ReNeuron Group's (LON:RQE) recent 100 for 1 share consolidation was a benign and cosmetic ‘tidy up’ of its historical capital structure. The share price of ReNeuron is trading at 52-week lows and the recent consolidation may have been an unrelated or an unintended cause for concern for some investors. ReNeuron’s valuation is now below its c £40m cash position. In this update, we offer some possible thoughts on this overreaction and, in the absence of operational newsflow, our forecasts and valuation are largely unchanged.
Share consolidation just cosmetic
ReNeuron completed a 1 for 100 share consolidation, which was supported and requested by some institutional holders in order to improve marketability, just before a period of intense stock market volatility. It is not possible to know investors’ reasons for selling but some may have mistakenly taken the share price rise as an opportunity to ‘take profits’. ReNeuron’s stock price is now not just trading at 52-week lows, but also below its cash balance. Our valuation of ReNeuron has hardly changed as a result of the share consolidation.
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