RE: A pragmatic view of Trading RNS25 Apr 2024 19:29
listen folks i’m a serious baller. i have just flown back into the uk and i have them fuelling up the jet. i’m cleaning up and then i’m off to dubai for dinner appointment at salt bae restaurant. i’m closing a massive deal there and i’ve ordered full of **** t bone steak, i’m clueless sticky toffee pudding. can’t wait for it but i can’t hang around as they are fuelling my yacht to get back home. as i’m waiting for my private jet to land i had time to kill so i though i would type this out on a stock i don’t hold and test it’s a penny stock.
you leave the country for a week or so and look at what happens? i am sure i have been missed by all.
so, a rns and the usual flurry of excitable spamming ensued. we even had over £100k traded on the day of release. mostly small trades but they all add up and the price increased. on a purely superficial level you can see why. the rns contained some great news. for me here are the plus points:
1) margin has significantly increased on the products. this means the appointment of an operations guy has paid off and the production side is working efficiently with further optomisation due. this relieves the need to relocate.
2) simon is gone replaced by carolyn who has clearly been an asset as non exec director. this does still leave a hole on the financial side and so with the appointment i expect a new cfo to be appointed. i didn’t rate simon and so this is a positive move.
3) profit up substantially and a cue to costs is that cash balance is up. this indicates, but doesn’t guarantee that the cash burn is over.
now, that is all good and it is encorouging that markets in india have also been identified as a potential growth area.
so why is this still at 4p? why were buys outnumbered yesterday and why is the price drifting today?
as mentioned, with a stock it is very easy to get over excited and carried away. most involved with odx shares will know this more than any. with cnsl it is often what they don’t say rather than what they do that is always slightly alarming:
1) no news on the government action – this is a weight hanging over the company but with an election coming it remains doubtful if settlement can be reached and it is clear they do not believe they have a strong enough case to launch court proceedings.
2) no news on the us. we know two machines were sold with one delivering. but for this primary growth target to not be mentioned is worrying.
3) revenue may look good but is it? i predicted that revenue would be below £10 million and here we are. this means that much of the growth has come purely due to deferment. that is not good because this business isn’t going anywhere unless it can substantially grow.
4) my guess is that the company may show a marginal profit when the figures come out. let’s be optomistic and say £500,000. on a straight optomistic multiple of 6 that would make the company worth about £3 million + goodwill and ca
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