Member Info for ragnarlothbrok

Spent a couple of hours updating my model using the latest trading update. Here are some initial estimates

Revenue: 2019 H1 revenue was £22.4m. The trading update told us that revenue was up by 40% on last year. So assuming this trend continues that would give £31.3m 2020 H1. Mind you they said AT LEAST 40%.

Gross margin: in line with expectations (66%). This gives us 2020 H1 GM of £20.7m

Opex: £12.7m per expectations. This is £2.3m higher than H219, despite a reduction in commercial headcount in January by 24 people...

EBITDA: Therefore H1 2020 £8m. Not unreasonable to double this for the full year to give £16m. We also have that pesky £6m product development to consider. So cash flow no more than £10m. Meaning debt reduction probably by around £5m this year.

Progressive have gone with £10.8m EBITDA. With my estimate of £8m EBITDA in H1 they only expect £2.8m in 2020 H2, less than 2019 H2!

Yes they are cautious, that's because they got burned last year after the Loop's unexpected decline in EBITDA. If you go back and look at their old forecasts just before the SP tanked they had £10m EBITDA forecast for 2019, when its more like £6m.

Update from Progressive. Some very healthy increases there. I'd be happy with that outcome (although a lot of guesswork involved).

https://www.progressive-research.com/company-coverage/loopup-group-plc/

Not a recent buyer but still content nonetheless. Always an interesting read from Sir Martin. The numbers and general tone are encouraging

All time high of 500p... 400% from here on a multiple of 25x EBITDA. Or are you expecting 100% EBITDA growth for a multiple of 13x?

Either way thats a pretty punchy target. I'd be happy with 100%, then I'd just about be breaking even

Looks like management heard us. Trading update with business performance materially ahead of expectations and revenue for the first 4 months 40% ahead of prior year. Given we only really started to see the impact of covid on home working in mid March, April must have been a huge month.

As expected they are cautious about the full year impact but personally I think the homeworking trend will become more structural.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/LOOP/14529578.html

Looks like the hunt for yield is on

I think we need some indication that EBITDA will grow this year as promised. The EBITDA reduction spooked the market, and rightly so for a company with a very high multiple. Expectations are for ~20% EBITDA growth this year. Anything above that will be a huge bonus and possibly allow the valuation to return to the stratospheric multiples of the good ol' days.

But right now the SP is happily riding on sentiment. Some decent sized trades coming through, a fairly respectable shareholder register and significant skin in the game from management are all positive signs.

Indeed MrG. Nice to see something doing well in all this madness.. They have done all the right things: reassuring updates, management buying shares on the dip, moving to main market, opportunistic acquisitions, maintaining conservative gearing and reduction in borrowing costs just to name a few.

And at this price still paying a dividend yield of just under 10% (net of the 15% WHT)

Now the question is: what is an appropriate yield for an investment grade company which pays an income which is as much like a bond coupon as an equity dividend?

At 7.5% yield the SP would be 127p and at 5% the SP 190p. I'm going to say somewhere in between so there's so still plenty of upside to go. You'll struggle to find many 6% yields in this market

Its such a small part of Cisco, Microsoft revenue that it hardly gets a mention

On thing Loop is sorely missing is the marketing budget. Most people don't even know it exists or is an option. Their method of marketing is cold calling potential customers.

It was always just assumed that the tech was good but the scale was missing so it was an acquisition opp for a bigger telco.

Flat production and EBITDA in this market is really more than we could ask for.

90% of production in 2020 and 2021 is hedged. We may see a decline in cash flow in 2021 given hedged prices will be 5% lower and some production decline, although may be offset by acquisitions.

Another 3.5c dividend scheduled as expected

I will be reading the prospectus out 13 May with great interest. Moving to main market 18th May

The rules require disclosure if trading for the full year is to be materially different from expectations. Few companies will stick their neck out so early in the year to extrapolate a one or two month trend over the rest of the year. Especially when almost every other company, many of them Loop customers, have withdrawn their own guidance.

I would love to see a positive announcement and think it would set fire to the SP but for now I think they will focus on achieving their full year targets to avoid similar disappointment like last year. I dont think they are under obligation to disclose any outperformance until they can establish a clear continuing trend from the change in business activity.

I hope you're right that client numbers are increasing and they are benefitting from the work from home trend. My biggest mistake on this investment was overstating the resilience of revenue as a necessary piece of corporate infrastructure, so it came as a huge shock to me that, when global markets were ticking along nicely, Loop was downgrading its expectations.

Loop aren't in the habit of providing regular trading updates and I wouldn't expect anything until July, in line with what they did last year. I would love to see an announcement saying at the least they are seeing a positive impact on revenue and that the increase in volumes they mentioned in March have continued and are being translated into revenue.

However any company that sees a 50% fall in its share price in one day needs some lessons in managing market expectations. Hopefully they have learned something. I'm a long suffering shareholder and remember that day last year very well and it certainly tarnishes a company's image and reputation.

They have admitted themselves that a lot of their revenue has been driven by deal making and many of their major customers (professional services firms) are putting significant numbers of their staff on furlough or making them redundant and in general seeing their business dry up. .

Saying that a rising tide floats all boats, and the hype around Zoom and its huge revenue multiple could rub off onto Loop .

Its a tricky one, because they COULD and SHOULD be doing really well based on how their competitors are doing but they also could be doing poorly due to their segment exposure and lack of scale in supporting marketing activities. But they are unlikely to let us know until after the fact. The perils of fishing in the micro cap pond. GLA

A lot of fund reductions this month.

M&G been selling, only 14m shares left. This one is a real dog of a fund, horribly underperforming the benchmark over the last ten years.

https://docs.mandg.com/IRS/MandG-Recovery-Fund_Interim-Short-Report_GB_ENG.pdf

Marlborough left with only 500,000. Fidelity also sold another chunk. In total funds offloaded over 20m shares this month. Majedie, JPM smaller companies both completely gone.

They were all the sellers which have been dumping stock at the bottom at 25-30p. Thats why I dont invest in funds.

I expect to see the SP trapped in a range for 2 months, supported by NTA at the bottom and upside limited by fund selling.

Been in this for a few years (sometime around the days of that Bonker fellow) and I would agree that right now MTR is definitely in the best state I have seen. Switching MOD shares for SFR (which can be used as collateral) was transformational by easing the tension around when the next fundraise would take place, especially for the money pit that is MOD which was a millstone by the end.

If any one of A4, Kalahari or Cobre deliver on their potential that will cover the current market cap alone. I particularly like the shorter term potential of the A4 NSR which could be monetised the quickest. SFR is fairly desperate to get Botswana off the ground to plug its production gap which is great for MTR.

All these exciting projects with not a whisper of future fundraising. Although with all this potential I wouldn't mind it so much now .

Are we going to break out of that 2.5 year 1.5p ceiling at long last?

That base of institutional holders has worked against SLP since Woodford. Since last year, even before Covid, most of these holders have become concerned about liquidity and reduced, with the distribution between funds v others changing as holdings were increased by PIs on the platforms like AJ Bell etc. Majedie alone has liquidated a huge position for such a small company over the last 6 months.

The trading pattern of large volumes of small buys offset by occasional large sells is particularly pronounced on news days as the funds take advantage of a liquidity event, producing the intra day volatility on good news which causes us all such anguish. So far this week we are turning 1% of shares per day which is a lot for a small company with limited free float.

If I was an MM I would drop the bid as much as possible to take advantage of funds that are desperate to sell and drip them back at 5-10% to an eager PI base every day of the week.

Hi TBTT!

Looks like the SP is heading south as per the usual pattern. The IC/ST response to this should be pretty positive which normally corrects any game day declines. We will see...

I'm concerned about the dividend policy. Management have been finding excuses to minimise dividend payments despite a huge growing cash pile. I wouldn't be surprised if Covid is the next excuse they use to keep the payout small.

I dont know if there is something we don't know about, like the impact of the South Africa exchange controls or some incredible future growth project that entitles them to hold so much cash, but Its starting to behave like a Japanese company, hoarding cash, showing low confidence in the market or the business and suffering a depressed valuation as a result. Its lazy capital which is diluting return on our equity and unnecessarily exposing shareholders to the ZAR.

I hope the dividend is close to the Liberum forecast, they can certainly afford it!

https://www.reuters.com/article/japan-stocks-buybacks/cash-hoarding-japanese-firms-please-investors-as-share-buybacks-hit-record-idUSL3N20941K

A huge chunk of performance relates to the massive sales adjustment. Prices were up 40% v Q2 which was applied to Q2 provisionally priced production. Prices are down around 20% this quarter so we may see an unwind of this.

This result is likely to be the peak for cash generation, I don't think we will see a result like this again with prices and production converging perfectly like they have. Q4 EBITDA lucky to be 15m if everything goes to plan.

Wonder if the SP will react positively to these results...Last time we had a stellar result the SP reaction was lacklustre at best

Couple of interesting tidbits:

- There was an extension project at the Lannex mine, hence the operation not being shut down as planned
- More detail around which mines Samancor will be curtailing production at
- Only restarting production on May 1
- The recovery in excess of 60% is fantastic

Mind blowing result...
Production: 20koz
Revenue: 43.6m
EBITDA: 32m
Cash : 45m

Im annoyed that they've been holding the huge cash balance in ZAR, half of that should be in our pockets by now