Tim Watts, CFO at Shield Therapeutics #STX presenting at our Life Sciences Investor Briefing Watch Now
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Markets down tomorrow.hopefully kaz can hold be resistant to over all markets.
Yeah Pokerchip, good climb I hope it holds and starts to move back up towards the 1st of Sep, which is the date when the US and China meet to discuss their on-going trade dispute. If twitter boy scraps rest of the tariffs then I am hoping copper will fly.
Nice 3% climb from mid-morning.
Now need to watch and see whether the bears sell into that
I will look tomorrow as to whether to buy in here,
Market waiting for Powell speech on Friday ..I reckon ... market reads into every word the poor bloke says
Trade war is very unpredictabale - any signal can change sentiment
Case of taking your position before that.... that could signal move one way or the other
"Sounds like you have your head switched on" ..not exactly..all you can do is read the data ..charts,Futures, tweets (!!) etc ( and try and ignore the "noise" ) and take a stance on sentiment.....plenty of reasons to be either side of the bet
Thanks to Rastuss,@hash, shakhtar etc for insight into Kaz itself
cheers Pokerchips sounds good to me. How long have you been trading in copper ? Sounds like you have your head switched on. Do you think Kaz might go down further ? I know it is hard to say but sounds like you have good gut instincts
Yeah...he too mentions the shorting of copper via the Put Options and the view that as the Put Options are currently weighted on the heavy side, then it will be the closing of some of these that will shift the Future pricing of Copper. You can be sure that China will be buyers at these current prices ..they always do buy copper, oil.silver etc when the Put Options drag the prices down ...
That is indeed where I have been focusing the signals regarding Copper prices
ok thanks for clarifying pokerchips, have a listen to this sounds very logical analysis by Mr Currie.
I don't think this has anything to do with company prospects. Both Barclays and Peel have reiterated their mid £7 forecast. The current daily trades are tiny but clearly Kim or someone have a sizeable amount of shares to shift. Market makers love this position an can make a killing. Just have to ride out stock overhang again.
I am not looking at shorters ..I am looking at the Futures market for copper
In my experience if the Futures market is bullish or bearish then that has a direct effect on share prices of Commodity miners themselves... as traders buy or sell the shares accordingly
If the Futures market is suggesting lower copper prices then traders sell the shares .... with the idea of buying back lower
That isnt shorting the shares
Most the focus seems to be on the Cooper price. Yet Gold is about 28% of the revenues and is up about 15% from most of H1 so this would make up for a lot of the change in Cooper price
pokerchip where you getting this information from ? On shorttracker there is no shorts listed, of course, unless they are below 0.5% ..please share your evidence of this ?
"Quite obviously being forced down by shorters. Vermin."
The shorters are probably getting their lead from the Derivative market - Put/Call Option ratio still quite high , and in need of bottoming out still by the looks of it
Something to do with there being an equal and opposite force on the share in the upward direction (Newton's Third Law), which makes it bounce. The conversion of elastic energy to kaz-etic makes it rise.
Always knew my O' level Physics would come in handy one day.
bounce off 395p?
@causal - you're right. Quite obviously being forced down by shorters. Vermin.
Obviously its down to USA and China,if no news,comes then it be Q1 2020 with reports from Baimsakya to lift the price
Share price should be higher alone.Just a guaranteed share,The shorters will pick on the day.
@hash: they’ve got $988mm of expansionary capex and $817mm of debt repayment to finance over the next 18 months. Against this, $480mm of new loan money to finance part of the Aktogay expansion and $700-odd of cash. They’ll need the cash flows you’re predicting, and more. They’re not predicting any capex on Baimskaya after the second half of 2019. It would be surprising if this turns out to be the case! Still, they’ll get any money they need from KDB again, no doubt. And a recovery in the copper price may bail them out.
annualised cashflow will be significantly higher than $366mm
h1 free cashflow was lower by 65m because....In the first half of 2018, inventory levels rose by $65 million due to higher consumables needed to support the ramp up of Aktogay and Bozshakol and from an increase in finished goods due to the timing of sales. this I believe is onetime issue..hence in my view annualised cashflow should be seen as 500m.
given they have cash of 700m 750m additional free cashflow in next 18 months should be adequate but if copper did go down then the cash flows would be lower say by 200-300 m which does put pressure on them but surely its not going to take them out of business....
well having said that the unknown risks always exist with any investment but in my opinion my earlier decision to stick around have paid off really well so worth doing it as long as it is not overdone...
@hash: yes, and I have little doubt that loans will be available again to Kaz if the copper price goes against them and/or if they’ve got their sums wrong. I don’t for one minute think it will be allowed to go bust. Having such strong government contacts affords them this protection. In such circumstances, they’ll just end up with an extraordinary debt load. If this happens, however, it won’t stop the share price collapsing.
Shakhtar: many thanks for this. I re-read my earlier post and it seems a little didactic, wasn’t meant to.
You may well be right about Mr. Kim. I just see no evidence of it. If the decision re Baimskaya was really taken by Mr. Southam, I should think he has a very limited shelf life. The share price is down more than 50% since the announcement and the balance sheet has taken a major hit, with more to come. An investor with 30%+ of a company and who, with associates, owns stakes totalling close to 50%, controls that company. You’ve been considerate enough to read my earlier posts, clearly, so I won’t cover those arguments again now! Suffice it to say that, for some reason, Kaz is prone to quite shocking management decisions from time to time which act as trapdoors to the share price. If they’d done the Baimskaya deal after they'd repaid the loans taken to finance Bozshakol and Aktogay, it would have been different. As it is, I think it’s rational judgment on the part of investors to see the deal as merely the latest in quite a long line of mis-steps(!) on the part of the same senior management.
Of course, if the copper price has a big, sustained, rise, Kaz will be out of the woods and I will appear a lemon!
I should add that I have enjoyed our exchanges of views and respect your opinions.
well interesting posts from Shakhtar and rastuss.
I believe the board has done the home work....see the comments in the half yearly results.. reposting them again...
The Board is satisfied that the Group’s forecasts, taking into account reasonably possible downside scenarios, show that the Group has adequate liquidity to continue in operational existence for the foreseeable future.
In the event of a more severe downside of sustained lower than expected commodity prices coupled with lower than expected production, a relatively modest amount of additional liquidity may be required towards the end of the going concern period. The Board believes that such additional liquidity could be achieved through either the deferral of uncommitted capital investment or from new sources of finance and/or a refinance of existing debt facilities. Separately, the Group will be seeking to raise longer term financing in respect of the construction phase of the Baimskaya project.
Rastuss, thank you for tour opinion. I have been reading this board for couple years now and have enjoyed your debate with Tucson. I must admit my view is more aligned with that of Tucson. I have been investing and trading (both) in Kaz since 2007 and have done well with this share, and I would fully agree with your view back in 2008, 10 or even 12. But this has been a very different company since Mr Ni departed to another world and Kim sold a chunk of his shares soon after. I have closely watched what was happening and I actually think that was the time when the Leader of the Nation exited his investment in Kaz, if one believes that he had one in the first place. What followed since was a serious of thought-out strategic moves - yes, including the gift of a chunk of the company to Kim. Yes, copper price turned and Tenge devalued probably returning what is now known as Kazakhmys back to profitability, but there was sound logic to that restructuring - I firmly believe that without it we wouldn’t have this discussion now as the company would have gone bust, and not even Kim with all his connections could help keep it afloat. I can’t think of any wrong move since 2013 and do not see any influence from Kim on the strategic direction, operating decisions, or financing decisions. Of course he maintains significant influence through his shareholding and board seat, but corporate governance is far superior to what it used to be under his chairmanship. I don’t doubt for a minute that investment in Baimskaya was nothing to do with Kim having some sort of a backstage deal with Abramovich or the leaders of two nations helping each other. In fact, I wish it was the case - maybe then there would be no questions about whether road and power infrastructure would actually get russian state funding - it would have been a given. I actually do think this acquisition was a result of a bold vision and sound strategic logic supported by confidence stemming from project delivery success on Bozshakol and Aktogay. I just don’t see any shady business any more at Kaz - a view that clearly you and the wider investment community do not share. Given the history that’s understandable, but after 5-6 years of current management making next to no errors in their project delivery, ramp up, operation management, and financing, surely the company deserves a benefit of a doubt. My point is that all too often I see investors supporting hyped up companies with dubious prospects and little in way of fundamental value, but in this case they totally disregard all that because of what happened to ENRC or management missteps of the post-listing strategy, which is now ancient history in my opinion.
I wish Kim sold half of his stake to open up the company for a potential takeover. The quality of its assets and Baimskaya project is second to none. It should be trading at twice the price even at today’s copper prices.
All IMHO. DYOR
Shakhtar: I’ve had long debates with Tucson on this. Kaz is well run day to day, I agree. Its policy direction and the investments it makes are not the decisions of the day-to-day management, however: they’re taken by Mr. Vladimir Kim. He appears to have his own motives for these decisions and investors just have to put up with this or disinvest.
Being the lowest cost producer is not much use to you if you’ve had to take on massive borrowings to acquire and build the mines. Over ten years, Kaz has merely replaced a nice safe balance sheet and some slightly tired, established copper mines for a couple of new shiny low-cost mines. But in the process the balance sheet has been badly stretched and the interest and loan repayment schedule has a similar effect on profits to the effect of low copper prices on a high-cost mine. Of course, loans are eventually repaid and investors can then benefit from excellent dividends and/or fresh mine investment. Kaz hasn’t got even close to this point yet and unfortunately, institutional investors seem to smell a rat with Baimskaya. The balance sheet is clearly about to come under serious pressure again and there are big question marks over Kaz’s ability to finance the new mine. That’s in addition to the potential problems of building to budget in Chukotka - and questions as to how the decision was taken in the first place.
Against this is the chance of a big rebound in copper, which, if sustained, would solve most of their problems. There’s no sign of this currently, which is why I’m not in this yet. The copper chart and the Kaz price chart both look rotten, to me. I’d prefer to wait for an improvement in both.
By the way, to a company in Kaz’s financial position, EBITDA is hardly worth looking at. Free cash flow is the appropriate measure, as far as I’m concerned. That’s an annualised $366mm, isn’t it? It’s dwarfed by the expansionary capex requirement - though it’s true that the $490mm-odd investment in Baimskaya was paid for in the first half and that it’s not certain that another similarly-large capital commitment there will be made in 2020. They’ve got just over $700mm. of cash left and will have drawn all their loan facilities in the second half of this year. They’’ll have much higher debt, big loan repayments and more capex next year. A further fall in the copper price would put the share price under further pressure. It’s not really surprising that investors have got the wind up.
Copper up a bit
First Quantum up 7.8%
MMG up 5.1%
Glencore up 3.8%
Antofagasta up 3.1%
Southern Copper up 1.5%
Large miners all up 1.5-2.0%
KAZ DOWN 6.3% !!!
Investors have capitulated. It’s not the operating performance - results were excellent! They seem to hate Baimskaya and the strategy the company has taken. I don’t understand why investment community gives no credit to the management for delivering year after year, and for their long term vision.
Why do companies like Solgold, Seabridge, Northern Dynasty, with no production and no money, have multimillion (over billion in some cases) valuations, but the lowest cost producer of 300kt of copper and 200koz of gold with $1.25 billion! of annualised ebitda doesn’t get any credit, and is instead given a substantial negative value for developing what could be the most promising project in the world?!
Any opinions? I’m at a loss here.
P.s. added 6000 shares at 415 today