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I totally agree with your appraisal. I am hopefull all the upheaval in Eastern Europe remains under control. I am happy though to hold and awit news..
When is next update
spindok - the reason most of us are here is that we had confidence in SRC's management team and their buy to build strategy. 12 months down the line for the Nordalk deal I am pretty sure SRC would not have paid £400m for a business predominantly located in Finland with a 1000 mile land border with Russia - with the companies largest quarry 20 miles away from Russia. I do think the company has very harshly marked down - and certainly way beyond a % risk factor being applied to the businesses operations in eastern Europe - but loading the business with debt to purchase Nordalk alongside all the wider macro economic issues - its difficult to have predicted a more damaging outcome for the last 12 months. It will be very interesting to get an update from the team - Q1 trading appeared on track - and the construction industry is busy, despite the doom and gloom being thrown around. ATB. SB
Coat-tailing Breedon which was tipped in Daily Telegraph today.
Seems to have been a bit of buying today. All hinges on update but I think it will be positive when it comes. I have a lot of confidence in the management.
Another major sell today - it was yesterdays 750k morning sale (pus the delayed 400K sale) that started all kinds of mayhem - auto trades took hold as soon as the price dipped below 50p and triggered stop losses. Big question is - who is selling at this price and why - have Rettig started to offload after 12 month lock in expired? Just over a year ago the business was valued at c. £270m with c.£40m debt - 'net' value £230m taking debt into account. A year later, having bought Nordalk for £400m and now carrying £160m debt we are now valued at £325m - 'net' value £165m taking debt into account. So the entire value of the Nordalk purchase and more has been lost over the last 9 months. Difficult to blame the team for the Nordalk purchase given it looked a good deal and added considerable scale to the business - but given the primary business operations are in Finland, Sweden, Poland and Estonia its clearly driving market risk attitude and more worryingly there appears to be a major seller even at this price. Will be good to hear how the company views all of this this. SB
I'm with you vig - I saw a decent business strategy and a decent team who were delivering said strategy. How thing's change - and leave us looking at our investment wondering if its just market conditions or is there is more to this than current sentiment. With so many purchases over the last 2/3 years there's a lot to amortise; and we are about to start paying the Nordalk purchase loan which ramps up considerably over the next three years. The term loan and banking facilities in place have both fixed payments and sonia linked repayments - so higher interest rates will start to bite - imo using the company's estimated £60m annual free cash flow from its full operation to repay some debt would not be the worst idea in the current climate. A significant chuck of director options are granted in the range 25p to 46p and are due over next 4 years - so they are not immune from current share price decline. That all said - the construction industry is busy - so eastern Europe aside we should have a well performing business. SB
Thanks SB, I am sure your right an update should be forth coming.
I watched the recording of their last investors pitch.
They empasised their ability to withstand a downturn such as we see now due to their niche products and ability to control prices.
I think H2 will be a checkpoint to see whether they are delivering on this. I think the market needs convincing.
I still think it has value, it's just that sometimes, I look at the current paper loss on my holding and need to reassure myself that I haven't missed something.
I was impressed with the investor pitch made by the CEO, he's a smooth operator.
Cheers, Vig
Nothing yet vig - although historically there is no real timing pattern for trading updates so not actually sure when we might hear from the company - other than given the recent price action here you would think a market update would be in order to reassure investors and such I think we can expect to hear in next 2/3 weeks. In addition to financial performance - I do think there is a broader communication required here on the buy to build strategy in the current market taking into consideration cost of funding (capital and equity) together with macro economic outlook. If we are generating significant free cash flow - now might be the time for a share buyback (assuming still no dividend policy) ......drives eps which is where a slug of options crystalize for max and co in 2024 from memory. There was the recent introduction of Polar Capital as a major shareholder with 5% - so someone sees decent value here. ATB - SB
Hi SB, is there a trading update this week
I have been on holiday, so trying to catch up on my various holdings.
Cheers, Vig
Given the ongoing turbulence here I would not be surprised if they were sells - fund managers trading positions wrecked all over the place. At 50p you have to think the directors would have a nibble at this price. Next weeks update will certainly make for interesting reading......given some doom being issued by housebuilders which seems to fly in the face of actual performance. SB
some largish trades gone through today at 50.5p.looking at the s/p movement suggests buys,but cannot be sure.
For the last few daily trading sessions the price has been repeatedly marked down in the last 30 mins. Another body blow to see trades under 50p. Now trading at 6.5 times 2021 EBITDA - and likely 4 times 2022 EBITDA. I mean seriously......SB
This really does need some good news. SP is half what it was six months ago. My holding stand me nothing as I sold enough to cover my initial pruchase and left the balce but even so it is proving hard to watch.
We should expect a trading update from SRC possibly as early as next week but more likely the week after. Its been quite a 12 months since Nordalk last year - and will be interesting to hear if there is any change of direction from 'buy and build' into 'consolidate and cash' from the team. Inflation and Ukraine have driven investors away - but will be good to get a strong H1 2022 under the belt and demonstrate the resilience of the business to cope with market conditions through its six core trading platforms. SB
This a reflection of the current market expectations. Builders,suppliers and construction is looking very shaky. Still articles appear about house prices falling but only to lower levels of growth. They are mad. I have shares in Breedon too and that has been a total waste of time and money. The next six months ar going to be painful.
I was trying to convince myself that my investment here wasn't a complete dud - and take some comfort that we have some major II's on board - although Blackrock's CFD position looks like it is turning into a very good call. £350m wiped off market cap in 9 months; c. £200m in last three months alone. Will be very interesting to see H1 EBITDA and earnings - looking for £40m+ and EPS of about 3p - which bear no correlation whatsoever to the current price. As you say italian - dig in for the medium/long term. SB
interesting silver blade,thanks.problem is the pretty universal risk off attitude isn't helping and it may be some time before this changes. long term view needed imo.
Italian - there's been quite a bit of coming and going in major holders as you might expect in the current dash for cash and those who see longer term value here - polar, chelverton and blackrock buying - quilter, M+G selling. 64% of shares held by investors with 3% or more - and quite a few sitting below the declared interest - so likely c.75% of shares in the hands of 20 institutions/funds. 12 month lock for Retting about to expire - they have 50m at 85p - hoping they don't need to cash in any time soon. SB
have increased. the tr1 doesn't give the former position, but i think they were at 4.15%.so reasonable increase.
More today
With todays latest decline SRC is now valued at less than the acquisition of Nordalk (£402m) just over 12 months ago and just a few pence off a 50% share price decline in 9 months. Breedon in the same boat. Lots of bad news assumptions being priced into company. Perhaps time to slow down acquisitions (although fortune does favour....) and start to pay down debt with earnings - we have some chunky loan repayments about to start. SB
Really strong numbers here. Well run company with so much potential in the sector. Got so much to offer and will look and hold for long term. Will become a top player in next 5-10 or someone is coming in and paying big for the privilege ie CRH, HOLCIM etc. Reserves and assets greater than market cap currently so consistently loading up. Max seems to have his head switched on aswell and great vision to lead us to the next phase.
In the last six years, SRC have purchased 8 major businesses with a combined value in excess of £550m; and a number of smaller operations below the radar. Our current market value is just over £400m for a business with a c.£450m+ turnover and a c.18% EBITDA - £80m (based on 2021 performance and Q1 updates). That puts us on a valuation on 5 x EBITDA.(although we do have reasonable debt - £164m prior to Johnston acquisition - but before H1 positive cash flow - so likely to be of similar scale). Depressingly familiar story being played out here. SB
Hi vig - apologies if I came across overly negative - wasn't my intention. I agree the SRC team provide an air of confidence in their approach and I hope the market starts to see the real value of what is being achieved this year as the full year revenue and ebitda numbers start to do the talking. The scale and breath of SRCs operations show the ambition here - lets hope shareholders see some of the value being created before too long. SB