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Has been very quiet here for a while unsurprisingly, as there has been little news. Quietly topped up on the dips, but people piling in today which is hopefully a better sign, although maybe still range bound. Would need 34p to be considered a real break out I suspect. That requires an update
In meeting today, the opening shot from Baines was rather a panicked plea that his plan was all about focus and growth. I do wonder whether perhaps his pitch to institutional investors did not go completely smoothly.
They may have supported a dividend break, but I cannot believe they are happy with his snails pace execution.
It will be interesting to see what happens in the next couple of days and whether there are signs of IIs backing this as a recovery share.
I just have a nervousness about their operational capability as it becomes clearer that that there were more issues than we realised in the ongoing business as well as the updated fermentation business. And for sure timescales to get this up and running and selling the capacity have been vastly underestimated.
We could really do with quarterly updates this year.
Re: corporate governance. It was exactly this, james188, which caused one of Ashworth-Lord's funds to sell out of EKF a few months ago. They cited corporate governance issues and 'something of a revolving door' at management level.
Re: divi suspension. It's now clear that they intend to use the cash saved to build up a kitty to fund future sexy investments & acquisitions. After their previous wasteful splurge, which has precisely gotten us into this mess, that is v worrying.
I don't know what to do here. Nothing hasty. Give it a few days/weeks for the penny to fully drop... but when management are such poor allocators of capital and they don't know it, it's a good reason for selling out.
This may be the most frustrating company that I have ever invested in. The core business looks decent, but there have been multiple management missteps/knee-jerk strategy changes over the last few years which have damaged the company hugely. Add to that the complete lack of stability at board level and sub-optimal corporate governance. Only one year ago, Mike Salter was stated to be a key part of management (having been sacked as CEO for good reason) and the company did not even bother to issue an RNS when he left, using the excuse that he had announced first on LinkedIn. Not nearly good enough.
The IMC presentation this afternoon as upbeat, but the credibility of management is on the line and we need to see results, rather than empty promises (of which there have been far too many). Shareholders are now being asked to back management to deliver growth and to accept a dividend pause. It had better deliver. I asked the final question on IMC as to whether the board had discussed strengthening the board by splitting the chair and CEO roles. I believe that it should. The response that this issue had not even come up in recent discussions really concerned me. As things stand, the company is uninvestable for me. I have reduced my exposure at a painful loss, but still hold. That is under review.
Disappointing...that's an understatement. Todays lacklustre, late issue RNS is completely symptomatic of why the shares have tanked to their lowest level in years. The life sciences business is meant to be an exciting, dynamic and innovative space where companies develop new products alongside market and end consumer demand with a skilled management team driving shareholder value and navigating the companies place in the bio-tech sector. EKF appears to be limping in completely the opposite direction of where it needs to be in just about every category where I would measure success, pushing out growth into another meaningless time period where it now looks there is yet another failed investment - if this is what the business is aspiring to, they really should just put the business up far sale. SB
Results ‘as expected.’ Market hates a dividend cut. Business streamlined and new facilities in Cardiff. Missed the meeting but will watch replay. Looks ok to me, was not expecting miracles. Looking forward looks pretty exciting . Will another US company pounce on this derisory price . I know I have. Gl
I agree with comments so far that results are disappointing and I had also seen this coming given the previous briefings.
The only positive spin I can put on this is that Baines is being ultra conservative and has instructed his CFO to build a reserve that can be released at a time of their choosing.
I think Baines took a blow to his ego due to the company's poor management and the insistence by major shareholders that he should assume an exec role to restore the company to health.
That would explain the ultra cautious forecasts, as his reputation is on the line.
Let's hope that behind the scenes things are better than they appear.
Thanks SB. I didn't appreciate the divi suspension was likely. Damn... not even being paid to wait... like holding a biotech then...?
I shall tune into the presentation this afternoon as suggested by Dartron. Presume man-of-the-moment Baines will be there to trot out the excuses. Hope people ask him about cash (levels and flow).
Can't say I was expecting much and the company didn't disappoint - market clearly know hence the share price performance of late. Fed up with the ongoing pre-covid stories - its 2024 and yet they are still harking on with 2019 comparisons to compare growth - none of which are particularly impressive anyway. Life sciences in decline - with limited income from a significant investment which has blown all cash to the point they have to cancel the dividend - although I think we saw this coming with Baines back at the helm. Even POC growth is grinding to a halt. Overheads reduced - but still way too high. Wonder what share options packages will be forthcoming at these depressed valuation levels. Painful yet again....and the thought there is any consideration for acquisitions sends a shiver....SB
Investor meet later.. lets watch that and see.
I'm struggling to get excited with these. I'm particularly disappointed with the divi suspension as I thought EKF was, above all else, a cash-generative business... at least that's what Mills & Co habitually emphasise. I'd imagined the dividend savings would be used to repair the balance sheet, but they say it's being done to "enhance shareholder value mainly through growth". What does that mean? It suggests to me the building up of a kitty to fund future acquisitions. I hope not.
Cheer me up. What am I missing?
Results look ok, some sensible measures in there, like pausing the dividend and discontinuing low margin products. They have a US tax rebate due this year of $2.7m USD.
Now they need to make further progress this year and get back to strength.
Completely unacceptable that the results were not out before the markrets opened.
Results due out today, but no sign yet.
Investor presentation at 3:00
If RENX was to go into administration - it would be a pre-pack deal and my money would be on Sinai and Harwood taking it private. They have sunk a lot of cash into the business and would not just walk away and let someone buy all their investment for a fraction of what they would value it. They both pumped further cash in today. So if there is a purchaser - they need to pay what Sinai and Harwood value the business imo. I took up some VRCI retail placing at 9p; and bought some more at 11p; hold a decent slug of EFK; and still hold some NIOX although have been selling at 60p+. Don't have any trellus. Not unsurprisingly I would like the bio tech sector to come back onto the radar for II's......SB
Just waited for confirmation on small cap report on renx from Paul Scott. He makes a very good point about the cash burn and possible further raise . On the takeover he asks why would anyone buy Renx when in all liklihood they can buy it out of administration? I saw someone arguing not to wait to see if it drops below placing price and why you should buy at todays price. I cant see that argument stacks up at all. Be interesting to see what Harwood does. So that leaves me with the choice of Vrci or more EKF… or more of the sllightly better Harwood case Niox! think I have overdone that already
Yes interesting to see the recent weakness, though it's on very light volumes, so frankly any seller or buyer (above say 200k shares) is going to move the shares close to 10% without any effort, this is AIM after all!
I'm looking forward to the update next week and expect to hear that the company is comfortably back to generating healthy monthly free-cash, and that the Fermentation/Enzyme business is starting to contribute progressively and then materially heading into 2025...
I see EKF being in the ludicrously cheap category and could therefore be bid for (at some point), like a growing amount of cash-generative AIM stocks. Think Wincanton, Hotel Chocolat, Mattioli Woods...
In the meantime, EKF has an excellent PoC business and they're likely to create a similarly strong market position in Enzymes, suggesting we're now in for a decent period of FCF growth, leading to higher dividends, share buybacks and a likely eventual take-out.
What's not to like here?
Just been relistening to Chris Mills discussing all three companies with Paul Hill recently. Ekf looks the strongest currently, with Mills on the board and he recently bought 100k shares@30p. He also flagged up that Rnex was running out of cash and needed a dramatic cash injection which unfolded today conveniently after the alleged approach which drove the sp conveniently up to 60p , nice timing . Tempted at this price, but maybe not that desperate to honest in this market! As chris says life science is not the easiest thing to raise cash for at the moment. Vrci on the other hand managed that quite successfully and I did mean to buy into that, but bought more ekf at 27p recently. Results expected to be conservatively in line with growth in the diagnostics side but nothing priced in for the enzyme business which is probably a year away from orders still.
Morning oogle - I think there may be some contagion here with another of Harwoods stable - RENX - fund raising this morning at a steep discount. VRCI down as well. I don't think EKF needs to raise money.........but some clarity in next weeks results would be good. Its burned through its £20m cash pile at an alarming rate and there is no confirmation on any commercial fermentation deals of scale to date post investment. SB
Another fund chucking their clients money down the pan. Seem to be plenty of buyers mopping up.
Everyone cashing in on their £10 profit again. Going to get badly caught out eventually
I'm not clear on the cash position Dartron. The comments in the H1 2023 presentation to 30 June 2023 relating to cash balance (£9.2m which excludes Russian cash of £2.4m) do not align with those in the 26 July 2023 trading update (" Group cash, net of bank borrowings, was £6.73m as at 30 June 2023. This figure excludes cash held in Russia which totalled £2.39m at the period end"). Which gets you back to the original c.£9.2m. The presentation then quotes cash at Sept 2023 as £9.1m (ie no cash generated in prior three month period); then remove £5.45m for the Dec dividend and add some net profit for the 6 months to Dec 31.......gets you back to c.£4.4m as at 31 Dec which for me still includes some Russia monies as noted in the 26 July update accepting some are no longer 'locked up'. And if the year end target was £2.4m - what on earth was still burning cash for that assumption to be made? Unless they are messing around with definition of cash v cash/equivalents? I expect a company which has messed up so much over the last 18/24 months to be much more diligent on how it reports fundamental information. Smacks of lazy and lack of attention to detail. 100% agree vig - what a waste of an RNS. 34 target is just so bizarre from our own broker its nonsense. SB
Just seen Singer Capital note and the 12 month target price of 34p. Hardly inspiring.
I kind of agree with you that there shouldn't be a liquidity issue, but like SB I think the update was totally lacking in substance.
Anyone who noted the statement from the exec chair last year would have seen this uninspiring, ultra cautious approach coming.
It's almost like he was dragged back to the coal face against his will and is now has only one thing on his mind, that is to save his reputation.
He has forgotten about shareholder value in the short term.
SB, previously, the cash balance quoted did not include Russia. And from what he said in the last presentation, the Russian balance would be run down any way. I linked to the part where he said this, if your interested.
https://youtu.be/a50MXSRBi44?t=1262
Listening on a little further, if the above is correct then current cash has exceeded expectations of 2.4M EOY. My remaining investment in my pension looking for growth is happy with the situation. I would still like a top up under 30p if it comes.