React Group Share Price (REAT)

With comments elsewhere that there's no or very little stock available to buy online. Should be good for a lot more if there continues to be no stock around.

In the absence of 'contract win RNS is likely to be a Trading Statement RNS, the last week April, and after that, we can look forward to the Half Year Report, sometime in first week June. Positive RNS's on these subjects should see sp hit 80p

Interesting point about it not being a sexy tech stock. True, the optics maybe lack a bit of glamour, but cold hard cash profits will eventually turn eyes in this direction

Onward Opportunities Limited (ONWD) last week announced their annual results. They have a £1.2m stake in REAT, or 6% of their portfolio, and they had this to say (incidentally, the tip in the last post was from Share Prophets - asterisked out):

"With React we believe we have captured a defensive growth opportunity at a value price, and invested c.6% NAV into the company. It is a business the team have been researching since September 2022 (pre-launch) and was an early pipeline priority. Through a mix of specialist cleaning services for UK corporates, the business has a highly attractive earnings profile.

The business has three core divisions:

1. React - the heritage of the group, reactive specialist cleaning often needed for emergencies or callouts requiring specialist cleaning techniques; high margin but less predictable.

2. LaddersFree - large glass pane and cladding cleaning for UK corporates, executed through a capital-light membership model.

3. Fidelis - contract cleaning focused on public services. The business operates over 80% of its sales on contracted terms of one to five years and has been organically growing at 17%+ per annum for the past four years under a new management team. Sales are highly cash generative and yield a high contribution margin, whilst CAPEX, depreciation and amortisation are all insignificant.

Crucially now, as a result of a mix of organic and acquisitive growth and the upcoming cessation of deferred consideration payments, the business is beginning to generate strong profits and free cash flow growth from contribution margin as it exploits inherent operational gearing. If one were to look away for a moment - not knowing the company cleans large glass facades, rolling stock, and prisons - its characteristics mean it could easily be mistaken for a small, successful software company. Yet we have been able to acquire shares in React over the past six months on forward P/E multiples of 6.5x - 8.5x."

tipped with a 100p target following the recent contract wins:

https://*************.com/views/73973/react-group-contract-wins-including-three-material-contracts-a-trading-momentum-continuing-buy

conclusion:

"of course, the group now has to deliver on such ‘opportunities’ but they are noted to further underpin confidence in its current year performance. we’ve noted year ended 30th september 2023 ‘real’ profit around £1.6 million on revenue up to £19.6 million and forecasts for adjusted pre-tax profit to rise to above £2 million this year, with also a healthy balance sheet.

we, therefore, now further look forward to a further update on trading the group has stated it will provide next month and continue to consider a (50:1) shares consolidation-adjusted 100p+ share price, £21.5 million+ market cap, looks justifiable on the noted earnings and growth outlook. at up to 75p, still a buy."