Back­ers swoop to prop-up Luceco

An­a­lysts left in the dark over near-term prof­itabil­ity

Shares - - BIG NEWS -

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)

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