React Share Discussion Threads

[1gw] 18/5/2022 10:19

That's just one of the terms of the acquisition - paid partly in shares.

"£1.0 million through the issue of 83,333,333 ordinary shares of 0.25 pence in the capital of the Company ("Consideration Shares") on Completion to Jason Korinek and Justin Korinek (the "Founders")..."

[superhoop2] 18/5/2022 10:01

Hasn't the founder of Ladders-Free not just purchased approx 4% of React ... see the RNS this morning?

[74tom] 18/5/2022 09:46

Indeed. There is a fundamental reason why you don't have many start up window cleaning businesses listing as public companies...

- Very low barriers to entry
- Minimal economies of scale (unless it's a robo cleaner)
- Little pricing power, otherwise someone will undercut you
- Little value creation, it's simply doing a job well.

I'd argue that the barriers to entry are significantly higher for a cleaning company as trust & reputation are important.

Had the majority of the acquisition been paid for in shares with the placing cash used for expansion then MAYBE I wouldn't be so negative, however as with Fidelis they've paid significant cash up front & also committed to a large (versus market cap) amount of deferred consideration. All cash generated for the foreseeable future will go straight out of the door...

Given directors own practically no shares and didn't buy any in the placing, it's fairly obvious this is an attempt at prolonging the listed company lifestyle. So as another poster said earlier, I'd expect a large chunk of zero cost options to land at some point...

As a private investor why would you possibly want to own shares here?

[yump] 18/5/2022 08:38

Perhaps the reason the market is fragmented is because nobody has bothered to consolidate it, because there isn’t a financial case for it that would lead to increased earnings and/or dividends.

Nice to run a bigger business for the BOD though.

[yump] 18/5/2022 08:31

They keep mentioning cross-selling.
Also that its a capital light business.

Both of those sound positive but cross-selling only works if you’re increasing revenue with relatively fixed costs.

“Capital light” is a red herring - the other side of that is that its labour intensive.

So adding contracts doesn’t gear up profits. Its not like having a (capital-heavy) production line running at 50% and then selling more product that gets it to 70%, which then rapidly ramps up profits.

If Reat have to raise money to buy businesses and there’s no economy of scale, then profits will rise but earnings won’t.

It will just get bigger.

This is going to be a long slog.

[vikingben] 17/5/2022 23:10

2 late trades of 1.6 and 1.5 million both at 1.1p showed as buys, but were they?
Could they have been sells from yesterday?
Are directors allowed to buy at the moment?
When are directors allowed to buy?

[superhoop2] 17/5/2022 21:49

With regard to React being a Covid play I think that there is more, a lot more, of that to come!

[jeanesy] 17/5/2022 19:47

Seemed to be a flurry of late buys. Not sure why we ended down at the lowest price of the day?!

[yump] 17/5/2022 18:25

Trouble is now, all the excitement went out of the share after the covid factor, the results show its back to being a lower margin simple cleaning company and its placed a gazillion new shares.

Will take a lot of coverage and delivery of growth, to prove its a proper growth share of interest. That will take a year plus imo. to get anywhere back near even 2p.

Only worth topping up if its going to be a mini-conglomerate and the market is really open to consolidation that will deliver great results.

[vikingben] 17/5/2022 16:57

A bit of buying in the last 30 minuted, got 500k @1.09p just average down a bit, all we want now is news of some good new deals, especially from our new none ladder company

[onehanded] 17/5/2022 16:21

Think may buy on that dip. looks good value at these levels.

[onehanded] 17/5/2022 15:21

NOT bought yet still watching, but will do so on other share price drop. They have money in the bank (well spent a lot on the acquisition) from the large raise at 1.20p so should see that at least settle there before more news. No rush .... like to see a few management team buy first.

[yump] 17/5/2022 14:12

Seems a very good multiple to be paying.

Perhaps the dire market contributed to the low value raise, but also presented the opportunity to by at a reasonable multiple.

Hopefully scale won’t be built at the expense of margin.

[ged5] 12/5/2022 17:43

Well someone liked the announcement late in the day. 600K buy.

The first half figures causing the drift along with wider market concerns but the outlook is very good as far as I can see.

Good acquisition.

The fundamentals give good long term prospects but looking at the chart, REAT is oversold and the gap from 1.5-1.7 might well be seen as an opportunity for even short term traders to make a 25% to 40% profit.

A safe haven in these dire markets?

[davidosh] 12/5/2022 12:00

Mello2022, our annual flagship two day smaller growth company event will be returning to the popular Clayton Conference Centre in Chiswick, London W4 on Wednesday 25th May and Thursday 26th May.

Just to let shareholders and prospective investors know that React will be among the 60+ LSE Small Cap and AIM listed companies attending. There will also be keynote speakers such as Lord John Lee, Andy Brough, Leon Boros, Clarke Carlisle and Gervais Williams.

1 day tickets are £115 and 2 day tickets are £189. However they are available at half price to shareholders so to obtain 50% off just use code MMTADVFN50.

For more information, please visit the event webpage:

[fatnacker] 12/5/2022 09:04

It's back on my radar, I sold my holding a while back but it's looking interesting again.

[onehanded] 12/5/2022 08:18

As I said early just looking at this, not bought or own any yet. Like to see management buy now and may wait to see if they do. I'm sure any price below the placing of 1.2p is not a bad start but no rush for me. Has massive potential but like all AIM stocks need to judge a good buying point.

[rivaldo] 12/5/2022 08:02

Jeanesy, the crucial part of the RNS is as Shuffle Man posted which should instil much confidence:

"Following completion of the Acquisition and the mobilisation of a number of new contracts won during H1, the Board expects to deliver adjusted EBITDA for the financial year ending 30 September 2022 of approximately GBP1.3 million."

[onehanded] 12/5/2022 07:59

that's why the placing was at a low price, expect buyers below 1.2p and just above

[jeanesy] 12/5/2022 07:55

I wonder if the market will focus on the acquisition or those poor H1 numbers . It is very unforgiving atmo !

[the shuffle man] 12/5/2022 07:52

With a market cap around £10m thats a PE of less than 10x

[le4r] 12/5/2022 07:50

Agree completely with you Rivaldo, and positively surprised by the profit margin for a ladder-based window cleaning business. Thought it a bit disingenuous to bury the H1 numbers at the bottom (esp with no reference in the RNS header) though, and as you say, the H1 aEBITDA is certainly a bit underwhelming, but I counter that with the bullish outlook of contract wins and robust FY22 aEBITDA expectation they have put out.

[the shuffle man] 12/5/2022 07:49

Following completion of the Acquisition and the mobilisation of a number of new contracts won during H1, the Board expects to deliver adjusted EBITDA for the financial year ending 30 September 2022 of approximately GBP1.3 million.

[onehanded] 12/5/2022 07:46

yes been looking at this company, could well be a chance to see a real pick up. First test would be around the 1.4p mark. Could be below 1.2p mark a great buy and hold. Will see next few days the support. Expect a few small funds may look.

[rivaldo] 12/5/2022 07:41

Yep, looks very good as an earnings-enhancing commercial operation which can be scaled up, which has good synergies with the existing operations, and which should enable lots of cross-selling in particular.

Great to see REAT utilising almost the entirety of the monies raised on its Target A within weeks of having raised those monies, delivering on its promises as opposed to other companies who simply sit on the monies raised and are unable to deliver.

Good value too - paying £7.1m for £1.4m historic PBT and high recurring revenues plus deferred consideration.

I note that the H1 trading numbers are unimpressive to say the least, due to the (presumably Covid-related) lower level of reactive work and investment in mobilising new contracts. However, the outlook for this H2 is very confident given all the new contract wins already RNSd together with those listed today. Perhaps those H1 numbers explain the 1.2p placing price and are therefore already priced in.