Previous post10 Nov 2021 08:15
By F1NESSE.
Is today's RNS something to do with your comments..
Stagnation22 Oct '21
Hi No1Scarlet and others. Shares only go up when there are more buyers than sellers. Despite the good half-year report no significant buying has happened so the share price has gone nowhere. There is what they call an 'open tap' somewhere so the market makers can get all the shares they want without raising the price. There are also a ton of 'stale bulls' in this share, dying for any small rise so they can sell. This is both from before the rights issue - the share price churned at 40p for a time - and even after the rights issue when it leapt from 10p to 25p in short order and now everyone would sell at 25p in a flash. Moving the share to AIM will have reduced institutional interest too. I do believe however eventually the price will rise as the value seems to be there but we may have to wait a while to work our way through the above technical situation.
The good bit of the announcement for me was that they have reduced the gearing so that it should be possible to refinance the company with 'normal' bank credit rather than the eye-wateringly expensive loan capital they have at the moment - currently paying 6 or 7% over LIBOR. This is in their plans and mentioned in the RNS. There will be a chunky one-off cost but it should free the profits to flow to the bottom line. At present we seem to be looking at annualised profits of around 4p a share ( it was 1.61p at the half and 'Revenue, EBITDA7 and EBITA7 all above management expectations in Q3 2021 to date.' Also 'Management now expect full year EBITDA, on a non-IFRS16, continuing operations basis, to be ahead of market expectations and EBITA7 to be materially ahead ' ). That puts the shares on say about 4 times earnings. If you think that's cheap then just sit it out and eventually someone will start buying... My 12-month target? 28p perhaps with most of the rise coming on the refinancing announcement.
FWIW Speedy has a crapped out share price too (but not by as much). DYOR.
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