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Florence
the 5pm rns is Harwood, a sale, the 5.45 is Premier Capital a sale of 40% of their holding. Rather more worrying.
Do we think that the holdings RNS from a couple of days ago was a mistake? Would be very odd if Harwood bought 0.3% to then sell 0.7% almost immediately.
Excellent set of figures. Baffling why sp has remained stagnant.
PE of 14.1/ 2.3 = 6.3. Peers are trading with PE of 15+. At PE of 15 sp would be 3.2p. FCC is 14% of MC. If ftse350 cos had that figure, it would be paying out 10% divis in cash.
With the CEO stating trading is robust, and expected to continue, very optimistic for the future. Would be rude not to add a few more.
Singer have a 1.9p target price. They have REAT on a current year P/E of just 9.8, falling to 8.5 next year.
They now forecast £2.5m adjusted EBITDA to this September, nicely up from last year, but reduced from prior forecasts by some £300-£400k due to additional investment in personnel, systems etc.
EBITDA is forecast to rise again at Sept'25 to £2.8m adj. EBITDA and then £3.1m the next year.
They say funding capacity could support a furher 26% of EPS increases via more acquisitions in 2024.
Incidentally, last night's holdings RNS hasn't been mentioned here - Harwood Capital/Oryx have been buying and raised their holding to 9.04%, or 96.5m shares in November they had 92m shares):
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Holdings-in-Company/93207973
Bought in today as I had been watching these a while and waited for results first.
Today's results are very encouraging:
- 0.2p adjusted EPS
- £2.3m adjusted EBITDA is ahead of Singer's £2.2m forecast
- strong momentum since the year end with record trading this year
- £1.64m net cash at the year end, again ahead of Singer's forecast
- £2.44m operating cash inflows in the year
- no need to raise further funds, as current cash enough to pay for not only deferred consideration, but also investments in systems and even further bolt-on acquisitions in the pipeline
- a whopping 87% recurring revenues
- gross margins still increasing, to 27% (from 24%)
- multiple contract wins which will benefit this year onwards
Amazing results.
The recent sp activity suggest some SH's are bailing before the prov. results. I am expecting a very decent performance including contributions from recently acquired cos. Will be v v disappointed with a set of av./ Poor results. May take a punt and a few more, following Warren's advice, 'go against the market!', or wte
Why
Coming soon
The turn
I want 1.2p ish, but may have to compromise
Interesting, BodRuncie. Thanks for posting. Agree this is a fantastic LT investment. Maybe ripe for TO too. Let's see...
Share price rose in recent months because this is a fantastically well-run company with great prospects and 2024 will see great improvements to the balance sheets.
The share price fell recently because of the joint-broker announcement, and that tends to be a self-fulfilling prophecy leading to a falling share price.
REAT don't need to raise cash to keep the lights on, but they might want to raise dosh for an acquisition. Or there might not be a raise at all.
Short-term this is difficult to trade because it's so illiquid. Long-term you'll be fine because there is only tremendous potential for upside to REAT from here.
There are wild fluctuations in this company's SP, for no obvious reason. Maybe rumours of TO or pending TU ?
Dartron - similar thoughts, however I have sold for a modest profit; now waiting to see if there is a raise. Like you, there is that thought 'I need to do something with this'... I'll be back in probably sooner rather than later no doubt as Doak & Co are solid and doing a good job here. The frustration is that no matter how many good updates, good acquisitions (ladders etc) the price stubbornly refuses to shift out of what is a long time trading range.
I sold my position in Eckoh (ECK) after they sent an RNS for a joint broker on the 9th March 2023. To date they have not raised funds, and went on to put out several positive updates. I would be more sceptical here if it was one of the market maker brokers like Cavendish etc. But you dont often see Dowgate as a broker, so maybe this is just due to their stake in the company. Just checked, and Eckoh appointed Investec alongside Singer. React has appointed alongside Singer, perhaps the reason is related to Singer?
This link (from 2018) is saying that joint brokers could be used to help find more investor clients such as II. (hopefully without a placing!!)
https://www.accountancyage.com/2008/07/17/aim-companies-why-two-stockbrokers-can-be-better-than-one/
Or another that came up from a google search is EQLS, who appointed a joint broker Peel, (almost on the same date to ECK 30th March), never raised capital, and are now under offer. Not sure we can say Joint broker goes hand in hand with a placing, but like I said I did sell a position due to that worry.
I need to do something with REAT, hold a very small position here from a momentum trade that fizzled out at 1.6p. Lol.
As announced in today's RNS, Dowgate Capital are appointed Joint Broker for REAT.
https://www.lse.co.uk/rns/REAT/appointment-of-joint-broker-c40tf0wff8806fp.html
Most likely a placing to raise funds for expansion or acquisition because REAT don't need the funds for working capital.
Dowgate Wealth recently upped their stake in REAT to 11%, so they have a dual interest here, probably looking to increase the Dowgate stake and possibly take shares in lieu of payment.
I just hope it's not at a ridiculous discount.
Good to see the finance department being strengthened, with the current CFO being moved up to FD and a new CFO appointed who has lots of experience.
The share price is still in a long-term uptrend from the Oct'22 lows but has slipped along with the recent poor markets.
The current year forecast from Singer appears to be for 0.168p EPS, which at the current 1.45p is a P/E of only 8.6.
And REAT should now have approaching £1m net cash to support growth and and perhaps make a further acquisition.
EV/annualised EBITDA is 5-7 (dyo work, lads)
Bit pricey relative to other plays, but the growth here is tempting
tp 1.2
Unfortunately, that post about that phone call, and the mentioning of Paul Scott has lesd to a near 20% drop in sp. Although the Chair dismissed the idea of a cash raise to fund future expansion plans, the Cat is out of The Bag. It has got investors worried. Well done for mentioning Paul Scott and his thoughts. And no, I do not see falls as buying opportunities, I'm full loaded thanks.
Cheers TaltBong, nice post and thx for the info on your chart with MB. Mangement here have done an excellent job since they came in, and I have every confidence that the current share price is good value and that they intend to grow the company seriously from here.
Great to see Dowgate Capital buying and increasing to 11.2% too.
Firstly, nice to see Dowgate increasing their stake again today. They’ve done their research and like what they see.
React have an impressive list of major shareholders with the recent slight reductions by Helium and Harwood a bit of profit taking/fund redemptions probably - to be expected and of little concern
Why I contacted Mark:
To discuss analysis of the company by Paul Scott last week on Stocko after I contacted him to get his views on last week’s pleasing trading update (and hoping to highlight React as a company of possible interest to Stocko subscribers)
Although Paul thought the update looked good with a strong rise in profits, upbeat commentary and the chart showing good progress over the last 6 months (rising from 1p to 1.6p) he voiced concerns with regards to React’s ability to make more acquisitions without either issuing more equity (at a cheap price) or taking on debt.
(He also noted liquidity issues and that it might be a good idea for React to do a 100:1 share consolidation to give the company more credence)
To be fair to Paul he was pressed for time, was only able to have a quick look and so he may not fully up to speed with what’s happening at React. Anyway, after mulling Paul's comments over the week-end I felt the need to contact the company to get their comments before having another go at championing React on Stocko.
Mark was very generous with his time and we a had a good chat noting some items missing from the analysis such as the cash being generated by React (which could be used to fund or help fund future acquisitions), the 20% like for like organic growth, minimum requirement for any future acquisitions to be earnings enhancing, accretive and strategically meaningful etc.
There’s still a job to be done here but they are on with it and I my current intention is to stay invested for the long term.
Also, Mark keeps an eye on the bulletin boards but he won’t respond on the boards (which is as it should be)
Hi Bob,
Yes, called Mark this morning and had a very nice chat (had his grand daughter with him gurgling away in the background which was very amusing) I'll write more probably this evening but have to rush (building an extension and concrete is due shortly)
Hi Talt, I just saw your post. Did you speak with Mark? How did it go?
I emailed Mark Braund this afternoon and he responded almost immediately asking me to call him to discuss. Pretty impressive I thought. I'll aim to call him mid-morning tomorrow (Monday). Let me know if you have any sensible questions and I'll add them. (short notice I know)