Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
$21 million for the machine tool solution against a market cap of £15 million, that's a good result if it goes through
This deal is just what the company needs - a realisation of cash hungry assets at close to book value, with a potential clearing of debt finally paving the way for growth investment/dividends/buybacks in future. It also looks to fit in with the purchaser's existing interests so quite possibly a win-win.
Indeed, yet Mr. Market has not noticed.
The next set of results cannot be far away, then a re rating may be due.
Sale complete and cash received.
Any thoughts on the below?:
Market Cap @ 16.15p: $24.8 million (£19 million)
Debt at 30 September 2021: $14.1 million (net of forgiven PPP)
Cash from sale: $21 million
Cash minus Debt: $6.9 million net cash
FY22 H1 Laser Revenue: $15 million
FY22 H1 Laser Profit: $1.8 million
Market Cap minus net cash: $18.7 million
Proposed Current PE = 5.2 based on FY22 H1 figures
*Tidied up previous post*
Sale complete and cash received.
Any thoughts on the below?:
Market Cap @ 16.15p: $24.8 million
Cash minus Debt: $6.9 million net cash
Market Cap minus net cash: $18.7 million
FY22 H1 Laser Profit: $1.8 million
Proposed Current PE = 5.2 based on FY22 H1 figures
The question is - what effect on operating expenses was the machine tool business having?
The reason for this question, is that the operating expenses are the issue here, the company is not really making any money. Gross profit - $12.2M. Operating expenses $10.7. Subtract finance expenses & tax, and you are left with $0.5M.
Seems the company has not been profitable and this has incurred debts. Ok they now have a chunk of money from the sale of a business, but there is a sizable debt to pay. How will they focus on growing the laser part of the business?
Also talk of exposure to microchip shortages in the interims I read. Only took a quick look. I also went back to pre covid times and still read familiar sob stories. Doesn't strike me as a growth opportunity - yet.
You can only sell the family silver once. I will keep watching from the side-lines.
Selling family silver? Perhaps escaping legacy millstone.
Historical accounts will mean little as this is a new vehicle, debt free with a growing laser business which has a increasing order backlog.
Concentrating on the larger custom built product, designed for client needs is proving successful.
Forward looking P/e of less than 5, suggests substantial re rate is due.
Semiconductor issue notwithstanding.
Indeed, the tool making business was high volume with razor thin margins; not the sort of business for a lowly capitalised entitiy. Good riddance to it if you ask me. Laser business looks much more attractive based on recent filings.