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Amusing that RBC have apparently only just noticed the Jackson split, first announced many months ago and predicted long before that. What was their previous target based on, the 1990s? Their observation about different valuation measurements has some logic, but it depends to some extent on the notion that international businesses are rated according to whims of their geographical home base rather than hard universal business metrics. UK based companies do always seem to lag on lower multiples though. The RBC explanation could even be used to sell the fundraising as merely a strategy for obtaining better quality shareholders, ones who are perhaps less concerned about China and more focused on EV! Another justification for a higher target is equally plausible: without Jackson Pru becomes a clear growth company with far more compelling Y-O-Y results, in theory.
... their price discovery has been a bit approximate, lol.
results don’t seem to have stirred many strong passions.
Odd to put a 200p valuation on Jackson when Pru only valued it at $5bn when it sold 11% last year which is more like 125p for the remaining stake.
just while we wait for results,
this was some of RBC’s logic:
https://www.proactiveinvestors.co.uk/companies/news/942744/prudential-looks-cheap-compared-to-asian-rival-suggests-broker-942744.html
An even more hilarious target price 'adjustment', this time from the Royal Bank of Canada: https://www.marketscreener.com/quote/stock/PRUDENTIAL-PLC-9590193/news/PRUDENTIAL-nbsp-From-Neutral-to-Buy-by-RBC-32574965/
They even jumped off the fence to say "buy"
Seems like something has shifted to get the SP back to where it was before the pandemic. The Times tipped Pru the other day at 1271p citing growth prospects, and today JP Morgan have raised their price target from 1182 to 1437. Despite this sudden dramatic hike of over 20%, they retain a neutral stance, the namby-pamby fence-sitters, and they look suspiciously like they are just retrofitting their targets to the actual SP rather than doing the sums? ( :
DT22 just lucky on that occasion. I don’t usually comment with numbers as that is a hostage to fortune, but in current markets where there is an impulse to mark down the price it is often overdone.
I have a lot of dollar earners and they are generally down as the exchange rate has moved against them......Pru has not experienced that in the same way, so it would appear the market is moving Pru up in quite a significant headwind.....as a long term holder and believer in the Asian middle class growth story I will be invested for some time...
but what a way to go.
Don't know if it has anything to do with the SP recovery, but it's interesting that Jackson have been quietly filling most of the top positions with females of the species: notoriously more deadly than the male.
Jatw, I think I'll listen follow your thoughts more closely next time. As per my earlier posts I've been looking to buy back in but didn't when the price dropped dramatically. You said back to 1300 but because I didn't act and buy all the way from 1170, it's gone up everyday and now en route to mid 1400s. So market makers didn't like the RNS about Jackson and then suddenly they did. Crazy for a company of this size that we can have such fluctuations. I can't buy now after that substantial rise even though we might be attracting a lot of attention from Asia.
i think it was less about jackson & more about that chunky proposed
cash raise (tho’ i appreciate some linkage between the issues!). but
penny has been dropping with mr market, i think, that there will be
good appetite in the far east to buy into a big chunk of this bad boy.
Should have been more bullish.....nearly achieved 1400p
What was the fuss about Jackson?
There is limited mileage in global financial groups anymore. Each regulator wants local capital.
What they can exploit is common infrastructure and reuse of technology (Eg pulse) where it can operate in similar environments.
There are plenty of bolt on acquisitions across the Asia and Africa geographies but you have to question why any M&A is needed when the internet delivers customers to your app if you can market it right and have a strong reputation.
Think the fall last week was over done and this is heading back to 1300.
Yes, Pru's MCAP something like $42Bn, Jackson estimated at $3.6M and the possible equity raise $2.5-3M. The ballpark figures help put the changed plans into perspective, compared to the huge SP mark down. Not clear why they abandoned the IPO route, but presumably not enough interest? Proposed dilution is supposedly to attract more Asian shareholders, and also to pay down expensive debt - both reasonable enough, maybe.
Large shareholders seem convinced the Jackson liberation will finally get markets to value Pru like other big Asian players. Well, patience is a virtue (or a timewasting card game). Like M&G, Pru bought Jackson with some guff about "synergies" or similar corporate BS, then let them continue operating more or less independently for a very, very long time, only to finally shift into reverse gear and demerge them again. Let's hope any Asian acquisitions are more prudent.
UBS not really taking much of a position here.....as it is today Pru is valued just over $40bn.
Swapping Jackson for cash is not changing the picture for them.
"the reshuffle should help uncover the true value of Pru. Analysts at UBS reckon Jackson is worth $3.6 billion. Once it’s fully demerged, the remaining group should be worth about $39.5 billion. Pru’s Asian business is expected to earn an operating profit of almost $4.5 billion by 2022, according to consensus estimates"
https://www.reuters.com/article/us-prudential-divestiture-breakingviews/breakingviews-prudentials-shortcut-adds-pace-to-asia-pivot-idUSKBN29X1S3?rpc=401&
Boards rarely change their minds. Usually they have sounded out major shareholders who probably like the thought of a growth markets operation.
US a management will be chomping at the bit for their own operation. F they weren’t before that will be wanting out of the Pru as soon as possible.
What caused the fall was a possible equity raise, they could run with higher debt for a few years instead.....as long as that does not affect their credit rating that is a possibility. The market does not like surprises.....
Pru very vulnerable to a bid at the moment.
SurreyCarrie or others,
Is it too naïve to think that PRU would change the Jackson strategy given the market reaction? Or is it already too far in progress?
Thanks.
investors chronicle saying long term buy. but they are pretty
scathing about the mess that mr wells has been making over
the last couple of years, so s/t & maybe m/t not so much jam?
Maybe, maybe not. Having slashed the dividend to peanuts and a share price that has gone nowhere for years barring huge spikes down and up thinking of getting out of here. It seems to be jam tomorrow all the time .
Long term the business will be ran cheaper and more economically. Asia/Africa is the future and the SP will rise over time.
I certainly would not advise buying this stock at the moment as during the time when Pru were considering Bidding for AIA the stock dropped to £6.50. Pru for many years has formed the core of my portfolio. But has preformed poorly since I purchased 4,000 @£18.50. Have really been disappointed with the way the company has treated its share holders. With recent events I had been Buying and selling other Pru stock to offset my loses and got within shooting distance of 5k loses but even the MNG stock which I had added to has been a poor performer. I certainly do not wish to hold Jackson shares and again feel Pru has misjudged its Share holders and is treating them with contempt.
Pru is a sitting duck for action to drive the price down to lower the price of new equity.
Likely to bounce once the terms are known and the offer is away.
It is a small raise in the context of Pru so don’t expect preemption rights to apply....hopefully not much discount either from here.
Slightly surprised by today’s share price reaction. Jackson is a good and substantial business but unrelated to the rest of Pru’s operations and Pru has suffered from a conglomerate discount owning it, ergo right to de-merge it as two separate share prices added together should exceed current Pru price. I guess the market was expecting Pru to sell/float Jackson and part distribute the proceeds received to shareholders by way of a special dividend. Proposed de-merger of Jackson brings no cash inflow to the Pru so they need to raise equity in lieu. Pru, shorn of Jackson, becomes a much purer takeover target for somebody like AIA. Pru bid for AIA in 2010 wrongly believing AIA to be contemplating a bid for the Pru: Pru’s shareholders voted against the AIA bid. So there has been a previous attempt to amalgamate the two businesses. Pru is on a sky high P/E even after today’s fall so acquisitions funded by an equity raise should be eps enhancing.
Thanks for all of the comments. I'm sat hovering over the Buy button because time and again a prolonged drop is followed by decent rises. Final dividend soon ish too. I'm finding it hard to press.
So much uncertainty everywhere and Pru focussing totally on Asia and Africa could either be great or poor. Arrgh!