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It was overwhelmingly positive.
The $10mill is the very lowest it will ever be and even in the first year it is highly likely to be in excess of this.
This is based off old embarking passenger numbers which will inevitably gone up. It also excludes new routes like the x2 non stop to Qatar, further Air France and likely flights to UK via BA. UK has the 3rd largest population of Congolese outside of DRC so its a huge market and the next inspection is November which should then allow BA to fly there thanks to WSG.
So i would be surprised if there is no uplift in the initial $10mill quote and in a few years with the addition of domestic and cargo i can't see it being less than $30mill. It is a truly transformational contract and being able to buy right now at around 3p is a joke.
If they take on domestic airports for internal flights, pax is 2-3 times that of international flights.
Freight is said to be double pax revenue.. (unconfirmed just notes on the private twitter group.)
Future Potential in DRC is current income a minimum of $10mil revenue x 4 ..
International pax growth very likely , improved security means more airlines will fly to DRC.
15 live MSC in discussion. some advanced, one very advanced. Expect to sign at least 1 more in 2024. PF feels the DRC contract gives great credibility and will encourage other African countries in discussions to step up.
Things are certainly looking a lot brighter here than they were a month ago.
Just listened to the first part of the call. A few points i noted, I’m sure mikes already covered but maybe offers corroboration.
“Opex/capex covered by revenue streams, very profitable from day 1”
They Will require some initial funding to start up. A number of options available.
“Our preference is debt financing, discussions under way to do that, we will announce in due course”
He wont completely rule out a future equity raise, “it would be foolish to do that” ( commit to no placings in future)
WSG believe that this contract as it stands should add 10p onto the SP. If we take the low at 1.4p thats a value of 11.4p before any future growth in DRC.
They are very surprised at the current low Sp.
The opportunity for growth in DRC is vast. Internal flights are the main travel means given DRC is the size of western Europe. If they take on domestic airports it will be much bigger than international. They cant take on until international contracts under way.
Freight contract another huge growth area.
Ive not got to the questions section yet. Will try and finish it later.
Rise ON funding news rather than INTO I suspect.
My take away is that this is stupidly undervalued. I totally understand why (lack of delivery for years), but it does give a potential for some cheap shares.
Potential $10m+ annual profit vs a £10m mcap. Something has to change!
Great summary Mike. Thanks hugely. It all sounds very positive. Sounds like SP should rise into funding news and once that’s sorted then the brakes should be off.
Likewise, the domestic passenger traffic, which is circa 2, 3 x the international travel. The domestic airport that WSG will operate, is the domestic airport that the DRC president uses.
The tax that WSG will collect will be circa $25/pax and will be made up of a part share of an existing tax, and a new tax of circa $12/pax.
The $10M revenue quoted is not reliant upon the passenger figures and the speed of the roll-out.
Air Quarter have just announced an increase in their provision from 1 to 4 flights a week.
PF believes that Air France are looking to increase the frequency of their flights to the DRC.
The British Government are also looking for a British Carrier to commence direct flights to DRC. However, for this to happen the security structures in place need to be improved. The Statutory body responsible for assessing airports make annual inspections. The next inspect in the DRC is November of this year. It is possible that the initial enabling works that WSG will have carried out by then would allow progress to be made on this.
MH confirmed that the operational set-up costs are inclined to be fixed costs and an y increase in pax traffic goes to the bottom line in terms of profit. It was clear from the discussions that the management believe there is the scope to considerably increase the contract value over the next few years.
This is MY take on that discussion, but I would suggest that a natural growth in international traffic, the add-on of freight traffic scanning and picking up a proportion of the domestic traffic, then $20M could be on the cards in 4 or 5 years.
Given enough time, PF may look to do several interviews over the coming weeks.
WSG have a conservative 10p/share value against the DRC contract based upon the existing contract structure.
Hope this helps.
DRC Contract
Previously announced in 2021 as being 20yrs. However, in-country PPP laws allow for an initial contract of 10yrs. We have 10yrs with a potential 5 years extension. Note, WSG will own all kit installed. If the contract is terminated after 10yrs with no extension the DRC must pay for or return all kit. This disruption and cost would suggest that the 5yr extension is most likely to be extended.
Should the contract be terminated early, WSG will receive 5 x annual contract value, so circa $50M min.
Should there be a dispute in the T&C’s, the arbitration body that will oversee any negotiations will be an International third party, outside of any in-house political influence.
The revenue due to WSG will be paid by the individual airline carriers in US$ to WSG. The monies do not come from a DRC source of African banks etc.,
The initial funding will come from cash at hand. The remainder of the funding will come from revenue generated by the security fees, as income starts in July 2024, and most likely debt funding.
PF clearly, would not take a ‘Placing’ off the table but it was made clear that is not his preferred route. PF confirmed that the company already had several debt-based funding offers on the table. Some with attractive T&C’s and others with less attractive.
The company has time in which to engage with the various lenders with a view to getting the best deal for the company. Given they have cash at hand, I got the impression that this process will stretch in to the ‘weeks’ rather than ‘days’ timescale. When decided, it will be announced to the market.
The roll out of the works/training for the 5 airports will be an 18-24month process, but the implementation has already started with staff in country. PF will be back in the DRC within the next few weeks and MH will most likely be in country towards the of May.
The current contract is for embarking international passengers only. The company are using historic date which suggests 400k pax/annum. WSG believe this may be lower than the current pax, however, want to commence operations on the ground before they comment further. For this reason, it will most likely be 3 or 4 months before any Brokers issue any new notes on the company as there forward-looking analysis will be based upon these numbers. They will also have the debt funding structure to hand by then.
The in-country company employing local labour will be 100% owned by WSG. They will be paid by WSG, and when all airports are operational, they estimate 400 employees.
The contract does not include freight scanning and monitoring. The DRC are desperate for this become in-country as this is, at present, sent outside of country for scanning, processing, and monitoring. It is likely that existing contract will be developed to include freight handling, however, PF stated that WSG must, in the short term, concentrate on deliver the international passenger contract.
Linton:
I con confirm what Esteban posted on Twitter.
Multiple debt funding options….deciding which is/are the best options in terms of total cost of capital.
Seemed bullish on at least another MSC this year…but this is irrelevant. Until the signed one starts to get priced in, nothing is the pipeline will be considered by the market.
But in the same way that people jump on a momentum trade as they like to know they’re not alone, the signed DRC contract should help with the other late stage MSCs.
I came out of the call more bullish. I’m more than happy to wait it out now. They’ll have to RNS the funding at some point, and the money starts rolling in from start of July, so there are 2 catalysts.
Https://x.com/estebanmaccers/status/1780567663862755778?s=46
“Multiple debt funding options”
Can others confirm what was said?
Lets be honest they have had sod all to tweet about until now.
2 tweets pre contract signing about the DRC visit. Smart pi,s bought in then at 1.4p area.
5 tweets since contract signed including the announcement, a few photos of fowler signing up. Hardly a PR bandwagon for such a major achievement by WSG standards.
Lets see what happens. Fingers crossed holders get to hear what we want to hear on financing.
The broker call is the same broker call that happens after every interims and end of year financial results. The only new thing is it was delayed a couple of weeks so DRC could be discussed, its not some secret placement ramp. They've not placed in 3 years and Fowler has continually said they won't and specifically they won't for this deal.
I certainly questioned if it would ever get to this point to him directly, so from my point of view, he's got a lot of credit back in the trust-o-meter.
I was referring to their Twitter page coming alive with regular posts being made when it hadn't been touched for years.
I believe this is a decent company and I believe it is undervalued, even factoring in political and geographical uncertainty. The problem is, the market is broken.
I'm not arguing that the company is bad, or that it isn't undervalued currently, I was just speculating as to what the board could be up to taking into account their recent communication to the market.
Was there any PR ive missed other than the results rns? Genuine question as id consigned my shares to the bottom drawer and forgot about them until i read the results and reference to an April visit to DRC, even then i remained sceptical .
Thankfully they got the contract and im very happy with that. Zero PR since. PF was still in Africa at weekend so i guess very busy getting on with business over there.
26p target was mentioned way down in section 7 of results.
I guess its up to investors and potential investors to decide if thats a fair long term target. My view is they will need to win at least another decent msc to get near that.
What do you see DRC as fair value, we know £8 mil pa revenue, margins 50-60% area.
Plus the existing company businesses which are around B/E
Relatively speaking there was a lot of PR compared to what went before. Didn't you find the 26p target at least slightly rampy?
Wheres the PR in overdrive you mention?
Its been the exact opposite, No PR before or after. There was a reference in intrims that DRC would hopefully be concluded in April visit.
The contract was then signed on the visit and announced via RNS and theres been no PR since. The RNS stated they have finding options including “project debt funding, the preferred method”
I wouldn't be surprised to see the company raise funds around the 2p-3p level. The PR machine was in overdrive leading up to the RNS which got me a bit suspicious. Now they're having a behind closed doors call for the brokers clients. I could be wrong but it all seems a bit fishy to me.
They could of course secure funds via other means but the fact they were so interested in pumping the market the last few weeks makes me wary. The 26p target was a bit of a shameless ramp, let's be honest.
Not knocking the company by the way, they've done fairly well all things considered, and I think they could do much better in the coming years but I've been burnt too many times not to read the red flags when they're sent up.
Having thought about it. Im Not sure we will get clarity today as any price sensitive info has to be in public domaine and cant be shared just with individuals. Hopefully im wrong.
Janiax,
I'm sure that there will be some info forthcoming from the presentation by the posters on here who will be accessing it. Nothing can be revealed in the presentation that isn't already in the public domain.
No it’s via the broker for mostly their clients.
It will be put to them to do a full investor webinar again tho
Does anyone have a link to where we can listen to the call?
Big call tomorrow !
If Mr Fowler wants 26p here in due course, then he needs to inspire hugely on tomorrows call, for starters
I'll not be able to listen in but great if people are kind enough to precise/feedback here
If this contract is actually as good as bullish players here might surmise then 3p is joke low imho
Good luck to all fellow holders
In case you’re not aware, its investor calls with broker tomorrow, starts 1030am. I think everyone’s waiting for some clarity on funding for the new 5 x airport contract.
A couple of guys on the twitter group have calls booked.
Hopefully the right noises will see the next leg up here after the last few days of churn and consolidation.
I expect plenty of chat from late morning, early afternoon tomorrow.
After such activity in the chat yesterday, absolutely no posts so far today 😁
Hope there's some good news soon about the non dilutive funding and this starts seeing a good strong rise over the next few weeks.
I still feel this is very undervalued for the position the company is in now.
Hey, again Nice2CU.....
:)