Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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I understand where you're coming from Dartron and nomlunga, but remember the objective of the company right from the start was to 'buy and build' and that is exactly what they have done and are continuing to do. I suppose there comes a time with this approach when you reach a maximum or optimum size and it's a question of when that time is reached. This deal will make SRC a £1bn company, comparable to Breedon for example. Clearly it is an investment for the long term though.
Last placing in February this year was at 54p, now one at 47.5p. Well done BOD of SigmaRock. Maybe the next one can be at 35p? If you look at the chart, this was obviously common knowledge around the 31st of October, when it made the low of 47p. Is this company ever going to reward shareholders?
" SigmaRoc will pay EUR745 million for the first set of assets and draw upon a new bank facility. It will also raise GBP200 million from the issue of 421.1 million shares at 47.5p."
Reverse takeover, due purchase CRH lime business. Look at CRH page
Seems OK discount but it makes you wonder if the BOD wants to build shareholder value or an empire for them to be rewarded for managing?
What to make of this?
So looks like M+G have been in serious offload mode in last few weeks - north of 30m shares sold into market which would go some way to explaining the recent declines here. Why they are selling shares in a business which is trading at an ebitda multiple of 3 is known only to them - and is perhaps more reflective of funds moving into cash positions to take advantage of current macro opportunities (interest rates, bonds, gilts etc). It does continue to remind the business that shareholders need a reason to remain invested here - and they cannot overlook the disconnect from SRC's peer group - where Breedon is trading on a PE multiple almost 2 times SRC. I also wonder if some PE teams are not having a look here - the upside would seem considerable if all is as we are being told. SB
Thanks for sharing that vig - perhaps max and his team will get closer to this issue when their share options kick in big time next year - although I suspect any awards based on share price performances will be difficult to achieve irrespective of wider industry contagion so it’s the 8p earnings which will matter most. Also agree on the pain for PIs - but in reality all investors are taking a beating here despite a growing business with a 20% ebitda - and it’s those major investors who need to put pressure on the board to align interests - or they will vote with their sell buttons. SB
I asked Max if he would include shareholder returns in the next major update which will be FY. He has agreed to do that. Better discussed openly than ignoring the obvious distress this is causing private investors.
Makes you wonder how the market would react to a poor update…..although looks like polar are reducing holdings which just continues downward pressure on the price. At least an acknowledgement that debt needs addressing was included - I would hope full year results in March 24 sets out a path to address shareholder returns. SB
Sigmaroc plc issued a trading update for the 9 months ended 30th September this morning. Like-for-like revenue growth was 7%, underlying EBITDA margin in the Period was 20% ahead of both the prior year and management's expectations, resulting in underlying EBITDA for the Period up 11% LFL to £87.1m. FY23 guidance was reiterated for revenue of £596.9m and underlying EBITDA of £110.2m, the latter would constitute a massive step on in profit. Valuation looks very attractive with forward PE ratio at 6.4x, PS ratio at 0.59x, the balance sheet remains in decent shape. Share price lacks positive momentum and is drifting back lower again at the moment suggesting that there is no rush to buy. But SRC is well worth monitoring for the longer run...
...from WealthOracle
wealthoracle.co.uk/detailed-result-full/SRC/821
Happy with that.pleased to see reference to focus on de-gearing.
Update is a little bit later than last year. I hope it’s not because there is some other news on further acquisitions - the business needs to focus on shareholder returns imo in an effort to create some meaningful interest in its valuation which is abysmal - accepting AIM is a full scale horror show. SB
20th october last year,so perhaps soon.
They’re going to make a fortune at that price! But when?
£265k trade @53p earlier today.from s/p movement im guessing it was a buy. "o"trade.
Macro economic turbulence is impacting the UK markets and AIM in particular.
There have been enormous outflows in uk equity managers in the UK (£7bn since Jan 23 ). This means most do not have sufficient assets in their funds to buy more stock.
This is going to get more volatile leading up to the US election next year.
Seems to me that private and institutional Investors see risks in equities that is hampering long term investment.
The AIM market in particular has taken a hammering, not surprisingly as generally those companies come with significant risk. This is for sure a drag on SRC.
I can't see anything changing until after the US election and even that may not be a positive outcome.
It's the worst climate I can remember for investing for many years.
Preserving capital is always high on my agenda, but more so than ever now.
JonnyGee - I bought into the buy to build story which Max and the team have been executing well up to the point where debt became a very expensive commodity on your balance sheet. imo a business should adapt to its market environment - and when it does not there is a risk is becomes a less attractive investment which I think we have witnessed here for some time. There is no debate on the loss of shareholder value - it is significant. As for sales - overall group volume is down 3%, and EBITDA margin is also down first half of 2023. Perhaps it is all about a future exit strategy - as and when the management team secure their share options. But debt and lack of shareholder return are a huge cloud over the business with neither being addressed by management. We will agree to disagree on the issue of multiples and how it impacts on valuations - but appreciate your background is PE. One query if I may - you highlight that the company is trading at a multiple of 5.5x 2023 EBITDA. From my calculations 2023 EBITDA should be in the region £110m/115m. The current market value of the business is c.£360m. This would seem to imply an EBITDA of 3.3? A multiple of 5.5 would give a market value of c.£600m or 87p per share which I am sure would be more acceptable to current shareholders? Apologies if my arithmetic is incorrect. SB
Just replied to your mail. Letting you know incase it is in the spam folder.
Given some of the comments in the thread about SRC being over focused on growth and destroying shareholder value etc - I decided to dig further into the company to figure out whats happening. Some key observations:
Whilst the company has doubtless significantly upped its scale through acquisitions - with Nordkalk in particular, they have also successfully grown the top line organically as well as defended operating margins in a difficult environment.
Viz: LfL (Like for Like) sales growth was 13% in H1 '23 and 19% in 2022, with forward analyst forecasts indicating a pretty respectable CAGR to 2025 of ~6%.
EBITDA margin has actually grown from 18.1% in 2021 to 18.9% in 2022 and H1 23, despite the inflation s**tshow.
Buying companies for low multiples absolutely does NOT devalue the buying company – as a former private equity manager who has done buy and builds I can assure you that to achieve low acquisition multiples, achieve operational improvements and to achieve a higher exit valuation for the improved and enlarged whole is one of the surest ways to increase value. The company currently trades at 5.5x 2023 EBITDA, which even at the current low values means acquisitions have been accretive at the
Hi Vigneron - would also be very interested to hear from Max if you'd care to share. My email is jmglg@blueyonder.co.uk
Hi Vigneron53 - thanks for the post. My e mail is acgt@yahoo.co.uk.
I contacted Max, yesterday following up on the share price discussion we had back in March.
I got a lengthy reply, which I don't want to share on here, but happy to share by email.
He has offered a telephone call to discuss, so maybe a small number of us could organise a Telco with him to discuss our key concerns.
Big.
Missed the presentation yesterday so appreciate the comments from those that dialled in. I think it is becoming clear that the BOD (max) is completely focused on growth through acquisition despite the cost to shareholders. To arrive unprepared for a conversation on valuation seems naïve at best. To have spent £600m on businesses which in combination are now worth less than £350m seems pretty poor despite all the other positive metrics. The company is also reaping what it sows by continuing to do deals at low EDITDAs - which becomes self fulfilling and is reflected in the current low multiple being applied. Whilst net debt is coming down - the implied comments from the update is that growth is still priority number 1 and not attempting to reduce debt - term loan repayments are now starting to ramp and by next year are c.£35m pa. Sonia is now extremely expensive from 12 months ago. Not one mention of shareholder value - capital appreciation or income. The BOD appear tone deaf to the current situation. Not unsurprisingly on track for 8p eps full year which triggers LTIP bonuses. Perhaps then we will see a BOD more focused on creating value and running a disciplined PLC which is more accountable to shareholders. SB
Yes unfortunately with Black Rock as a large investor there may well be some games being played.
I thought it came across as an embarrassed and incoherent response from the bod at the meeting, which adds weight to your point.