9 Red Flags of RM2 International that Investors Should Question

Friday, Jul 07 2017 by
5

When you got an experienced management team, as well as independent directors such as Paul Walsh from Diageo and Lord Rose (formerly Stuart Rose from M&S), along with a famous investor in Neil Woodford, whom fund holds the biggest stake in the company (35%).  

You think you are on a winner.

Instead, RM2 is one of the worst performers in the market. Since January 2014, the shares collapsed from 88 pence to 14 pence.

Worse still, the company wasted hundreds of millions of pounds by initially pursuing the wrong strategy. Despite this, it needs hundreds of millions of pounds to meet the terms of agreements with their new outsourcing partners.

 

If you think the share price of 14 pence is cheap, do some research before taking a punt on this stock.  

 

Here are nine to consider: -

 

An ONE Product Company (Red Flag No. 1)

RM2 has one “high-tech” pallet product called BLOCKPal. However, high-tech this product possesses it’s still a pallet. Secondly, the price of industrial pallets aren’t expensive, you can buy pallets on eBay and on Alibaba.

With prices at single digits, this makes BLOCKPal pallet (with a tracking device) looks expensive to rent and buy.

On top of that, RM2 is in collaboration with AT&T to develop a new tracking device pallet called ELIoT pallets

We know the product is real, but can they sell enough of it to make RM2 a self-sufficient business. 

 

Manufacture First without Testing the Market (Red Flag No. 2)

When the company raise £130.8m in net proceeds, investors should question the business model.  

As a fan of Shark Tank (the U.S. version of Dragons Den), the one question they always ask “wannabe” entrepreneurs are: “What are you going to do with my money?”

And, if the reply is: “I will use it to manufacture and stock up on goods.”

Then, the reply is always the same: “Do you have the orders coming in?”

And, if this turns out to be NO, the sharks will start ripping into their business model (no pun intended).  

Apparently, that was the mistake RM2 International has made and they paid a price with their reputation, along with going down the drain.  

Even worse, they decided to…

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By reading my articles and newsletters, you agree to use the research of Walbrockresearch.com at your risk. The purpose of this site is to educate and entertain readers. In no way, we are giving investment advice though the information provided is to my knowledge accurate at the time of the report. You should do your research, or seek advice from qualified professional investment advisors.

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RM2 International S.A. is a pallet development, manufacture, supply and management company. The Company is principally engaged in developing and selling shipping pallets and providing related logistical services. The Company's product for moving goods, BLOCKPal, has impermeability to water and contamination, fire retardancy, and resistance to damage and weight. The Company also offers systems for tracking asset movements and for optimizing the utilization and logistics of those assets. The Company's ERICA system provides real time intelligence to monitor and manage the movement of any transit equipment. The Company also offers a pallet rental program. The Company also offers supply chain auditing and consulting services, including measuring a supply chain's efficiency, determining the viability of a closed loop system, weighing the advantages of an open architecture and monetizing inbound pallet movements. more »

LSE Price
8.5p
Change
 
Mkt Cap (£m)
2.1
P/E (fwd)
n/a
Yield (fwd)
n/a

Diageo PLC is an alcoholic beverage company. The Company operates in various categories, including spirits and beer. Its geographic segments include North America; Europe, Russia and Turkey; Africa; Latin America and Caribbean, and Asia Pacific. Its principal products include Scotch whisky, Gin, Vodka, Rum, Beer, Irish Cream Liqueur, Wine, Raki, Tequila, Canadian Whisky, American Whiskey, Progressive Adult Beverages, Cachaca, Brandy and Ready to Drink. It manages its operations from various locations, including the United Kingdom; Ireland; Italy; Turkey; the United States; Canada; Brazil; Mexico; Australia; Singapore; India; Nigeria; South Africa; East Africa, and Africa Regional Markets. It also produces a range of ready to drink products mainly in the United Kingdom, Italy, South Africa, Australia, the United States and Canada. more »

LSE Price
3399.5p
Change
0.6%
Mkt Cap (£m)
80,171
P/E (fwd)
24.4
Yield (fwd)
2.2



  Is LON:RM2 fundamentally strong or weak? Find out More »


1 Post on this Thread show/hide all

ExpectingValue 7th Jul '17 1 of 1
1

No opinion on RM2, but your allegation of double counting is wrong.

The first two entries are to reconcile net loss to operating cash flow, i.e., they start with net loss and then must TAKE OUT financing costs and expenses to get back to a clean operational figure.

The next two entries are these same costs and expenses appearing in their rightful places.

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