The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Thanks SB, I am sure your right an update should be forth coming.
I watched the recording of their last investors pitch.
They empasised their ability to withstand a downturn such as we see now due to their niche products and ability to control prices.
I think H2 will be a checkpoint to see whether they are delivering on this. I think the market needs convincing.
I still think it has value, it's just that sometimes, I look at the current paper loss on my holding and need to reassure myself that I haven't missed something.
I was impressed with the investor pitch made by the CEO, he's a smooth operator.
Cheers, Vig
Hi SB, is there a trading update this week
I have been on holiday, so trying to catch up on my various holdings.
Cheers, Vig
RTO is all part of M&A. It takes ages and costs a fortune in advisors fees. Unfortunately it will be done when is done as that's the way it is.
I think they were caught out by this being an RTO.
It takes up a lot of management time, so let's hope it's not slowing down the business.
ITV attacks on the government are putting their advertising revenue at risk. Seems the short sellers are gathering.
The formal bit of the AGM was over very quickly with all motions carried.
There was a question and answer session, which consisted of mainly technical and operational subjects. There were some questions relating to the financials that were not addressed. The only thing we know is that Q1 was at similar levels to last year.
They are making good progress on transition to non Covid testing and the pipeline for enzyme manufacturing is taking shape ready to hit the ground running in 2023. Up to 60% capacity to be sold by end of 2023. Typically a contract for enzymes, if the end customer is successful is 5-10 years. That will give a very solid base going fwd.
A question was asked about margins for testing and I was pleasantly surprised to hear it was 60 to 80%.
I guess we are going to have to wait for the half year trading update to get the financial KPIs and to be honest I am not expecting any significant uprate until then.
Two brokers notes published with target price of 60 and 90..that's quite a variation.
Hi Silver,
The BOE forward forecast was downbeat and even the shares with great fundamentals are suffering. Personally I think the BOE are a little over pessimistic.
I am really impressed with the exec team at SRC and if anyone can steer through the turbulence they can. Q1 was good and they are still on the acquisition trail.
I am looking at this with a glass half full, there will be a lot of construction in Ukraine at some point ! and SRC should be ideally placed.
Fyi
You can join EKf AGM by zoom, 11am Weds
Join Zoom Meeting. I have registered am my sign on below. Not sure if it will work for all, but you can register by contacting ekf@walbrookpr.com
https://us02web.zoom.us/j/89652746997?pwd=-1S4_jDUKIwwEtgk0K4y5vrBfkNZdb.1
Meeting ID: 896 5274 6997
Passcode: 541840
One tap mobile
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At the investor meet presentation we raised a question about the share buyback. They said it was good value for the company as a recent acquisition had been made at circa 80p per share.
As discussed before it seemed announcing the buy back price was unnecessary as the share price was marked down and has not recovered.
The question is who benefited from the buy back as it certainly wasn't existing private investors.
The AGM is in May and we will be coming back to this if there is no share price recovery.
Looks like BOOM continue to boom. Presentation was very positive.
Booked over 60M of business in Q1 which is same as whole of last years bookings.
Q1 2022 is circa 100% greater than Q1 2021.
They are growing faster than all the competition taking an increasing slice of a fast growing market.
Margins are increasing, because of demand for Audio boom services.
I get a feeling that we can expect another good year.
I have become slightly overweight on EKF, but I am optimistic that they will deliver on their plan. I am still uncertain on the buy-back policy. More so after listening to podcast by Chris Bloomstran of Berkshire Hathaway. He says that buy back is now a trend with companies trying to boost their share price. His view that this would be better invested and the share price may mask underlying growth issues within the company. It is clear that advisors are pushing this to businesses right now, not least for the arrangement fees.
I think EKF have made their investment for future growth, so not such a worry here.
Next milestone is AGM in May.
After visiting Finland, Liberum have issued an upbeat note with target 130.
This is list of major shareholders. After the buy back this would equate to something like 55% of total shares in issue.
However it could be more if these shareholders are buying during the buy-back period.
Harwood Capital 130,875,000 28.21%
Canaccord Genuity Wealth Mgt 30,875,780 6.66%
Liontrust Asset Management 29,682,369 6.40%
Schroder Investment Mgt 20,100,000 4.42%
Octopus Investments 19,278,000 4.16%
Stock Invest 17,830,000 3.84%
Could be today, but certainly by end of the week.
Nice to to see the share price increase after the investor conference last week.
No doubt the hearing loss trial with the NHS is going to lead to revenue in the UK. After this is a proven success in the UK they will address the large US market. They were giving no indications when this could happen, but right now they have something unique in the market.
It looks like they are now starting to earn revenue after a period of development.
Dartron,
Manufacturing revenue (covid related) was still at 2021 rate for Q1, then it tails off. So if you strip out all manufacturing revenue that gives you a very conservative forecast. Margins on this are also low compared to other business.
The singer target is also quite conservative and so from current price there is upside potential.
I and other current shareholders are a bit miffed about the way the buy-back was done, which largely signalled a 45 p valuation.
I saw enough in the presentation the other week to accumulate at this price and expect a tick up leading to the AGM in May. At the AGM they are requesting approval to buy-back another 15% of issued share capital.
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They target to complete before the AGM in May.
At the May AGM they are requesting shareholders approve a mandate for buy back of a further 15% of issued share capital.
This does not guarantee they will execute, but they have the option.
On investor meet, I see they are still working through comments and Questions, so I might get an answer via that route.
As I have a fair investment in EKF I was trying to rationalise my thoughts yesterday evening. (main points only)
As far as competence in their field I got a warm feeling and also their CEO although a Brit clearly has a lot of contacts in the US an knowledge of their market.
They said Q1 2022 Revenue was running at same rate as 2021 and that 2021 should be seen as a spike in revenue due to Covid, so I am looking at 2020 as a benchmark to measure progress. Note Covid work was high revenue but low margin.
The Covid effect they think will tail off from Q2 onwards and their efforts now are to switch the testing to non Covid (and there are plenty of opportunities), which they are already pursuing. I think this will ramp up as the year goes by. In the US this means leveraging on ADL.
The other area they rely on for growth is via the investment they made in bio culture production. This would seem to have significant potential in the US and although they are marketing this capacity now to secure contracts. The new capacity will not be in place until 2023 Q1 and so sales will ramp up from there and thru 2024.
They were clearly conscious that investors may measure them based on 2021 spike and see any revenue reduction as a negative. I don't see this as an issue as what 2021 has done is allowed the to develop new areas that build the future.
I think 2022 is the challenge and it will be interesting to see how quickly they transition to the future business model.
As with most AIM companies, they rely heavily on advice especially on governance and Shareholder engagement.
I await clarification on my question on the share buy-back and this will shine a light on this.
I asked the question about the share price drop today after the buy-back RNS. They only answered in part saying that they were taking 9 million shares out of circulation as they had issued 9 million for the ADL deal. Also as that deal was done at 80p + per share they said if they could buy back at something like todays price it would be a good result for the company.
They didn't comment on the share price drop triggered by the announcement, which was the point I wanted to make.
I have left feedback post meeting on this point and I will share the response when I get it.
Chelsea,
Once you have registered with the investor meet company, you will get a weekly mail informing you what company presentations are upcoming.
I find it a a great service and free to investots.
Hi Silver,
Totally agree with with your comment below, which is what I alluded to in my post.
The market makers had set the price long before the markets opened based on the buy-back.
Can the price be clawed back, of course but this was un-necessary and may spook private investors who perhaps don't get into the detail as they probably should.