Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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Cheers merlin_andrew - here's the feature on REAT:
""My first pick was cleaning services firm React Group at 1.4p. Small caps can be volatile, with the stock trading above 2p only to close as low as at 1.10p recently. The company raised its market capitalisation in cash for the acquisition of LaddersFree – a capital-light business that the board believes can be integrated into React’s offering then scaled up. Shareholders may be smarting from this, but the board believes this is an incredible opportunity given LaddersFree’s service partner network and its impressive gross margins of more than 50% in the last two trading years.
Chair Mark Braund believes this can even grow – LaddersFree recently won a competitive tender which apparently came in “significantly below” the price of the next competitor. The deal is materially earnings-enhancing and none of the board are taking large six-figure salaries from the company (unlike many Aim shares), instead aiming to be remunerated through their options. Put simply, there is no reason to do this deal unless the board believes in the long term. So while there may be short-term pain, the investment thesis hasn’t changed."
Bought a small holding and i know this is very small and not for widows or orphans. I done my research and they are revenue every year and winning lots of contracts recently and the shareholder register contains a lot of well known fund managers. You pay your money and take a risk. Good Luck everyone and happy investing
REAT is tipped in this week’s MoneyWeek magazine.
It is an impressive list of II's. They, like us, must be waiting for the next 'new order' RNS, which is the only thing that seems to increase the sp.
Catching up on research, the latest major shareholders list is pretty impressive now for such a micro cap:
Shareholder Number Ordinary shares %
Octopus Investments Limited 163,344,667 15.56
Canaccord Genuity Wealth Management 103,333,333 9.84
Helium Rising Stars 97,329,362 9.27
CRUX Asset Management 66,700,000 6.35
Premier Miton Group plc 44,539,177 4.24
Mr. Justin Korinek 41,666,666.5 3.97
Mr. Jason Korinek 41,666,666.5 3.97
Harwood Capital LLP 39,926,396 3.80
Per Singer Capital's new note, they have initiated coverage as a Buy with a 2.5p target price.
They forecast 0.14p adjusted fully diluted EPS to this September, rising to 0.16p EPS next year.
Basic EPS is forecast at 0.16p EPS, rising to 0.17p EPS.
They summarise:
"Shares attractively valued
React is trading on a Sep. ’23 P/E rating of only 6.5x or 4.2x EV/EBITDA, which we believe substantially undervalues the Group. We target a 15x P/E multiple, which implies a target price of 2.5p. Given the M&A strategy and opportunities to grow LaddersFree ahead of our forecasts, we see scope for the price to exceed this level over time."
And:
"React is a leading specialist commercial cleaning, hygiene, and decontamination company. We believe it is well placed to build scale in terms of both its earnings and market cap. The business has a highly attractive proposition – largely non-discretionary, specialist services, a high proportion of recurring revenues (FY23E: 80%), attractive and improving margin profile (FY23E operating margin of 12%), and a capital light model (low working capital and capex requirements). It has a clear strategy to deliver double digit organic growth, alongside selective, earnings enhancing M&A.
The most recent acquisition of LaddersFree is transformational and offers potential for significant earnings growth beyond its current, consistent run rate. Against this backdrop, we view a Dec. ’23 P/E rating of 6.5x as very undemanding. We believe the share price is well placed to outperform, driven by both strong earnings growth and re-rating potential as the business scales. We initiate with a Buy recommendation and 2.5p target price."
Mark Braund presented at Mello and came across very well imo.
The LaddersFree acquisition will be earnings enhancing on its own terms, but REAT can add significant value and accelerate LaddersFree's organic growth:
- by increasing sales and marketing, which to date has been minimal
- the model is scalable "by introducing services to other companies and through new and existing relationships with other FM service providers"
- diversify current service offering, and up-sell and cross-sell the company's other services
- "up-sell national services to existing customers who use the company's services locally or regionally"
In ISA...... 1.095p took live offer at target ,around 8.30am , looked at days down price after deal ,same order no lift yesterday
0.7p? as placees dedisk
for oversold bounce
With over a billion shares soon to be in issue, to realise a MCap of £100M, the SP would need to be c10p. and represents c 800+ % increase from todays SP. Using a 15;1 P/E ratio, this would require EBITDA of c £7M. Compare this with the BOD's estimate of £1.3M EBITDA for this current FY. With the acquisitions made, and further plans for organic and inorganic growth, I can easily see 10p SP within 5 years. As always Do Your Own Research.
The crucial part of the RNS as regards current trading is this extract which should instil much confidence:
"Following completion of the Acquisition and the mobilisation of a number of new contracts won during H1, the Board expects to deliver adjusted EBITDA for the financial year ending 30 September 2022 of approximately GBP1.3 million."
Looks very good as an earnings-enhancing commercial operation which can be scaled up, which has good synergies with the existing operations, and which should enable lots of cross-selling in particular.
Great to see REAT utilising almost the entirety of the monies raised on its Target A within weeks of having raised those monies, delivering on its promises as opposed to other companies who simply sit on the monies raised and are unable to deliver.
Good value too - paying £7.1m for £1.4m historic PBT and high recurring revenues plus deferred consideration.
I note that the H1 trading numbers are unimpressive to say the least, due to the (presumably Covid-related) lower level of reactive work and investment in mobilising new contracts. However, the outlook for this H2 is very confident given all the new contract wins already RNSd together with those listed today. Perhaps those H1 numbers explain the 1.2p placing price and are therefore already priced in:
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Acquisition-of-LaddersFree-Ltd/88084005
Apols Rivaldo. I was assuming, incorrectly, that since the 'new' shares will not be listed 'til June, the %ge held by those parties, was on the present number of shares in issue.
Well, the shareholder list just gets better and better.
Christopher Mills via Harwood Capital and Oryx Growth has taken 4.14% of REAT in the placing, or 39.93m shares:
Https://www.investegate.co.uk/react-group-plc--reat-/rns/holding-s--in-company/202205101051229400K/
Octopus and Helium both greatly INCREASED their shareholdings in REAT, as I first posted.
It was only their percentage holdings in REAT that fell overall because of the quantum of the placing shares.
The RNS's for both Octopus and Helium confirmed the former had reduced it's holding by about0.5%, and Helium had reduced it's holding by about 5%. There were offset by BNL increasing it's holding and Cannacord, I think a new stakeholder, was at about 10% holding.
The downward drift is very disappointing, and is now at the 'offer' level recently announced for II's. Hopefully the bottom has been reached, and we need new orders to regain momentum.
Good to see the late RNS's on Friday afternoon confirming that via the placing
(1) Octopus have increased their stake by almost £1m to 163.3m shares, or 16.9%
(2) Helium have similarly bought another £0.2m and now have 97.3m shares, or 10%
What is that trade about?
I would like the directors to commit to this placing although wouldn't be surprised if its just a For Sale Board to get the company noticed.
as explained a few months back lol
now with placing shares to churn thru/derisk
tp 0.7p for oversold bounce
ashden. Probably, almost certainly - no. The fundamentals are still the same. The dilution is massively disappointing, and I am hoping for news on a T/O.
this is probably gonna drop to a penny once the other shares are in issue in May? thoughts?
Given the relative weighting pre and post placing with the post placing 964,339,358 shares in issue I calculate the share price should - in theory! - settle at around 1.5p.
If a "meh" H1 trading update is in the works, then perhaps it's now priced in anyway. After the initial sellers have exited the shares might bounce back to that 1.5p level or so.
I'd like to see the directors investing substantially in the placing.
Management have a lot of credibility to regain now. I'm expecting the H1 trading update to be reasonably good if not great given the comment about H2 in particular benefiting from all the recent contract wins.
That wealth of contract wins - approaching £10m from memory - and high recurring income/forward visibility give every reason for confidence.
32% discount .
I sliced 27/4/21 for 3p.
Got them all back two tranches 29th and 30th June 2021 at 2.9p & 2.7p ( only about 7% in that )
The high on my Birthday 3.68p
I see I had sell orders which failed for 3.7p ... 10th to 15th June 2021( hence the thinking above )
Poor show from the company. Why no participation for us! Usual rules apply no doubt