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To pick up on what CharlieS was saying regarding 'having a word', I saw this piece and thought it apt. Bearing in mind this is from just before Infa took on Appeldore and before they got the grant to build the Scillonian IV. But it shows a little of the process and that certain MP's where looking for ways to help both Appledore survive and get a new vessle for the IOS.
You may recall that Geoffrey Cox had a lot of involvement in the ealy part of getting the Infa/Appledore deal going.
https://www.thisisscillynews.com/single-post/2018/11/20/MP-has-been-working-on-Appledore-ship-idea
IMSL not worth anything over what they have spent, who would want to buy a fictional paper company with a CEO who has been caught out several times now with his porkies?
Good evening Gents not much news around but a couple of titbits
Hydrogen UK launched last week article here on the importance of salt caverns
https://hydrogen-uk.org/the-hydrogen-story/storage/
3 new high end jobs at H&W
https://www.harland-wolff.com/careers/
Regarding current valuation of IM the latest Cenkos note has it at £35/£50 min if sold now
Stokey - hilarious. I was typing whilst fielding a question from a child, so you're right, my accuracy was lacking, but you get the point.
CharlieSays ref 16.42 post strictly speaking you cannot have a debate at PMQs. To get around this you would need four or five MPs to ask the same question. This allows each MP to then ask a question. What would not be permitted is a speech. How much leeway you will get in getting to your question is up to Mr Speaker.
"I invested for a reason and whilst I have lost a lot of money, I still think the tide will turn."
Although unable to back it up facts and figures or short-term arguments, I am in agreement. I will continue to hold and wait for the submarine to surface.
Surely there'd be some debate at PMQs before H&W was allowed to fail. There's a fair amount of MP interest in this company, with all the various local potential. I'd say a few of the posters have a short on and will probably say anything til they close it.
If these shipbuilding contracts are serious and would offer a great deal to community, then one of the most significant things that could happen next, aside from a contract, would be if H&W announced a workable, revolving credit facility. Much is done regularly to assist ailing businesses (remember all those covid grants), so it seems blindly obvious that someone from government should be 'having a word' on behalf of H&W to get the ball rolling on this facility. It would mean continuity, not only for shareholders, but for the company itself.
Let's see where this winds up. I remain hopeful there's going to be a contract and a debt facility announced this side of Christmas, in whichever order they have to work.
Hebridean9. I hear you. It has been difficult to accept all the losses attributable to placings. Difficult to accept exuberant reporting of what will be insignificant profit drivers. The point of my article was to say, where do companies turn if affordable seed capital is not avaliable. If it were a tech company, silly sods would be happy to pay huge premiums for a company that had a few kids in a warehouse tapping on keyboards. If we are to make a difference to these communities, let's take a deep breath and support H and W. They have re-furbushed these under invested sites. They have done the heavy lifting, now we must pray the contracts come. At 45p we all thought it was only a matter of time until profits come. Sadly, covid came.... At 18p, I say keep going. If the company fails, so do the hopes of a lot of honourable, hard working people. I am happy to stand with them.
Totally agree with all of your post Lottie123. I am local to the Arnish site and invested in the company to support local jobs. However, the company has done very little of late to support shareholders / investors with a disastrous placing and the weekends debacle of the RNLI RNS. I'm afraid the sentiment we have for local jobs has not been duplicated by HARL to its investors. I intended to purchase more shares today but took a step back, had a real good think and realised enough is enough. Until the company can show it has a firm financial footing for the future and not misleading with the information it releases I will not invest another penny - and - will most likely divest if anymore deceit comes to light.
Stockey, not indeed. I agree, a broader decision making tram would help. JW has his feet planted firmly in the soil of heavy industry. He could do with some respected voices from a wider business acumen.
Lottie 123 ref 14.14 and 14.21 posts I presume that those posts were not aimed at me. As I have stated my view is that we need to detach the possible future prospects of HARL from the current failings of the management. One thing that I believe needs urgent addressing is the failure of the company to follow best practice and have more NEDs than Executive Directors. I am not sure what your view is but I am inclined to the view that HARL needs at least two more NEDs. This would give two NEDs for each Executive Director. I am not a fan of having just the bare minimum.
Part 2
So go ahead and try to put down a company trying desperately to rekindle hope in communities for a better future. Giving young people a chance to do something really positive. A company which has set its sails squarely on the winds of change in the green revolution. A company which has embraced the long term government commitment to re-birth our naval and maritime heritage.
I have invested heavily for me. I am not abandoning ship because you want failure. I had a long career in Merchant Banking 70s, Stock Jobbing 70-80s, Investment Banking until my retirement in the noughties. I was lucky as a young un-qualified man that someone was prepared to give me a chance. Go somewhere else and spread your doom. If this fails, so be it. I invested for a reason and whilst I have lost a lot of money, I still think the tide will turn.
I have listened to the valuation argument and hear the overtures of satisfaction from all those detractors saying, I told you so. The share price is at all time lows, well done. However, I ask you to think about it more logically. Why has the company performed so badly? Sadly, this country has failed all heavy industry over the last 40 years. Successive governments have overseen a dismantling of manufacturing which has led to the loss of millions of good, honest jobs. The lack of government support coincided with two fatal blows to our industrial heritage. One was the EU enticing huge investment in companies which moved jobs away from the UK, the other being the currency manipulation (maintain weakness) by the Chinese. This weak currency allowed China to move 20million peasants a year from the wheat fields to meaningful industrial employ.
I have two reasons to support this company. Firstly, my heart tells me that by our political masters turned once thriving communities into abandoned, economic wastelands, where little or no alternative employment existed. By investing some of my own money into HW I am making a commitment to help improve the lives of those, not fortunate enough, to have opportunities that I had in the South East of England. Had our government, and Investment companies, supported companies trying to make a difference, H & W would not have had to sell themselves down the river with constant calls on hard pressed, private investors.
Secondly, my head tells me that the assets purchased with the proceeds of several cash calls, were from receivership. Hence, no big premium. Significant assets with huge potential and surrounded by a talented, if aging workforce. The point you make of useless without profitable contracts is valid. I look further afield for my reasoning than the end of my nose. I look at the biggest manufacturer of products aligned to H & W, China. For 30 years they have gobbled up capacity from industrialised countries and yes, you are right, they have a huge pricing advantage. I am of the opinion that things are about to change. For two reasons, currency and population. The Chinese Yuan is currently at a five year high vs $. I happen to think it will go a lot further. One reason for maintaining a low currency was the need to shift all those able-bodied workers. That is no longer the case. For some years now, working age Chinese numbers have been falling, as the population ages. The really big change could come this year, that is a real fall in total population. Some forecasters fear that births this year may not outstrip the usual 10m plus deaths. This is a huge deal for the now, unrestricted (how many children) Chinese. The focus need not be on production at any cost, even losses, but a more commercial, investor returns focus. The shrinking workforce will gain pricing traction for wages and a stronger currency will help curtail any inflationary uplift from enhance consumer appetite. Part 1
Good idea Razor, you should filter anyone who disagrees with your contrarian view and call them morons. Reality is uncomfortable sometimes. Bye!
Iamsailing ref 09.39 post I think you meant to say cash breakeven in 2021. The other metric is whether it will have a turnover of £30m over the 17 months period to December 2021. Taking the second one first I remain confident that this will be met. I say this for the reasons I have stated before which are unchanged by last week's placing. The interim results showed turnover for the 12 months to July 2021 at circa £10m. Since then we have had the Saipem 1 contract payments under that in 2021 are circa £15m. In addition we have had a number of vessels into both Belfast and Appledore. Taking the number and in some cases the complexity of the work into account I would expect earnings from these repairs to exceed the £5m needed to meet this metric. Turning to the first breakeven by years end you state 'Will HARL be cash breakeven for 2022 as a whole? Not a snowflakes chance in hell.' I note that in its note last week Cenkos casts doubt on whether HARL will breakeven in the 2021 financial year. This would seem to support what you say. Due to the lack of visibility of the nature of the ship repair work being undertaken or due to be undertaken I am undecided as to whether this metric will be met.
Razor - commiserations if you are a long term holder, you must have lost a fortune. I admire your trust in the managements promise of imminent cash breakeven. Let’s all hope it’s the first promise they are able to keep. Personally I wonder why a company on the cusp of cash breakeven launches an absolutely desperate, heavily dilutive, take-all-you-can end of year cash raise. Will HARL be cash breakeven for 2022 as a whole? Not a snowflakes chance in hell.
It’s worth reminding ourselves that the day before the new issue, the market value of the company was £35mln, and that now, despite injecting £8mln of new cash, the market value of the company is only £24mln. This is all you need to know about how all the new ‘institutional’ investors view the capital raise: not as an exciting new investment opportunity but as a license to keep burning cash. It’s just a lottery ticket on some miraculous turnaround now.
Iamsailing what a bloody load of rubbish you posted - the company will break up and the dissolve? Take your 30 posts elsewhere as you're not fooling any of the long term holders - after all we're still eagerly awaiting the cash break even, which is due to come.
Iamsailing ref 08.31 post You misunderstood my 07.43 post HARL is not building the Deep Water Terminal the local authority is as part of their Masterplan for the area. There will be no cost to HARL it will only be a beneficiary of the project. On the point of the timescale for this I believe that the Deep Water Terminal is due for completion in 2023.
Thanks Stokey, the deep water terminal sounds like an interesting long-term development project for sure. But I somehow doubt that current shareholders will ever benefit from a project like that. The amount of new capital required would dwarf anything currently in place. We’d be starting from scratch all over again, probably with new capital, new shareholders, and maybe new management and another new name! What little equity current shareholder have a claim on is almost sure to end up plugging the massive holes in cash requirement for their near-term misadventures. I won’t faint with surprise if they take a couple of million for themselves too.
Iamsailing ref 21.02 post I see where are difference is I am looking at the potential to increase earnings over the next three years. My view based on all relevant information is that there is a likelihood of increasing earnings. The basis for this are firstly, At Arnish the local plan involves the development of a Deep Water Terminal near the site. As part of these plans a new link road will be built linking the Arnish site to the Deep Water Terminal. This would facilitate the fabricating of parts for the offshore wind farms in the area. Approval for this development has already been given and it should be in place within the next three years. Secondly, both Appledore and Methil are also near a number of Offshore Wind Farm developments. Accordingly, there is a good chance in view of both the local content rules and the fabricating footprint that HARL has for HARL to secure a reasonable proportion of the fabricating work in relation to the wind farm developments. On the shipbuilding site both BAB and BAe are close to or at capacity so I would expect HARL to acquire either on its own or in partnership with others some of the pipeline of work. I would therefore concur with the estimate of a potential of around £800m of work over the next five years. As such at this stage I would argue that the book value per share is a valid basis of valuation.
The difficulty I have with your valuation is as you have not provided any information that can be independently and objectively verified it is impossible to confirm. The FTSERussell information is based on verifiable information.
We = myself and one of the few other personal investors I regularly interact with and share ideas and work with. I’m a chartered financial analyst with a postgrad degree in finance and over 2 decades of professional investing experience. But valuation is essentially a subjective art and I don’t say my view is right and your’s wrong, it’s just an opinion. I find it hilarious how some people are trying to rubbish those who have been bearish as doom-mongers . Perhaps have some humility that they’ve been proven largely correct and could have saved the Polyannas a lot of money if taken seriously. It’s the bulls who surely have red faces and need to reflect on their biases. Anyway, Book Value is not a very helpful metric imo, as it merely reflects what they have paid for various businesses and assets, which are currently more liabilities and cash drains than actual assets, the ML excepted. It is extremely hard to paint any scenario in which the shipbuilding business actually makes a long-term profit, the negative value therefore reflects this. Luckily as equity holders, you can’t lose more than you put in, so there is always a little value in the share. If they dissolved the shipbuilding “assets” it might cost them about £10-15mln , then they might get the £25mln for the ML if they were lucky. That would leave something not far off the £12mln you mention, but that would mean the share price halves. That’s the best case scenario probably - a breakup and dissolution of the business somehow. More likely they’ll try to keep the show on the road and it will continue its historic trajectory (-99% and counting) towards some extremely small value after dilutions.
Stokey the “WE” probably refers to the “Prophets of doom” they seem to be multiplying at an exponential rate at the moment
Iamsailing ref 23.46 post I note you say 'We spent some time valuing the equity of HARL' assuming you were not using the royal we there can you clarify who the 'we' is in that sentence. On a more important point you give a negative value for HARL of -£46.5m can you clarify how you came to that figure. You say that you used a probability weighted value of £25m to reach this figure but you have not said how you arrived at this probability weighted value either.
I downloaded a valuation from FTSERussell as it is the most independent valuation I am able to get and was dated November 26 so would reflect the placing. It gave a book value per share of 0.32 and on that basis the value for HARL would be a positive £39m. The same report gave HARL a market value of £12m. Both basis of valuations which are objective are higher than your valuation.