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Possibly just me but didn’t think it would take four months to pull together a job spec and advert for a CEO. Not exactly prioritising the role…..SB
Welcome back dartron….almost. Good day trade - when opportunity knocks. SB
Ahh, couldn't resist the whole penny of profit in a few hours (4%). Out again.
Back in EKF. Not as many as I used to have, prior to the price crash, but enough for some upside. Might be about to break out?
Gresham have combined their two fund holdings and also added some more which takes them to 10% + holding. I did a quick review of current ownership - and c.70% of ekf is now in the ownership of funds (Harwood - 29%; Liontrust 11%; Gresham 10%: Canaccord - 5%; Schroder - 4%; Stock Invest - 4%; others - c.7%). Looks like there is an optimistic view on the future from this low point. Lets hope they are right. SB
Morning all, looks like healthy volumes now going through on the buy-side and it would seem the big seller has been cleaned out, well let’s see what gets disclosed on RNS.
I'm taking this as an encouraging sign that the lows could well be behind us and the shares could now re-calibrate back to a sensible discount to fair value and then hopefully onto a premium as the Fermentation revenues start to kick in later in the year and in 2024.
I have added a few more at 27p this morning.
DYOR and GLA!
Ah, Liontrust increased to 11.02% from 10.014% on Friday, I see.
Happy to be up 11.6% on the price today :)
Hi SB, the data suggests Marlborough Fund Managers have been the ongoing seller and who may well have completed their selling on Friday, given the volumes that went through. They reportedly cut their position from 32m to 16m in the last update in February, and so I think it's reasonable to assume it's them. Let's keep a keen eye on the RNS updates.
Thanks for sharing Datron - quite a mix you have going on there - and I note you are quite hands on with your trading which shows you are well briefed in your investments. Years ago I looked at CNIC when it was 40p.....and instead opted for its peer MMX. On reflection I should have hedged and gone 50/50.....hindsight eh! In the end I picked up CNIC...but over £1 average - lets hope the market start to place some value there again soon. As for EKF - it could drift a bit lower - but I think we are close to a 'bottom' based on what we know - and assuming fermentation is all successfully commissioned and customers complete orders - this has decent prospect of a material recovery imo. SB
Hi SB, if you are interested here is my pf and its performance (-4.4% YTD).
https://twitter.com/DartronTrading/status/1659651499109105664?s=20
I contribute a good chunk of money to my pension each month, so I feel like I am partly in cash, although the pension is fully invested. Also ironically, as a business owner, I cant get anywhere near 5% interest commercially, so benefiting from the tax advantages of a SIPP I am happy to keep pumping money in. Not everybody has a risk free return of 5%.
As for Harwood, he recently upped his stake in TON to 20%, which had very poor results today. But you have to ask yourself, what are the timescales, im sure TON will come good, just like EKF. Hope to grab a few EKF, cant see it going much lower now.
Hi Hawker . Out of interest do you know who the seller is? I accept there may be some impact on the price if there is someone offloading - and look at the 4m share trades notified after hours tonight which look like sells. Against that - Liontrust and Gresham have both been adding in decent numbers so they appear to be picking up the seller interest - and you would think this would balance up. I don't think we will see any positive momentum until H1 results in autumn - although we should get a trading update before which could help. For me it doesn't help that our house broker doesn't seem to have any appetite for price support - but I go back to the management team on that count. NIOX has enjoyed a good run of late - so there is hope here. SB
...I think it's worth throwing into the mix that there's been a single significant institutional seller that has driven the share price down and this is the main source of the disconnect between the recovery/growth story ahead, and the now heavily discounted valuation. I for one, expect this to re-calibrate once the selling is done, with the shares likely recovering the 30-40p level fairly quickly. As for Harwood, etc, one only needs to look at stocks like NIOX to see how the EKF story should be playing out, and I suspect this is the playbook going forwards... if not, PE will be sharpening their pencils as I'm sure they've already been doing! bonkers discounts come along from time to time, this one is just more extreme than most. The share price is the same today (in pence) as it was in 2014, however, the revenues are 1.8x higher and the EBITDA is 2.5x higher, with the wind now steadily filling their sails. It's surely now just a matter of time before this corrects, not least as the forecasts are likely to rise from Autumn onwards, once the Fermentation revenues start flowing. With this all in mind, I have added more at 25p this week. DYOR, GLA.
Dartron - in 20 years of investing I have never seen an investors market like the current one - major events (russia, pandemic, sub-prime type stuff) aside. I have looked at the holdings of recent posters here - and we share investments in companies such as Centralnic, Verici, Sigmaroc, Renaltyix - and none of these are exactly stellar performers - although some fall into the category of having milestone events due which may trigger revaluation. I also have some shares in UK infrastructure funds - some of which which are delivering the 7% yield you mention - but all with substantial price discounts to their NAV as a result of BoE interest rate monetary policy providing near 5% zero risk interest rate availability. So great if you chase yields, poor on capital return until interest rate rises cease and start to reduce - but looks like that's 2024. The smart position appears to be in cash......but where's the fun in that :-D. EKF, with its core business likely to do £50m in 2023, plus whatever life science can throw up (£5m?), with £11m cash and a divi close on 5%, EBITDA north of £10/12m (?) - looks like it should recover and does appear to have significant II support - but its very very painful to be a holder for now. SB
Yes on this occasion, it was a good call to sell. With the market so tough, I couldn't see it rising. Generally the small cap market is brutal at the moment, you either need to buy at rock bottom, or buy an already winner. I don't think EKF was either at the time. You have to also consider the opportunity cost of waiting out such a stock, when you could be earning 7% or more yield's. I still have a lot of recovery shares, but those have nearer term expected catalysts, and less baggage.
Always good to read your sanity SB, excuse the indelicate language.
while you are mentioning investor sentiment to baines vig you might want to remind him of the substantial bonus he and the cfo enjoyed in 2022 from the value creation (each was paid £2.5m bonus - more than the entire shareholder divined allocation) 'theoretical exit' nonsense the remuneration committee made up to line their pockets. all that 'value creation' and more is now gone. the fact our previous ceo who was responsible for part of the current ****shw as unhooked delicately put it remains in the business having been at the helm as the business bought and sold adl damaging the overall valuation to the tune of £200m+ is as mind boggling as the bonus he was being lined up for - little chance of that being achieved now. the reality is don't have a ceo, we do have a disinterested chairman, a cfo who must be wondering what he has got himself into (although looking at the historic bonuses i can imagine what sold him on the idea) and three non-execs who don't appear to be challenging decision making. sb
Just catching up with my investment here. What a sh*t-show! When I bought in I'd been sold the idea that Harwood were smart investors & managers. They've turned out to be very poor strategic thinkers and capital allocators ! I've totally lost trust in them and I'm kind of expecting them to come up with some sort of financial engineering stunt (Harwood's forte) that will screws us private investors (for whom they have no regard). And will they de-list the biotech spin-offs for a song? Probably. No faith, no trust.
Silver, I agree. The last year and a half has been a case study in BoD ineptitude.
It all started with buy back of share to buy what we know now was a dud. The pricing of the buy back was well below market value sending a message to the market that EKF did not value their stock as high as the market did and the downward correction happened as most predicted.
From then on we saw a number of gaffs in execution, that see the share price where it is today.
Today's chairman's statement lacked any inspiration.
If he can't summon up any enthusiasm, the little wonder the markets marked it down again.
I was on the call when Baines was asked about taking the CEO job. His CFO jumped in and said we would all like to know that.
Baines' response was pretty much no fekin way.
He might at least have said something like, I am staying in control until we steer through this phase of development and until a suitable CEO can be found.
Just writing this now, makes me think Baines needs to get a feel for investor sentiment. I will write to him.
Aside from congratulating Dartron on his prediction last month, Like Hawker I wonder at what point the company should consider a strategic review to see if there are any suitors who could do a better job with the companies business interests ? Barnes has made it clear he doesn't want to be in the hot seat and without a focused CEO what can we expect here. We have now lost almost 75% of our peak valuation - which in itself is dreadful alongside the acquisition failures. The uncertainty over further unquantified impairment costs is clearly unsettling - why this was not taken into 2022 I have no idea - with the net result on the shareholder proposition plain for all to see. What a mess - and yet all avoidable with the correct leadership, governance and decision making. Razor, razor. lol. SB
I think the point is that EKF is now in deep value territory, trading at less than half the peer group multiple, it has no debt, a dividend yield of 4%+ and it's throwing off free cash every month. Private equity will be sniffing around if the market isn't prepared to give EKF the multiple it deserves. Yes they've had a reset post covid, but the core business plus the free call option on the Fermentation/Enzyme business makes the whole company an attractive asset, with or without a trading update. Def worth having in the portfolio to my mind and Gresham House and Liontrust have been adding into the recent weakness.
Have to say, when I read the results on the day, my initial reaction was that it might drop further. I dont think it will just recover to 40 without further news and trading updates. I agree the story is promising but the recovery will a lot slower IMO.
I actually sold mine at 30p a few days ago, I dont see it going anywhere soon. Much better things that can be bought in the mean time.
Good to see volumes holding above 500k and the share price recovering back above its 50dMA, next hurdle(s) the 100 and 200 with both currently around 38p, and then we could soon be back in the 40-50p range, closing the gap from Feb 3rd. I also wonder if some of the recent selling pressure from retail could be linked to tax year-end tidying up, in which case we may see the shares pick up something of a tail-wind in the coming weeks. Shares are trading on an EV/EBITDA of 8x FY23 and 7x FY24, both are below half the peer average. Added more at 31p this morning. DYOR and GLA.
Well, ~10% up is a good start
Thank you for the summary of the call v53 and good to see the buying interest following through today!
As usual the call was positive and upbeat. It always is.
They see no surprises this year in terms of material exceptional costs.
They are confident that the new enzyme capacity will be on stream by August and generating some commercial income in 2023. I believe the significant increase in revenue from this will be next year, with forecast of 50% capacity being sold at roughly 10M revenue.
They seem to be back to their core , so now we wait and see whether they can deliver.