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"Profit growth and lower debt: a lot to like about Venture Life"
Simon Thompson's summary:
For the year ahead, house broker Cavendish expects adjusted operating profit margins to increase one percentage point to 8.5 per cent, which on 7 per cent higher revenue of £55mn could drive up operating profit 20 per cent to £4.7mn. Furthermore, estimated free cash flow of £6.1mn (2024) and £7.8mn (2025) is predicted to slash net debt from £13.7mn to £9.2mn (2024) and £1.9mn (2025). In other words, the £47mn market capitalisation company is on course to be almost debt free next year when it is forecast to deliver underlying operating profit of £6.1mn on revenue of £59.4mn.
The operational improvement in the business and balance sheet deleveraging were key bull points when I suggested buying the shares, at 30.5p (‘Investors are too cautious with this cash-generative company’, 26 September 2023). That’s still the case. Cavendish’s fair valuation of 68p a share is not unreasonable, representing a target forward price/earnings (PE) ratio of 10 for 2025. Buy.
Thanks Krull.
I’ve watched and Jerry Randall appeared convincing when talking about the strength and direction of the business. It caught my interest when they spoke briefly about M&A and I got the impression there will be some activity in 2024.
True!!
I think my comments are slightly borne out of frustration with the market.
Of my shares this, MFX and IPF have all reported great results recently and yet the shares, despite being on lowly valuations are all still trading at the same price.
This looks very lucrative
Starting from 2024, a new revenue segment called Private label will be introduced to the Group, referring to products manufactured by VLG-owned factories, which develop formulations for retailers, who will sell these products through their own retail channels. This is aimed at providing a more comprehensive understanding of our business performance by segregating these revenues from the currently reported segments. As revenue from this segment grows, the Group will consider reporting and disclosing performance separately in future periods.
Customer Brands refers to products manufactured by VLG-owned factories, which co-develop formulations with customers, who will distribute and market these products under their own brand names
Debt reduced further in 2024
Group net leverage7 reduction to 1.30x (2022: 1.65x).
Group net leverage7 reduced further to 1.15x at 31 March 2024
Good results, perhaps people expected more information on outlook?
Today's price movement is just traders in and out from yesterday.
Will need additional fresh buyers to get this into the 40p's IMO. I reckon this will happen over next 2 weeks.
Simon Thompson in Investors Chronicle is a fan and regularly reviews and tips this as a buy.
It’s only been an hours trading!
The Results are as good as the Trading Update indicated. No nasty surprises at all. I wouldn’t have thought 40p+ is too far into the future.
I expected this to move into the 40’s… I must be missing something in the detail of the results.
Yes, I noticed yesterday's rise. Leaky, leaky!
You're more forgiving than I am Jatw - after all, the sp was over 40p a year ago and again just two months ago.
Certainly hope those small cap funds shove some money VLG's way as it's been a frustrating wait.
Unhooked, suspect this is just the unwind of yesterdays rise. a relatively large number of people trying to take advantage of any early mark up we all expected to see based on the TU, in the end the MMs have seen them coming.
It matters more what happens in the next few weeks - will the small cap funds that still exist coming knocking?
Encouraging results (again) and the share price drops (again). Why is this company so unloved? Very frustrating.
Particularly like these……
· 5+ new key VLG brand products in the pipeline, ready for launch across 2024
· Group net leverage7 reduced further to 1.15x at 31 March 2024
“Ready” for launch would suggest inside the next 3 or 4 months which if correct, would therefore impact 2024 bottom line significantly.
It’s a strong buy a reckon
It appears as though all figures are slightly ahead of forecast, accompanied by a very bullish outlook statement from the board. What more can you ask for?
The results certainly read well on first look, with 5.21p adjusted EPS, net debt falling nicely, selling prices across key VLG brands in UK retail increased by almost 10% this year and a very bullish outlook:
"I am delighted to announce another successful year for Venture Life Group, marked by significant commercial achievements and strengthened financial positions. Our strategic emphasis on organic growth and cash generation led to a faster reduction in net debt despite challenging market conditions. We have made notable inroads in new product development, resulting in increased revenue and showcasing our innovative in-house R&D capabilities. Furthermore, enhanced branding and marketing efforts have expanded the reach of our 9 key brands to a broader global audience, further propelling our growth trajectory. With a strong commitment to improving EBITDA margins, successful new product launches, and digital transformation initiatives, we are well-positioned for sustained success in 2024 and beyond."
Back to where it was following the FY trading update….which was very positive.
Whether the accounts will translate to another gain tomorrow is anyone’s guess, but management credibility is on the line if they dont measure up to the TU.
I would expect MMs to mark the shares up tomorrow, but whether that sticks is debateable.
Nice bit of movement this morning. Wonder if someone knows something ahead of tomorrow?
Good to see the share price moving upwards in the run-up to the results in "early April" - last year's were on 4th April, so not long to wait.
As a reminder, the positive trading update concluded:
"Benefiting from our robust growth, clear strategic priorities aimed at refining our operation, substantial generation of free cashflow and a strong balance sheet, we are now in a prime position to deliver strong shareholder returns and I look forward to presenting the FY23 results to shareholders in April"
The Q4 update was really positive, but the SP has slipped back recently.
Tempted to acquire some more in the mid 30s this week as I suspect it will bounce up on results in early April.
Jerry Randall was saying in the podcast, the iced cherry flavour mouthwash was selling well, in that case, perhaps they should introduce more flavors just to be different from the rest, like Apple, Strawberry, Blueberry, even bubble gum flavour might sell well.
https://youtu.be/wVVkU9gG_J8
Someone is loading up ahead of next news, volume is much higher than normal.
After a bit of a soggy patch, today’s rise is possibly a result of Haleon impressing with their self treatment products indicating that customers continue to purchase.
Roll on the results in early April.
Thanks Rivaldo, missed this holding update. Good news as you say.
About time share price started to move upwards again - slight rise yesterday, but still a bargain at current price.