Red Squared Share Discussion Threads

[mjcrockett] 08/3/2006 16:03

Purple, Thanks for all that info. Most helpful.

MJ

[purple] 08/3/2006 15:40

I have added the directors holdings together and stated when they were acquired. I think the management team have got a passion for the business so they are in it for the long term. The buoyant market place and addition of a direct sales team has transformed the company's fortunes and indeed its prospects. I agree that it appears we are at the start of a new growth face in the company's life and that the prospects look mouth watering (the MD John McGuire recently stated "We've come a long way since 2004"). I however feel that a takeover by Netstore can not be ruled out if it is pitched at a significant premium to the current share price. Red Squared is a very attractive take over target for the bigger Netstore as it would benefit from the managed service business and Network Monitoring software (huge potential market!).


Directors Holding
G Cooper 2,121,200 Chairman (held since flotation) 7.5%
J McGuire 4,848,400 Managing Director (held since flotation) 17.3%
A Pilkington 4,848,400 Technical Director (held since flotation) 17.3%
Mr David Sheppard 150,000 Sales Director (acquired August 2005) 0.53%

Approximate director's holdings 42%

Substantial Shareholdings
Mr A K Simpson and Mr J Patterson 2,990,000 10%
Adam and Company International Nominees 1,017,500 3.6%
John Story 900,000 (acquired from the market May 2004 around 20p per share) 3%
Jarvis Investment Company (acquired January 2006) 5%

Substantial shareholders 21.6%

Free float 36%

[purple] 08/3/2006 15:28

The momentum, how we got to where we are:


November 2000
Red Squared Plc floated on Ofex in 2000, raising £2.4 million at 48p and valuing the business at £9.67 million.

April 2004
Red2A!lert launch to provide integrated system monitoring for the mid market.

May 2004
Strategic Partnership and first sales agreement for Red2A!ert with INACT

November 2004
Red Squared Plc raises £820,000 through a heavily discount placing with institutions at 10p per share.

"the funds raised in this Placing will be used to fast track sales and installations of Red2A!ert software monitoring applications through the recruitment of a dedicated team which we believe will also assist in generating revenue for other parts of the business."

This marks a fundamental shift in the companies business model with the recruitment of a direct sales team.

March 2005
Appointment of David Sheppard as sales director and Mr Mark Dugdale as finance director.

"Mr Sheppard brings with him a demonstrable track record within the technology and consultancy services sector where, during the past twenty- two years, he has built a number of successful U.K. private companies. In the last ten years, he has been responsible for forming Oakbrook International Limited which was subsequently sold to the El Camino Group of Companies where he was responsible for the acquisition of three additional companies, leading to the formation of the Real Solutions Group of Companies, a leading IBM partner."

June 2005
£250,000 managed service deal

September 2005
Red Squared awarded BS 15000

September
£360,000 managed service contract with INCAT

January 2006
Jarvis Investment Company acquires 5% of company

February 2006
£760,000 agreement with Speedy Hire Plc

[aleman] 08/3/2006 12:53

Are 60% of the shares still held by directors? What did they hold when they floated on ofex, and at what price? I have seen 48p mentioned. There'll be no takeovers if they have ambitions to take the share price much higher. Given that they are only just starting to gain traction in direct sales, I would imagine they would want the business to mature much further before they would be prepared to sell out.

[purple] 08/3/2006 12:29

Netstore to make a bid for Red Squared?

The current market value of Red Squared makes it a potential target from its competitors. Netstore is probably the most obvious company that will make a move for the business. Red Squared is attractive because of its managed service contracts and the successful Red Alert network monitoring software. Any bid would have to be significantly above the current market capitalisation if it will be accepted and based on the amount paid for other companies by Netstore. I believe Netstore would position a bid around 25p per share, based on an enterprise value for Red Squared of £6M plus its cash pile. Just pure speculation but I can guarantee that the directors of Netstore have Red Squared near the top of their shopping list.

Red Square
Market Cap £1.9M/ cash in bank £900k

From Netstore:
Market Cap £60M / cash in bank £10M
Acquisitions

"Netstore, a leading provider of managed IT solutions, announces today that in line with its stated acquisition strategy, it has entered into an agreement to acquire the entire issued share capital of ............"

[aleman] 06/3/2006 23:15

purple - would you like to add this to your header after the other report?

[purple] 06/3/2006 21:50

The tick ups in the last two trading days from a technical analysis standard point is significant. Since the company floated on AIM in September 2004 it has been in a down trend taking it right down from 18p to the support at around 6p. It now looks like a bottom reversal pattern with price closing above the previous resistance level. As Murphy would point out that the more time that prices trade in a support or resistance area, the more significant that area become. I therefore believe that the down trend that latest over a year and a half is over and we are entering into an uptrend.

[aleman] 06/3/2006 15:03

The buy that moved the price is showing - straight after a larger sell? Must be more to come. Busy today. :)

[aleman] 06/3/2006 13:28

Certainly does. Should be good for another penny I would think, but I wouldn't expect any more without news from the AGM or results in June.

If the company does indeed become profitable this year, has anybody any idea what they might do with the cash worth more than half the market capitalisation? It may be possible they need to be well capitalised in order to win the contracts which are tending to look very lumpy at this stage of the company's development.

[purple] 06/3/2006 13:13

Have a look at the chart, looks like a breakout!

[purple] 06/3/2006 12:28

Although the recent deal with speedy hire in great news in the short term its significance is more important. It demonstrates the company can compete at the top end of the market and its offering has a competitive advantage. I would therefore expect Red Squared to generate more deals like this over the coming years. This top line turnover will then have a dramatic impact on the bottom line and the company moves into sustained profitability. We now have a growth business with good transparencies for future revenues and profits.

Red Squared has a market capitalisation of just £1.8 Million of which £1 Million is cash. The company should move into profit this year of around £100k, followed by £400k in 2007. It would not surprise me to see the share price move strongly up soon or be taken out by some of its larger competitors such as Netstore.

[purple] 03/3/2006 17:48

The market makers sometimes widen spreads to discourage buying as they are short of the stock. There has been a large overhang of shares since the placing of shares at 10p around a year ago, which has now been moped up. If there is any buying in the shares next week we will see a sharp correction of the price.

[the big fella] 03/3/2006 17:27

Simple - to make money.

[aleman] 03/3/2006 17:18

Thanks. I think 8.5p to buy is okay, although I wouldn't push it much past that for now, but 5.5p to sell them back is a complete rip-off. I might have a trawl and see if I can find out what MM obligations are.

[mjcrockett] 03/3/2006 16:32

Aleman, All three MM's are at 5.5/8.5. I was thinking of adding a few more today at 7.5, but 8.5 is just a bit too much.

MJ

[aleman] 03/3/2006 16:16

That spread is criminal. Must be busy elsewhere in the market and the MMs just don't want any trades. Anybody got level two and can tell us jusy how bad each one is?

[aleman] 03/3/2006 13:26

There you go. Now, is that just a delayed reaction from my buys, or are there some more to appear in an hour or two? My money's on the latter. Share price hasn't been here for a while. I suppose it's a little illiquid to get excited about a breakout, but it looks very low for the forecast I've seen, so I would hope to regain the 8 to 9p range until we get some further news. Has anybody else seen a forecast indicating 1.3p for 2007? As it seemed fairly recent the interesting debating point would be whether the analyst knew of the big Speedy Hire order about to be announced, or is that still to add in? (I suspect he knew. Analysts are often given inside info so they don't issue forecasts that immediately become obsolete, causing some of the brokers' customers to possibly lose money as well as just being embarrassing.)

[aleman] 02/3/2006 10:07

A few names on here are new to me, but it seems a pretty sensible thread, which is always a good sign. RDS has come to my attention since I came across a recent Daniel Stewart 2006 research book which forecast earnings of 0.4p this year and 1.3p next. Cash is forecast at £1.0m at the year end, or 4p per share so a buyer for this company would be paying 3.5p for 1.3p earnings at the current spread after cash. If you take the mid price the p/e after cash for 2007 is just under 2. The mid price is a little unrealistic, but the actual price you will pay still gives a p/e of 3 net of cash. Ignoring the cash, the 2007 p/e is still pretty cheap at 5.8 for the 7.5p you will pay at the moment. The massive order win on Tuesday has enticed me in. I bought yesterday and today since they wouldn't give me what I wanted yesterday. I'm surprised the price hasn't moved.

[alexacj] 01/3/2006 17:34

It's just not on anyones radar ....yet!

[sharegod] 28/2/2006 11:07

the money in the bank and this contract alone make up the MKT cap.you get another 2mill turnover thrown in for free.If these get any more contracts like this one then I can see this doubling to 15p very quikly.Expect another upgrade from dan stewart shortly.

[mjcrockett] 28/2/2006 10:40

Today's contract announcement is very good news. The contract is valued at about one third of the company's turnover for last year. If it were not for the ridiculous spread there would have been a rush of buyers this morning.

MJ

[purple] 06/2/2006 18:42

Look like a another buy 100,000 at 7p, with another trade between market markers at 6p probably to fill an order.

[purple] 06/2/2006 16:36

Growth company investor............



"Managed services provider Red Squared has cut its annual loss and reports an encouraging order pipeline.

AIM-quoted Red Squared reduced its deficit from £467,000 to £291,000 in the year to last September on turnover up 45 per cent to £2.5 million. During the financial year, the Altrincham-based company won a £250,000 five-year contract with a major European logistics and distribution group through its strategic partner, Specialist Computer Centre, and agreed a new three-year deal worth £360,000 to supply its 'Red 2 Alert' monitoring system to INCAT International.

Having raised £780,000 at 10p in November 2004, Red Squared, headed by chairman Graham Cooper and managing director John McGuire, ended 2004-05 with £903,000 in the bank. The company strengthened its management team and beefed up its sales and marketing effort and, looking ahead, Cooper speaks of a 'strong managed services pipeline'.

House broker Daniel Stewart predicts a move into the black in the current year, with £100,000 pre-tax profits and earnings of 0.4p a share. At 6.88p, up 0.88p today, the shares could be worth a modest flutter."

[sharegod] 30/1/2006 17:16

someone keeps snapping up small chunks.I imagine there is still a bit of stock around from listing but this could very easily rocket one day.