have revisited RHL after the recent trading update and chart formation.

i think at the current price it represents a good risk/reward ratio
with the factors below tipping scales significantly in our favour
- operating in an industry with growth characterisitcs whatever the level of european austerity
- they have some relatively scarce expertise
- mgt are full of confidence of future contracts
- prior to one off contract dispute there were highly CASH generative
- the contract dispute will have increased financial discipline
- the fact that it did not cause the company to fold is a credit in itself
- broker forecasts and mgt comments imply positive momentum

on a chart basis i see the current price as at a critical though not yet confirmed b'out level
support at the current price goes back to 2003
and in the more recent trend price is now firmly above the 200d
and looks as if it is forming a triangle bottom for a base before next (hopefully) uptrend
mostly interestingly there is 5 yr resistance at c.80p so a move above that would imply significant further upside is possible


on a fundamental basis i think the shares are reasonaby priced....
- yes there are eps fcsts of 15p giving p/e of 5 times
- but the level of debt is at the max you would want to see
- and a modest pension deficit
- and there is no divi at the moment
- and it is still a small company in a multi billion size market
- and ultimately it is a contract based business model which is only as good as the last contracts
- so, assuming they lose the court case, i can understand the low market rating

but the upside i think is huge.....
- if they win the court case it is worth c.50p a share plus costs
- it improves their credibility and thus rating
- i think they are an ideal take-over target
...... the same industry specialisms in a larger multi-national would
- allow the multi-national to offer a more integrated service
- they would be be able to increase margins by 1% maybe 2% but 1% would be worth an extra c.50p a share to the valuation and that is even before head office synergies which would also be considerable
- and the same level of RHL profits in the hands of a multi national would be worth perhaps 50% more due to that company's higher rating
so, if court case successful i dont see it beyond the realms for a 200p bid
of course this is all overly hopeful but, in my mind, a realistic scenario (say 20% chance)
such huge upside from the current is also suported by the chart pattern

so in summary i think the business as it is is prob worth 80p
successfl court ruling automatically adds 50p
so taking 50/50 chance of success gives a fair value of 105p
with an outside chance of a 200p bid.........
it's a good enough risk reward for me

here's hoping :-)


All IMHO, DYOR + BoL
RHL is in my portfolio

Did anyone here attend and able to report back beyond age RNS?

For those of you who enjoy the light hearted corporate publications made freely available to employees and accessible to all who wish.....
http://www.redhallgroup.co.uk/downloads/redhall_news/Redhall_News_Dec_2011.pdf
Just remember, any corporate in house publication is not impartial information.

There is no evidence that the Vivergo dispute has left Redhall at a disadvantage regarding quoting for new projects. I do not subscribe to the idea that the Vivergo money is 100% lost.
My glass is half full regarding Vivergo. For me it is / has been a frustrating investment as I no longer invest using the reasoning that I did 9 months ago. I hold because I believe I will more than achieve target growth when I cash in during 2012. (target 108). I have no reason to suspect that will be peak (if achieved) but that is my exit point. I am familiar with Redhall but invest now based on fundamental and technical formula. No surprise here that Redhall only scores on fundamentals.