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I feel a lot happier on the back of the investor presentation. The "whoops" moment is the fact that LEDs have steadily replaced incandescent sales since 2018 and these have a 20X life and a 5X price - therefore the market size - due to technological improvement - has dropped by 75%. SUP's channel customers have merrily continued ordering the same volumes for years but suddenly found they are overstocked. This is described as an industry wide phenomenon - e.g. the lighting association reporting the same.
The lighting forecast sales per Equity Development were confirmed and actually indicate a *SIGNIFICANT* uptick in sales (taking into account the above 75% drop) and sales are forecast to *INCREASE* FY2024 (compared to historic run rate) on the basis of x20 life and x5 cost compared to prior incandescent sales..... however the revenue drops accordingly.
I can immediately think of some puns around why didn't someone remember to turn off the forecast - but hey - it's not like this is a loss of masses of customers or anything other than a step change in technology.
I sorely wish that I had funds to top up today and am contemplating cutting some of my other horses as 81p is incredibly cheap and tempting....
Fat fingers…B
google says 31p.... what just happened?.......B
Very good rns. ???
This should shoot straight back up tomorrow. Imho DYOR
Thinking of jumping in… not sure where the floor is.. thought it was 85p…. Seems it might be in the 70s…. Quite brutal markets at the mo…. Wait for tomorrow me thinks might be best… but deffo value down here…B
Unhooked - It's actually a slightly higher dividend announced today of 2.2p vs 2.1p forecast for 2022.
However I take the point that the forecast 2023 and 2024 dividend is now lower. 4.7p and 2.6p vs 7.3p and 8p.
Based on a reduced EPS of 13.3p to 9.3p in 2023 and 14.6p to 11.7p in 2024 the forecast drop in dividend in 2024 seems overdone.
I'd echo the point made about today's drop being a large overreaction, and that at 90p we are talking about a business on a (reduced) forecast 2023 PE sub 10 that drops to a PE of 8 in 2024.... and that managed to grow its Wellness segment by 132% in the past year and forecasts 30% growth in its most profitable segment in the coming year.
Ok so an honest update and both revenue and profit will be a little off in the new FY. This is 200p share at fair value and I’m sure after the investor briefing we will bounce back to around 100p to 110p. It is amazing how much the sell off is and how sentiment turns so highly negative on some of these high quality well run companies like this, Volex, THG. These are great times to be topping up if you have some spare cash that’s for sure.
The market really is wobbly these days - the remotest sniff of bad news and panic selling kicks in. Can't believe the drop today given a ROCE and earnings growth. Not sure what I make of the new divs policy, though, 5% yield plus reasonable growth prospects was what sold this to me. Did not buy as a pure growth play.
"FY22 results in line: FY23 emphasis on Vaping"
For the year to 31 March 2022, Supreme PLC reported revenue of £130.8m, +7.0%YoY, gross profit of £38.5m, +16.6%YoY, and EBITDA (adj.) of £21.1m, +9.3%YoY. The contribution to total revenue from Vaping dominated at 33.3%, with Sports Nutrition and Wellness rising from 5.6% to 12.2%. Year-end net debt was £4.0m, with a proposed full year dividend of 6.0p/share.
FY22 performance was within 1.0% variance of our estimates. During the year the Group noted: the addition of new vaping contracts with Sainsbury’s, Morrisons and Core Communications; acquisition of Vendek Ltd., in Ireland, allowing access to the EU; acquisition of the Sci-MX sports nutrition products and brand; over 3,300 retail and public sector clients and 70,000 active customer accounts.
Headwinds in Lighting reduce our FY23E EBITDA outlook from £22.8m to £17.5m.
Group customers in the Lighting products division report inventory and stock build which should reduce the pipeline of demand in the current year. High margin (33.1%) Lighting products contributed 24.3% of FY22 gross profits, making the impact of inventory correction noteworthy.
Accordingly we reduce our Group FY23 revenue outlook from £143.5m to £129.5m, and EBITDA from £22.8m to £17.5m.
Our Fair Value / share is reduced from 245p to 190p.
Link to full research report: https://www.equitydevelopment.co.uk/research/fy22-results-in-line-fy23-emphasis-on-vaping
Yes, we did see a divi announcement - a reduction, lol!
I've topped up. The drop is overdone and this will be seen to be a bargain price over the medium term.
I never bought this share for the divi anyway.
even cheaper now!
2021 Accounts out at 7am. Perhaps we'll see a dividend announcement too.
Love this! https://vimeo.com/723690595
*** 6th July webinar - with Q&A ***
Supreme (AIM:SUP), a leading manufacturer, supplier and brand owner of fast-moving consumer products, will be conducting an Investor Presentation covering their Full Year results for the period to 31 March 2022.
The presentation will be hosted by Sandy Chadha, CEO, and Suzanne Smith, CFO.
The event will take place at 11.00am on Wednesday 6th July.
The online presentation is open to all existing and potential shareholders. Questions can be submitted during the presentation to be addressed at the end.
Sign up to register here: https://www.equitydevelopment.co.uk/news-and-events/supreme-investor-presentation-6july22
Wassssss-sup? My fellow supremes!
Been reading about the acquisition and how this is a smart move for supreme.
So here we go. A chart that summarises perfectly why buying a closed system provider is smart:
https://www.bbc.co.uk/news/business-44295336
60% of the market is closed and growing.
Another clever move by our BoD
Supreme PLC has announced the acquisition of Liberty Flights Holdings Limited for an initial consideration of £7.75m, with a deferred £2.0m and performance-related earn-outs taking the total potential consideration up to £14.75m. The acquisition of this leading UK manufacturer of closed system vaping products significantly enhances Supreme’s vaping customer footprint, and introduces new opportunities for cross-sales into Liberty’s customer base.
Founded in 2010, Liberty Flights is the manufacturer and brand owner of the Liberty Flights vaping brand, and Dot Pro closed system vaping device range. The acquisition from Liberty Flights’ three shareholders is funded from Supreme’s £25.0m HSBC revolving credit facility.
We estimate that in FY23 the acquisition will add revenue of c.£7.0m (+5.1%) (c. 9 months) and EBITDA (adj.) of c.£0.8m (+3.5%), and in FY24 add c.£9.0m (+6.3%) and £1.5m (+6.2%) respectively. Vaping products rise from an estimated 33.4% of total Supreme revenue in FY22 to 43.1% by FY24. We estimate that cost savings will accrue from 12 months post-acquisition.
Based on revised forecasts, our fair value is increased from 230p to 245p/share.
https://www.equitydevelopment.co.uk/research/earnings-enhancing-vaping-products-acquisition
moving out of oversold and anticipate buyers to come in as we start the long move up, just look at the chart, technicals looks great
technical stochastic, momentum, rsi etc now in favour of longs - compnay doing well and should rerate from this level
Looks bottom's in as buyers are back
The recent drop in share price is worrying. Wonder if there is some piece of news I am missing . . . “
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Nkhatt’s sentiment surely speaks for others too. As I’m surprised there are not more similar posts.
The SP is now way, way, way below its launch price – and yet I still haven’t bought my first tranche of shares!
I have data that reveals IPO’s, on average, don’t perform well (SP-wise) and that it’s only a minority that go on, to outperform.
So, I waited for 3 to 6 months from the Feb 2021 launch to give things time to settle.
(Brief SP history):
From launch, the price rose until August 2021. Whereupon it commenced a pullback from Sept until late autumn of that year.
I was ready and looked for pullbacks that might get the price back to the 180’s area.
Seduced by seeing 170’s, the downtrend petered out in the 180’s.
Which engaged my greed so I delayed to see if any other pullbacks evolved in which I would take up any 170’s on offer.
But the SP then set off on a bullish rally from December 2021, leaving me at the alter cursing my lack of greed control.
2021 closed the year with the SP at an ATHigh of circa in the 240’s area - And that was as good as it got!
In essence from launch in the 140’s back in early 2021, SUP went on to close the same year £1 higher – nice.
From the commencement of 2022, the SP has done nothing but retrace all the way back to the launch price.
And kept on - into no-man’s land – well below the launch price.
The accounts show nice annual revenue increases and corresponding nice net profit increases. So, what indeed has gone wrong? Nothing, as far as I can see.. And can only assume it’s geopolitical events, with value stocks being 'in'
- and quality growth stocks being shown the door.
The accounts show nothing untoward. The annual results are due in July this year. They should confirm both increasing revenue and net profit as per the recent update from the company.
(Brokers' notes, provided on SUP’s website are very buoyant for this and future years. Covid lockdowns didn’t appear to even impact recent years' results).
SUP has a high “quality” rating (but pedestrian ratings against most of its other metrics). As quality growth stocks (along with tech stocks) are out of fashion due to geopolitical events, SUP appears to be caught in the crossfire.
The results this July, should back up prior guidance and with the current SP area, the forthcoming dividend will be almost a 6% yield!
So, July, all being well, should act as a catalyst if this downtrend is still in force.
My greed has now turned to fear, so I need to see a change in the SP trend (and pay a higher price) to finally make my move.
Currently, not a single retail investor is in profit with the SP.
The P/E ratio is now in single figures. So, shouldn’t be long before it also gets a “value” rating if trading guidance comes in as expected on song, in July.
.
No news in particular, just a distressed seller that seems is nearly, if not done this week. Personally I think it's Blackrock selling down.
The business model itself is superb as is the BoD. Forward looking statement is also rosy from last update. Hopefully next week we'll see a reversal in the share back up to reflect true value.
The recent drop in share price is worrying. Wonder if there is some piece of news I am missing, that bigger investors are aware of? The stock seemed cheap at 140p so i kept buying but now its 120! Any idea if there is any upcoming regulation on vaping?
Results in December 21
Trading Update just over 1 month ago.
Supreme could really do with providing more regular news updates as nothing has been added since September 21.
Previous to that they were updates almost every month.
https://www.supreme.co.uk/news/
Come on Supreme, you need to be doing more to stop the share price slide unless that is the intention!
You've hit the nail on the head Agricore. The vaping market alone is growing massively. I myself have been using 88vape products over the last few years. The liquids are cheap and less harsh than the more overpriced competition. They also have varying solution strengths and flavours so you can phase slowly down. Not only that, they're compatible with the majority of free liquid loading vaping pens.
As you've outlined the health/wellness/fitness improvement sector is another growing area of business. The truth of the matter is that Supreme has targeted growing and profitable sectors and furthermore looking to broaden its portfolio within the same theme.
It's what I like about the BoD, they've stuck their money in the business with management owning over 50% of the company in shares and Institutional Investors also taking a slice of what's left. They've also looked inflation in the eye and forward bought products to cater for problems ahead! Jeez if that isn't forward business thinking, I don't know what is!
At current MC and consequently share price... This is a steal!