Fireangel Safety Technol... Share Discussion Threads

[jojaken] 27/7/2022 11:29

>Tiswas Could you expand on what's in those 2 broker notes please?

[the big fella] 27/7/2022 10:28

I guess Rome wasn’t built in a day but there were lots of positives to take from todays announcement. Given that it appears that the first half numbers compromised of sales of the low margin products, now that they have to components sourced the margins should improve significantly in the second half as more of the high margin products feed through to the sales mix. I am hopeful that they will report a small profit for this year which will be a major milestone. The Techem project is going well. All in all this should be the turning point.

[zxie] 27/7/2022 08:31

INSP shares jump soon

[tiswas] 27/7/2022 08:28

Yep, good update but very little interest from Mr Market so far despite 2 positive broker notes being issued.

[babbler] 27/7/2022 07:57

excellent update.

[tiswas] 04/7/2022 10:34

Hi again

I compared like for like by referring to the transfer pricing element that you subsequently mentioned.

Numbers from 2009 eh? Your grievence with them certainly goes back a long way!

Not without risk but happy to see this one through.

[timetosell] 04/7/2022 09:14

FireAngel’s gross margin before they entered into the BRK distribution deal was almost 43% in 2009. That is where my 40 per cent GM% number comes from.

Past management were not very savvy and failed to defend the gross margin
letting the product range explode in size and losing control over product costs at the same time. The product cost base should have been defended better and the product range controlled better.

FireAngel has not been able to pass the increases in its product costs to its customers which is unsettling from an investor perspective. If you are defending the poor quality of your products in front of your customers and your brand is tarnished, you are not in a strong position to push through price increases.

AICO UK accounts show the distribution margin only and include management recharges which deliberately depress the profitability. Its Irish parent company accounts which are not published would include the profit from the manufacture of the products amd the distribution margin. The AICO UK accounts reflect the distribution margin only so you are not comparing like for like to the FireAngel gross margin which includes manufacturing profit and distribution profit.

AICO have not chased Retail business as it tends to have the poorest margins. They have also manufactured their own products in the same facility forever.

Check out the FireAngel product reviews by comparison. They are truly shocking. This is a products business where the product costs and product range grew out of all recognition crippling the gross margin. It will almost certainly never recover. The damage was done years ago sadly and made worse by the massive product warranty issues which have drained cash out of the business ever since.

[tiswas] 04/7/2022 08:14

Timetosell

Thanks for the post, always good to hear reasoned thinking even if it is negative!

Aico of course has been around for donkeys years, is an extraordinarily successful company with a balance sheet that JC would kill for and shows what can be done if you get it right.

Aico manufacture in Ireland so will also have some currency exposure. The accounts to 31/12/20 show a gross profit of £21m on a turnover of £145m so I am curious as to why you think 40% margins are the norm when they are showing 15%?

To be fair I can not get access to the parent company accounts in Ireland so there may be some additional transfer pricing going on.

You switch between Aico and Lifesafe and back to Aico again which can be confusing. Lifesafe numbers look pretty poor to me and I do not believe are in direct competition so I will ignore them for the time being.

FA have said that demand for their product exceeds supply so they must be doing something right. We also know there is a lot else going on. Sure currency and manufacturing at the right price are the key which is why the share price is languishing where it is. If the brokers forecasts are correct then we will soon be generating cash and profits but no one is saying that a turnaround like this is without risk.

Regards

Tis

[harrogate] 04/7/2022 08:01

That is true and clearly some connection. But it doesn't make his / her comments wrong. I am a long term holder here and my view of prospects has been wrong for a good while. Some of the risks going forward still remain and currency is a key one. The ex FD is not launching a new business. He and the old MD here have been parachuted in to an existing business. They are not major shareholders.

[masurenguy] 04/7/2022 07:41

Hmmm.......interesting username which does not suggest someone who has a very balanced view of anything. Furthermore, this is the only stock and thread that you have ever posted on and each of your prior 6 comments here have always been negative. Hardly a paragon of credibility !

[timetosell] 04/7/2022 06:03

Within the near future I believe FireAngel will require yet another further fund raising to remain solvent. It’s cash burn is worrisome to me and it remains loss making.

It’s business model is essentially shot to pieces.

There are hundreds of current poor product reviews on the internet talking about the poor quality of the products. They can’t all be wrong. Warranty returns are continuing and the brand is tarnished. How can it not be.

A technology business with a gross margin of not far off 20 per cent tells its own disappointing product management story. Gross margin is unlikely to improve 30 per cent as hoped. For a technology business gross
margin should be closer to 40 per cent. That is world away from where they are today.

I believe that Sterling’s weakness against the USD will prompt a profit warning later this year unless Sterling can quickly make up lost ground and hold onto it. That is unlikely in my view. When the currency goes against you most businesses don’t have sufficient forward cover as they were hoping fhe exchange rate will improve before placing further cover. FireAngel is likely to be no different.

Supply chain issues will continue to hamper OTIF deliveries. Container prices are still many times higher than 12 months ago and with fixed price contracts FireAngel will not be able to pass on all the extra costs so a margin haircut is unavoidable.

The former CEO has launched a new business to sell competing products targeted at FireAngel’s core customers knowing all of its product prices at the point he left. History shows us this does not usually end well for the industry incumbents that are a sitting duck.

AICO are advertising nationally on the radio and targeting FireAngel’s customers including its retail customers. AICOa connected product technology is vastly superior to FireAngel. Check out the product reviews.

JC is doing his best but this business was so badly damaged by the previous management team it was essentially left on life support relying on charity to keep it afloat. FireAngel’s excuse list is legendary in the investment community.

I sincerely hope they will
pull through but I am struggling to find reasons to be more cheerful about this company’s prospects. Maybe I am missing something here. We shall see.

[3800] 27/6/2022 09:57

Thanks for the link JakNife, looks like they are going into fire extinguishers as their main line in addition to carbon monoxide, smoke and heat alarms.

[tiswas] 27/6/2022 09:45

hxxps://www.voxmarkets.co.uk/articles/fireangel-jumps-as-former-ceo-plans-3-million-aim-ipo-b026a2a/

[tiswas] 27/6/2022 08:46

Timetosell

5 posts since joining in July 2018 and all anti FA. No posts on anyone else so far as I can see and you even came up with a user name that summed up your thoughts on FA!

Nobody would take it away from you that you were indeed right at the time. It was a sound call.

Anyone invested here knows only too well that this has been a serial disaster over the last few years. We are here not because of that but because of the turnaround that we think we see happening. The new management team, improvements in margin and the supply chain, a growing market, leading edge products and so on.

So come on, balance our newfound enthusiasm by sharing your reasons for having such a downer on them, we may have missed something and you might end up saving us a fortune!

Its good to talk!

[the big fella] 24/6/2022 15:51

I am not one to criticize however your last few post are all negative on FA. stretching back a year or two. Clearly you hold a grudge. Given that the share price it is at at its lowest level ever it is no wonder.
But the points you make are not factually correct. The warranty costs are less than 1% of the costs of the running of business. These are historical and are well below what they are currently budgeting for.

Exchange rates are out of their control. However, they adopt hedging strategy so this years numbers are unlikely to be "sucking cash out at an alarming rate".

Margins have been a big problem. But the company have stated this will be improving. 2nd half this year will be c 30% and improving not 20% as you quote.

Not sure what your agenda is but I would appreciate a modicum of accuracy.

[timetosell] 24/6/2022 09:35

FireAngel’s ongoing warranty costs and Sterling’s weakness against the USD continue to suck cash out of the business at an alarming rate.

It looks like the board couldn’t face a yet another - a fourth - fire sale of shares for an emergency cash raise so instead, opted for the £3.5m LOC route. Three cash raises have been necessary as the business is still on life support stretching creditors to fund the wage bill.

A technology business with a gross margin of close to 20 per cent - you can’t make it up.

Palliative care in Coventry continues.

Good on you JC for getting on with the job.

[tiswas] 24/6/2022 07:56

I think JC is trying to give us a sign! 😇

[masurenguy] 23/6/2022 08:11

23 June 2022: Director Purchase: John Conoley, Executive Chairman of the Company, yesterday purchased 80,000 Ordinary Shares of 2 pence each in the Company at a price of 10.67 pence per share. Following this transaction, Mr Conoley and his wife now have a total beneficial interest, in aggregate, of 1,363,607 Ordinary Shares, representing 0.75% of the Company's issued share capital.

[billybunter1970] 21/6/2022 13:30

@gnnmartin That is disappointing to see, but look at how many "excellent" reviews they have had. The FA products are usually top notch!

[gnnmartin] 21/6/2022 10:37

I am very disturbed to hear from a number of sources that they still have the 'chirping battery' problem, and don't seem to be handling customer complaints too well. See for example:

uk.trustpilot.com/review/fireangel.co.uk?stars=1

[harrogate] 21/6/2022 10:20

Yes thanks for that. Decent write up. The elephant in the room here though is the £ weakness. While they might have hedged for 2022 to a decent level it is hard to imagine that the fall from $1.40 to $1.22 has done anything but put the margin for 2023 and beyond back quite a few % points. These guys can't seem to buy a break

[tiswas] 21/6/2022 09:57

Surprised no comment on the BRK (Resideo) stake but otherwise good article.