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EVR is currently testing the 375p support line. If it breaks through and dips under 350p on a close before Xmas, that will be a very bearish sign. The next trend-trigger will be the Q3 2019 results in a few days. If they are bad or neutral, the downtrend will accelerate.
Personally I'm not expecting a divi in the announcement on 2nd November, but looking for assurances that the company remains profitable. IMO that was the between lines message in their previous reporting and conference call. EVR seems like it's priced expecting a return of around 40p or around $0.55 a year given that previously the SP was priced for roughly a 10% divi return.
There are quite a few US companies in the sector reporting as well as EVR.
High % inside shareholders seem also to made back their investments, IMO this doesn't mean a pressure to pay dividends, as reflected in the high capex spending, which will reward longer term.
I bought a holding at 398p recently to perhaps trade on an upswing by steel price stability and confidence in EVR with it's reporting.
https://marketrealist.com/2019/10/us-steel-companies-call-a-bottom-after-prices-plummet/
"In my view, US steel prices appear to be near their bottom. We should see some recovery as we head toward the first quarter of 2020. Typically, the first quarter is strong in terms of demand. Also, with supply chain inventory so low, we could see some restocking next year.
Domestic steel imports have fallen, and the trend should continue. One risk for the global steel industry is the expected slowdown in China’s construction sector next year. Looking at the floor area purchased for future construction, we could see a slowdown in the country’s real estate development sector next year. Given China’s dominant share in global metal consumption, a slowdown in Chinese demand could negatively impact metal prices."
With a steel and vanadium downcycle, and a global recession, the firm's $2-3b profit pool could be wiped out in a flash, taking the dividend with it.
Falling (or peaking) profit + rapidly rising spending = tanking shareprice.
@NI "the size of the dividend has been the reason to own Evraz. The problem now is that the board has indicated the need for over $1bn capex per annum for four years!"
2018 CAPEX $527M, DIV $1566M, debt decreased by $400M.
2017 CAPEX $603M, DIV $430M, debt decreased by $1032M.
The last two years have seen significant resources going to reduce debt. Debt is now below the medium-term target, so that is unlikely to continue, and the funds which have been going to reduce debt will mostly now be going to CAPEX instead. If the company continues the same profitability that it has, the dividend should remain largely supported, despite the CAPEX.
The question, as always, is if the company continues with comparable profitability. At today's share price, a 25-30% cut in profits (and dividend) would still be catching my attention. These prices are insane. Either someone knows something we don't know or it's a shorting attack.
the size of the dividend has been the reason to own Evraz. The problem now is that the board has indicated the need for over $1bn capex per annum for four years!
Sound the better reason for the constant drop. Was tempted Today, but will wait until a firm bottom has been established. This looks to be going even lower for a while and the low £3.00 mark now looks to be on the cards. The divi seems irrelevent in this case.
If you look through the presentation its stated that the average CAPEX between 2020-23 is expected to be on average $1BN. That for example compares to $527m in 2018 ! Some of that will be absorbed the efficiencies they've highlighted but reality is it eats into free cashflow which makes the profitability and divi more questionable. I can see why the price dropped today.
I maintain that FERREXPO is a much better pick with only $270m net debt and that's expected to drop dramatically again this year. It has a profit multiple of 2!!
Anyway, best of luck all
Debt, extra capex, steel downcycle, global / US recession on the horizon, exec selloffs, profit challenges, dividend questions, FTSE100 kickout looming... and a 40-50% shareprice collapse already in weeks in a peak-Dow bull market... The problems are mounting big here. The red lights are flashing.
If the upcoming Q3 results are neutral or bad, and any 2020 outlook is non-positive, and there is a close below 350p before Xmas, then the charts are now pointing to 50-100p as the next stop in 2020 / 2021. Very, very bearish momentum at the moment.
Thaiflyer in my experience the market always overreacts, and when a share is dropping then theres not much one can do- it just seems to fall & fall... well... we have 3 choices- 1) sell at a loss, 2) hold & wait or 3) buy some more & average down. My choice is 3, and my average is around £4.15 which I think is pretty low compared to a lot invested here. Big question is where is the bottom? 3.77? 3.50? 3.00? Ask yourself will this one reach £7 again in the next 12 months? Maybe? What about £6? Probably? £5? Almost certainly... it's about managing risk, and in the meantime we can collect the generous dividends on the way! There is a Q3 update on the way- perhaps that'll be a turning point and it'll start to rise again. But when it does turn, the price will rise & rise & rise almost irrespective and then we have another question to ask ourselves- the same 3 options as above! ATB my friend
Don't like the sound of FXPO. Not an investment for the faint hearted. Lets see what comes out of today's Capital Market do.
The last profit number not helping, the size of the capex and the enormous debt weighing it down. The sector itself though has taken a huge hit of late. Worry here now is that this could soon face eviction from the FTSE100
Think a better pick is Ferrexpo which has equally been knocked back hard. The difference there though is that the stock is trading on a 2019 PE ratio of 2 (has to be the lowest for any miner out there), is below net asset value and similarly to Evraz pays a large dividend. In Ferrexpo's case it's around 11% at the current price if also factoring in the special divi. As for Evraz, good luck
Could well do..............but expansion is a good thing isnt it?.................or would it be better if the RNS said they were contracting?
Also, lets just say the expansion will hit the dividend, does this then explain why the drop of 330p a share in 4 months i.e someone on the inside has been dumping shares?
Could all this CAPEX expenditure which is planned compromise the dividend?
Currently sitting at 383p from 710p only 4 months ago...............i dont buy its only market forces, theres something underhand going on....
Whats with all the A trades on L2 of 1 and 2 shares?........asking as i thought this was a sign of Bots at play?
May as well of bought an AIM share at this rate........
Probably partly doing worse than other steel-heavy miners due to the trade wars -- sure, there's the US division but it's still mostly Russian, so vulnerable to high tariffs.
Partly also, I'd guess, the high gearing compared to some others. In an economic downswing, if that's what we're going to have, the companies with high gearing will be impacted more.
I would also guess the significant share sells by principals earlier this year has the market spooked, thinking that upside will be capped if they dump more shares next time the price goes up. No one knows if they will or not, but some will avoid this share for that reason -- not a factor with other miners.
Plenty of reasons for people to sell, but am pretty sure it is oversold and that reality will catch up sometime in the next few years. If I'm right I'm going to do really well on this share.
It does seem strange why this has fallen so steeply. PI`s are still buying but need to look who is reducing more. I`m not touching this one yet as it seems the bottom hasn`t been reached. Some news may give a clearer view on why the stock is being dumped.
Trading update Q3 2019 on 1st November.
We will be at 300p by then....:-(
Why is it that other companies in the sector have not dropped by a similar amount?.........also the ore price hasn't dropped by 40%.............i don't expect shares just to keep going up and up but a 40% drop since July is worrying,even taking Brexit and all into account
Evraz is still operating isnt it?.....lol
Brexit weekend, Investment day this Friday and Trading update Q3 2019 on 1st November.
Interesting couple of weeks ahead for EVR, that's without the worldwide picture.
https://www.evraz.com/en/investors/events/trading-update-q3-2019-r/
The Brexit-smashed FTSE is still up 5-10% YTD, and the Dow is up 5-10% in 4 months, so the overall global bull market remains strong for now. A -40% collapse in EVR during just a few weeks hints at major underlying or macro-market problems. A US-China trade deal will only provide temporary relief for EVR. US bonds are inverting (and un-inverting) and pointing to a US and global GDP recession by the end of 2020 or 2021, and that will push EVR (and steel) on another downswing.
'EVR has collapsed by almost half in 4 months, in an overall bull market.' Four months ago the FTSE closed at 7345, today 7211. Nice 'overall bull market.'
We get it, you're short on Evraz. Good for you, it's been going well for you. I'd guess it wouldn't go much lower, but if you push it you might get lucky and see further drops. Bet you're praying Trump doesn't agree a deal with China, your whole strategy will fall apart.
But don't think you are going to influence anyone. I won't bother to tell you why.
EVR has collapsed by almost half in 4 months, in an overall bull market. It is not just a slight downturn, it is a full-on collapse over -40%. EVR shareprice is in recession. The charts suggest very bearish momentum. The steel market, also, is in a downcycle. Any close in the 3s here will signal a push for the 2s. This will be a great buy at £1-2, but not at current levels of £4. Just too much downside momentum right now.
Thanks for highlighting that VanVan. There's a link on their website about the Investor Day, I share below.
Any hint of the next Dividend level by Alexander Frolov, for a dividend in March 2020, and holding at a good level will be good news.
Steel prices are low and look roughly at 2017 levels.
So... Sticking my neck out with a humble opinion.
Prices staying at this level could well mean they'll keep the dividend around $0.30 which would indeed signal a boost in the share price of EVR, but would not react until the Steel price proves it can strengthen.
A strength of Evraz is highlighted in the recent conference call. https://finance.yahoo.com/news/edited-transcript-evr-l-earnings-184823821.html
"Yes. Speaking about our self-sufficiency, we are fully covered in Europe division, so with the NTMK, with respect to iron ore, so we're 100% self-sufficient. Speaking about our Siberian assets, our self-sufficiency is approximately 60%...
When we calculate the cash cost for steel, yes, we use the market prices."
"Talking about Russian assets, coal and steel I don't think that we expect any big changes in the cost just because of our vertical integration."
Putting that together, costs for the coming year similar to this year, capex spend of $800m and EPS levels keeping up with 2017. IMO it does mean the share price looks over sold and a slow bump rating upwards possibly to around 500p or more, as long as the steel prices hold up, which IMO look like they will if that World Steel Association article below is right.
Steel Prices : 2002 to 2019
http://steelbenchmarker.com/files/history.pdf
https://www.lme.com/Metals/Ferrous#tabIndex=0
World Steel Association
https://www.steeltimesint.com/index.php/news/view/world-steel-association-short-range-outlook-significant-downside-risks-ahea
"Steel demand in China will grow by 7.8% to reach 900.1Mt, according to the World Steel Association’s Short Range Outlook (SRO) released today. The rest of the world is expected to record 0.2% growth to 874.9Mt.
For 2019, global steel demand will grow by 3.9% to 1.775 Mt and by another 1.7% in 2020, reaching 1,805.7Mt."
It's all speculations and roundabouts though. But I am looking to average down my holding and buy, now we're just above 400p, the base of the broker recommendations.
Anyone else with opinions ?
https://www.evraz.com/en/investors/events/cmd-2019/
The event will begin at 9:00 am local time and include presentations, Q&A session and a buffet lunch with management. The registration will begin at 8:15 am local time.
Key topics and speakers:
Opening remarks - Sir Michael Peat, Senior Independent non-executive director
ESG - Alexander Frolov, CEO
Market outlook - Alexander Frolov, CEO
EVRAZ’ strategy - Alexander Frolov, CEO
Strategy execution - Alexey Ivanov, Senior VP, Commerce and Business development
Digital transformation - Artem Natrusov, VP, Information Technologies
Financial overview -
I believe there is an Investment Day this Friday. Might put a stop to the weakness. The yield, of the dividend is maintained, could be very enticing.