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And strong buying in to close
REAT are looking rather good value.
Allenby have retained their prior forecasts of £850k EBITDA, almost £0.8m PBT and 0.14p EPS - though of course a full year's inclusion of the Fidelis acquisition takes the run-rate to 0.17p EPS.
Their forecast now seems rather conservative. With a stated MINIMUM of £350k EBITDA in H1, one might expect - with a little growth in H2, especially given the lockdown easing - a conservative £400k in H2. In addition, Allenby incorporate £295k EBITDA from Fidelis in H2 in their forecast (call it a round £300k).
That makes a total of £1.05m EBITDA, against Allenby's £850k forecast.
On an annualised basis, with a full year of Fidelis contributing £600k EBITDA, that's a run-rate of £1.35m EBITDA against a £12.4m m/cap......
Yup, impressive numbers. This is a very promising small company flying below the radar .
Great stuff:
- 43% organic gross profit growth to £1m
- EBITDA of £350k, up from £85k last year
- £0.8m net cash - after paying £1.5m for Fidelis and associated acquisition costs
- gross profit margins up to 40% from 33%
- positive outlook
- and stating clearly how high REAT is aiming:
"our ambition to rapidly become the leading provider of specialist cleaning, decontamination and hygiene services in the country"
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Trading-update-and-Investor-Presen/84829403
Just announced this morning - Fidelis have won a £700,000 cleaning contract tender for Tewekesbury School:
Https://bidstats.uk/tenders/2021/W15/748683303
This is until March 2027, so it's £100k per annum for the next 7 years. A very nice annual sum, but most importantly lovely recurring income for the long-term as per Fidelis' other contract wins over the last couple of years.
Not quite as good as you on the entry price pumpky (1.28p), but still very good. The next company update is going to be very interesting to find out more about what is happening generally / revenues / growth / targets etc. As i mentioned before this has gone from becoming a short term 'punt' to possibly something a bit longer and fruitful.
I expect REAT will get a one-off boost from the great re-opening, as (1) call-out work from the likes of courtrooms and housing associations returns to normal, and (2) various premises require COVID decontamination.
The main driver of REAT's recent success - via the excellent new management - has been the growth in its core business. Whilst COVID has been a useful addition in compensating for the loss of some call-out work, it provided only £444k of revenues last year, so the return of REAT's regular work should more than outweigh the steady decline in COVID revenues which is likely, especially as fears over transmission via surfaces are diminishing - unless there's a further lockdown and another more transmissible variant comes along.
What a lovely share to be in from0.95
Another 350,000 shares just reported bought at the full 2.45p offer, and another tick up....
Looking very promising.....ask above all-time chart highs but again can't buy anything
the acquisition pushing this higher I wonder?
New highs after 454,507 shares bought at the full 2.4p offer price and 211,000 shares bought earlier at 2.3p.
Cheers - stock must be extremely scarce! Though I see someone managed to buy 150,000 just now and immediately send the price back up to the 2.3p all-time highs....
Can't buy anything at all on Barcs........
Couldn't buy anything over £500 worth all day............the recent acquisition looks like an extremely good move and is starting to be recognised by the market - as Mark Braund, Executive Chairman of REACT, commented:
"We are delighted to announce the acquisition of Fidelis today, our maiden acquisition and an important milestone in our stated goal to become the country's most trusted name in the provision of specialist cleaning, decontamination and hygiene services. The acquisition is expected to be immediately earnings enhancing and leaves REACT well positioned to continue to increase market share.
Up again today - hopefully new all-time highs soon.
I'm certain the two 950k and 952k trades and the two 450k trades today are both people switching their stock into their ISAs for the new tax year, which is good to see (particularly the 950k trades as they're almost exactly £20k).
Interesting to see 500,000 shares bought at 2.25p around 10.26 am above the 2.2p full offer price. There's been other good-sized buying of a 240k, a 350k and just now another 250k at 2.25p, whilst a 450k sell achieved a good premium over the bid price at 2.15p.
Encouraging stuff suggesting keen buying and decent demand out there.
REAT have today posted a nice, concise summary of the maiden, earnings-enhancing Fidelis acquisition on their web site. I particularly like this paragraph:
Https://www.reactsc.co.uk/post/react-ties-up-with-fidelis-in-our-maiden-acquisition
"High levels of recurring revenues for Fidelis provide clear visibility of future revenues and income: 87% of revenues in the financial year ended 31 March 2020 (“FY 2020”) were recurring in nature. Indeed, contracted maintenance cleaning accounted for a significant proportion, with a small element from contracted reactive cleaning. The company boasts largely long-term contracts of 3-5 years in duration, with a strong track record of contract renewals and long-term customer relationships. What’s more, Fidelis enjoys a wide spread of customers, with no one customer generating more than 8% of revenues, and the top 10 customers representing some 50% of total revenues in FY 2020. "
Good to see the price back up above 2p - and on healthy volumes too, with 3.3m shares traded already.
According to this, Fidelis have won a £22m contract for cleaning services over six years to September 2026 at the University of Birmingham!
Https://bidstats.uk/tenders/2020/W39/735445093
Looking closely, I suspect this is a case of the commas in the wrong place....further down there's a link to this, which states that the contract is for £2.16m over 3 years, i.e £720,000 per annum, with an option to extend for another 3 years:
Https://litmustms.co.uk/tenders/UK-Birmingham:-School-cleaning-services./522QM7J29B
In the last 9 months Fidelis have also won an £815k school cleaning contract over 5 years here:
Https://bidstats.uk/tenders/2020/W31/732037122
Another one here for £390k for 3 years:
Https://bidstats.uk/tenders/2020/W26/729546868
And another for £350k for 5 years:
https://bidstats.uk/tenders/2020/W24/728563855
Pretty impressive. That's around £1.1m of guaranteed revenues per annum just from these four contracts. No wonder Fidelis has 87% recurring revenues if these are typical.
I like the sound of this
My decimal point was in the wrong place for the prior post! Here it is now corrected.....
Allenby Capital have issued a new note. They've increased their EPS forecast for this year by 40% to 0.14p EPS, and note that with a full year's contribution from the Fidelis acquisition the forecast would have been 0.17p EPS.
This puts REAT at 2.15p on a current year P/E of just 12.6 on the fully consolidated business.
And with Fidelis being so cash-generative, REAT are still expected to have £0.9m cash as at this 30th September.
Which means there's still room for another acquisition, albeit likely on a smaller scale than Fidelis:
Http://www.allenbycapital.com/research_1188_3174052641.pdf
So the business is now React & Maintain? Diluted focus but clear cross selling opportunities.
Also is this an indication of future trajectory and building the business into the traditional 4 main types of maintenance:-
REACT = Corrective Maintenance also traditionally/abusively called REACTive maintenance
FIDELIS = Preventive Maintenance also traditionally the basis for Reliability programs (Reliable translates into Latin as FIDELIS)
????? = Risk Based Maintenance - perfect use for AI to hunt through piles of data to spot opportunities for risk reduction
????? = Condition Based Maintenance - monitor for early indications of future failure and then REACT
The last two are the sexy technology ones that could shift the business into tech share price territory. AI would be great for spotting risks, and IOT for condition based sensing. Two very nice buzz acronyms!
Allenby Capital have issued a new note. They've increased their EPS forecast for this year by 40% to 1.4p EPS, and note that with a full year's contribution from the Fidelis acquisition the forecast would have been 1.7p EPS.
This puts REAT at 2.15p on a current year P/E of just 12.6 on the fully consolidated business.
And with Fidelis being so cash-generative, REAT are still expected to have £0.9m cash as at this 30th September.
Which means there's still room for another acquisition, albeit likely on a smaller scale than Fidelis:
Http://www.allenbycapital.com/research_1188_3174052641.pdf