RE: Results17 Nov 2023 11:31
Do you have any more info on the Cannacord note?
I'm a long-term holder in Mano and often view on the side of the positive and always dial in for the updates. I think its good management engage in this way. However, I must admit I was left frustrated after the presentation yesterday, mainly because feels like I've heard the same narrative for almost 2 years now and I'm concerned that a couple of the key themes haven't been delivered - by this I mean specifically BBL loan opportunity and the HSBC covenant breach.
BBLs we've been told a second bank is imminently signing for well over a year and its yet to happen. I'd like to think it will happen but at present the 'imminent' timing at least has been overpromised and underdelivered. Referencing positive conversations 'the Treasury' yesterday are also slightly unhelpful unless there is a genuine view Mano will be announcing a partnership with HMRC in the coming days - when clearly they won't. It just gets hopes up unnecessarily.
HSBC covenant we were told was a none issue and would be resolved months ago, yet here we are in November being told it'll be sorted before Xmas (and I'd put money on that not happening).
Someone made a valid point below the reference in the trading update to being 'marginally' below the previous 6 months and rightly questioned if 27% profit miss is 'marginal'.
To summarise, my gripe is a constant theme implied overpromising. This is even more frustrating with a small company that only really issues updates 3 or 4 times a year. It will likely be April now before another update.
On the plus side, and the reason I stay invested, the underlying business is clearly back up to and above covid levels, which is positive, albeit on a higher cost base (both operational costs and interest cost on HSBC facility given current SONIA rate vs 2019). So the business will need higher levels of cases just to tread EBIT water vs 2019 given the higher costs. I have no reason to doubt they aren't already doing this its just the time lag for P&L to be 'realised' on the new cases. It's also a positive to gear up operations in advance of the expected case jump, which they have done.
Finally, a 1.4p EPS for a 'positive' 6 months on a 170p valuation isn't really knocking the lights out. Even if that becomes 4 or 5p by year end, it needs to get up to minimum 20p before we can expect any proper valuation uplift.
Again - time to forget about this share until April and hope the usual slow decline in the meantime doesn't take us below the historic lows of a few weeks ago.
For all these reasons I'm interested to know what Canaccord are assuming for revenue and EBIT over the coming 12-24 months as ultimately that's what will drive shareholder value. As I struggle to see how a positive 6 months only delivering 1.4p of return on my share satisfies that. I do accept that of the current share price, around half of the value is sat as retained earning on the Balance Sheet.
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