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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Brilliant result:
£32.6m revenue vs £32m guided. £600k ahead of expectations.
Run rate (extrapolating H2) is £37.5m revenue.
Adjusted Earnings £6.3m (?)
"Order book significantly ahead."
FY2021 result confirms this is trading on a PE of 8 in a growing company with outlook for 2022 where peers are on a PE of 20. It's safe to say this isn't gonna stay at 36p a share.
It's been delicious bargain buying today but I was lucky; I was in the process of moving funds from one SIPP provider to another so had dry powder through that.....
Once things settle down about the Ukraine we'll see a bounce in the market
Very good, thank you, but the market doesn't want to know.
I wish I had spare cash to take advantage of the carnage out there today, but sadly I'm fully invested. Another lesson for me to learn. What I certainly won't do is sell any of my holdings in this turmoil. Tin hats on.
Given the recent fall I went back over the recent interview on Vox Markets to write down the key points of the interview.
1. Brand strength in their niche areas (60% of revenue). Products are staples.
2. Customer Brands (40% of revenue) opportunity for new opportunities, additional sale of VLG products (white labelling)
3. Vertically integrated - helps offer better levels of service to customers
4. BBI - Balance Active Diabetes products - growing, 2 new areas of therapeutics - women's health; additional Swedish manufacturing capacity
5. Helsinn - Oncology products - help reduce side effects of cancer treatment - profitable and growing
6. Majority of sales are European. Looking to grow US presence. For now use Amazon. Good relationship with Amazon. In the future looking to acquire a US presence.
7. Chinese distributor strong until early 2020 (é7m sales in 2020). Hit with lockdown, large inventory, never recovered. Samarkand now in place who specialise taking European brands to China. VLG now deal with the UK people of Samarkand.
8. Overstocking. Hand sanitiser - over ordered during covid.
9. Margins. 3% hit to gross margin due to cost increases e.g. shipping costs. Now passed on customers as higher prices in 2022. Will we see margins above 40%? MD replies YES YES
10. Dentyl has ingredient called CPC. The research will be peer reviewed in 2022.
11. New product development. Innovating on existing products. More acquisitions around women’s health. Acquire weak brands and rebrand them using VLG’s brands e.g. Balance Active
Four levers to achieve synergies in acquisitions. 1. Strip costs out e.g. admin costs (+5% margin) 2. internalise manufacturing (+5% margin) 3. International Markets 4. New products. Leverage “substantial benefits”
12. Debt capacity in Jan 2022 - £5.5m includes lease obligations FRS16 – net debt is “considerably lower”. Scope for £50m inc accordian… can buy 2.5xPBT + what they’re buying.
13. "Expect 10% growth"
14. Existing manufacturing capacity to grow sales to £60-70m
VLG not escaping this week's market jitters - down almost 20% from recent highs.
Agricore, lol, small mercies...;)
Maybe we can convince ULVR that its a better buy than that Glaxo thing they're chasing! ;-).........
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LONDON (dpa-AFX) - In a planned update released on Monday, Unilever (UN, ULVR.L, UL) stated that GSK Consumer Healthcare would be a strong strategic fit for the company. Unilever believes this would be an attractive and synergistic combination for the shareholders of Unilever, which would also deliver value and certainty for the shareholders of GSK (GSK.L, GSK) and Pfizer.
Following an extensive process to review strategic pathways, the Board of Unilever has concluded that future strategic direction lies in materially expanding its presence in Health, Beauty, and Hygiene. The Board of Unilever also noted that major acquisitions should be accompanied by the accelerated divestment of intrinsically lower growth brands and businesses.
Also, Unilever said it plans to move away from existing matrix to an operating model that will drive greater agility, improve category focus, and strengthen accountability. The company will announce a major initiative later in the month.
Unilever stated that the company is committed to strict financial discipline to ensure that acquisitions create value for shareholders. Following any acquisition, Unilever would target a return to current levels of gearing over the short to medium term.
I agree but at least he’s not constantly talked over by Paul Hill - I call that progress.
Simon Thompson in the IC republished a tip with a 100p target - though I think good news will be the main thing to raise the SP.
Watched it.
Bit rampy, but that's Vox Markets - they give everybody an easy ride.
Positive nonetheless.
Thanks for posting the video Agricore, will watch later.
And (again) for your thoughtful analysis. Last I understood was that margins were being squeezed and it would take time to clear the debt, so if they've made that much progress, that would be great!
I worry more than you about their acquisition trail. Now is not necessarily the time to be again adding to debt. On the other hand, if they can pick up suitable assets for a song.... I don't know... i need to see more before I'm convinced they're superb capital allocators. Maybe the video will help.
https://youtu.be/KV-zPUZL6Zg
No "news" but provides context of the events of 2021 and where they're going for 2022. Interesting too that they are once again on the acquisition trail and not standing still. All very positive in my opinion and am looking to next month's update. Describes their non-IFRS16 debt to be negligible which is interesting also..... reading between the lines that means cash flow in H2 2021 has reduced its acquisitions debt to negligible levels ("much less than £5.5m excluding lease commitments" said Jerry). That in turn means the cash flow positive indicates to me potential for a good level of earnings. I appreciate cash is only one current asset so it depends on a few other timings and aspects like destocking - but it's more evidence that this will surprise the market and at 45p it's still good value. Interesting, too, that Cenkos report that peer business Science in Sport has a EV/EBITDA 5x higher than that of VLG.
I'm also delighted. This was my worst performing share but I kept buying on the way down - just for once it's good to be rewarded for one's bravery and hopefully correct analysis.
Simon Thompson's piece has zero analysis. It is just a re-write of the RNS. I am amazed people rely on such articles to make investment decisions. At least his previous notes on VLG had something that was not in RNSs or TUs.
There is zero evidence that VLG is integrating recently acquired businesses well. Indeed, they at some point stated an acquired business was delivering sales lower than before being acquired.
Further 10% bounce today following an ST update. For those two bought in sub 30p this is now a 50% retracement.... more upside to come and with the China issue resolved with a smart replacement, I am delighted with how this is progressing.
There is a markedly different tone to today’s RNS.
However management need to execute well for some time (18-24m) before they will be fully trusted….
One thing we have learned is that they know when to deal their stakes….follow the directors when they buy and sell..
Venture Life plc is a leader in developing, manufacturing and commercialising products for the self-care market. Dentyl Dual Action is the fastest growing mouthwash brand in the UK and Ultradex is the leader for UK halitosis mouthwash market. Both brands have previously generated sales in the Chinese market. Samarkand Group plc will immediately become the brands' exclusive distributor in both the cross-border ecommerce market and the general trade market in China. Using its Nomad technology and service capabilities, Samarkand will create multiple ecommerce and retail sales channels for the brands.
" As Samarkand has other key brands under their stewardship, we are confident that our oral care brands will be properly exploited and managed by them in China. This partner brings two key benefits which I think will be paramount to our success; the first being a UK base that we will interact with directly, making communication quicker and simpler than with a partner direct in China, and the second being their own team in China directly interacting with the UK base."
Subject to minimum performance conditions, the new agreement will be for an initial term of 5 years.
And there is more...
"Further to this and following the months of intense integration since the acquisition of both BBI Healthcare and Helsinn, our commercial team is starting to make good progress on exploring and exploiting the expected synergies. A new distribution agreement has been signed for Pomi-T in Germany and good progress has been made in identifying other prospects in other key parts of the world. We will continue to update the market on this progress in due course."
New China distribution arrangement RNS.
Saarland Group plc is listed on aim under ticker SMK Mcap 80m
Office in Merton, London
Business description from HL.
Samarkand Group plc is a United Kingdom-based company that enables its wholly owned and third-party consumer brands to access Chinese consumers through cross-border electronic commerce. The Company serves brands from the health and beauty sectors. Its software platform, the Nomad platform, provides a direct-to-consumer route to the electronic commerce market. The Company's platform offers five technology and service solutions: Nomad Checkout, Nomad Storefront, Nomad Commerce, Nomad Analytics and Nomad Distribution. Nomad Checkout is a software as a service (SaaS) based solution that integrates with electronic commerce software providers. Nomad Storefront supports the operation of electronic commerce stores on Chinese platforms. Nomad Commerce offers customizable electronic commerce solution. The Company's platform is integrated with electronic commerce and social media platforms, as well as payment, logistics and customs systems.
But I think they were - multiple directors made purchases at the start and then the end of December, all in the 30-35p range!
L3 - I think the market is proving you wrong, actually.
Look back over this thread - all the analysis is there - if you only took the time to look. Your throw away analysis of
"it failed to deliver the level of sales and EBIDTA that were announced at the time, etc" fails to consider some simple facts:
1. VLG has a solid track record of growing profitability in the past. A solid track record of acquiring companies and adding value to those through product innovation, leveraging new geographic markets, cross selling new products to existing customers = PROVEN SYNERGY
2. The China Distributor Issue and the Tom/Richard/Harry making Hand Sanitiser issue - whilst both unfortunate - didn't justify the ENORMOUS overreaction of people throwing the Baby Out with The Bath Water...... The value on offer here is incredible. The destocking is temporary & appointing a new distributor is fixable.
3. If you re-read VLG's latest trading update there are nuggets in there for the future. Especially in the performance and progress of the acquisitions. I think we will see positive news in due course.
4. The BOD have bought £100k of shares recently and have substantial "skin in the game"
Considering I bought in at over 90p on ST's "tip" I'm delighted to now be back in profit and looking forward to VLG's update and continuing re-rate. I wish all Venturers a happy 2022.
Yep, great to see this bounce. Hopefully the trading update due soon (1st Feb last year) will confirm VLG on track to meet the new 2021 forecast of 2.86p EPS, and on track for this year's forecast of 4.55p EPS.
Perhaps the directors will be just as astute in re-purchasing at 30p-35p as they were in selling at 90p.......
Two days of sharp rises! Let's hope it sticks and that it repeats elsewhere as it's been a torrid few months for UK small caps. Spring cometh!
ABftse, can you provide details at to why the balance sheet is strong and healthy? We must be looking at different companies... There is a loan... cash has been used for acquisitions that failed to deliver the level of sales and EBIDTA that were announced at the time, etc. Please prove me wrong. Thank you.
Great company with market-leading, evidence backed brands... look at Ultradex (no.1, beating cb12); Dentyl Active (growing market share, did recent study with Salisbury Hospital).
Strong, healthy balance sheet.
Ridiculously cheap.
Good to see an up-tick here for whatever reason.