The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Your support level seems to be holding. May have a look eod for a trade at this rate as do agree on the price looking too low for the cash and growth just be nice to have the market agree too.
50dma support.
None of he 6p bond holders cashed in to sell at 9.5p
Market cap almost covered by cash, post sale of Energy Management Division.
“The sale of the Energy Management Division will allow us to focus entirely on our similar sized, high growth Energy Services Division which grew 87% in the past 12 month period despite being undercapitalised. The sale will simplify our business, strengthen our balance sheet and will bring the opportunity to invest further in the higher growth segments of Solar and EV Charging across the UK.“
PBT £1.1 million (FY 2022 Loss Before Tax: £2.2 million). Let’s assume that about one third of that came from the energy services division. You sure still left with a rapidly expanding, profitable business that is trading at around its cash level.
This is a mad valuation.
£1,607. Best I can manage right now. I still have a sub 3.5p average.
I agree. The market doesn’t understand the business.
I will add whenever I have funds.
Https://ukinvestormagazine.co.uk/top-15-stock-picks-for-2024/
The SP seems to be getting a bit silly now. At c6.5p the whole company including the part that we're selling for £30m is valued at £26m,
Anyway, i've re-checked old RNSs and the bonds/loans taken out in late 2022 that are to be repaid in May/June 2024 can be repaid early without penalty so that is good and should save us a bit as this interest rate is high.
Attached to the bonds are warrants at an exercise price of 6p (42m of them so potentially an extra c11% of shares).
Some of the selling could be in anticipation of exercising their warrants at a lower price .
Clearly paying off the £8m debt is sensible as it will save over £1m in interest p.a and will improve the bottom line immediately ( £1m at 10 x PE could be worth the equivalent of £10m to our valuation). However, it appears people are now waiting to see how this money will be used to expand the business. Energy Services is definitely a hot and fast growing area.
I am not expecting it but a special divi of say 1p would cost less than £4m.
Fair points shandy, so my calcs should be worse case.. we will start to trend up soon.
Sit - in terms of sellers, it is possible LUCE are selling a chunk as they bought in recently at 5p - so even at today's SP they are making c40%.
Also, remember the period end date has been changed so this YE is 18 months, not 12. The interims announced late last year were for a 12 month period, so the £2.3m EBITDA is not an estimate, it was achieved, albeit accounts haven't been independently reviewed. Maybe the growth over the last 6 months (July to Dec) has been lower than they would have liked (maybe some managers were focused elsewhere!!) , but the first 12 months is definitely impressive
I believe there are a number of things playing out currently;
-profit takers that got in sub 5p, which there there will be a lot, as we were down near 3p for a while.
-shareholders from legacy acquisitions cashing in. They have been sat on shares way below market value for some time and they are probably frustrated. I know this to be true, as I am one.. :)
-MM's playing the game to mop up cheap shares, as some of the trades today/yesterday just do not make sense.
I suspect we will settle down back end of this week and start to normalise up until the day of the vote. Once the deal is ratified I fully expect this to bounce north of 8p and hopefully test 10p. I think we will only push on from there once the AIM market as a whole starts to improve.
Apologies £19.5m not $19.5M as quoted on advfn.
Thanks for the posts re valuation. Useful to see. Seems the markets valuing the rest of the business at c. 2.5p today which seems a tad cheap.
I have from the advfn BB's that..
Year to 30/06/23
"Services grew revenue 87% to $19.5m" so looks a decent candidate to research further at least imo.
The interims project the Energy Services EBITDA to be £2.3 million. If you wind this down to a flat £2m to take into account the expected under performance as cited in the RNS, this gives a share price of 3.6p based on 7x. 5.2p on 10x.
I calculate the £25m to be the equiv of 6.5p (£25m/387.2m shares). This gives a fair value range of 10-12p before considering any upside 'potential'.
So approximately 3 - 3.5p. difference. for the other division.
The Mgmt division deal includes £25m cash upfront. Pay off overdraft and loan of £8m leaves £17m sitting in the bank. That's c4.5p a share. So whatever the SP take off 4.5p to get the current value of the business.
It looks like long term support around here. It may temporarily dip further to release more stops but this only confirms they want your shares.
Looking at yesterday's trades bigger players are now active confirming the above.
It did open at a reasonable level c9.75, but dropped within seconds. I had 3 sell limits at 9.5, 10.5 and 11.5 and the lower got sold at 9.51 bang on 8am. Within minutes the price was in the 8s.
The current price of c7.6 is slightly less than £30m which seems strange considering the news today.
I agree, I was expecting it to prop above 9p and test 10p and beyond, but quite the opposite. It looks like we have a big seller at 8p, possibly an investor cashing in, which keeps pulling the rug.. I suspect we will bounce around for a few days until the system is flushed and then charge north to 10p+.
New note from Equity Development with audio summary: https://www.equitydevelopment.co.uk/research/30m-energy-management-disposal-to-unlock-growth-potential
eEnergy reported in early November that it had received a number of unsolicited approaches for its Energy Management (EM) division and that it had entered a period of exclusivity with one of the interested parties. An agreement has now been reached (subject to General Meeting) to dispose of the business to Flogas Britian Limited (a subsidiary of FTSE 100 constituent DCC plc).
The initial consideration of £29.1m comprises £25.0m cash with the balance of £4.1m being used to repay amounts due from the Group to the EM division. The total initial consideration equates to an enterprise value of £30m after customary adjustments reflecting net debt and normalised working capital. Before factoring in the earnout, this represents an immediate return on the £23.4m invested in the division since December 2020, principally through the acquisitions of Beond and UtilityTeam.
£25m net proceeds will eliminate debt and fund growth in Energy Services. Net proceeds will be used to pay down the Group's debt facilities of £8.1m, to reinvest in the high growth Energy Services division and for general working capital purposes.
With significant balance sheet strength, the Group will now have the opportunity to invest further in the higher growth segments of Solar and EV Charging. See our initiation note for a detailed overview of Energy Services activities: Driving net zero through innovation and technology
The Board expects trading for the period to 31st December ‘23 to be at the lower end of market expectations as a result of previous cash constraints, which have now been eliminated. We will publish new forecasts following the General Meeting (7th February) and completion of the disposal.
Must admit with the news of the sale finally coming through i was expecting circa 10p per share, wondering if the results expectations have something to do with it, "lower end of expectations indicated". hopefully onwards and upwards now with the debt being wiped out. live within your means comes to mind.
Yes good to see this finalised. Seems a fair, if not spectacular, deal. £30m upfront was always my minimum expectation and hopefully at least 50% of the extra £8m will be realised.
Accounts at 30/6 had borrowing of over £7.7m with the £5m overdraft taken in full. This resulted in financing costs of just over £1m for the 12 month period.
Clearing this in full will put the business on a firm financial footing and eliminate any financing costs going forward.
Only small negatives for me are the YE figures are at the lower of mgmt expectations and with debt being repaid i suspect there is not enough left in the kitty for a special divi.
However, having said that the current price is madness. So we have just sold a proportion of the business for £30m and the overall valuation is currently £32m. Under 10p (£38.7m) is ridiculously cheap. Even £45m (11.7p) seems on the low side.
Maybe once the profit takers have gone and the AGM is passed we will see this creep up.
They got there in the end.. Hopefully the profit takers are mopped up quickly. I also suspect share holders from legacy acquisitions may look to cash in also, muting the upside further in the short term. Real price action will likely occur once the deal actually goes through following the AGM in Feb. We will see. good luck all.
Definitely. Every school board of governors will want to be net zero heroes. Now they may,
Eenergy has been clearly financially constrained but the shackles are off now!!!
What's that all about?
Today was obviously a smash and grab, right from the off.
Sadly, I had no funds to add. Never mind. Looks very good for Monday!