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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| React Group Plc | REAT | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.00 | 0.00% | 89.00 | 16:35:10 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 89.00 | 87.50 | 89.00 | 89.00 | 89.00 |
| Industry Sector |
|---|
| CHEMICALS |
| Top Posts |
|---|
Posted at 24/11/2024 19:16 by effortless cool Just catching up on this one. Seems to be the same old story - a miss against forecasts distracted by an outsize acquisition.I don't think that REAT have ever hit their forecasts. Now we have revenue of £20.7m against a Dowgate forecast of £21.3. They really do need to get their act together. Last time the acquisition was LaddersFree. A good company yes, but a transaction done on terms that destroyed value for those shareholders that were not given the opportunity to participate in the prior placing. (We have still not recovered to the heady pre-consolidation levels of over 2p per share). Now its Aquaflow. This looks like a decent business being bought at a decent price, but it is too big for React's balance sheet and the same group of institutional investors that management let screw over other shareholders in 2022 is in on the act again. I'm going to update my model over the next week or so and I dare say that there will still be value to be had here. I am concerned, however, that this business seems to be run for the benefit of Mark Braund and a small group of institutional shareholders, rather than the entire shareholder base. |
Posted at 31/10/2024 09:25 by rivaldo Indeed - Harwood Capital have increased to 11.051% and now have 2.6m shares:And Octopus Investments have increased to 17.11% and now own 4.03m shares: |
Posted at 28/10/2024 15:16 by rivaldo This is a terrific deal imho.Singer have raised their forecasts to 9.3p EPS this year and 11.3p EPS next year. Which makes REAT look very cheap indeed imho. Today's acquisition is: - highly earnings-enhancing - a cheap acquisition multiple - lots of recurring income - lots of synergies via REAT's recent digitisation/new computer systems - founders staying with the business and incentivised with contingent consideration - existing large shareholders Octopus, Dowgate and Harwood all buying more shares - the placing was at almost no discount - and was "heavily oversubscribed" And we all know how in demand plumbers and drainage enginners are - this demand is only going to increase assuming the weather becomes more volatile and extreme. The "at least" £2.4m EBITDA for the year just ended may be a touch behind the £2.5m forecast, but this is completely immaterial, especially given today's news. |
Posted at 17/9/2024 12:37 by rivaldo RNS - Octopus Investments have been buying more. They now own 16.71% (up from 15.22%), with 3.6m shares:So in the last few weeks we've had Octopus, Dowgate and Harwood/Oryx all buying. Perhaps this RNS and the major IC tip will now make investors realise the value here. |
Posted at 06/9/2024 09:03 by rivaldo The investment company ONWD have this morning just release their (rather impressive) interims.They own £1.42m of shares in REAT - 5.8% of their portfolio - and they had this to say today: "React Group plc (REAT LN) - Date of first investment May 2023 With React we believe we have captured a defensive growth opportunity at a value price, and invested c.6% NAV into the company. It is a business the team have been researching since September 2022 (pre-launch) and was an early pipeline priority. Through a mix of specialist cleaning services for UK corporates, the business has a highly attractive earnings profile. The business has three core divisions: 1. React - the heritage of the group, reactive specialist cleaning often needed for emergencies or callouts requiring specialist cleaning techniques; high margin but less predictable. 2. LaddersFree - large glass pane and cladding cleaning for UK corporates, executed through a capital-light membership model. 3. Fidelis - contract cleaning focused on public services. The business operates over 80% of its sales on contracted terms of one to five years and has been organically growing at 17%+ per annum for the past four years under a new management team. Sales are highly cash generative and yield a high contribution margin, whilst CAPEX, depreciation and amortisation are all insignificant. Crucially now, as a result of a mix of organic and acquisitive growth and the upcoming cessation of deferred consideration payments, the business is beginning to generate strong profits and free cash flow growth from contribution margin as it exploits inherent operational gearing. If one were to look away for a moment - not knowing the company cleans large glass facades, rolling stock, and prisons - its characteristics mean it could easily be mistaken for a small, successful software company. Yet we have been able to acquire shares in React on forward P/E multiples of 6.5x - 8.5x." |
Posted at 18/6/2024 10:38 by rivaldo The Mello Monday presentation is excellent as usual. Some highlights:- "it's been a great start to the financial year" - "momentum has continued into H2" with a "healthy pipeline" - recurring revenues are now over 85% - "we're ready for M&A activity again" - revenues have grown organically at 24% per annum for each of the last 4 years - Fidelis have grown their revenues from £4.8m to £12m since acquisition - Laddersfree are growing revenues by 30% and have added 7 new nationwide customers in the last 18 months - REAT looked at 40 other opportunities before buying Fidelis - acquisitions have to be earnings-accretive in the first year - REAT are likely the only company who can provide their services nationwide - "now extremely cash-generative" as final payments have been made for the acquisitions - REAT is a "very defensive business", with customer expenditure being non-discretionary - the rating is undervalued - minimum wage increases are already built into contracts |
Posted at 11/6/2024 09:41 by rivaldo Dowgate Capital have also issued a new note on REAT.They have a 100p target price - and that's assuming only 60% of REAT's goal of £5m free cash flow is met. They go for 6.9p EPS to 30th September, then 8.1p EPS to 30/9/25. That's a P/E of only 9.1. The cash pile is forecast to rise from £1.0m to £3.0m (against a £17m m/cap). Extract: "Polished results display continued progression. React Group has released 1H results that demonstrate EBITDA growth of 35% from a 13% advance in Group revenue. The Board has confirmed that the Group has maintained its strong sales momentum into 2H and in so doing has secured higher margin business. The Board commented that the pipeline for the remainder of the year ‘remains robust providing the Board with a high degree of confidence in achieving full year consensus market expectations.’ We have left our FY 2024E forecasts unchanged and they assume FY +9% revenue growth. However, we continue to hold the view that there could be an accent on the upside as the year progresses, with contract wins that should benefit 2H, and a strong pipeline for next year. We maintain our Buy stance with a Target Price of 100p. This still conservatively assumes the Group achieves only c60% of its medium term cashflow target, and we reiterate again, it also does not include any potential value enhancement from deploying the Group’s firepower on acquisitions. We believe the latter to be rightly back on the agenda now the new banking relationships are in place, prior acquisitions have bedded in well, and the LaddersFree digital platform is more than 60% of the way towards completion." |
Posted at 29/5/2024 06:26 by rivaldo Agreed, excellent H1 results. Lots of confidence in the outlook, and given that REAT have achieved well over 50% of forecast EBITDA in H1 there's a good chance that forecasts will be beaten.Particularly with all the contract wins already announced. And I don't think the three renewals of healthcare contracts valued at over £0.5m per annum noted today - now expanded - have been announced before as they were post period end? REAT also have £0.7m net cash now, so are well financed in terms of paying the final Laddersfree instalment and the investment programme. With forecast 6.8p EPS, and potentially a decent beat of that figure, REAT remain very cheap imo, especially given well over 80% recurring revenue. OT : I don't like this adjusted EBITDA EPS and wish they'd also give us the normal adjusted EPS calculation! |
Posted at 25/4/2024 06:25 by rivaldo A terrific H1 trading update today, which strongly suggests that REAT will beat expectations for the year.With H1 EBITDA up 36% year on year to £1.3m, REAT have already achieved 52% of the £2.5m consensus forecast, even without the substantial contract wins already announced this year. Other highlights: - recurring revenues remain above a huge 85% - the cash pile is now up to £1.5m, against a £14.8m m/cap - margins are increasing fast given revenues up 14% and EBITDA up 38% No wonder there's "a high degree of confidence in achieving full year market expectations" - and much more imo. On a current year ex-cash P/E easily in single figures REAT looks in great shape for a re-rating: |
Posted at 29/2/2024 12:09 by rivaldo The Mello presentation is well worth a watch. I thought the management came across well, the outlook was generally very positive, and the particular advantages of the company were stressed:- recurring revenues up to a whopping 87% - free cash flows of £2.1m and £2.3m adjusted EBITDA against a £14.9m m/cap - further acquisitions being considered - REAT have the advantage as business purchasers due to their size and reach - similarly REAT have the size advantage in being able to serve clients nationwide as those clients expand and grow - REAT are installing systems this year in LaddersFree which will greatly enhance efficiency and enable cost savings Plus we now know that "the first few months of FY24 have delivered a record trading performance for the Group", and "Momentum from FY23 has continued into the new financial year". With 0.136p EPS forecast to this September, rising to 0.156p EPS for the year starting in only 7 months, REAT are cheap on a single figure P/E, let alone on the FCF as outlined or given the huge recurring income. Watch from around 1hr 21m: |
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