Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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There's a lot to like in this latest RNS. The key financials are more than respectable and the comments on current trading and outlook encouraging. Of most interest is 'giving consideration to growing by acquisition'. How would they finance such an acquisition? Raising the cash through debt or equity would come at a high cost. Perhaps a synergistic all-share merger with a similar sized company would make sense. Management is nothing if not ambitious and they are operating in the right sector at the right time.
I think this company has a great future and I remain a buyer.
A couple of highlights which I thought were most interesting:
"At Nasstar, Nigel took the business from being loss making on turnover of £2.5m to making an EBITDA profit of £6.4m on turnover of £26.1m"
It looks like Nasstar was used as a vehicle to acquire a number of small managed service businesses. I see that it was recently acquired for around £70m. It looks like they may be on the hunt for some acquisitions to try and replicate this strategy
"We are pleased to report material overhead savings versus the first half of the previous financial year. Through these reductions, these costs are now more closely aligned with the size of the business. Management continues to take steps to make the business as efficient as possible from a cost perspective."
They have really ripped out some admin expenses, 600K lower than the previous half. They seem serious about keeping costs under control. These are words that I like to read
Pretty much break even on a cash flow basis. Great base to continue to build some scale and make some acquisitions
I agree, should be 4p plus
Sorry I meant its a 'Strong Buy'
No Brainer longterm hold. CEO/founder personnally committed and not just a hired employee chasing a salary and bonuses. All employees are shareholders (what better motivation do you need? 'if the Bussiness wins you win') Clients include Boohoo and Kings college london. Key focus that sets them apart? 5-Star 'human' customer service that stands out. Not just an automated nonesense. Very steady and healthy growth for a newbie. 60% of shares are NOT in public hands. More great things to come. For best value hold long. You will not see this prices again in a few months. HOld , Hold, Hold. come back in 2022 and thank me.
3rd set of positive results on the bounce since the new board/CLCO change. SURELY people will see this trend and start to believe now!
Lakeside, I hope your right. I have been under water on this share for 18 months so hopefully today will change that and the next few months will have made holding them worthwhile after all.
EBITA up 435%!!!
Also 500k cash in bank.
The market was expecting results end of month in 3 weeks.
This will rocket today.
I expect £50M market cap in next 12-18 months.
10p per share here we come.
Top up if you can!!
The trains leaving the station!!
GLA
Can’t wait to see what the CLCO board has in store for 30th June. Judging by a strong Q1 hopefully the trend is set to continue - exciting times IMHO...wouldn’t it be great to see the SP get back to 3-4p pre take over price. That would seriously bolster some confidence back in the market that we’re heading in the right direction!! Fingers crossed all the faithful holders!!
If we assume that the trend from the first 4 months continues then we could see trading profit at £1m for the year. plc costs are £550k so perhaps 400k of operating cash flow. And that assumes no growth from that first 4 months. I think the SP will explode if the rest of the year continues like the first 4 months. There are almost no shares around and with a MCap of $7m and an amazing turnaround in trading profit over the last 2 years, i'm a little disappointed I didn't get to top up lower, but someone else got there before me
Continued progress, with a strong start to FY21 at a sales and Trading Group EBITDA level - management accounts for the first 4 months of FY21 show Trading Group EBITDA already ahead of the £261k achieved in the full 12 months of FY20
Like I say, I think it has taken 6-9 months to move those shares, but feels like the process might be largely over.
There's been just enough news from June last year to provide demand to gradually soak it up at these prices but not too much, after all, why enrich people who are now running competitor businesses.
Prior to June last year, the old vendor shareholders had no hope at all of any exit.
That said, all of that is conjecture as I cannot prove it, just feel it in my bones.... !
If there is any sign of sales growth on a stable gross margin and overhead base, this will re-rate for growth quickly.
If not, we will require more patience, but as long as they get to cash neutral this half year as a minimum (i.e. covering plc costs and exceptionals) patience will eventually be handsomely rewarded.
Interesting month ahead, let' s hope it moves into a growth rating and not a 'they might run out of money' rating!
.
Mark Halpin
CEO | Founder | Providing Managed IT, Cyber services and IT Hardware with the highest levels of customer support.
2d
When I get the rare chance to reflect on the last 3 years since CloudCoCo Plc started I find it amazing to genuinely feel the warmth we have from people who we provide IT management and support for. We started on the basis of being highly responsive and being nice people to buy IT services from. When I see things like 1,798 followers on our LinkedIn company page and in circa 1,100 days it genuinely makes me really proud that I backed myself and believed in what we wanted to create.
https://www.linkedin.com/feed/update/urn:li:share:6803015369150758912
Agreed MonkeyWizard. I'm expecting strong YoY performance and good progress. However, it still baffles me why they wait until results time to share the good news. Without a regular flow of news it makes it difficult to shift the SP.
Still, patience is the key. 100% confident it'll come in time.
Gosh I hope theres a big seller... I for one am waiting for the opportunity to accumulate more in the 1.2s or even the 1.1s.
No trades today, none! Not often you see that is, even in the micro micro space... It would take an age to liquidate even a small stake.
That sales number you have quoted seems entirely realistic. If you look at the most recent trading update, signed TCV was 97% ahead of last year so at the most optimistic you could perhaps say sales are also 97%. I think that might be a little bullish and I would be happy with 25% sales growth, which would get to in excess of £10m. Companies like this go for multiples of sales, not fractions, so as long as that sales number has a high recurring element then we should be peachy. Even 1x sales would be 50% upside from this level
I think there is hope for equity upside if they can lift sales beyond £11-12m on a reasonably stable gross margin and cost base.
They should be able to do far more sales from the cost base they already have.
Also, by then, the old shareholders (go back and research the Adept 4 shareholder lists - clue Ancar B vendor) who are now running similar businesses might have finished exiting their old paper.
I cannot prove this is what is happening, but it feels like there has been a seller for 6-9 months now. The two people I think would be sellers based on the fact they now run competing operations owned about 25m shares back in the inglorious shambles of Adept 4 days.
This would certainly help in tandem with evidence that sales growth is available off a stable cost base....
There is hope in this micro micro micro cap turnaround yarn (I liked that word ragnar....)
1.17/1.32 for £5K... not for trading, sticky hands only. MMs don't want to touch this and you need to be committed. I wonder what is going on through the minds of those sellers of bits and pieces over the last week. I suppose tired of waiting for contract news. Current MCap £6.3m, market sees the equity in this business as being worth almost nothing. Anything could happen!
Some good observations there ragnarlothbrok. Liquidity is an issue with this share, but I'm a big fan of the new BOD (since cloudcoco came in). Its a very capable sales team and deliery looks to have improved no end. Great sector to be in. This is just a matter of time. But there is a need to be patient as turn arounds are never as quick as you'd like.
Agreed - if the manage to land and then do some PR around a decent client win, it could make a big difference along with the improved 1/2 year results which will be out in June. It needs a bit of consistency and momentum to shake of the Adept4 hangover.
Looking back on the trades this week my 2 top ups on Monday were the only volume of the day! And those 2 trades alone moved the dial by around 5%. There is no stock around on this, a bit of good news will light one under it. You just don't see this type of business trading at 1x revenue these days. Quiet times like this are the best time to accumulate, not getting caught on the spike when results in a few months will likely show another healthy increase in sales. They have already told us that trading results are ahead of last year after only 4 months...
One downside of which I am well aware (and there are others) is that revenue would need to double to make a profit. Another is that I have no idea how much cash they have. And another is that loan note which will need to repaid at some point, although expiring in October 2024 and held by what appears to be a supportive shareholder, its a millstone incurring high interest p.a. and you would expect that to be converted to equity in the absence of a meaty raise or some serious cash generation over the next three years.
But I love a good turnaround story and management are spinning a good yarn
I've been buying a few of these over the last few days. This type of business should go for at least 3x recurring revenue. It's currently about 1.5x. They managed to grow revenue and start to get costs under control over the last year despite Covid, which is very positive. We could see some pretty rapid growth from a very low base. With a £7m cap it could all go pear shaped pretty quickly. It will take some time to rinse off the stain of the Adept reputation but the Redcentric link gives added confidence and it could very easily double on a bit of revenue growth. It doesn't look like we will get much news on this until results in June so may have to sit tight and be patient but it seems they made a good start to 2021 so lets see what happens
Somebody is hungry this morning 400k shares brought.
With a market cap of 7M & Softcat 4Billion, if we are 1/2 as big that’s a 100 bagger!!!
Linmited shares in issue all directors big skin in the game.
We have 600k cash in the bank should be trading in the 3-4p range on fundamentals alone.
Any news on new contract or renewals will see this re-rate big time!!
My price target is 10p in 12-18 months & a market cap of 50M.
GLA
This was 3 years ago today when the CloudCoCo journey and brand started as I launched the website. A company launched purely to provide the right answers to business with the right technology, rockstar service and highly talented and kind people. Over 350 customers have joined our technology movement since then and now have their IT provided and supported to market leading standards by our unbelievable teams.
Who knows, in 3 years time we might be as big as Softcat plc :) What I do know is I am highly grateful to those people who have supported us and believed in what we have been building here.
#thefuturestartsnow #dreambig with CloudCoCo Plc
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Zzzzzzzzzzzzz
I'm totally confident there is no bad news coming at all. If I'm wrong I'll apologise here. If you check their Twitter feed it's business as usual and always posted with a smile.
The sell-off is just bored sellers that expected the Company to build much faster than it's achieving. It's my opinion that long term holders will be rewarded.
Hope not. Didn't turn out to be multi bagger everyone said t'would be a year or more ago. I have 2gg in here, not a fortune, but I might have better backing a couple of gg??
With nothing but sells. It looks like a few people know something bad is brewing. being 50% down at this price I have to hold and hope for something good to come along this year. :(