The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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Hi,
Thanks for posting the presentation.. So it seems very good look ahead. Probably some bidder is in the horizon probably @50P.
presentation has been published here: https://www.sisplc.com/results_centre/investor-day-presentation-18th-of-april-2023/
So what does it mean the Investor Site Visit? Does it mean they are showing to a possible bidder?
Another 2m in addition to Fridays, it’s like someone’s building a position in the company at these crazy low prices ;)
Some mysterious big trade is going through today!!!
And who snaffled another 1mil shares on Friday!?
Whilst we’ve not seen cash position yet, I’m hopeful that we’ve seen the end of cash drain as:
‘The Board has agreed a business plan which has been developed to regain growth levels of former years and step change margins to build profitability to industry benchmarks’ That’s some pretty big benchmarks - AN, Protein Works etc all make decent profits.
Then:
momentum is gathering, as evidenced by a record March revenue of £7.2m (FY22 £6.4m) and current trading performance in April. This beats estimated cut off point to deliver profit.
So:
A further trading update will be given when the Company announces the 2022 annual results prior to the end of Q2 FY23……
I’m expecting that we’ll get an update for the drop in cash between Sept22 and Feb23 (hence no update on this) and then a look at the ‘profit’ we’ve been making Mar/Apr/May
What would you value a profit churning SiS business with investment phase finished, sales growing and profits being delivered, I’d put that at many many multiples of current share value.
Watch outs for me are TR1 from Stephen Granite, any director buys as they’ve set their stall out and any ‘inventive’ plans they set out whilst share price is at rock bottom.
Anyway, times running out as firm guidance has been given, update will be given in the next 11 weeks.
"at the core, there is a good business and product here it is simply being badly managed in my opinion."
Exactly!
I'm also intrigued re current cash position- the placing appeared to be conducted on the premise of sufficient liquidity in the case of further economic downturn and more increases in input prices etc- well this hasn't come to pass and it appears we've seen an uptick in performance since so I'm hopeful (but keep in mind the chequered history)
I still don't rule out a bid (with the end of the offer period) - keeping my eyes open for any stake building as the shareholder register is full of disillusioned instis (see baillie Gifford)
Laura I’ve been here a while - pre PHD purchase.
I’ve seen them issue equity to pay sports stars in the past - unbelievable really. They have a history of tapping shareholder for never ending cash burn.
Frankly I was glad to get my money back at ~75p
So whilst I am back in, because 7.45p felt far too cheap, I do look at this through slightly jaded eyes.
I have learnt that cash is the key metric here and two updates without a mention of cash is a real concern.
My problem is, at the core, there is a good business and product here it is simply being badly managed in my opinion.
Thankyou for the balanced summary
I am slightly up on my purchases last week and will continue to hols
Positives -
great March revenue;
we have a business plan;
we have a state of the art factory;
Putting prices up
Negatives -
poor Jan and Feb revenue;
Quarterly revenue run rate will not get to break even
no update on cash;
no update on lending facilities;
no approaches after being in shop window for 6 months
As for director buys close to 2 years since the last one
A drastic improvement- we have revenue growth and what looks like a hugely significant increase in contribution margin (I also like the fact they're starting to use such a metric)
I was taken aback how profitable Applied nutrition were when looking at their accounts off the back of Granite taking a stake- this has to be something to aim for here
I concur re director buys- the whole board have taken the p*ss here over the years- if they don't step up down here then they never will
unfortunately no-one seemed to share their belief that the company is undervalued, the killer line is at the bottom:
"The Board confirms that it is not in receipt of any approaches for the Company at the date of this announcement"
they have no choice but to put a spin on it and carry on, you might get a small rise but not one that is going to rocket imo
Let's hope now the offer period has ended we see some director buys
"Trading in the year to date, as further noted below, indicates that the business is responding well to the new plan, with growth across both different geographies and sales channels, price increases, and lower costs attributed to the recently commissioned manufacturing and distribution facility, all contributing to improved profitability".
~~~~~IMPROVED PROFITABILITY~~~~
Cracking update, profitable growth and latest numbers are looking very promising. Carry on like that and no more raises needed.
Guessing Baillie Gifford just wanted a sale?
thanks SQ
Interesting, so they have to increase revenue from £63.5m to £74m or by ~16% to break even.
I believe the debt facilities are due to be renewed this month - probably at worse terms than previous, given interest rate movements I wonder whether this will impact the assumptions made by the company.
I notice a new fixed charge registered in Jan 23 for Lombard North Central - presumably for factory kit, who knows?
There are lots of unknowns here to ponder.
Cash:
Taken from end of Sept 2022 raise:
The Company believes that following the actions taken by management this year and the commissioning of Blackburn, circa £6.2 million of monthly revenue will deliver a breakeven cash position, expected in 2023
Taken from Feb 2023 RNS:
Against the tough economic and supply chain environment throughout the year, the Group performed broadly in-line with expectations. Group revenue growth of 1.5% to £63.5m (FY2021: £62.7m) was achieved.
So yes, very likely to be a gap / cash drain and I’d hope that the Sept raise covered this until expected profit in 2023 (assuming sales growth).
Also, still worth noting that now results have been published yet - historically out in March….. must be coming to the end of the ‘strategic review’ soon.
Thank you Mr M. I’ve dipped back in here at 7.45p on the fall but not a huge amount, I’m nervous about cash position, further dilution and the culture at the business. Frustrating because they have great product and should be doing better
In my view, if an institution dumps at such a price, it's usually one of two things. Either the investee no longer meets the specific investment criteria, which therefore forces the institution to divest at a specific threshold. Alternatively, they are privy to something the market hasn't yet factored in and in their view it doesn't reflect well for the future of the business.
Me that’s why I asked the question….?
Any number of reasons and who cares with a background buyer(s)
Whilst the seller has cleared it begs the question- Why would they ditch this at 5p?
With Sarasin & Partners LLP also adding the sell by Ballie Gifford has all be bought up. Any more buying should take this up very fast. Any interest announced and this could rocket. Easy double bagger.
SARASIN LLP added 1.37m on April 6th