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Agree DC thing do look precarious at the moment and earnings have dropped off a cliff, after all SGC is supporting the Governments messaging re social distancing and have reduced capacities while operating normal service levels in exchange for funding to break even. Exactly the same with NEX and GOG uk operations.( I have more invested in NEX than here by the way)
SGC cash piles could last to eternity under the current agreements, not quite the same for NEX who in their last trading statement were very open about 60% of their ALSA and some N America revenue being at risk.
However when the virus is under control and the messaging changes revenues will steadily increase, tho not initially to pre covid levels. Therefore SGC, NEX and GOG will cut operations to suit, they will not operate services that are not profitable.
all of the current covid concerns are factored into their current SPs , all will easily survive this and all may even be stronger after this. There will be opportunities for all 3 (and FGP) to grow in the fallout of the pandemic with many smaller operators unfortunately not surviving.
IMO there is little risk at this current SP and any risk is far outweighed by the potential upside. Same for NEX and GOG!
If we stuck to Company fundamentals and balance sheets this investing would be easy eh?!
The probability of bust isn't high SuperJ. But their earnings look fragile for as far as we can see. The cash on hand is good, but much less than half the £800m you mention ( these are their undrawn facilities). If earnings continue to fall off the cliff, how long will their cash pile last before they have to tap equity markets, or otherwise restructure the capital? Companies can only go so long without their main source of revenue before the owners might need to take a haircut. Things here look more precarious than GOG, with NEX looking far stronger than both.
DC; your correct Covid will affect earnings for some time to come but SGC are masters at reducing costs and that is exactly what will happen when the funding is removed
The subsidy is in place due to the Govts demand for a full public transport service while implementing THEIR social distancing measures and messaging which is harmful to the sector. How can a business be Strong right now with these constraints in place? Operators are doing their bit by assisting with the messaging, operating full services and reducing capacities, why should they not be compensated for doing that, it does not make them weak businesses?!
SGC is not in a precarious position, public transport will always be at the heart of a good economy and the answer to congestion and pollution, SGC know that Governments know that and so do most folk.
Going Bust a possibility, your having a laugh, Currently NOT operating at a loss with 800m cash in hand?!
No, I'm not moon man to whoever insinuated that. I researched SGC in some depth before corona and then during corona. CV19 is going to crimp their earnings for years. With their debt and weak balance sheet, they really don't have much slack to absorb this.
Some see solace in the goverment subsidy but I do not. A strong business would not need a subsidy; it would not be dependent on it to remain viable. What if the government tighten the terms? Or if they have to reduce the funding?
SGC is in a precarious position and admin/bust is a peripheral possibility. The market they operate in has went from stable and predictable to being an unknown: much like the way online rapidly supplanted physical retail, CV19 has catalyzed a shift to remote working that is here to stay.
Moonman I think your smart enough to know the answer to your question is yes,
What I really struggle with is why people spend time looking at stocks and joining on BBs when they are clearly very negative about them. Ok you say you have a soft soft spot so just buy a little here and then go invest more time and money in a stock that you see has real potential and promote it.
I gave my positive thoughts on the potential here, do you agree or disagree?
I’m not bothered where this share price goes in the short term.... by short term I mean anything up to 18 months...... I’m buying and continue to buy once or twice a week... and will continue to do so... as an employee of the company there is no negative feedback coming from senior management via their blink social media website.... just keeping their employees aware of the current day to day situation... however only time will tell..
Ok Timmy so you have looked at SGC from every angle, decided it will barely survive yet here you are today having another look(bargain hunting I assume)?! Doesn't really make sense?
Moonman/ DC same?
Current SP is a @ 1/4 of Pre Covid price, same as other major public transport players and SGC have historically paid excellent dividends yet you see no plausible upside, come on! passenger levels have gone from 10% at lockdown to almost 60%, not to shabby as we are still very much in this pandemic so to suggest SGC will not survive is ludicrous, public transport is a necessity for the masses not a luxury. Yes there will not be a return to pre Covid passenger levels but just as before the virus non profitable routes will go or be subsidised even further, Margins will be maintained.
Dc2007 I have to agree, I’ve looked at this from every angle ( bargin hunting ) and this company will barely survive covid ,let alone yield a profit.
The balance sheet is very precarious, covid is going to sink their earnings, and part of their income is subsidised. Capital restructuring probably needed to stay afloat. This is a poor investment: high risk to principal with no plausible upside.
We were starting to recover before the new measures announced. SP is chomping at the bit now to rise from here I honestly thought we had bottomed out at 39p anyway ALL the bad news must be out now ?
yep the ERMA is for train operators but the separate funding for bus has been agreed for as long as needed?
and probably should have added SGC have no overseas risk exposure ATM.
at least were out the red and heading for a blue day now!
The new Emergency Recovery Measures Agreements introduced by the chancellor apply only to bus operators that also have trains. Their share prices seem to have bounced a little after this further funding was secured. Trains have been hit harder than buses though. https://www.sharesmagazine.co.uk/news/shares/why-go-ahead-firstgroup-and-stagecoach-shares-have-plunged-today
No Sense or reasoning to this downward trend, SGC are the least exposed of the big 4 with no rail involvement. Bus patronage is well ahead of train ATM so don't understand.
GOG and NEX statements much better than anyone expected so WTH is going on here?
Will just have to keep adding more at this ridiculous low price!
Is SGC getting hit so hard? 10% down at open and the worst transport performer despite positive GOG and NEX news about the sector.