the 4.5 months post-acquisition to Sept'22 they made £1.629m revenues and £0.585m net profit. If you annualise this that represents £4.35m revenues and £1.56m net profit.
Which is a rather impressive rate of growth.
or delayed action linked to holdings RNS
The drop in sp is investors are seeing the losses on the FYR with closer scrutiny. Disappointing
Singer have reiterated their Buy with a 1.5p target price.
They conclude:
"We believe the shares are substantially undervalued, trading on a Sep. ’23 P/E rating of only 7.8x. We target a 10x P/E multiple, which implies a 1.5p TP. Given the M&A strategy and opportunities to grow LaddersFree ahead of our forecasts, we see scope for the price to exceed this level over time."
Singer's forecast is now 0.148p EPS this year (from 0.153p). Which is the tiniest of adjustments, but unfortunately with the roundings means Singer's forecast on the front page of their note is a hugely rounded down 0.1p compared to a previously hugely rounded up 0.2p!
The full results are in line with the numbers from the trading update, so no surprises there.
Good to see there's almost £1m net cash.
Perhaps the key takeaways from today's RNS are:
- the outlook is very positive:
"Momentum from the final few months of the previous year has continued into the new financial year, and despite the usual slow down across the festive period, the first quarter has delivered a record performance for the Group"
- recurring revenues should reach 86% this year, which is extremely encouraging and should bode well for City sentiment as they love to see recurring revenues
- the LaddersFree acquisition has gone well and seems to be delivering nicely
Singer have forecast 0.15p EPS for this year. Assuming no changes today, that's a P/E of only 7.7 (and less if stripping out the £1m net cash).
Interesting! Buys?!?
'Meet the company' invites out for the results: 10/02 @ 12pm
These are due out next Tuesday, I believe. Hoping for a real good bounce in sp , if as expected, a major improvement on '21 results, which were decent. Onward and upward - hopefully.
No the last placing was done in April 2022 & it raised £5.4m at a price of 1.2p. In May 2022 the company bought Laddersfree for £8.5m using the proceeds from the placing. The share price has been under 1.2p since