Backers swoop to prop-up Luceco
Analysts left in the dark over near-term profitability
Aprivate equity backer of LED lighting systems supplier Luceco (LUCE) is taking action in the market to try and prop-up the fragile share price.
Epic Investments has ploughed in an extra £2m into the stock by buying 4.99m shares at 39.74p per share.
This takes Epic’s overall stake to 44,064,372, or 27.4% of the business. Taking a 30% shareholding would force Epic to launch a full blown takeover of the company, under Takeover Panel rules.
Luceco designs and manufactures a range of LED lighting systems, controls and other electrical kit to offices and industrial sites across the globe.
But it is the squeezed retail sector that continues to cause massive alarm for investors, which typically provides about a quarter of all revenue.
The company reported a 20% slump in half year retail sales in a trading update issued on 30 July thanks to ‘lacklustre consumer confidence’ and a big retail customers destocking.
That led City analysts to slash forecasts for the full year to 31 December 2018.
Numis cut its pre-tax profit estimate from £14m to £6.4m, roughly half the £12.8m that the company chalked-up in 2017. Forecasts for 2019 have also been cut deeply. Investment bank Berenberg went further, withdrawing its own estimates, saying it is ‘hard to have any confidence’ in the LED light maker in the near-term.
Berenberg analysts also cut their share price target by two-thirds to 45p, from the previous 135p.
Luceco, which joined the stock market in October 2016 at 130p per share, first got into problems after uncovering stock and foreign currency mis-management in December.
That hammered profit margins and forced the company to issue a profit warning. Several other negative trading bulletins have followed through 2018.
Luceco share had been trading at 232.5p levels before the December warning. Now changing hands at less than a fifth of that level Epic has been provoked into a response.
The private equity backer has been joined in the share buying by chief executive officer John Hornby and Giles Brand, the chairman. The pair bought 1m and 622,919 additional shares respectively, taking their personal stakes in the business to 20.15% and 5.89%. (SF)