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REACT Group – contract wins including “three material contracts”, a trading momentum continuing Buy

By HotStockRockets | Friday 12 April 2024

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

REACT Group (REAT) has announced what it describes as “three material contracts” all for mobilisation this month in addition to a stream of small and medium sized wins, stated as “demonstrates both the demand and the cross selling opportunities for our services”. This sounds good from a current 68p to buy share price, £14.5 million market capitalisation.

The material contracts are detailed as a 3 years, c.£0.785 million, Facilities Management soft services renewal and expansion agreement with an NHS trust in the Midlands – which represents a c.30% expansion of services from the previous agreement and is with an option to extend to five years. There is then also a 2 years extension of a “Core Vendor agreement” with the UK business of one of the world’s largest Facilities Management companies - noted to include “a new incremental agreement to provide crime scene cleaning for a large UK Government agency, with a history of spending c.£500k per year on reactive specialist cleaning” - and a new agreement “with a leading UK FM business to provide a single point of service delivery for emergency decontamination services to its customers”, with a noted incremental revenue opportunity in the region of £0.5 million per year.

Of course, the group now has to deliver on such ‘opportunities’ but they are noted to further underpin confidence in its current year performance. We’ve noted year ended 30th September 2023 ‘real’ profit around £1.6 million on revenue up to £19.6 million and forecasts for adjusted pre-tax profit to rise to above £2 million this year, with also a healthy balance sheet.

We, therefore, now further look forward to a further update on trading the group has stated it will provide next month and continue to consider a (50:1) shares consolidation-adjusted 100p+ share price, £21.5 million+ market cap, looks justifiable on the noted earnings and growth outlook. At up to 75p, still a Buy.

This article first appeared on HotStockRockets - for three gold stocks to rocket as gold surges again OUT AT NOON TODAY from the HotStockRockets team for just £6.06 click HERE

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