React Share Discussion Threads

[effortless cool] 23/6/2024 18:58

I have updated my valuation to reflect the H1 results and the subsequent grant of options.

I get 103.6p, a 41% premium to Friday's closing price.

[rivaldo] 18/6/2024 11:38

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

[vikingben] 13/6/2024 18:31

Is anyone keeping a check on the large sells since 13/05/24?
Ladders free brothers had 833k which they might sell into an orderly market?
Another 75k today @ 73.5p
Is now a good time to increase the holding, for any major holders?
As soon as the 833k have gone, the share price should significantly increase?
GLA

[superhoop2] 11/6/2024 19:58

hxxps://youtu.be/6E8GDYyF3iM?si=7AZFcXd8qol5xW5e

[rivaldo] 11/6/2024 10:41

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."

[vikingben] 11/6/2024 07:30

I missed the Mello Webinar last night, was there anything new said?

[vikingben] 07/6/2024 12:44

Are the ladders free brothers selling?

[rivaldo] 07/6/2024 09:05

New interview with Mark Braund (Chairman) FYI:



- "high degree of confidence" in meeting expectations to 30th September, i.e 6.9p EPS (which rises to 8.1p EPS for the year starting 1st October)
- recurring income is up to almost 90%
- in H1 earnings were up 35% against revenues up 13%
- FCF was also up 35%
- since acquisition Fidelis' revenues have increased from £4.8m to £12m
- and LaddersFree is growing 30% post-acquisition

[davidosh] 06/6/2024 10:47

yes it is free to shareholders in the companies presenting. General admission is by paid for tickets to cover the cost of running the shows

[rivaldo] 06/6/2024 10:23

Looking forward to it - and it's actually free if you use the code SHR100:

[melloteam] 06/6/2024 09:52

Just to let shareholders and prospective investors know that React will be presenting on MelloMonday on Monday 10th June 2024, starting at 5:30pm.
Get 50% off your ticket with code MMTADVFN50

[jeanesy] 04/6/2024 20:19

Strange final trades !

[rivaldo] 03/6/2024 09:08

Moving up - looks like an upwards breakout is on the cards.

[rivaldo] 31/5/2024 11:10

Here's a link to the (imo) very impressive Investor Meet presentation.

It's notable that:

- they've doubled Fidelis' revenues since acquisition
- they're targeting £5m FCF in the next 3-5 years
- they have a number of regional contracts with national businesses, so there's lots of room for organic growth just by expanding their work with the existing customer base



There are lots of potential acquisitions being looked at, but none in the final stages as yet. I'm sure these will be purely from available resources unless an absolutely exceptional deal.

[effortless cool] 31/5/2024 08:32

I suspect it is the prospect of further M&A activity that is keeping REAT at this level.

After trashing the share price last time with the LaddersFree acquisition, the management have a lot to prove in this area. The fact that, in the recent InvestorMeets presentation, they didn't rule out an equity component to any such transaction was not reassuring.

[tole] 30/5/2024 21:34

https://masterinvestor.co.uk/equities/silver-bullet-data-services-and-react-group-both-set-to-rise/REACT Group (LON:REAT) – Operating On Nearly 90% ARRSince I last commented upon this company's fortunes its share price has risen from 1.38p to last night's 75p – unfortunately that does not reflect my share-picking ability, but instead the result of a 1 for 50 share consolidation.The group is the UK's leading specialist and contract cleaning, hygiene and decontamination company, operates with three divisions: LaddersFree, one of the largest commercial window cleaning businesses in the UK; Fidelis Contract Services, a contract cleaning and facilities maintenance business; and REACT business, which primarily provides a solution to emergency and specialist cleaning situations, both through long-term framework agreements and on an ad-hoc basis.The £16.2m capitalised company yesterday issued its Interim Results for the six months to end March 2024.It reported a 13% increase in revenues to £10.57m (£9.32m), while its adjusted EBITDA was an impressive 35% better at £1.28m (£0.95m), lifting its EBITDA earnings up to 6.02p against a previous 4.51p per share.The group reported a good uplift in contract intakes, while it has been consolidating its banking relationship with HSBC, which I can see as a possible pointer to some M&A possibilities before the end of 2024.CEO Shaun Doak stated that:"We are delighted with the Group's performance, particularly in a year characterised by significant investments. Despite the challenges, we have maintained strong sales momentum and secured higher margin business, which is a testament to our strategic efforts and operational efficiencies.In addition to securing new material contracts, the Group has also achieved numerous small and medium-sized wins, whilst simultaneously renewing and enlarging existing contracts. This consistent success across various deal sizes underscores the quality of the Groups value proposition and is testament to our effective selling and cross-selling to drive growth."Commenting upon the group's Outlook, he stated that:"Looking ahead, the pipeline for the remainder of the year remains strong. This solid foundation provides the Board with considerable confidence in our ability to meet full year market expectations. We believe that our strategic investments and diversified contract wins position us well for sustained success."Analysts Mark Howson and Paul Richards at Dowgate Capital have current year estimates out for revenues of £21.3m (£19.6m), with adjusted EBITDA for the year to end September of £2.5m (£2.2m), with earnings of 6.9p (7.8p) per share.In my opinion this group's shares have good upside attractions and I cannot disagree with Dowgate Capital's 100p share price aim, against last night's close of 75p.The shares are a very good Hold for existing shareholders and an appealing bargain for new investors.

[rivaldo] 29/5/2024 09:12

Singer Capital retain their 97p target price and forecasts of 6.8p EPS to this September, with 7.7p EPS from this October.

Net cash is expected to be £1m at September rising to £2.6m at Sept'25.

They note that H1 PBT is 53% of this year's forecast - so things are loking good for a beating of expectations.

And they note that M&A potential could add 26% to EPS forecasts, i.e giving rise to 9.7p EPS next year.

They summarise:

"Strong H1 outturn confirmed

React’s H1 results were well flagged in the 25th April update, confirming a revenue outturn of £10.6m (H1’23: £9.3m, H2’23: £10.3m), with repeat/recurring revenue at greater than 85%, and an adj. PBT outturn of £1.1m (H1’23: £0.8m; H2’23: £1.0m). This represents 53% of our full year forecast. The pipeline for the remainder of the year remains robust which provides the Board with confidence in delivering full year expectations, as well as supporting the outlook for FY25.

We therefore make no changes to our forecasts, with momentum expected to continue into H2. We remain at Buy with a 97p TP, noting React’s defensiveness, high recurring revenues and attractive margin."

"Shares attractively valued given M&A potential

Management remains focused on scaling the business through both continued organic growth (we expect adj. PBT growth of 12%-16% p.a.) and M&A (supporting upside potential). React trades on a Sep. ’24 P/E rating of 11.3x, falling to 9.9x, broadly in line with its 3 year average FY1 P/E rating (10x). We target a 10x Sep. ’25 P/E multiple but take into account M&A potential which we estimate could
add 26% to our EPS forecast. This drives a 97p target price (28% upside), underpinning our Buy rec."

[rivaldo] 29/5/2024 07:26

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!

[microscope] 29/5/2024 07:22

On first reading these interim numbers look very decent. Diluted EPS 5.5p and strengthened cash reserves. Pipeline variously described as robust and strong, with 'significant' confidence of meeting FY consensus expectations.I guess some of the main questions for the presentation will be about the exceptionals, consolidated banking arrangements and intentions of the holders of recently ended lock-in shares (which thus far looks promising).All-in-all very comfortable holding here.

[effortless cool] 29/5/2024 07:14

The model seems to be working well, albeit the bottom line missed due to an unexplained outsized tax charge.

Happy with those results. My valuation will increase now, when I roll it on six months.

[effortless cool] 25/5/2024 08:08

We have the half-year results on Wednesday, so what should we expect?

My modelling gives the following:
Revenue : £10,584k
EBITDA : £1,252k
Reported PTP : £296k
Reported EPS : 1.04p
Adjusted EPS : 3.48p
Net cash : £1,322k

Based on the full year forecasts, I would say that I am slightly on the aggressive side of the broker consensus, so meeting these projections would be "ahead of expectations". That's not a very comfortable place to be, given REAT's history of misses, but I am trusting they have learned from experience. Also, I don't think that they would have accelerated the production of the figures by four weeks from previous years if there was anything other than good news.

Incidentally, my valuation for REAT assuming they merit a 30th percentile PE ratio versus the market is 97p.

[vikingben] 20/5/2024 09:35

Half year report and investor presentation is a whole month earlier than last year!

Anything you can read into that?