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With comments elsewhere that there's no or very little stock available to buy online. Should be good for a lot more if there continues to be no stock around.
In the absence of 'contract win RNS is likely to be a Trading Statement RNS, the last week April, and after that, we can look forward to the Half Year Report, sometime in first week June. Positive RNS's on these subjects should see sp hit 80p
Interesting point about it not being a sexy tech stock. True, the optics maybe lack a bit of glamour, but cold hard cash profits will eventually turn eyes in this direction
Onward Opportunities Limited (ONWD) last week announced their annual results. They have a £1.2m stake in REAT, or 6% of their portfolio, and they had this to say (incidentally, the tip in the last post was from Share Prophets - asterisked out):
"With React we believe we have captured a defensive growth opportunity at a value price, and invested c.6% NAV into the company. It is a business the team have been researching since September 2022 (pre-launch) and was an early pipeline priority. Through a mix of specialist cleaning services for UK corporates, the business has a highly attractive earnings profile.
The business has three core divisions:
1. React - the heritage of the group, reactive specialist cleaning often needed for emergencies or callouts requiring specialist cleaning techniques; high margin but less predictable.
2. LaddersFree - large glass pane and cladding cleaning for UK corporates, executed through a capital-light membership model.
3. Fidelis - contract cleaning focused on public services. The business operates over 80% of its sales on contracted terms of one to five years and has been organically growing at 17%+ per annum for the past four years under a new management team. Sales are highly cash generative and yield a high contribution margin, whilst CAPEX, depreciation and amortisation are all insignificant.
Crucially now, as a result of a mix of organic and acquisitive growth and the upcoming cessation of deferred consideration payments, the business is beginning to generate strong profits and free cash flow growth from contribution margin as it exploits inherent operational gearing. If one were to look away for a moment - not knowing the company cleans large glass facades, rolling stock, and prisons - its characteristics mean it could easily be mistaken for a small, successful software company. Yet we have been able to acquire shares in React over the past six months on forward P/E multiples of 6.5x - 8.5x."
tipped with a 100p target following the recent contract wins:
https://*************.com/views/73973/react-group-contract-wins-including-three-material-contracts-a-trading-momentum-continuing-buy
conclusion:
"of course, the group now has to deliver on such ‘opportunities’ but they are noted to further underpin confidence in its current year performance. we’ve noted year ended 30th september 2023 ‘real’ profit around £1.6 million on revenue up to £19.6 million and forecasts for adjusted pre-tax profit to rise to above £2 million this year, with also a healthy balance sheet.
we, therefore, now further look forward to a further update on trading the group has stated it will provide next month and continue to consider a (50:1) shares consolidation-adjusted 100p+ share price, £21.5 million+ market cap, looks justifiable on the noted earnings and growth outlook. at up to 75p, still a buy."
Dowgate have initiated coverage of REAT today with a target price of 100p and a 25 page research note.
Good to see that they say the 100p target is "conservative" as it's based on only assuming the Group achieves c60% of its medium term cashflow target.
They forecast 6.9p EPS this year, with a closing £1m cash pile.
The year starting this October is forecast at 8.1p EPS with a £3.1m closing cash pile:
Https://dowgatecapital.co.uk/documents/
I'm back in after a relatively short hiatus. Like the use of 'material' in the RNS.
Yeah I sold for breakeven. Didn't have momentum I expected.
I wouldn't count on it :)
REAT is a great company and is heading in the right direction, but it flies under the radar of most PIs, so it's better suited for longer term investors.
Would like to see 75 today or tomorrow...
Took a small trade position this morning. lets see what happens
Excellent news this morning, with both material contract wins and contract renewals which now include significant additional services.
The headline is £1.3m of annual revenues, which I assume comprises the additional £500k per annum from the new FM agreement plus the new £500k from the UK Government agency, as well as the £295k per annum from the existing FM provider? Or are the new/potential revenues in addition the core values of the contracts?
Whichever, there's also "a stream of small and medium sized wins" in addition.
It all sounds extremely promising:
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Contract-Wins/93602432
It is my experience that companies who have had a large consolidation (50:1) drift lower until a positive RNS is released. There will be some SH's who sell because they do not know there has been a consolidation, and are perplexed when their no of shares in account is only a fraction of what they believe it to be. !!!
The company fundamentals above has not recalculated no of shares in issue. The 'old' no is c1b, the new no should be about 22M. The MC, I believe is correct.
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."