Half year results - Mixed bag.21 Nov 2024 09:20
Many shareholders get very excited around results. They want the "team" to do well. They crave confirmation bias to prove that the investment is worthwhile. No one likes losing money or the realisation that it isn't coming back. Doesn't matter if you're retried, a lorry driver or investment banker. No one likes losing money. The only difference is impact on ones life dependant on the gamble taken. Because, let's face it, AIM is a gamble. You would be a fool to have all your eggs in the AIM basket or gamble more than you can afford to lose.
For most, they want to make a decent return on stocks. That may be short term or long term.
It is therefore amusing to watch chatter around CNSL today. I set the benchmarks to look for on the 11th November.
Revenue is down,, just as I said it would be. Not catastrophicly but significant enough. Remember, historically H1 has the highest revenue. Even Cavendish have reduced expectations for the year to 8.8M. I believe this to be optimistic.
The increased margin is welcome as is continued cost controls. However, this is still a company that isn't on top of sales or cost.
Although it is good they have hired a BDA in the USA the FACT is sales are down by 39%. The 2nd lab is no longer mentioned. China is another key market and yet Asia is down. Again.
No mention of new regulatory requirements being addressed. No mention of relocation. The DHSC dispute is now sucking £100K from the business every 6 months and despite the foot stomping I have written about this on a number of occasions and I do not share the boards optimism.
Another element is in the accounts that is interesting. I want to see if anyone spots it.
As I have said before - CNSL is generally on the right path. One of my concerns - the people running the business - has now been addressed. So, this leaves two fundamentals - do they have the time and resource to turn the ship around? The answer is - we don't know.
The key issues are:
1) Marketing and sales take longer than you expect to get going. Awareness is a huge (costly) factor.
2) Competition is tough and although R&D is welcome this doesn't appear to be on development of gut microbiome testing. They seem to be sticking on the IGG tests. This, in my view is wrong. They are spinning IGG tests abilities but the fact is other competitors are well ahead in the field that is growing the most. We have already seen they are using FUD to sell the other product. Never a good look.
This brings me back to the main point. Is anyone seriously going to invest based on the uncertainties this stock has when much safer bets are available? I doubt it. Perhaps a bit of loose change. This leaves the LTHs who try and trade the stock (a big gamble in itself) or are so far under they cannot face selling. So why bother? Currently this remains a sell. You aren't going to get a surge or rerate imo unless something dramatic happens.
Sign In
Follow the stocks
