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I agree owls, you don’t conjure up value out of nothing. The market is punishing melrose for not finding a buyer. They bought a dog and over paid massively when they did. The march update has to be perfect.
If it is expected to be worth more then there would be more demand at the current price.
Everything else being equal the market cap will be the same pre and post split.
Don't "know" anything Freddie2.
"Expect" to get one share in each of the 2 businesses for each share held of Melrose currently. Key question will be how will those businesses be valued. I'd expect them to be worth more than the current c£6bn market capitalisation (otherwise why split ?), but how much more ? Only thing I think is sure is that the aerospace business will be valued more highly than the automotive.
I assume, to fit with their previously announced timetable, that the annual results 2 weeks tomorrow should clarify everything ?
Have we any views on what the demerger will bring for us shareholders , will our holding get split ? Does anyone know ?
Doh!, ftse to have an up day, last thing we need for mro! Expect a. 3-4p fall. Getting f off now.
Painful drop, especially given this didn't go up with the rest of the market Monday to Wednesday. When the big players want to they will take this up…..
Ftse, this is so undervalued for how they have positioned it is a crime! Im just frustrated and ranting. 300p is realistic and what their business model should achieve. I averaged down 10p lately and now at 130p, doing that is dangerous though as can miss out the eventual wake up and rerate. It surely has to come!
Interesting viewpoint Dodger - you may be right. I have averaged down as I absolutely believe in the split opportunity.
Melrose is such a complicated beast and I suspect there is two way disappreciation between them and the city.
MRO just can't seem to be faffed with feeding the city updates and I suspect the city just cannot get a feel for all of the different trading divisions of GKN and other business.
I watched the videos for the analyst meetings for each of the two sub divisions of new GKN and thecase is compelling for auto and aero alike. I'm still convinced they will offload the auto division - possibly on US market for better valuation and then take on a meaty acquisition for aero....still sticking my neck out and saying they'll make a play for part or all of RR.
8bn worth less than 6bn five years later. This needs to rocket. I think the market views the floats as admission of failure.
Wish there was a nice rise today. This is dragging and the rest of the market is flying. I would have hoped to see this around 200p with the ftse 100 at 7900+. What a dog GKN has been. Still the clear winners are GKN shareholders. Original shareholders sadly looking for 240p…..
Management have done a great job but the market just hates melrose. Maybe because its British. F knows.
nice rise today, im holding. gla.
Interesting couple of recent TR1 announcements, indicating that Capital Group Companies inc has increased its stake and now owns 15% of the shares / voting rights. While Melrose strikes me as being a valuable investment full stop, I suspect this might also be Capital taking a "position" ahead of the upcoming split ?
GKN itself valuation will be higher than group total market value, given aerospace industry is picking up Mro valuation should too… management seems optimistic as indicated in their last statement; I have just added more and let’s see how demergers works out and subsequent share price ! To me it’s a great business and post pandemic recovery stock , SP should be much higher, even if price doesn’t go up at least will get dividend if I just hold
GKN Aerospace, which makes parts for aircraft manufacturers Boeing and Airbus, for business jets and helicopters, and components for engine makers such as Rolls-Royce, average revenue per month was said to be 6% higher than in the first half, when growth of 11% was reported, with operating margins “notably better”.
Management said Aerospace is “positioned well to benefit from the strong momentum being seen into next year”.
its a buy and hold for me. gla.
Agreed. Without aerospace numbers it is hard to ascertain true value but based purely on the numbers for the spin off enterprise one would hazzard a valuation guess of c10-12x EBITDA so £6b+. On the basis the current share price puts the market cap of the whole business at that value then we must see a re-evaluation when the split comes.
Good update, but shows how this market is illogical, how can a share whose update exceeds current expectation fall?
Even with the recent rise the share price is still well below the last reported NBV of around £1.85 per share.
Annual results announcement scheduled for 2nd March, and would expect some announcements regarding the upcoming split / demerger by or before then. I can understand people taking profits, but for me this remains a hold for a while yet.
up 12p since i last wrote! still plenty to go i believe! gla
always very quiet on here!! nevertheless sometimes thats good? s/p seems to be slowly creeping up again, ive put a bit more in this one .gla
A weak pound; a low SP - great update and a tasty portfolio
A good solid update, nothing in it not to like
* Group revenue in the Period is 14% up on the same period last year and operating profit is substantially higher
*Aerospace enjoyed improving momentum in the first half of the year, with sales up 11%, and encouragingly trading has
been stronger again
*Automotive and Powder Metallurgy (DemergerCo), Revenue in these two businesses combined is up 19% in the Period
versus the same period last year, with margins significantly stronger
*Cash generation is performing in line with expectations and is on track, in the second half, to achieve materially higher
operating cash generation than in the first half
Will add more and this is now a long-term hold for me
https://news.sky.com/story/veteran-city-banker-lined-up-to-chair-gkn-automotive-spin-off-12732559
Holdings increased - nice.
Jax, she absolutely is gone. They are just deciding when!