The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
Revenue, profit and cash generation is essentially a story for 2015 and beyond. This year is about building scale and turning pilots to contracts. Walsh reckons revenue will hit $250 million next year and then double in 2016. He attributes the falling share price since the first day's spike to long-standing investors exiting. He is comforted by its biggest backer, Invesco Perpetual, having increased its stake at IPO and chairman Ian Molson investing £467,900 in stock earlier this month. Growth: High The company expects rapid revenue growth over the coming years. Risk: High Conversion from pilot to contract is not guaranteed and there's plenty of competition. Quality: Medium The potential cash generation looks significant and the firm may build meaningful scale.
Buy: RM2 International Market has misunderstood pallet maker as IPO gains fade Thursday 30 January 2014 Pallet maker RM2 International (RM2) is trading below the 88p issue price for this month's IPO creating an opportunity. Investors have worried about high-profile sector flops and a lack of detail on contracts in the admission document. But we see strong upside based on long-term rental contracts generating significant cashflow. The earnings forecast blackout period ends next week, at which point forecasts are likely to underline the £244 million cap's strong growth potential. The firm is also poised to update the market on its plans, although Shares Magazine can reveal that several pilot projects have already turned to full contracts. 'A huge amount of logistics info has been exchanged between clients and us by the time it gets to the pilot stage,’ says chief executive officer (CEO) John Walsh, underlining the strong relationships which the company develops with potential customers. 'We're not simply handing them a pallet to test. We believe the conversion rate from pilots to contracts will be almost 100%.' Promising project pipeline Walsh says confidentiality agreements prevent him from naming clients though he says work is taking place in the bottling, beverage, pharmaceutical, food and fast moving consumer goods industries. One advanced pilot includes the provision of pallets to a supermarket that has its own water bottling plant. Pilot projects last 60 to 90 days and big names on RM2’s board provide excellent industry contacts for potential work. The CEO doesn't want to compete against large pallet providers like Brambles (BXB), operating in the 'downstream' market, providing pallets to transport finished goods to retail outlets. He says a large proportion of units go missing because products are sent to so many different destinations. That's why Intelligent Global Pooling Systems, with a similar product to RM2, went bankrupt in 2013 after losing an estimated 1.5 million pallets. RM2 is targeting the 'upstream' market which is the supply of raw materials and components to a manufacturer. Its glass fibre and resin solutions cost $55 to make and last for more than 100 trips, says Walsh who adds that wooden pallets cost $40 but only survive 30 stints on average. Pallet power The business model assumes a pallet takes six trips in a closed loop supply chain and generates $15 free cashflow per year. Walsh reveals that units are exceeding the six-trip velocity which bodes well for future earnings growth. The £137 million of IPO cash will bankroll an initial pool of 1.3 million pallets. Production beyond this amount will be funded through a mixture of cash and securitised debt, with new units only made to order. RM2’s Canadian factory will produce 200,000 pallets in the first quarter of 2014; 600,000 in the second three-month period; just under one million units in the third quarter; and just ove
Article from the Telegraph last December quoted Walsh that the Company made a small profit the previous year. If you look at the board composition not one of them would want their name sullied with a failed company. This is a long term hold and I have faith that the sp will increase especially when the dividends start.
Heavily into Regenersis and this fall hurts. Anyone know why. Migh be a top up opportunity but not for me as I am overweight here hence the pain. Hopefully it will rise again quickly but I am surprised especially as many so called experts have tipped this Company for 2014
Sold out last week at 37.5p. Reason I could not see it staying at the same levels partly because Earthport is so bad at sending out regular news. This was just a gut feel. Happy to take the profit but aiming to buy back in so will watch the price very closely. This Company should break even soon and might even make a small profit which will send the SP back up but I feel it is a bit unloved.
The Director has put his money where his mouth is, so to speak. A big vote of confidence . The future is bright and it will be Rm2. Patience is required and the Director would not have purchased any shares unless he had real conviction in the prospective revenue capabilities of this Company. I would not be surprised if a good RNS is not issued about more contract wins by the end of March 14. As mentioned a lot of sells are actual buys and it depends on the SP paid. It is very confusing. For example, for PLE there was a sell of 4m shares on the trade board when in reality it was a buy as announced this morning via an RNS. I wish that the sysytem was clearer as it caused a bit of constination until this morning.
Just noticed my buy is down as a sell
Just invested this morning. As said before this is a wait and see share . Good to read that they already have a number of blue chip clients and its all about global growth. In terms of pallet production rising in 2015, this should produce healthy revenues and thus dividends but time will tell.
Two big buys £32K and £55 K appear on share trades. Surprised that the SP did not rise further. Very interesting. Looks as though Earthport SP will rise over the next 12 months dependant on news which should now contain further contracts confirming more revenue.
50p Fingers crossed. Any views where this share may be in 18months. Happy with the growth but thinking about when to sell. Suspect that this SP will rise when the Company states it is in profit quite dramatically.
The most silent board on LSE. The recent deal seems to have cemented Earthports future and the SP. Lets hope it holds and continues upwards. Happy Christmas to one and all.
Antone have any idea whats going on Looks like someone is building a big stake in Earthport.
Have to say I was criticised by a few on this forum when I sold out about 4-5 weeks ago as I had lost faith. The new CEO has to remove the smell of the BBC reports and other comments about the Company on the internet. I lost money on Cupid but have made it up elsewhere. I note there a few who are heavily down and I hope this new CEO drives the price up. If so and you can reduce your losses /break even taking the dividends into account, get out. Cupid is on the radar now and any mistakes / funny ways of selling will be highlighted whether it is true or not. They are cash rich and should return the money to the shareholders.
Earthport has either slipped under the radar or nobody cares. Big sells and big buys over the last few days. Any views? I still believe that by next November we should have received some good RNS news on contracts and revenues. The end of year statement was good. They are making progress but their silence over long periods hurts the SP.
Contacted Earthport and inforemd that the results will be out the end of next week.
Wish they would stop talking about thsi share and give us some news which drives the SP up. Whose paying for all these nice trips to Dubai, yes the SH. We need some good news not bloody conferances . I know that they are looking to drum up business but surely they should have some contrcats already under their belt and some income revenue to tell us. Getting very frustrating
No he went on some speed dating site and paid for that which had no association with Cupid or at least that was his impression until he saw his bank account. Anyway good luck to one and all who remain faithful Cupid followers. I hope you are successful. For me other opportunities beckon.
Had enough of hanging around for this to go back up. I suspect it will not happen until March 2014. Sold at a loss of £2500 but a net loss taking into account previous trades and Divs of about £1200. Invested in PLE and up £1000 on the day. Much happier and a company with excellant prospects, DYOR. Also a friend informed me he went on a dating site NOT connected with Cupid and a month later noticed they were taking £25 per month out of his account. He is always careful about what boxes he ticks or not. Comment from him, bunch of crooks and he is a heavy investor in shares across the board and had looked at their accounts.
Anyone out there who may have any snippets on Earthport
I know they are not out till late November but has anyone got any information . It seems very silent on this board.