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Poor show from the company. Why no participation for us! Usual rules apply no doubt
The Board are allowing short-term dilution for long-term gain via big acquisition plans - "target A" would cost £8.5m, and there are others in the pipeline, so this is serious growth given REAT's size.
Unfortunately they've been stuffed by Singer Capital Markets. The markets are obviously difficult at present, but even I could organise a fundraising at 1.2p. What a giveaway to the institutions :o((
Not even any opportunity for us via an Open Offer/rights issue/PrimaryBid. Perhaps this is to do with the necessity for speed to do the Target A deal, but this is not a good look for management.
32%discount:seems very harsh considering business "seems to be doing well"
Thnx the posts Rivaldo. I am not a fan of 'research notes' since they are paid for by the client. is REAT. It has been said many times, 'not worth the paper they are written on' However, looking at facts , the profit, the orders on the books, one can see that the company is undervalued. Its present P/E is c 10, which should see the sp at around the 3.4p with a peer adjusted P/E of 20. It is too 'small' to catch the eye of the majority of investors. It appears upward momentum in sp only happens after 'good' RNS. I am fairly confident the sp will be 3-4p within 2 years.
It's worth noting REAT's stellar historic and forecast EPS growth:
y/e 30/9/20 - 0.04p EPS
y/e 30/9/21 - 0.15p EPS
y/e 30/9/22 - 0.17p EPS (forecast)
y/e 30/9/23 - 0.20p EPS (forecast)
REAT have very high recurring income and forward revenue visibility via multi-year contracts. The forecasts above are deemed "prudent" by Allenby, who have a 3p fair value price target.
REAT are also aiming to become the sector consolidator, and have made a great start with Fidelis which has been terrifically successful.
The PEG of 0.77 shows that REAT are very good value at these levels, let alone the single-digit forward P/E.
Any company which is a specialist in its sector, with high recurring income and forward revenue visibility, and which can deliver acquisitions consistently, will trade on a very decent rating.
Such a rating would be far higher than REAT's present forward P/E of 8.75.
Yet another contract win for Fidelis - £700,000 over 3 years, and with a new education sector client too:
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Contract-Win/87799061
With 0.17p EPS forecast for this year to 30th September, rising to 0.2p EPS next year, REAT remain very good value imho.
Because of it's small MC here is little enthusiasm for the share. However, there are good profits to be made here. Hopefully there will be further contract wins in the next few months to give momentum to the sp, and the Half Year results, end of June, will almost certainly give the sp a good kick in the right direction. I am hopeful, because it is a Listed company, that a Reverse T/O of a larger company can happen, which will be a game changer. Cream on the milk will be dividends in a few years time. Great share to be in.
A confident AGM statement suggesting all is going well. I particularly like "The Board is confident that the near and long-term outlook for the Group remains positive", as well as " a strong and growing pipeline of opportunities with both existing and new customers":
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-AGM-Statement/87640170
"Mark Braund, Executive Chairman , will make the following statement at the AGM:
"In the Company's results for the year ended 30 September 2021, published on 31 January 2022, the Company noted that it had entered the 2022 financial year with a positive outlook following a number of contract wins during the first half of the year, some being material with long-term contracted revenue further strengthening the Company's business model. The Company expects to see the benefit from these awarded contracts materialise as they continue to be mobilised during the second half of the financial year.
In addition to the contracts announced post-year end, the Company expects to continue the progress and contract win momentum and has a strong and growing pipeline of opportunities with both existing and new customers. The Board is confident that the near and long-term outlook for the Group remains positive."
With 0.17p EPS forecast for this year to 30th September at least REAT's P/E is finally back above 10!
Hopefully tomorrow's AGM statement will reinforce the outlook from the prelims, when REAT noted that "The new financial year has begun well" and "We believe the Group is well placed to deliver another exciting year of growth".
sentiment slowly returning; up we go
Another £150k in the bank for this year. This is an RNSNON as it's not material in itself, but I'd have thought REAT have announced it as this is likely just the "initial" short-term contract which could/should turn into a material long-term contract assuming REAT perform to standard.
And it's also been acquired via their core FM customer, showing how well that relationship's going:
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Contract-win/87628967
Well, that went well! The only thing that moved was the spread
Allenby currently forecast 0.17p EPS this year, so REAT are on a P/E of only 10 for the year ending in 6 months' time, when the forecast increases to 0.2p EPS, further dropping the P/E to 8.5.
They have a fair value of 3p for REAT. They also state these forecasts are "positioned prudently".
Worth noting from their last note that REAT have (including today's contract wins) won over £10.2m of new business in the last 12 months, bringing very good visibilty of revenues going forward on top of the already high recurring revenues.
Looking cheap at these levels.
And more contract wins today. REAT's management are certainly proving themselves to be extremely capable in terms of winning contracts with a variety of large companies.
Today we have £1.2m of revenues over three years with "a large multi-national manufacturing and distribution business", plus a new train emergency cleaning contract and further "smaller contract wins across the Group":
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Contract-Wins/87510641
Fingers crossed this will not be another non event. Company promises shareholders. I'm patient but not for ever!!!
Today's RNS notes that the AGM on 24th March will be on Investor Meet, so presumably attendees will be able to participate in a Q&A session:
Https://www.investegate.co.uk/react-group-plc--reat-/rns/posting-of-annual-report--accounts---notice-of-agm/202203011230012151D/
Confirmation of two presentations, including Cenkos today and Mello on the 21st. Good to see REAT out spreading the word (though typically I can't attend either presentation - hopefully there'll be a recording of one or the other avaiable somewhere):
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Upcoming-Presentations/87212511
Agreed - a very good presentation as usual. The strength and evident capability of senior management is a large part of why I bought in here.
I noted they stated the "very conservative" guidance re Allenby's forecasts......
73% of recurring revenues during the last year has now increased to 80%.
Fidelis get paid by their clients before they have to pay their staff, which is a rather nice, cash-generative model.
The Fidelis deferred consideration will be paid from internal resources, be it via cash or utilising invoice discounting facilities. This should still leave room for further acquisitions.
REAT's stated ambition is to become "the leading specialist and contract maintenance cleaning business in Great Britain". The m/cap will be multiples of where it is now if this is achieved.
It looks like they are lining up their next acquisition which if as good as Fidelis will certainly add value again
any golden nuggests therein, Deaholly
Excellent presentation from a good solid company looking to grow and expand and proving they are already on their way with very good results, be interesting to see where this goes
There's some interesting analysis in Allenby's new note.
Firstly on the extent of recent contract wins - not bad for a £10.7m m/cap:
"Impressive contract wins driving growth – Over the past 10 months the Group has won new business worth over £9m of which £6.2m has been awarded since the beginning of the current financial year. This business is spread over varying contract lengths ranging from 22 weeks to 5 years and we estimate that meaningful revenues from these contracts will fall into the current year, providing support to our forecasts."
Secondly, hints that further acquisitions are clearly top of the agenda:
"The Group’s ambitions are clear and we would anticipate an increasing focus on growth by acquisition and believe that the Board is actively reviewing acquisition opportunities that would be strategically aligned to its focused areas of growth and significantly earnings-enhancing."
Finally, REAT are clearly undervalued relative to sector comparators - understandable on a P/E of only 12.6:
"While acknowledging that there are no direct analogues to REACT, against a peer group of industrial and commercial support service companies the shares trade at a discount of:
PER – 29% in FY2022 and 34% in FY2023
EV/EBITDA – 5% and 10%, respectively, and
EV/Sales – 42% and 44%
We believe that the shares are undervalued and given the growth prospects and
improving quality of earnings have a fair value on the shares of 3p."
Here's the link to today's 12 page update from Allenby Capital:
Https://www.allenbycapital.com/our-research/?fwp_research_client=1756
They have a 3p target price. I note that their 0.17p EPS forecast is prepared "prudently".
They summarise:
"REACT Group plc (REACT), a leader in the specialist cleaning, decontamination and
hygiene sector, has reported full year results to September 2021 which shows strong
year-on-year growth, generated from both the core REACT business and the earnings
enhancing acquisition of Fidelis.
In line with its strategic focus, the majority of Group revenues are now under multi-year contracts providing good revenues visibility and this focus is expected to continue both organically and from targeted earnings accretive acquisitions. The current year looks very promising with a full 12-month contribution from Fidelis and further growth from the core REACT business with momentum continuing through 2023. We have a fair value on the shares of 3p."
Great results
Allenby Capital's new note today shows historic adjusted £767k PBT and 0.15p EPS.
For this year to 30/9/22 they now forecast £889k PBT and 0.17p EPS, rising to 0.2p EPS next year.
Good results imo, and a confident outlook with the new year having "begun well".
The £795k EBITDA is well above the forecast £750k, and revenues are also slightly ahead.
I note that Fidelis produced £243k net profit in the 6 months post-acquisition, so this year should benefit from well above £500k profit from Fidelis given the rate of growth and contract wins.
And reactive work should be well up given the much reduced Covid closures this financial year.