for more information about stanelco click on the links.

driver's research page link
http://www.moneyam.com/InvestorsRoom/posts.php?tid=7681#lastread
website link
http://www.stanelco.co.uk/index.htm

Just come pack to visit the thread and wished I hadn't bothered. It seems to have deteriorated offensively into an egotistical parade and has little value as a forum for balanced debate. I would also make the point that we are in the 'Investors Room'. It would seem to me far better that those who are bashing the stock as part of a shorting strategy should do this in the Traders Room.

Having said that, I will try to inject a more objective perspective for those visiting, puzzled by the recent fall-out.

(1) Stanelco, the company, is doing rather well. The flow of news is positive. Following the acquisition of Biotec, half that company has been sold to SP Metal thus halving the cost for the area of appeal to Stanelco. We now know that their biodgradable trays can seriously undercut the price of polyester trays. The recent deal with Mondini gives them an OEM source to complement their retrofitting service.

(2) Tim Freeborn of Evolution has discussed progress with Ruane of ASDA. '...the companies are amassing test data for each class of packaging. It is crucial to be able to objectively establish the cost savings and other benefits in each case. Once this is done, ASDA will approach its suppliers and demand price cuts equivalent to half the savings - whether or not they have installed Greenseal! Ruane says he would be 'disappointed' if there are not at least 200 units installed in the UK in a year from now.' The significant words, repeating an earlier statement, are 'whether or not they install the machine'. In one sense ASDA aren't too concerned if they do install the machines (although they would lose the packaging benefits) because they will get the cost saving anyway. However, the supplier will get less cash if he doesn't complete the installation.

(3) Freeborn adds: 'The company has bigger fish to fry. In the US we believe it is in talks with several Fortune 500-sized companies about both Greenseal and biodegradables but it would seem reasonable to expect major progress on both fronts in the next few months.' The Evo model shows eps of 2.3p in 2007 and 4.8p in 2008.

So Stanelco, the company, is making significant progress in its roll-out of its new technology without any significant hiccup. What about SEO, the share. The problem here is how you determing the appropriate capitalisation of the company given that it is still involved in the launch process of its lead product. The cap. is back to 160m - is that too much or too little? How should we value the company?

I have little doubt that the share has been over-hyped and has run ahead of events. I have discussed, some 2000 posts ago, the Economic-S curve. We are still in the launch period when the innovative initial users stick their necks out for competitive advantage. This should include the initial US user(s) and maybe user(s) in other markets. There is a theoretical linkage between the gradient of this inital sales line and that of the steep line which follows the bend to general use. But I don't believe we can know this gradient. Given 200 ASDA machines and, say, 500 in total in this first phase, lasting some 18 months, then, using KBC Peel Hunt's figure of an sp of 2.5p per 100 machines, then that is 12.5p which should largely underwrite the current price. Evo's projected eps of 2.3p in 2007 implies an sp of 46p on the basis of a pe of 20 which seems cautious given the assumed gradient of the second phase of the growth curve.

So the investor who locks the share away should make a good profit over a three year period. In the short-term momentum is against the sp. There has been too much over-hyped expectancy in the share and now we have the reverse with the hot money draining away. When will the tide turn, as it surely will? There is hope for a positive RNS, but why should SEO be that concerned with the sp? The ASDA deal is in the sp, certainly at the 200 machine level. What would change the scenario overnight would be a significant US order or even a comparative trial period to that at ASDA. I do expect this in the relatively short-term but that is as likely to be three months as three weeks. I expect there is quite a lot of shorting money in at the moment which may be a dangerous game as the price could rocket with a positive US announcement. We are back to the 18p-20p trading range of a couple of months ago. But we have broken the support level defined by the 21.25p fund-raising and can one be too confident that this will not be repeated, with the next support level at around 13p? On balance, I think this is unlikely as we are considerably further forward in development terms since those days. The problem as I see it is that if I stay at my present low level of investment (although I added 100K shares today) one could miss out on a significant run to new levels. Downside risk = 5p. Upside potential = 13p (to previous high) and the stars thereafter. On balance, better than 3:1 which is the reason for today's investment.

Eric

EW,
Not so sure i agree with 2
ASDA will want the benifits of longer store life,
which will allow them to plan better.
cyril

Cyril

I did say 'in one sense'; its really kick and carrot from ASDA to make certain that the suppliers do implement Greenseal. The significance to stenalco is that it does underwrite the 200 machines and probably a good number more.

Eric

Eric

Hi there. What a refreshingly cool and sturdy evening breeze to fill the sails and drive us forward after all that unpleasant hot air of the afternoon causing the canvas to flap all over the place and the boat to go nowhere.

I would add to your words of wisdom the reminder that we are waiting for the results of the third trial to be published. Not only is that an important result per se in that it proves the technology for salads (I guess, after the meat and fish trials) but is also Ian Balchin's quoted trigger for the roll-out in the States - for which, by the way, I do not think there will be more trials, so much as probably limited test orders for the retrofitting to be followed by larger numbers when worked in to the food suppliers' satisfaction. Above all else, I think it is the perceived delay in their announcement which is at the root of the restlessness in the market in these shares and on this thread. Does that necessarily mean bad news?

The acquisition of half of Biotec that provides the biodegradable materials to be formed by Mondoni into bases for SEO's tray-lids to cover is now a complete packaging solution with an integrated, efficient pricing ability - worldwide. After UK and US will come Japan, Europe, India and China.

All the positives are well rehearsed. The negatives may arise from any of the macro economy (must mitigate in favour of reduced cost biodegradable packaging) fiscal/social government policy (ditto) management (where is their weakness?) commericalisation (always tricky for these new technologies - but, thank you, Howard White, no problems there) runaway overheads and/or negative cashflow from a weak balance sheet (nothing doing here either). What is it that will prevent SEO from achieving an increasingly profitable level of operation over the next 2-3 years?

Whether I buy at 18p or wait for 13p, I will still make more money by buying more at 18.75p today than if I kept my same holding and went vertically up from 28p - in which case I would never have topped up. The SP will still arrive at the same future peak, but may be on a differennt day. And, for all you traders out there, you can have fun and profits too on the way without the need to denigrate less courageous investors.

I have read that consistent long term holding of fundamentally good companies (for those with the nerve - ah! so an investor is not necessarily less courageous than a trader - I see) over time outperforms the more frenetic trading in and out of a stock. Is this true? Luckily I don't need to know the answer to that one, because whatever anyone else makes out of this stock will not affect to any significant degree what I make. Companies who produce real goods create real wealth and the trade in their shares is not a zero sum game.

I retire with bated breath against what tomorrow may bring in Tim Freeborn's so-called roller-coaster ride.

sd

hello eric. long time , no hear. a good summation. you have been missed. i agree, sd....tomorrow will be an interesting day.

Tom Bullford - the man who recently gave people ARX and TPA ??? Nice droppers were they ???

Still very overvalued - over ramped - over tipped - over hyped - and still NO ORDERS - apart from 2 when around 900 are in the price.

Break below falling trend line - could be a massive drop coming by late afternoon once the MMs mark up to open to give a fake bounce then drop it later perhaps followed by more WT sells late in the day ?




Looks terrible - higher rate of fall coming soon ?? Who knows

I issued a warning on this thread yesterday about abusive posts etc. And yet again this morning I come in check this thread and it seems to have moved back to childish name calling.

I will be reviewing this thread this morning to see whether any action is necessary.

As an aside, may I remind you that this thread is about SEO - can we stick to that please?

Ian

morning ian. the conflict is between traders and investors. it might be an idea for traders to have their own thread in the trader's room.

Morning all - morning Eric - what a breath of fresh air - where the hell have you been - look what has happened in your absence

Looking forward (not) to an interesting day

Baza

Well - a reasonably positive start -

Baza

Morning baz, bos, lets hope for a good day, no bombs no nutters, no panic.
Good post eric hope you had a nice rest.

to EWRobson,

Eric,
Confession time...............have lost your reply.

Do you have a copy to send me ?

Where it is I cannot imagine.

Regards

Predateur

A fat lot of notice you pay to the R/Page for the last couple of months the link to Premier Technology was wrong taking you to a totally unrelated Web Site, now corrected, pay attention!!

Watch out there's a predateur about, shouldn't that be predator.

Good chap, predateur - came third in the golf challenge; won't say who won it!

Good positive trading today with steady buying - level 2 shows a significant order book. Great post from our nocturnal dog; suspect he then nodded off and dreamt of bones, or 'n.b. SEO' (clever that!). Interested in your comments on the third trial as the trigger from the US. The Evo quote I gave seems to imply that they are testing a wide range of products with the primary purpose of reporting to ASDA suppliers the level of cost savings so that they are then shared between ASDA and the supplier; ASDA are not using their exclusivity year frenetically but as part of a clear strategy to maximise their own cost savings (reduced payments to suppliers) and also ensure maximum take-up. Presumably the results will be available to Walmart but not to competitors so it will be difficult for a competitor to follow the same strategy without their own trials. Interested in comments.

Eric

Eric,

A HUGE thank you for rescuing this thread.

The bears are conspicuously quiet today. i am sure they will be back is the stock starts to trade lower.

One important point is that the stock is now SETmm. A big difference in that it is so much easier to trade and stack the book.

its all about the US and RNS containing order flow. I can see the highs retested in the coming weeks now that some of the stale bulls and stop losses are out.

thx again

rgds
PT

Thank you Ian, I'm fed up of having SEO thread hijacked.

i agree

LOL. But who are the axis and who are the Allies???