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Strix’s announcement of their conditional purchase of Billi is another example of the management’s ability to identify acquisitions that are both good value and make excellent strategic sense. The group has been eyeing the multifunctional tap market for some time. Not only does the merger widen the group’s product portfolio, but it additionally brings in new markets – not least into commercial offices. We also expect the strong cash flow from Billi to result in a rapid deleveraging of the Group. We note the Directors’ subscription in the placing, amounting to £0.37m.
Significantly, the merger presents an opportunity for targets in the Group’s five-year plan to be met a year early, but for now we conservatively hold our financial estimates and Fair Value per share, with the latter now at a significant premium to the current price.
Link to full note: https://www.equitydevelopment.co.uk/research/an-opportunistic-and-strategic-acquisition
It looks as if the payment for Billi that was made in 2018 was $56.4m v the $43m being paid now. If Billi has been growing over the last 5 years, as stated, it might be a good deal. The link is to Watelogic Annual Report to 31 Dec 2018.
https://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/x4ORBDRFGQEzML0snEhvQDx95yJqCGgoGSSu9blbk_c/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=ASIAWRGBDBV3P4VQMIMZ%2F20221005%2Feu-west-2%2Fs3%2Faws4_request&X-Amz-Date=20221005T095913Z&X-Amz-Expires=60&X-Amz-Security-Token=IQoJb3JpZ2luX2VjEBgaCWV1LXdlc3QtMiJHMEUCICS6OIWV1kS1tXjFY%2BZnaOzuAIdAgS9TAfgyRQxAE8uyAiEA3Cc%2BTWCpJUxe8f94S8LC7PkcEYnJw2XZLC1pcLdFjLQq1gQI0f%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FARAEGgw0NDkyMjkwMzI4MjIiDHtwdo9M%2B0hyN1wGwiqqBOXQ0X2wRbsbyyTrGTR09pr%2FYbY8MuSzPJloLNujbp32QkfOMjns1ixYjJoAbjvkkgzcqaeGw7C%2F%2FfD3AsmzIkZmaOsQkQ8oN8x7ZZkG9nC2qiszHG3jxG9ZxJcUTuFrYk5I0XWuvfyETU2XdbFBbtojZsbUnOQ1yibkhD2mvihTTyGmD%2BqFuxzZn21Dbz69lU0A256qrtgsQMJTJ3AmGUHY3H81ULp9i4OtB2NQs%2BytxdXbRCBw%2FHeEwLzcGLc%2BnBXT%2F8I9hqSsK1Q6LpwODjq%2BOLq3Tnezpj%2BGiTb9Lyfhk%2BGA51gcnwXeA%2BXW2auHZ2SWPAweQ2iZyl0a%2BlBU%2BP3qb6uMiaGGX5jUkucej1Zs7Zlq1yDh8pWBrDjSRoerXTZQkKBCDqReUGUdxmtbZ0Npw9DEpsdB%2BzDn72OdBfhjYPJCngWmsTQ2oAx4HZ%2FSjGnpotNuzWM5v6YqXfLM0Zq8ZneK7%2BLZxMsCLxgmLCTZ62AxYhdEcimQL47BwFxuDCtugTD325pkunhUAp%2FVWaIIuxy%2BMJGf4xSUNMpc9L9tbTHO6KfgqX5VHHwjvsz73GpSGuuPNuniibMsdleFOnfhLO8ZFtEJor2OYoacwBb6fJMEMo8BgLLBR6UeCtWDd9onVQOYQbHi%2BMFDfOVYw0Ue7gHZk4iP2jHDkZmQfZioAb0BFw7CLwqEUYsR8mZa45bj2Q09UuuWVSUK5hsmAFdAtl9kM2r3fRgNMJTs9JkGOqkBM0QdGoR1IMqDVIifHuJMazPxsOdq1PBuZWbpGWF%2Foeis0ud34Z%2BRd%2BRSdwi54idQYEMVfC8He2Mv%2BX0MSR7PI65am0X8VFsypxySzl4RIUmaCPsNtl01rQmQVXBO0ZCppQe%2Fzj3W5aigRzjXasR1Gs4ebeWoz9iF%2BxviOd%2F1b3P5CchoEnXjdA2V7XMwLbNEburJL50DF5L82dX7tNJevZsGXnR%2FhCQS2A%3D%3D&X-Amz-SignedHeaders=host&response-content-disposition=inline%3Bfilename%3D%22companies_house_document.pdf%22&X-Amz-Signature=776c2cab309e21019fcbd4eeae5cc2a8209046a0c6172aaf9cec7fe3cd5115e4
Opportunity for the directors to buy in cheaply by participating in the fundraise - which they did. I suggest we follow suit.
It looks as if Billi was acquired by Waterlogic in 2018
https://corporate.waterlogic.com/newsroom/waterlogic-to-acquire-billi/
https://www.waterlogicaustralia.com.au/
I have not, as yet, found any information about what was paid back then and the current value.
Conducting a placing of shares to part-fund an acquisition when the price of Strix shares is so very low, doesn't make sense to me... unless the target company was bought very very cheaply indeed, which I don't know. All I do know is raising money at 115p per share when a year ago the price was 380p looks badly timed. At least it's a small dilution - less than 5%.
Placing RNS 7am today, 10M bookbuild @ 115p
Disappointingly, Daily Telegraph Questor column has Strix as a sell today.
Every day more shares bought than sold and SP falls, looks like "short sellers" are at their work.
Hi Legs, same here, local and confident - I added too!!
Not letting this go .....directors nospace talk no space dot com
That was *************interviews dot com all starred out.
Date today 14.35.
https://www.***************************/strix-group-very-well-positioned-to-maximise-opportunities-lonketl/4121084398
Being a local I have a lot of faith in Strix and added again heavily at around 112p
Plenty of positives for Strix - good team and I am happy holding here - small top up too. Dr T still keep an eye on progress and patents.
#KETL - signs of recovery emerging in China (new research note) - full link here: https://www.equitydevelopment.co.uk/research/signs-of-recovery-emerging-in-china
In a challenging period for Strix it has successfully grown both its Appliance and Water Categories, while taking measures to mitigate a slowdown in Kettle Controls. Historically, the Group managed a rapid turnaround in its Kettle Control revenues as discretionary spend rebounds. We think this period will be similar, with Chinese demand picking up in Q3 ‘22 and OEM backlogs set firm into Q1 ’23. Whilst there is undoubtedly pressure on disposable income across the world, a combination of numerous product launches across several platforms, price increases, and a rationalisation of the cost base should limit the pressure on profitability. Nonetheless we have reduced adj. EPS estimates by 12% in FY22 and by 6% in FY23.
The stronger H2 bias to trading should result in a recovery of revenues in the remainder of the year, aided by the combination of the price increases, product launches, rationalisation benefits, and the rebound in Chinese demand. The share price currently stands at a lower level than in the depths of the COVID-19 lockdown uncertainty and since 2018. Based on our new estimates we have updated our DCF and several peer group comparison valuation models. The average suggests a fair value of 236p, which stands at a significant premium to the existing share price (+102%).
In IC on line today, Simon Thompson has a "hold" recommendation.
https://www.investorschronicle.co.uk/ideas/2022/09/21/strix-s-profits-boil-dry/?xnpe_tifc=4.HXxD_ZOkYpb.B.xFHjbMpsafeWaeiWhFW5adLcbue3aG8Lbj43nkPlbdicauU.EG8.adJSOFYJhu4shIP.OfPNh.YXxXTT&utm_source=exponea&utm_campaign=Investment%20Daily%20Email%2022%20Sept%202022&utm_medium=email
I managed to avoid this company, in spite of quite tempting SP gains over the last few years. Looking at my notes, dated 01/01/20, I see that I wrote, "negative equity and falling eps" and that probably put me off. It's been on my long watch list ever since because IOM companies are often quite interesting ;-) The other thing I wrote was, "funny place to make thermostats." Looking further back, I see they were quite prosperous before going public and taking on too much debt.
A lesson for us all, perhaps :-)
Every day last week ,more shares were bought than sold and the week total nett figure (total bought minus total sold) was over 2 million bought. Even to-day more buys have been made than sells ,so it would appear that a large number of investors agree with me. that the shares are vastly under valued. This share was 370 at the start of the pandemic and now the results show a drop of 5% in the revenue and the debt has increased to buy other investments ,considering the prevailing conditions I find the results as expected and fail to see any reason for the landslide which is taking place .
I have been right so far. My last post was 140p share price or lower. This was at 200p, 180p etc … Main issue is a global recession & then Strix took on debt to expand it’s operations. This was unfortunate timing but now it has a debt overhang, sales & profits reversing. Then a doubling of sales target predicted by the Strix Board which is likely not achievable given the world economic recession.
A lot of funds hold these, Octopus Investments Limited appear to have 19% of the company .
unhooked - I had already posted I paid 124p at 10am ( limit placed at 9am ).
At 118p it matched the lowest covid low shown March 2020 .
You can buy this for 118p right now - a mere 18% above the company's IPO price of 100p way back in July 2017.
Are things really that bad? Doubt it.
Might be the only one, but I've topped up.... 122p paid, down 4% already lol.
Same again today paid 124p I guess insiders must of known this RNS was coming yesterday when it hit year low .
Wed, 21st Sep 2022 10:50
Strix shares plunge amid drop in interim profit and revenue
(Alliance News) - Strix Group PLC on Wednesday said it maintained its interim dividend, despite suffering a fall in both interim profit and revenue.
Shares were down 15% at 120.20 pence on Wednesday morning in London.
For the six months that ended on June 30, the Isle of Man-based kettle safety controls provider said pretax profit fell 12% to GBP11.6 million from GBP13.2 million a year ago, as revenue declined by 7.3% to GBP50.7 million from GBP54.7 million.
Strix said the decline in revenue was mainly caused by a "drop in sales" in its kettle controls category, impacted by the ongoing conflict in Ukraine.
Administrative expenses widened to GBP6.0 million from GBP5.4 million, and distribution costs rose 15% to GBP4.5 million from GBP3.9 million a year earlier, mainly due to "higher outward carriage and freight costs".
Chief Executive Officer Mark Bartlett said: "Despite the challenging macroeconomic and geopolitical environment, Strix has delivered a robust performance across its three product categories and remains on track to deliver medium-term targets to double the Group's revenues primarily through growth in its water and appliances categories."
Adjusted earnings before interest, tax, depreciation and amortisation decreased by 8.6% to GBP15.9 million from GBP17.4 million.
Strix declared an interim dividend of 2.75 pence per share, unchanged from a year prior.
Looking ahead, Strix said it's on track to deliver medium-term targets to double its revenue.
How do you calculate the 50p or are you just guessing?
Strix shares worth 50 pence. Bad results today. The company unlikely to hit doubling sales, medium term target. The Board Directors need to revisit future sales targets. Until this happens shares will drift lower. When this happens shares will re-rate lower with share price collapses.