|A pocket summary of SORB for new investors:
* SORB is one of the world's leading food sorbate (preservative) suppliers. People must eat...
* Revenues = £14m;
* Net assets = £10m;
* Cash = £7m;
* Profit = £1m;
* Potentially up to £6m compensation coming from a Mongolia factory dispute;
* Potential repayment of £2m loan-notes compensation from a subsidiary;
* Current marcap today = £2m...|
|SORB right now has *£14m revenues, £10m net assets, £7m cash, £1m profit, and potentially up to £6m compensation coming from Mongolia*... and a current *£2m marcap*... Hugely undervalued.|
|Can sell over 100k shares way above the bid.|
|taken from 2013 results
Inner Mongolia facility
As announced on 23 April 2013, the Group had reached agreement with the local authorities in Ulanqab City, Inner Mongolia authorities over compensation terms and the resumption of building in Ulanqab, totalling approximately £5 million. However, with the advent of discussions in Linyi over a possible site re-location due to the redevelopment zone, the Board decided that it should not continue to pursue the commencement of rebuilding in Inner Mongolia while the option existed to expand within Linyi. Accordingly the local authority in Ulanqab City has been informed that the Company no longer wishes to pursue its original plan in Inner Mongolia and will continue to seek compensation. Negotiations are currently taking place on the understanding that the compensation agreement will be 'fair and reasonable' to both parties. An open dialogue exists with the Inner Mongolia authorities.
Given the investment to date of approximately £9.138 million in Inner Mongolia, the Board has decided that an impairment provision be made of £6.684 million, representing all of the costs incurred to date, but excluding 50% of the equipment which has already been paid for and is considered re-useable in the construction of the new facility in Linyi. The provision will be released when the quantum of the compensation agreement has been agreed.|
|taken from 2012 results:
"Inner Mongolia facility
As previously announced, the Group has been severely impacted by the notification to cease construction in order to make way for a new passenger railway terminal which will be linked to Beijing.
The Company has sought diplomatic support from the UK's embassy in China to help in reaching a satisfactory settlement.
In addition to the overarching understanding that the Company will not suffer any financial loss as a result of the rezoning process, the following specific principles have been established:
· The Company has been offered land on an adjacent site only 0.5 km away from its existing site. The land will be of approximately half the size of the site of the current facility (approximately 200 mu (13.33 hectares) rather than 400 mu (26.67 hectares)), and the Company should be reimbursed the proportion of costs already incurred for the land, which equates to approximately £800,000. The Board is satisfied that the remaining land is sufficient for the Company's requirements
· The Company will receive compensation for the costs incurred in terms of construction, relocation, inflation and interest
· In respect of the costs incurred in construction of the manufacturing facility, an independent valuer (acceptable to both parties) will be appointed to appraise the construction cost. The Company is concurrently obtaining third party quotes for the rebuilding of the facility, which will be compared against the independent valuer's appraisal."
I know from experience that legal wranglings in the region can take an inordinate amount of time, but given that the proposed compensation figure includes interest, the final amount should be a tidy sum, exceeding the current MC on its own.|
|Percentage of AIM Securities not in public hands
91.6% of shares are not in public hands
As at 28th July 2014, significant shareholders with more than 3% holding in the Company were:
RAY ANG W B ESQ 33.79%
WALKER CRIPS 6.46%
WESTMINSTER ENTERPRISES LIMITED 5.47%
GUNN J H ESQ 4.21%
HERMES FINANCIAL GROUP BVI LIMITED 3.73%
PEEL HUNT LLP 3.44%
181 FUND LIMITED 3.02%
So only 8.4% of shares are in public hands. None of the above holders have sold and all are in at significantly higher levels than the current share price. In rough terms, at the current share price there is only approximately £200k of equity outside of the holders above.
New due next week on the Mongolian compensation and the release of some the £7 million of cash on the companies books in China.
Current MC less than £2 million.
Underlying business is consistently profitable and growing demand for their products.|
|Given the £14m revenue, £7m cash, £1m profit, and strong order book for 2015, SORB deserves a rerate to 10p as a minimum starting point (currently 3p, with a £2m marcap).|
|Now up 22% and in top 5 risers for the day. Seems very undervalued|
|Took a position here today. Exceedingly cheap even taking in to account the Chinese risk.|
|Interesting statement today - no figures though, not even a clue !!!|
|slide arrested and hopefully not a dead cat bounce
Nice to see the Gunn's going through 3%-10p and beyond on the cards
Could be an interesting few weeks
|back on my watchlist this is, should have about 9million cash in the bank but mc is 5/6million£ interesting.|
|RNS is OK, means they don't intend to just steal it and if a railway terminals isgoing there it must be key to plans.
"no financial loss" - I would prefer a financial gain, but even so the compensation should be more than the current capitalisation of sorbic.
I wonder what timescales are planned, it could be possible to continue producing (or even start LOL} at the current site and then transfer smoothly - more clarification later I presume.|
|I sold my very small holding recently along with my CFC holding which was much larger, both at a loss. I know there are many who believe in SORB and CFC but this latest set of results has confirmed my feelings that these businesses are poorly managed and are a long way from reaching the goals i had originally expected, despite the China growth story.
I think the bottom line is i foolishly expected the type of performance you'd expect from a uk managment team and we forget how inexperienced these business people are, particularly in terms of a quoted company. They are a long way from sustainable profitability.
Good luck if you're still holding.
It's hardly surprising that there's a growth in revenue if you're reducing your margins and selling product at a significant loss.|
|Results are same old routine of treading water, but there a a bit more to it than that:
- possible compensation and value of the property/land if the city is going to expand in that area
- a well advanced strategic deal, that could be very positive
- strong cash position, now with low cash burn
- market for products is still strong and the company is resisting getting bogged down with long-term contract in order to maximise profits further down the line, I agree with that even if it means less profit in the short term
Things are not great, and I doubt anyone expected them to be,the problems with the new plant are a massive disappointment, but we are at the bottom of the economic cycle worldwide (hopefully) and there is no reason why Sorbic should not prosper along with many other unloved companies once things pick up.
I'll stick woth the small shareholding I've got for the time being, at least until the potential deal and compensation news is out.|
|The whole inner Mongolia new factory has turned into a disaster and will significantly impact the development of the company for at least 2 years, IMHO. Yeah sure they can build a new factory but that is going to take at least two years to get up and running....no matter what positive spin Mr McClean puts on it.
The whole point of opening the factory in inner Mongolia was to move away from the Linyi factory where power disruptions, environmental checks ext, were impacting productivity and increasing costs.
Glad I am not holding this one. CFC looks a far better investment, IMHO.|
the count of monte_cristo
|Results due in the next week or two; hopefully some nice surprises and a decent share price rise|
|11.85p to buy and 10.5p to sell, over 11% spread - no wonder there is little interest in trading these, clearly the MMs don't know where to go with the share price and are swayed by selling/buying of small quantities.
The upside of that is that for those with the patience of a saint, when the company gets it's house in order the gains could be sudden and significant - at least thats what I keep telling myself.
I'm still hopeful of a significant win.|
|I don't think there was ever any doubt the AGM resolution would pass seeing as the main players have a massive controlling interest. Still, I'm looking forward to a proper RNS on the progress at the new factory - must be up and running by now.
|Niether do I, might not be of any consequence but it seems strange that they RNSed something that "Might" happen and surely cannot effect existing agreements which resulted in the investment decision to locate there.|
|...dont like yesterdays RNS|
the count of monte_cristo
|Looks like the MM are keen to mark up the share price despite very modest volume as the prospects of an Aprilstart up of the potassium sorbate production line draws near, followed by the sorbic acid line, 3 months later.|
|With the share price trawling close to the bottom of its three year 10/45p range,I have decided to take a small punt of 20k @ 11.50p. If the Spring and Summer start ups are achieved, there could be some notable upward movement. However, 2013 should be a cracking year. I note the chairman bought 136.5k in the 11p placing.|
|I am watching. However,according to Morningstar, it appears that the only director with a holding is the chairman. None are held by the CEO and CFO. does anyone know different?|