Sapan Ghai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video 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.
Staff turnover and heavier use of contractors is undermining the business model - they need to stabilise the staffing side and improve retention of their best people. Centralisation of these previously strong businesses they acquired has disrupted the culture and staff moral. What a **** show it is there at the moment.
Thanks SeaTank that is a much more balanced post. Interesting what you write. I will keep watching.
I don't see TPX as a take out target by anyone but especially not the Chinese. This is an organic growth story valued by DCF.
The last two recent acquisitions have been at 7x EV/EBITDA, which WAS relatively cheap, but not any more it has to be said.
I met someone on the board and they told me they won't do any more acquisitions until the share price recovers - why would they?
You got to remember that this is a heavily owned company by management. Not just the board but also divisional MDs. Erick Grant owns 10% and he's not even a PDMR applicable person. Not to mention the other former owners of acquired companies. They all have skin in the game and are incentivated to fix the current issue with business wins, which according to recent outlook figures they have corrected very quickly.
The additional central and finance cost base will need to be diluted over time, but that should be doable.
My main concern has always been top line momentum. They lost it entirely for a quarter last year but have since regained it.
My outstanding concern is whether they can maintain the top line momentum without additional dilutive marketing & sales cost burden. The issue remains, in my view, that key figures (former company owners) are winning most of the business and how sustainable is that? We need to see the business institutionalise, but not at the expense of a bloating cost base or loss of top line momentum as happened this time last year.
The talk of a share issue is absolutely crap analysis. The business is fundamentally cash generative, which is why they are paying a dividend still. The management shareholders wouldn't sanction a pointless and dilution share issue.
Chinese take over coming.
Won't be long now
Reported operating loss of £(3.9)m (H1 2022: operating profit of £1.3m)
Reported loss before tax on continuing operations of £(4.3)m (H1 2022: profit before tax of £0.9m)
Basic loss per share from continuing operations of (4.2)p (H1 2022: earnings per share of 0.7p)
Net debt1 as at 30 September 2022 of £14.1m (31 March 2022: £10.1m)
Sorry but this does not look like earnings accreditive to me or fundamentally cash generative (at the moment). It is valid to be concerned that the cash position is decreasing. Of co**** those that speak for TPX are going to have a positive spin on this, but the balance sheet tells otherwise. In fact a quick look and it appears TPX has only reported a FY profit once - not much of a track record. Not sure how Seatank can speak for the companies acquisition strategy, even though its pretty obvious with no cash and low EV those options are not available. I still think they may need to raise funds one way or another.
Sorry, I got to point out that Dartron is misinformed. These acquisitions have all been enhancing on an EV/EBITDA basis. They have all been relatively small companies and they agree to be acquired on relatively low EV/EBITDA multiples for a mix of cash and shares. TPX targets companies that will add a new skillset or industry vertical with substantiated track record, with which they can then leverage to grow the business further. Therefore, TPX won't acquire companies with material overlap in skillset. The organic growth potential is large, so it is cheaper to grow organically than acquire again in the same domain. That said, the acquisition element of the strategy has been paused indefinitely, given the lowly multiple of the share price. At this share price, acquisitions will be dilutive, so the board won't agree to any. That is alright, as TPX already has a wide product and vertical expertise.
It is a fundamentally cash generative business, so suggestion of a diltutive share placing is absolute rubbish and marks out those who claim such to be extremely poorly informed or just very unsophisticated.
The many acquisitions seem to have failed to integrate together, increased over heads, and also dilution to the share price. Last time an acquisition was made "Swirl" and "Peak indicators", so Peak cost (cash and) £2.11m being satisfied through the issue and allotment of 938,888 ordinary shares and Swirl (cash and) £2.0m being satisfied through the issue and allotment of 888,888 ordinary shares. Doing the sums on the deal, this valued the share price at £2.25p. Today it is 41p. Not to mention the acquisitions were supposed to be "immediately earnings accreditive" Yet TPX reported a loss in its last interims, and lower revenue (extrapolating for the FY) than was touted when the deal went down. Those 2 acquisitions also added 65 full-time staff members to the payroll.
In all honesty, I wouldn't be surprised if the £6M cash was running dangerously low now, and rather than print some new shares for the next acquisition, its more likely those shares get printed in the form of a placing. Further backed up by Oliver Rigby's actions of selling the wads of shares he bought, when he was trying to lift the SP after the last profits warning. Rigby sold well over a million shares "due to strong II demand" which is total bull, that there would be such demand for a company failing to make any money. (He literally dumped his stock off a recovery bounce, partly caused by his pumping). The only hope here is that they announce a large contract, but maybe TPX is too disjointed even for that to help.
More buying today, onwards and upwards
Another high volume day. Also CFO in the market buying. The overhang must be close to done by now. A couple of large positions have been exiting due to market cap limits. Good riddance I say. Onwards and upwards.
This will be trading >120p by the full year trading update end March IMO
Significant volume. Remaining sellers being cleared now. Further rises ahead IMO.
Backlog is pretty transparent, largely not speculative, then it's just about managing their costs.
Up another 10%
Wish I had £75k for every positive forecast I read!
They read the outlook statement in the Interims, unlike anyone on this chat group.
2 significant unknown trades. Assume buys at that price. Let's hope they know something we don't yet.
Now up 23.75%. If you can't look forward you're not going to be a very good investor.
Up 20% today. But the stock is worth 130p based on an EV/EBITDA of 10x forward (March 2024) EBITDA.
That's a 3x return, almost.
October and November new business wins came to £26m, which is fantastic. That's an annual run rate of £156m. Second half ebitda of £6m is almost assured based on their budgeting. Their guidance of 10-15% revenue growth next year at 12% ebitda margin is easily achievable. The business has clearly turned a corner.
Thanks
I now can't see the TO before Xmas Wouldn't make sense
Yes no profit warning. But also no profit either.
Reported loss before tax on continuing operations of £(4.3)m
Can you elaborate?
ha! No profit warning today! TPX are going to meet new guidance.
I'd like to think you're right. I am a shareholder so a TO would be news welcomed by me. Any predictions how long this TO might take?
Think what you like Christo