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A very good presentation. I noted down some highlights....

- they want to be the biggest in the sector and will eventually become attractive to an acquiror
- normalised cash is now up to around £2m, and REAT have another £1m of debt facilities
- acquisitions will be earnings-enhancing and material, and inside the next 6=12 months. They won't need to go the market for funds at all
- they have a huge addressable market, which is very fragmented at the lower end, so there are plenty of target companies
- the £440k of COVID-related last year was almost all in H2 only, and is continuing at the same rate at present
- COVID has brought new customers in for the first time and further opportunities for sales of REAT's core work
- the fast growing sectors are in facilities management, healthcare, rail and education
- the directors are incentivised to get the share price to 2.8p per their share option plans, and beyond

Today's update looks pretty positive to me also - particularly the $1.2m contract win, the new mViva win and the $600k of other gains achieved this month.

Looks like around 75% of 2021's forecast revenues are already in the bag given the $5.4m recurring revenues, so it shouldn't take too much to achieve consensus at worst.

Last year's numbers won't look great, but that was the peak transition year from lumpy contract wins to the new longer-term contracts which is now smoothing out.

The m/cap is now at only £13m. With a high and increasing recurring income base, at some point there should imo be a decent re-rating here. It's just a question of when, assuming PTRO continue to perform.

Terrific to see the company able to raise oversubscribed funds at 5p - it would have had to have been 1.5p-2p only a couple of months ago.

Also good to see the directors themselves subscribing for £150,000 of shares. The subscribing directors now own over 24% between them, so their interests are aligned with everyone else's.

And to top it off, in case anyone missed it from last night's RNS:

"Production Update

Further to the 'Full Year Production Update' for the Company's palm oil operations at Ayenouan announced on 11 January 2021, positive momentum has been maintained and the January production update, due on or around 10 February 2020, is likely to show a material improvement in production on January 2020. This material improvement is in line with expectations due to the peak harvest season commencing later in 2020 as announced on 9 April 2020. Further updates will be made by the Board as appropriate."

Today's update confirms 2020 trading was in line, and that management's expectations for this year are overall unchanged.

Which presumably means that forecasts of 1.2p EPS will be retained.

Most importantly, underlying cash generation has been good, and net debt has been reduced to pretty minor levels, especially after the SME unit disposal.

It's likely there'll soon be acquisitions to kick the group on. A shame that a large acquisition was aborted, but better to be prudent and wait to acquire quality.

Patience is required, but INSE should make good gains at some point when the lockdown eases (and thx for the comments LordofBurnley!).

I bought some of these back today on the dip.

Cenkos' forecast today is for 15.4p EPS this year, with a 4p dividend, against a 92.4p share price.

CTO have £10.2m net cash against a £40m m/cap, and most importantly the order books are still rising and now total £456m - CTO apparently already have secured work underpinning 95% of this year's revenues.

That's a very solid place to be going forward.

Hopefully Simon Thompson will feature CTO again soon, and I seem to remember SCSW cover CTO too.

Excellent news for RNWH's Clarke Telecom:

Https://www.thetimes.co.uk/article/assault-on-mobile-not-spots-begins-skn27qm8x

"Targeting of mobile ‘not spots’ begins

Three leading mobile phone operators are to build and share hundreds of masts as the industry seeks to boost rural coverage.

O2, Three, and Vodafone said that construction of the 222 masts would begin this year and be completed by 2024 as part of an agreement with the government and Ofcom, the regulator.

A £1 billion programme to improve rural mobile coverage was agreed between operators, government and Ofcom in March last year to increase all operators’ 4G coverage to at least 90 per cent of the UK land mass and their aggregate coverage to 95 per cent by 2026.

etc"

"ST also stated that there has been continued progress with OEMs 1 , 3 , 4 , & 6 , and with 3 new OEM customers , which were labelled at the presentation as a well-known German car manufacturer , a USA manufacturer , and a European manufacturer . Indeed , ST's contract pipeline has the potential to exceed the entire production capacity of Knowsley ( £75m ) by 2025 .

BREMBO -

Brembo is ST's much larger but only competitor , and the CEO used an interesting footballing analogy to describe their relationship . On the field they are both totally focussed on beating each other to new contracts , and off the field there is a mutual respect and awareness that competition will accelerate growth of the overall carbon ceramic brake market , and that dual sourcing is what OEMs typically want of their suppliers anyway . ST believes that Brembo's newest product , the Dyatom brake disc , is an acknowledgement to ST's superior qualities in strength , heat and durability in that its manufacturing process partly tries to replicate ST's own production process , but fails . Encouragingly , this was the product ST competed against in the most recent beauty parade with OEM 8 , a large global car manufacturer , and ST was subsequently awarded its largest ever contract worth £27.5m over its lifetime . Whilst Brembo produces 200/- discs a year for a turnover of £160m , ST maintains it is not only competitive on price but can compete equally well on cost of production . Indeed , the CEO said that he was confident of reducing costs further .

EXECUTION RISK -

There have been some recent new senior management appointments , and ST will undoubtedly continue to hire as well as they possibly can . Cell 2 will replicate Cell 1 , there will be no new bells and whistles , and ST is confident of its dual sourced and fully integrated supply chain . The FD told us that he is comfortable with the £5m of cash from the fundraising that is ear-marked for working capital requirements , and I note that this figure is twice the level that joint broker Finncap mentioned in their research note . The company anticipates no unforeseen Brexit effect , and are confident that with the multitude of processes involved in their disc manufacture that it cannot be reverse engineered by AN Other . Although ST don't currently have a warehouse in Germany , where a lot of their potential business evolves , it is now their intention to do so . Interestingly enough , the Chairman stated that the bulk of board meetings was taken up with questions on execution risk , and it is the one thing that keeps the CEO awake at night .

In summary , my overall impression is of a management team not only in tune with the massive opportunity that presents itself , but confident of their ability to deliver the products successfully . In my view , this remains a classy long term structural growth story , now accelerating before our eyes as EV's dominate future OEM planning , and with huge barriers to entry

by Bomber13 elsewhere, which I hope he won't mind me copying here.....

"Along with some 160 attendees on Monday , I listened to ST present their case for its £20m fundraising at 50p per share .

It now seems clear to me that the burgeoning development of the EV is accelerating the adoption of carbon ceramic brake discs . Their huge weight advantage , their tangible performance advantage , their durability , and their green credentials seem to lend themselves more to an EV than to a traditional IC car , particularly because of the cost , weight and limited range of the battery . According to management this is also having the effect of bringing forward the normal lead times of about 2 years on a typical contract by 9 to 12 months , hence the need to put new capacity in place at the earliest instance .

I have picked out some of what I thought were the more interesting and newer comments from the management's presentation below FYI -

FINANCES -

given that the cost of building Cell 2 is a little over £9m , and that ST is raising £20m ( gross ) , the FD made the comment that there would be enough cash left over after working capital needs etc to " kick start " construction of Cell 3 , if so required , which is a tremendous position to be in if the contracts start flooding in . Given the relatively quick payback expected from Cell 2 ( 15 months ) , the CEO also declared that cash flow from running Cells 1 & 2 at full tilt " should fund an additional Cell's investment " , which is again very encouraging given the ever present concern of further equity raisings . Moreover , up until this £20m fundraising , the company has had to cope with a very small balance sheet with net capital employed of just £6.75m at end June 2020 , and carrying net cash of just over £1m pre-fundraising . As the FD alluded to , moving not only to a much stronger balance sheet on the back of this equity issue , but also to cash positive earnings for the first time on the back of rock solid long term contracts , this would allow ST the option of raising a modicum of debt .

OEMs -

After signing for a revenue pipeline of £43m with 4 OEM's in the last 18 months , of which OEM 8 represented the lion's share , we know current capacity will be near to full by 2023 . We also know from the written statement in the fundraising document that ST " is confident that ST will be awarded contracts on further OEM vehicles in the near future " , of which potential carry over business on new models for OEM 8 , and a possible new contract with OEM 9 for an EV are the most likely . ST will be sole supplier to OEM 8 , and the CEO stated that negotiations with OEM 9 were " coming along " , and that ST was also likely to be sole supplier . Should contracts for OEM 8 and OEM 9 be awarded , they would be material , and the new Cell 2 would be fully utilised in H2 2023 ."

Nice :o))

Encouraging H1 trading update - everything "comfortably" in line.

In fact, with £5.8m gross profit in H1, FNX are trading nicely ahead of expectations. Forecasts are for £11.2m gross profit for the year, whereas FNX are on track for at least £11.6m even with no growth in H2.

Worth noting that the dividend is forecast to be 5.1p - a very healthy 3.5% yield:

Https://uk.advfn.com/stock-market/london/fonix-mobile-FNX/share-news/Fonix-Mobile-PLC-Trading-Update/84186480

Nice 200,000 share buy just now at the full 1.5p offer price, and any selling is being nicely absorbed.

Hopefully ready for another move up.

News - a contract renewal for Mottech bringing in around $2.5m over the next four years. That's solid recurring income going forward adding nicely to forward visibility:

Https://uk.advfn.com/stock-market/london/mti-wireless-edge-MWE/share-news/MTI-Wireless-Edge-Limited-Contract-Renewal/84176309

Short and pretty sweet:

- trading nicely in line, unaffected by the lockdown
- order books continue to grow year on year
- cash flow in line too

That'll do for me (Tommy).

Great new interview with the CEO. I particularly like this paragraph, together with the analyst's prediction of $100m revenues this year:

Https://www.pressreader.com/ireland/sunday-independent-ireland/20210117/282767769252310

"With GAN's US growth set to shoot sky-high, Smurfit says he believes there is an open goal to move toward revenue of $500m in the next five to seven years. GAN is also well-placed to take advantage of any moves to regulate online gaming in Australia and Asia."

Looks like the traders have taken their profits and are now out.

REAT look definitively good value to me at these levels given the rosy outlook and the new - and conservative - £505k PAT forecast. I'm not surprised the directors were buying in size last month at around 1.3p-135p.

Another positive excerpt from today's narrative:

"The circumstances surrounding COVID-19 and REACT's response to it, has helped accelerate the sales engagement process with new customer prospects, and enhanced the Company's reputation with many in the existing customer base. This resulted in incremental new business opportunities for other of REACT's services, some of which were delivered during the period with others flowing into the new financial year."

It's encouraging to see that it's the core business which is driving the growth, helped by COVID-specific revenues of £444k for the period - and this was achieved despite that core business being hit in certain sectors by the lockdowns.

Wow - Allenby Capital have set a forecast of this year of £505,000 PBT and £555,000 EBITDA!

And these forecasts "are set prudently"....they say these "could be raised" as the year progresses.

REAT would have over £2m cash by this September too.

These numbers won't have been produced without guidance from the company. Excellent news:

http://www.allenbycapital.com/research_1132_696149988.pdf

Very good results, confirming the "ahead of market expectations" trading update and the continuing improvement in trading initiated by the new management team.

The really interesting snippet is that recurring income now comprises 80% of total revenues and 74% of gross profits.....a lovely stable base to work from.

And the current year "has begun well, with profit and cash generation stronger in the first quarter of FY 21 than the prior year".....

REAT made £138k PAT in the last H2 - when normal trading was affected by COVID. As I said in post 1510 above, you can annualise this for the current year at say £300k. Throw in a little growth and you're looking at £350k profit, and calculate growth at the historic level for the last two years and you're looking a lot higher.

Nice to see over £200k of internally generated cash flow too, resulting in that £1.8m cash pile - almost a quarter of the m/cap.

There's also some nice detail about non-RNSd contract wins in twelve care homes "for one of our newly appointed nationwide customers" plus manufacturing sites, distilleries, film studios and offices.

Overall, this year should continue the growth path given all the new customers and the return of reactive work which will have slowed again in the current lockdown, combining with additional work to combat COVID-19 which will continue for some time to come.

with a 275p target price.

The buying price has finally just moved up to 202.75p - hopefully an indication that the overhang is finally clearing.

Here's the midday tip since it's been posted elsewhere already:

"Kape Technologies (KAPE:198p), a provider of cyber security software, has released a bullish pre-close update ahead of annual results on Wednesday, 17 March 2020.

It’s hardly surprising given that home working and remote working restrictions due to the Covid-19 pandemic has led to increased adoption of Kape’s cyber security software (which protects data security and privacy against piracy and phishing attacks). Demand for virtual private network (VPN) solutions that encrypt and secure internet connections has been rising notably in both North America and Europe, regions that account for almost three-quarters of Kape’s annual revenue. Kape is also benefiting from the transformational acquisition of Colorado-based Private Internet Access (PIA) at the end of 2019.

These strong drivers have delivered full-year cash profit of $39m, well ahead of previous guidance ($35m-$38m), on 85 per cent higher revenue of $122m. Margins shot up from 22 to 32 per cent, helped in part by a 31 per cent reduction in PIA’s operating expenses. On this basis, analysts at Progressive Equity Research forecast a trebling of full-year pre-tax profit to $34.4m, EPS of 15.8¢ (11.6p), up from 6.4¢ in 2019, and closing net cash of $25.7m.

Furthermore, higher marketing activity in the final quarter of 2020 has laid the platform for accelerated organic growth in 2021. In addition, Kape has completed a cutting-edge infrastructure upgrade that has significantly cut costs as well as enhancing the customer experience for its 2.5m paying subscribers, a tenfold increase since I first advised buying the shares, at 47.9p, in my 2017 Bargain Shares portfolio.

Analysts forecast a further increase in cash profits to $41.5m in the current year, but I expect this to be easily beaten. However, even on this basis, the shares are not highly priced on an enterprise value to cash profit multiple of 13 times, one reason why they have made decent headway since I last suggested buying at 170p (‘Four tech companies with high growth potential’, 18 November 2020). I expect the positive share price momentum to be maintained. A chart breakout above last summer’s highs around 225p would signal that a share price move towards my 275p target price is under way. Buy."

And a very confident 1m share buy at 1.399p has just been reported.

A reminder of the "ahead of market expectations" year end trading update:

Https://www.investegate.co.uk/react-group-plc--reat-/rns/trading-update/202010210700037091C/

"REACT has continued to make strong progress in the period, achieving 42% organic growth in revenue to approximately £4.4m* (12 months ended 30 September 2019: £3.1m).

Growth in revenue was as the result of both strong underlying performance in the core business and demand driven by COVID-19 decontaminations. H ealthcare, rail, and facilities management sectors performed well, augmented by incremental business in other areas such as education and residential care homes.

The Board expects profit before tax for the year ended 30th September 2020 to be ahead of market expectations driven by both COVID-19 related decontaminations and a number of non-COVID-19 related projects.

The Company's financial position is robust and underlying cash generation remained strong during the year ended 30 September 2020. Net cash at 30th September 2020 was also ahead of market expectations at £1.8m*."