The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Agree the market doesn’t get it. If there was an issue with debt then surely the company would include the third option. Pay down debt. They haven’t…
“ The company said the sale of the subsidiary–which it holds a 71.4% stake in–represents the first step in unlocking value for shareholders and closing the gap between its share price and the intrinsic value of its assets. It will decide whether to reinvest the proceeds into new growth opportunities or return capital to shareholders when the transaction closes.”
https://www.bollyinside.com/news/contourglobal-sells-hydroelectric-business-in-brazil-for-318-million
They are clearly selling because it’s ‘a good shareholder deal’ and it mitigates EM currency risks. With the Fed raising rates EM’s will have to follow to maintain the risk premium. Simple as.
Usual caveats
Trek
I think it is. just the. debt. which is. holding the. SP. back. Investors. do not know or have not bothered. to. find out that. much the. debt is external debt pertaining. to. each specific. operation (115. of them) and not. to the. company as a. whole
Pleased to see this go through. Personally I'd prefer debt reduced a tad in rising rate environment. Seems to be well covered but I do think this is a slight negative for market rerating. By the sounds of it management have the cash earmarked for other uses.
That said I am still scratching my head with GLO.
Utilities sector have been one of the brighter sectors in current market gyrations but GLO SP seems to be stuck in treacle. Div is great but I would like to see some capital appreciation.
Just had a proper read. So reduces non USD/EURO currency exposure to 10%...
“Non EUR or USD adjusted EBITDA currency exposure for the Group will decrease from 14% to 10%”. Looks like wind sale to follow.
Interesting that one of the motives was the disconnect between NAV according to private valuation and what the market currently values GLO for. ‘Cheap!’
This seems to be a challenge for many listed companies. They are based on buy sell pressure rather than what the intrinsic value is. However, in the case of GLO we have a +6.5% yield paid quarterly which I am pretty confident puts a floor under the SP.
The private valuation was about 250p and market valuation is now 188p. That has hardly shifted even after share buy backs, yoy inflation beating divi increases and now some asset sales!
This is looking more and more like a safe boring solid income play if you can tolerate the 20p trading range.
Usual caveats
Trek
I agree totally, a stock holder windfall is nice, but I would rather they add value, which in turn should support long term returns.
Fantastic news! Only glanced at RNS but the axiom is the removal of fx risk to the real following impending fed rate rises. Perfect timing! Now we just have USD and EUR.
Company will ‘determine’ how to spend. I would rather they reinvested as they would, hopefully, get a better long term ROI should the right opportunity manifest than a special divi.
Usual caveats
Trek