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Rentokil swooping in with a buy out sounds a good outcome for all; SD can then move on to his next project
Today's Investor Meet presentation was extremely impressive as ever imo.
Interesting commentary on the potential going forward. The Group (including Fidelis) are on an anuual run-rate now of £10m-£11m turnover, and this could double in the next 3 years - but it could also be three or four times bigger with M&A, which will always be earnings-accretive.
Other notes:
- REAT have a large and defensible moat as they are the only company of size which (a) provide a one-stop shop of such specialised services and (b) operate throughout the UK with such fast response times
- there are around 150 customers, of which 25 are large, key accounts. REAT are actively going after these to consolidate their supply chains, in the manner of the recent £2m per annum contract win of "one of the world's leading facility management companies"
- interesting to hear SD note that he much admires Marlowe (MRL), and Mark Braund also referenced them later
- the likes of ISS and Rentokil do NOT do this work, so subcontract to REAT if they have to do it
- all the institutional shareholders are supportive, and in particular the emphasis is on capital growth with no need for dividends. I heartily approve!
- at some point REAT themselves may become a target. This was noted by MB as a possible exit route for shareholders, and again this seems perfectly likely to me.
Incidentally, the poster earlier who claimed that REAT are somehow "covid dependent" evidently missed just what a small proportion of income arose from this source in the prior reporting period! And indeed has entirely missed where REAT's income - which is largely recurring - emanates from. Hard to credit.....
Yes and on reflection I decided it was time to move on fully. I am sure the company will still be busy and has the chance to buy other companies with paper but the price is no longer a penny and the times when the phones were ringing off the hook are gone for now I think. So good luck holders
From TU:
"H1 for REACT was very strong, however the start of H2 by contrast has experienced some softness in the reactive business as the country stutters towards the end of lockdown."
As previously mentioned, these are covid dependent.
Going forward, more people will continue working from home or go in a couple of days a week. With vaccines proving effective the need for PPE/cleaning reduces.
Steady-ish buying since early sell off. Hopefully get back to around -6% for the day; followed by steady climb to c 3.5p again
I feel it's worth summarising this morning's RNS:
- "H2 has started well" (this is repeated twice)
- Fidelis has reported record trading since H1 acquisition
- the contract maintenance business has continued to trade well
- reactive business had two softer months but has since seen "high demand returning"
Today's sellers have imo completely overreacted to overall just one month of post H1 soft trading in one division relative to the other two divisions trading very well and the third now back to "high demand"!
Incidentally, those who've researched REAT know that it's not just a "cleaning company", but is a growth company and a specialist provider of skills which cannot be easily replicated, and has a now proven strategy of consolidating its space - for example its recent appointment as the core vendor for specialist cleaning in Britain to one of the world's leading facilities management firms:
"This three-year agreement is aimed at consolidating their supply chain from several hundred suppliers to ultimately just one, REACT."
I agree that these are very good results but just a bit expensive. A cleaning company with no dividend should not be on a PE of 16. I reckon about 12 is high enough.
Holding as a freeroll and wont sell but def would not add.
Just living up to its name...!
Sorry...
Not sure what holders were expecting. Numbers look pretty good to me so have bought a few more at 2.85
New Allenby note is out. They've left forecasts unchanged at 0.14p EPS this year, but note that including Fidelis for a full year, REAT are now on a run-rate of 0.17p EPS.
When you strip out the £0.8m net cash, REAT at 2.9p are therefore on a current year ex-cash P/E of only around 16.
There are no forecasts for next year as yet, but presumably the P/E would fall further to say 12 or 13 - and next year starts in just 3 months' time.
We know that H2 has "started well" despite the small reactive hiatus, so with the recent contract wins, plus Fidelis' record trading, we may yet see a further upgrade - and there's always the chance of another acquisition.
Looks like there's been a specific seller/profit-taker around this morning, but REAT looks very good value to me on the above figures:
Http://www.allenbycapital.com/research_1242_3324314454.pdf
"There are no changes to our 2021 forecasts at this stage although we would repeat our earlier observation that on a full year run rate basis, just doubling the Fidelis contribution results in indicative Group revenues of c.£10m, underlying EBITDA of c.£1.15m and EPS of c.0.17p. A strong start to H2 has been made with record trading achieved by Fidelis in April and May and consequently, we believe REACT remains comfortably on track to achieve our full year forecasts."
Excellent H1 results and outlook. Revenues are up 20%, and EBITDA is up hugely to £369k from £85k (well ahead of the projected £350k in the trading update).
H2 has "started well", and Fidelis will be added for the entirety of H2 and is trading very strongly post-acquisition. Plus there's still £0.7m cash in the bank after paying for Fidelis.
There was a small hiatus in reactive work in April/May, but this has been boosted recently with "high demand returning", and the overall outlook is very encouraging:
"H2 has started well; Fidelis, acquired at the end of March 2021, reported record trading months in April and May to continue their solid track record of growth. This, together with important post-period customer contract wins for REACT, announced on 20 April 2021, 26 April 2021 and 18 May 2021, support a strong positive outlook for the medium to long term."
Tomorrow morning then.....
Up 4% on 1.4m shares traded - hopefully that indicates a scarcity of shares.
RNS confirmation that the interims will be next Tuesday, with an accompanying Investor Meet presentation next Friday:
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Notice-of-Interim-Results-Invest/85433068
A reminder of the strong H1 trading update, before the results due in the next few days:
"REACT has continued to make strong progress in the period, achieving c.19% organic growth in revenue to approximately £2.5m (six months ended 31 March 2020: £2.1m) and c.43% organic growth in gross profit to approximately £1.0m (six months ended 31 March 2020: £0.7m). All numbers quoted in this announcement are unaudited.
Growth was the result of strong underlying performance in the core business alongside some demand for COVID-19 decontaminations. Healthcare, rail and facilities management sectors performed well, augmented by incremental business in other areas such as education and residential care homes.
REACT carried out a large proportion of high-margin work in the period helping to drive the gross profit margin to c.40%, approximately 700-basis points higher than the same period last year (six months ended 31 March 2020: 33.2%).
The Board expects EBITDA (before exceptional items relating to the acquisition of Fidelis and some restructuring) to be in excess of £350k, materially higher than the same period last year (six months ended 31 March 2020: £85k).
These numbers do not include any contribution from the recent acquisition of Fidelis Contract Services Limited ("Fidelis"), details of which were announced on 29 March 2021.
The Group's financial position is robust and underlying cash generation remained strong during the period. Net cash at 31 March 2021 was £771k (31 March 2020: £306k). This figure is after payment of the initial consideration for the Fidelis acquisition (£1.5m in cash) and a proportion of the associated transaction costs, the remainder of which (approximately £170k including VAT) is payable in the second half of the Company's financial year."
The spread is so tight now the MM's have real confidence in the stock and another 300K buy this morning
From today's Times:
Https://www.thetimes.co.uk/article/small-businesses-face-bill-of-23bn-for-covid-safety-v9hp9m9rb
"Small businesses face bill of £23bn for Covid safety
Small businesses will spend £23 billion on making premises Covid safe, according to research by Hitachi Capital, the financial services company.
The financial hit of the pandemic is expected to linger because of the extra money that firms will need to spend on infection-control measures, a survey of 1,500 small business owners found.
Office risk assessments, signs, sanitising products, professional cleaning and air filtering systems are forecast to cost small business about £4,850 each on average this year, the equivalent of just under £23 billion in total.
etc"
this share is a good example of that tired old adage about money going to patient people. I've been tempted to sell a few times, but really where would be better for your money be if you play with securities (that's a generalisation but you get my sentiment)
Nice :o))
Buying coming in at 3.7p now. I'd assume the 700,000 or so shares at 3.6p and 3.65p in the last half hour are all buys.
No not really just seemed to jump up,hopefully something good in the pipeline!
Price up 6.6 percent wonder why. any ideas
Lots of good price movement happening at the moment, cannot buy.
at 3.48p just reported.
need to get some serious volume on here, or we aren't going anywhere.... don't get it, it's a cleaning company making a profit, acquiring other companies in the mists of a global pandemic. still under the radar, i guess
A +8% day..? Yes please