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Many thanks Hounddog and Shatter. To clarify the sales forecast I took was from market screener and was for full year 2023. From memory the 2022 full year revenue forecast is for around £11.5m (worth double checking that).
I agree on the profits based multiple as high margin high growth ( if we get the high growth now) will command a punchy multiple on days with strong sentiment.
Dividend is an interesting idea! Agree no signifoxant capex requirements so payout could be quite high and with good near term growth. Would be a confident signal from management.
Troy. It may be better than that. Taking the £14m forecast for this year (out of interest where is that published and when was it made?) that is a £5m hike over 2021’s £9m of sales. Given that it probably assumes that new sales are made on average half way (or later) through the year and sales tend to be more or less recurring an extra £5m in 2023 is not unrealistic. So around £20m sales in total for 2023 possibly (if around about the £14m is met this year). So the extra £11m sales in 2023 over 2021 should be at a good (largely) d2p margin of say at least 50-60% - so £5-6m of extra gross profit and few extra costs outside that. Loss in 2021 was £1.4m but there were a number of one offs so previous year losses of under £0.5m more representative. So they could make £4-5m profit after tax (no tax as losses) in 2023. Stick that on a multiple of say 20-25 (not too absurd for a fast growing company) and that is a £80m - £125m market cap.
Another aspect is that this stock tends to spike periodically. The herd arrives from time to time before getting impatient and thundering off. I also wonder if the City has totally absorbed the implication of the Bimbo contract. I think post lockdown everyone is more focused on holidays and Wimbledon. Bimbo is a very big company - as someone else has pointed out on another board it made £3.8bn in sales in Q1 this year. It is also growing rapidly - greater than 10% per annum.
Also they do not have much need for the cash and if they do get strongly into profit then there is a prospect of a decent dividend - but that will probably only be in 2024.
Troy…Your analysis seems as good as any and as you say perhaps on the cautious side but until Sym give us a few more details doubling up would be very welcome.
£14m is the revenue forecast for the year to end Dec 2023. This is before the grupo bimbo news yesterday. I have no idea how to estimate what the annual sales from the new GB contract could be worth but £5m feels like a reasonably conservative estimate. Given the increased confidence around further sales forecast uplifts related to d2w and d2p outlined in the agm statement today revenue for 2023 could easily be £20m or even as high as £25m.
What that means for company valuation is again an estimation. I don’t think it’s too much of a stretch to assume 3x sales for a low capex and low operating cost business model. That would give a £75m valuation target for the equity over the course of the next few months as investors get more visibility on the 2023 sales forecast. Granted there are A couple of ifs in there but if sales start getting booked for d2w in Latin America as well as traction with the Indorama jv then share price doubles from here on confirmation of those in my opinion. Just an opinion though and would be interested to read what others think on sales for 2023 and valuation. Thanks. Troy
Indeed and more to come in the short term by the sound of it. Feels like they have got the bit between their teeth now.
Another good RNS today.
Don’t wo worry, there will be enough sweets to go around
The reason I sold out some years ago was the perpetual awarding of free shares to directors. Good news today but will the sweets be dished out again at the expense of investors!
Indeed; after holding for fifteen years and multiple false dawns this may be the beginning of genuine progress. Everything crossed!
Very significant update and a massive validation for d2p. No details on commercial terms but I think safe to assume that this will make a large difference to sales and profits over the next years. Global sales should follow shortly. Sym true to their guidance that 2022 will see step shift in sales revenue.