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A few sells yesterday, makes you wonder if there’s something brewing? Not much communication !
And today you get your answer… guess somebody knew this was coming… leaky!
It obviously doesn't take much to be "CEO of The Year" in the textile world!
It would have been better to suspend trading straight away rather than give notice.
LOL Yorker!
Delaying the suspension date does seem a bit strange. Could it mean the audit issue is purely technical in nature rather than a signal that a black hole has been found in the accounts? Or am I reading too much into this. Anyway, I took the gamble of topping up at 18p. Let's see what the next few weeks has in store.
Anyone considering a HEIQ buy after the return from suspension may be interested in this research:-
"What to do when one of your stocks warns on profit
We discuss how share prices react in the aftermath of a profit alert
06 June 2019|Feature
... RECOVERY FROM A WARNING DEPENDS ON CIRCUMSTANCES
A study by UK finance professors George Bulkley, Richard Harris and Renata Herrerias looked at 455 profit warnings issued between 1997 and 1999 and tracked the stocks until 2001. Unlike some of the other studies that we discussed, this study looked further ahead. It tracked future earnings announcements that were released to the market.
It found that between 12 and 24 months after a profit warning, the average cumulated excess daily returns of these stocks was a positive 23% relative to the market.
In other words, the stocks showed strong signs of recovery between one and two years after the warning. This can be explained by analysts being slow to change their opinions, even in the face of new information. ..."
https://www.sharesmagazine.co.uk/article/what-to-do-when-one-of-your-stocks-warns-on-profit
The period of a year gives sufficient time for the s.p. to deflate, and for business recovery to take place and be sufficiently reported.
And it's also partly psychological: the one year period gives sufficient time for 'emotional healing'; and there's an element of 'self-fulfilling prophecy' re standard expectations of the common time period before recovery.
A good recent example of this 'one year rule' working well is NWT (Newmark Security).
After its 15th. October 2021 trading update the company's s.p. nearly halved over the following twelve months.
But since its 27th. October 2022 trading update, its s.p. has more than doubled (from 25.5p to 56.5p), on improved trading.
Newmark Security (NWT) 56.5p Market cap. £5.3M.
https://www.lse.co.uk/SharePrice.asp?shareprice=ARA&share=Aura-Renew-Acq
I would agree with the premise that this should bounce post the suspension
I have had a couple occasions where auditors have changed and new enterprise accounting software is being implemented. Both cause drlays to the normal course of business
The recent rns was pretty clear it was a process / procedures issue. Had Deloitte identified a " black hole " in the numbers this would have had to be annouced . Even if only at a potential risk level
My expectation is accountscwill get issued in the next couple of weeks alongside info about how the supply chain is working through the excess stocks in thevmarketplace
It was that that caused the drop from 50 p ish . Also expect expect an update on the cost control program. When that lot lands logic says the stock will rerate upwards
I originally got interested in Heiq because of its IP and 10 year plua track record of sales and profit . The fundamentals dont change once the current problems are worked through. Aa a result i am minded to think this is a buying opportunity at an depressed price . Could of course be wrong but nothing ventured nothing gained
ATB LTH
I bought Heiq for the same reason as you, albeit, in retrospect paying too much. But I don't believe 5X too much. I am up for buying some more but suspect there is not great rush.
A similar pattern emerged at Equals, although fintech rather that materials technology. I that case the reports were slightly disappointing but the underlying growth of the quality corporate business was visible. Nevertheless, the market knocked it from 116p to 25p, since when it has recovered in a fairly steady line from Jan 21 to now at 92p. Plenty of time to see the continued progress and market sentiment catching on.
I think Heiq has great potential and, because of the current lack of support, there should be time to see clear operational improvement before the market price increases significantly. In other words, one for the watchlist but probably no rush today.