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Stodgy88
I am not sure what reality you are talking about. All investments are made on fundamentals. The first basic one is whether the markets are valuing the company on its book value (ie actual worth of the company) in RMs case they were well undervalued at £4.50 a share with a market cap of c.£4bn when they are worth £5bn. Then you look at eps which will grow and with another lockdown coming in Europe there will be more demand for Royal Mail services. Yes there is some workforce challenges but a company like RMG will work this out. When you have free shares why would you sell especially with a strong divi surely you would’ve kept them as employees would’ve got a decent discount. But let’s see what the future holds you have to take emotion out of investing and use logic. Also if you are not invested then why are you even bothered posting surely you would invest your free shares elsewhere. You might think you are helping others but you have not provided any factual insight on why RMG shares will drop fast.

For 35yrs you should have some key insights on why SP will drop ie machines actually don’t work, accounting team at RM are lying about the numbers, the staffing crisis is meaning packages are being sent back to sender and they are using UPS or DHL. That one insight if you could share would be valuable then just saying SP will drop. We await your insight so people here can also put a short below stop losses so that they can hedge against any fall in SP

Good point I missed the £200m. Ok recalc and estimated shares will reduce by 40m so looking at 960m outstanding shares. Which still means that book value is at £5.25sp. Discounted does drop to £4.80sp. Still a 7% upside on today’s price. Also remember the current sp is below book value. Most ftse 100 companies trade 1.5x above book.

Anyway beetroot juice I’m in and will see what the future holds. If there is a price drop and I have it completely wrong I will get some divi.

How do you get to your assessment. Do you work at RMG. The numbers don’t seem to agree with your analysis. You stated troubles ahead will be good to understand the troubles you mention and how it affects bottom line.

It’s interesting how you have not read the detailed report from RMG today in interims and noticed the increase in stock buying pressure over last few weeks which is opposite of your assessment.

Anyway I’m in now with a much inflated buy price however I believe the risks from last 2 months sell off have been removed.

I have been waiting on the sidelines to wait for a catalyst to buy. A share buy back / special divi and net profit of £270m has done it for me. YE RMG will expect £540m net profit and will have over £1.5b cash in bank with net debt reducing.

With shares reducing to 800m and net assets of £5bn in reality RMG is worth £6.25 a share if you used discounted cashflow and added the inflationary and National insurance impact the SP should be no less than £5.35sp. Interesting to see what markets do and why they will keep the sp below £5 but I am a buyer now in the morning and just hope it is a red open instead of a massive green

I don’t think averaging down at this stage will be a safe strategy. The big worry for me is that RMG is trading below its NAV of £4.5bn this indicates that markets know what is coming in the next results or the markets don’t believe RMGs books. I noticed this pattern on a few stocks notably NMC Health who was trading well below book then the he muddy water scandal.

Things do not add up with RMG as their balance sheet and accounts indicate that they are well undervalued. Will the markets intentionally allow such a stock to be so undervalued. On 1.5x NAV and profit of £1.5bn I would assume RMG would be more near £5.50 an sp and not £4. There must be more to this story that we have not been made aware of. I’m still patiently waiting for a upturn in this stock as if no issues with accounts then this may be a no brainer. GLA

Hi Angers I agree that a big company with a shareholder equity value of £4.5b is trading below this. Most Ftse100 companies will trade 1.5 times their value on balance sheet.

However one fundamental piece is that parcel volumes are down 12%. This is key as the Pandemic helped with the income generation and this additional income will reduce. As oligarch states the energy costs rising, shortage of staff will also impact the share price.

Also factor in Q4 is a busy parcel delivery period with Christmas coming, due to the driver and petrol situation will there be backlogs and delays in delivery which will impact bottom line and cash at RMG.

I personally would wait and see where bottom is as RMG has been a success story in 12months so this drop we are seeing is nothing and more a correction unless someone bought at £6. I prefer to see if there will be an upswing and buy then if I buy 4% higher than today so be it but at least I am buying in an uptrend so will minimise loss.

Commonsense5 you’re analysis on the fundamentals side is good and are right that there is good value here. However you should never top up or chase a falling stock especially in a downturn market.

I’m your analysis you haven’t factored in any forward looking impact which will have an impact on RMG and will lead to a massive cash burn and a reduction in NAV. The recent issues around petrol and driver shortages is a start. RMG need to upgrade their systems as well. The charts look bearish however I see a trading range between £4.00 - £4.40. I think if the petrol crisis settles short term RMG should see £4.50 again but I think 2022 will be a tough year as we move to interest rate rises.

It will be interesting to see the impact England’s win today has on leisure stocks. Rev bars will profit from this defo. Every bar is gonna be fully booked for euro finals and there should be positive market sentiment in general tomorrow

Thanks to Covid 19 I managed to benefit from a number of No Brainer Opportunities and the market was kind: My biggest wins were William Hill / React / Barclays / BP / Mitchell and Butler / Marstons. However I am still waiting on a few which will come good: Inspired Energy / IAG / Rolls Royce / LLoyd / Restaurant Group / Rev Bars. I think now that the impact of Covid is starting to diminish and if England win the Euros a company like Rev Bar in the short term will flourish. We have to remember that even during a slow period they still made £21m Half Year. Revenue will certainly go back to the £100m agains once things settle and people are confident to go bars. Once Unis are fully operational and student nights kick off again then Rev Bars will see quick growth to profitability. The UK has been in lockdown and people are dying to go our and enjoy themselves again. I was in central London last week and the number of people in bars were crazy as people just want to have a good time. In addition we are not far from Christmas and if we get to normality before that period then again will significantly drive revenue.

The only risk here is that the balance sheet is in negative equity and the the debt is huge. However there is enough assets to cover debt.

I wouldn't be surprised of a quick rise in SP from here on. Good Luck All.

Does anyone know who the second investor is. I hope it’s Tony Pupekewitz or Frans Indogo as both have good experience and contacts in Namibia especially to help secure good deals for mine development.

Either way both will get their money back quick as they will broker the mine development and use their friends which means they will get a return from the contract and then when the mine is producing then happy days.

At present there is no cash in bank but no debt, just need the first set of revenues and this will blow. Just my opinion but will be good for any long term investors in here to share their views

Hi all, you all have put in some great posts to help me understand this company better. Sustainability is a huge thing and will get bigger as more companies start focussing on their ESGs. For me the continuous growth in revenue and asset value makes this a good investment. I have been sitting on the fence for a while with this one but with some good cash ins this year now I have cash to burn.

Good luck all but the fundamentals look good. For me any company that makes over £50m in revenue which I think INSE will hit during covid is a great company. GLA

I am planning to buy IGE as my first investment for 2021. But I’m struggling here the financials look good and compared to other stocks this has a decent future and return. Does anyone know why the share price is so low for this company and where can I get more info on IGE customers as their website does not have the right level of detail.

Hi Rivaldo I absolutely agree that the presentation was fantastic. I won’t go on too much about my thoughts as I shared my analysis and views of React early in 2020 and so far the results I had initially calculated react have gone beyond my expectations. £2m cash war chest and the company is only worth £7m seems a massive market correction is due. This is still a tuck away for me and lucky I have been drip feeding into this stock while it’s been low. As many may recall I was buying at 1.5p plus early in 2020. But I got chunks below 1p which bought my average down significantly. I still believe the mathematically this company should not even be trading below 3p. Unless the market foresee a massive cash burn in the future.

Hi jolly - that is the main reason why the sp is surpressed due to not being able to calculate future EBIT or even EBITA. For this year EBIT should be £100-£200k. But the issue is that is the income steam sustainable next year without the added covid 19 revenue. There isn’t enough evidence from the team to give any confidence around that. Albeit the fact that the company should turn a decent profit will allow them to seek other growth opportunities. I think this company will come good in my humble opinion as the revenue without the additional covid 19 has been sustainable and they are managing costs and receipts of payments well. I am still holding to 3p-4p sp by YE as all it needs is 2 new contracts and they are at £5m plus revenue with cash in bank not including the placing and RCF. All in all they are building a cash generative model which is a good thing.

The news has been priced in for a while remember the sp jumped from 0.002p to current price and the revenue is not that much higher than last year. In addition this is not a pump and dump stock anymore so you will see less swings. I had the same frustrations with Hardide which at 1p was mind boggling at the time as it was making profit. But I stuck to my guns on that. You will see many good penny stocks that are in profit not being pumped as these are value stocks to hold on to. I think react slowly will get there. They just need to prove they can sustain the growth and it was not a fluke to current situation with Covid

I am taking a bit of a conservative view, until we get news of more contracts. I think H2 will be a bit slower post pandemic recovery. I think 2021 will bring new opportunities if they can manage their cash well and grow organically.

There are few pieces to look forward to for the YE results which will show significant growth:
- cash collection from tier 1 company will be reflected in YE results
- more contract wins post reporting period
- Leicester could be in lockdown again due to virus increase so portentously more new business as they help us through this turmoil
- I am expecting £4m rev and £150k net profit YE

Can’t wait for the investors meeting this Wednesday

Thanks for this Rivaldo. I was hoping less tweeting from the company until mid next week when I get paid so that I can top up. Have paid all my bills early this month to ensure I have a decent chunk left. I did sell inse aswell as I bought in at 9p and sold at 16.5p so will use those funds. I hope REAT price stays low for a while so that I can top up slowly into it. The investor meeting last week gave me confidence and with a second wave of the virus and results coming I think this will be a winner and an easilly triple my money here.

A great presentation today and a few key takeaways which confirmed and in some instances better than my current expected figures and as such am really excited to run my new set of values for react. A few key highlights that will mean this company is well undervalued:
1) cash expected to be £400k without touching the £225k facility and c£1.25m placing. - that is a war chest of nearly £2m and company valued at £7m.
2) the c.£1m contract wins is known but the jump in recurring revenues Shaun talked about was exciting alone - 3 companies with additional annual recurring revenue c. £750k revenues which is a massive jump in recurring revenue 1) from £23k to £300k, 2) from £13k to £150k and 3) a jump to £300k
3) I think the operating profit is bigger than what the company is making out to be as cash is still same as last year revenue increased But this was not covered strongly enough in my opinion.

All in all if we don’t smash 5p sp this year then something is seriously wrong with the markets.

The regular maintenance business largely operates in the healthcare, road and rail sectors. Revenue continues to grow in the rail and healthcare sectors more than compensating for temporary disruption in others.