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Birddog - i'm not doubting the challenges in front of the STOB BOD, and as TF posted a week or so ago - anyone believing they know what the future holds here is probably guessing.
It's important to consider here that all outcomes are possible, when deciding on any particular trade.
I'll keep on looking for dip trades, whilst chatting things through on here.
I do need to come back to you yet again re Southend Airport, we have covered the previous costs of annual capex on the bottom line, in previously reported yearly figures. There is more to do at Southend infrastructure wise, but STOB has invested heavily over recent years, to get the Airport to where it is now.
I notice you didn't comment some of my previous posts on the damage the virus is causing to its competitor Airport's balance sheets
Short haul should recover first in my view. Both the planes and the Airports will still be there in years to come, Southend offers a low cost option to the likes of RYA / WIZZ, etc. it has a low volume annual passenger requirement in B/E terms.
Perhaps it's not a case of worrying about the future of Southend, I suspect it will expand and develop, over coming years. Perhaps who will ultimately own it longer term is of more relevance here.
STOB is like many businesses in "choppy waters" atm, and needs to maintain close control on costs, whilst looking to follow through on the BOD's recovery plans, there are many variables out there that could scupper things, that's the fun of being on this bb.
Far more fun here than other bb's where I am invested, many are like ghost towns, lol.
G
Ah Gerry - I feel like you've lured me in there on the Luton thing!
Well, to my knowledge, which is admittedly all gleaned from the internet, is that the local council has poured in lots of money. Might even be hundreds of millions. Luton is a well placed, well established airport and yet needs tax payers money? All it says to me is that these airports are not charging enough to the low cost carriers who use them. A bit like Southend. It's mad to subsidise the airlines at the expense of local tax payers or your shareholders. It's a vanity project. Who cares how many passengers they get when for every passenger that comes through, it costs money! T/O vanity, profit sanity.
On the liability on the airline it's simple. Stobart Air / Propius did a sale and lease back on some ATRs. They got over $60m in cash terms from that. 2018 I recall. In the meantime, the lease rates calculate to $15m pa. Over a lease term of 10 years this calculates to $150m. They're 3 years in now, so that's reduced to around $100m. Stobart Group are guarantor. To my understanding, that debt crystallises should the guarantee be called in. Therefore, in reality STOB cannot allow the airline to fail, or else they need to find the remaining lease rates. If they sell the airline, they need to offload the guarantee too. Even if they managed to do that, the leasing company would need to approve that transfer of liability to the buyer. All in all it's a total mess.
Birddog - oh why indeed lol.
Did say whilst we wait its great for speculation here.
Did you want to break down The "huge liability - North of £100m into bite size chunks, including time frames. Maybe it would help to comment on the break clause - perhaps ? - Maybe I don't know maybe not.
The tender is key as you say, so its quite a play here, if the liability you mention could be classed as immediate, and is removed from the accounts, some might say the Mcap might respond positively.
So as I say - some may see the sp at sub 20p as a value play others as a value trap, and any slippage down to 10p even more so.
BTW - how do you see things panning out at at Luton Airport - what will the council do next ?
G
"To me it's all about the sale of Stobart Air in the short term." - Why would anyone buy an airline that lost money in the good times, has a huge liability north of $100m and has failed to secure it's only feasible source of income with Aer Lingus franchise which has now gone out to general tender instead of being extended?
Then there's Southend airport - There is talk of recovery, but recovery to what? They have lost less money during the pandemic than during their purple patch of 2019. Even if there is a quick recovery in the sector, it will take years for it have any sort of tangible effect on Southend. Heathrow, Gatwick, Stansted, Luton and City are all in front of Southend in that queue. The cargo buisness seems to be a life line, but does it have longevity and can it save STOB? It's the life support machine not the cure. Gerry likes to read what the BoD say and revels in the narrative. The fact is that the numbers don't support that narrative. I predicted sub 10p by Christmas back in the summer. I still think I'm right on that.
Lol...I'm still waiting for my sub 5p entry...
Moni - I should re read my posts for auto fills.
Pictured you scratching your head yesterday , though you may have been stretching it lol.
Did you make any money on a little trade on the half year report, I suspect not here though hey ho there have been so many opportunities this week in many sectors.
Be handy if this could drift a little over coming weeks - could offer a great dip position, or a value trap, depending on whether you believe STOB can sell Stobart Air.
G
Moni - our posts crossed this morning ah ah ah.
Am guessing you didn't listen to the Investor presentation so you prob don't have the cash flow projections to hand.
To me it's all about the sale of Stobart Air in the short term.
Thought of you yesterday were you stretching your head wondering why the sp moved northwards on the day iof the half year figures ?
It's a case of waiting for the tender results the by the end of the year, if secured I'd expect the sale to go through.
In the meantime this bb is available to all to speculate.
G
Cleveinvestor - lots of positives from the Investor Presentation. Did you note that it was pre recorded, and as such some of the cash flow projections did not factor in the added bonus of the renewed furlough payments during this latest lockdown. The Q & A session did seem live to me.
They were very cagey on progress for the sale of Stobart Air. To me this is the key here, the need to secure the tender bid. I would venture to suggest that if this is moved on and lifted out of the balance sheet it's a major game changer, and the sp could move sharply northwards on any positive news. On the other hand if Stobart Air is not off loaded then the RCF could come under pressure next year, under their "worst case" analysis.
TF is pretty much correct the £119m is actually made up of £10m cash and £109m headroom RCF.
TF did you listen to the presentation, WB made reference to possible expansion of the logistics contract at Southend, though he also mentioned Carlisle as an additional option, emm, though of you immediately lol.
We have the monthly "worst case" cash burn position for both the Aviation Division and Energy Division ( excluding Stobart Air) and that suggests STOB is very well placed to ride out the virus / lockdowns / quarantines, but it does depend on losing Stobart Air.
So any news on it's sale or a vaccine / effective airport testing, should be a big positive here. Lack of news the opposite.
I'll continue to trade here on dips, and home my " free shares".
Rarely a full day here with STOB.
G
I wouldn't put a lot of faith in the cash raise, it all depends on rate of cash burn, potential profit and market confidence in the BODs ability to keep this ship afloat, although currently looking like taking in more water than the pumps can manage...question is will more cash be required? and if so what affect in SP? Expert analysis to follow from Gerry I assume? Adyor!
Been following these for a while now and at this price they look a good bet, it was only in June / July they raised what about £100m at 35p- 40p so at this point have lost 50%.
If they can hold out for 6 months then we could see a big rise in sp to 50p again, and so might be worth a punt.
Yes Gerry i bought friday, usually i don't hold for more than two days but i have done well with TATE last time so i am holding for tomorrow , fingers crossed lol. i have done my lunch time walk and i am off for another one half four. what a day in the markets. i don't like any of them , they are to old, America should have a young president in my opinion.
Hi Volcano - did you have a little a nibble on TATE.
I watched the US Election till 5.00 am - kipped for 2 hours checked over the various rns news at 7.00 am.
Took a sofa nap to catch up till my better half got fed up with me and started "tidying & cleaning" around me. I took the hint and went for an afternoon walk !
Got to love the US election process, particularly when you throw Trump into the mix !
God best America !!
G
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Ledsparky, no I bought last week, (after selling over £1) and sold this morning making a very small profit of £102. I was a big fan of STOB up until the virus struck. I wish STOB all the luck in the world and it's shareholders.
You wouldn't be short Nigel would you ?
Ooops missed this off...
"The directors have considered a severe but plausible downside forecast, which represents a scenario before non-controllable mitigating actions such as asset disposals and other controllable mitigating actions. This forecast indicates that the Group may require additional funding by February 2022 and may breach some covenants in May 2021. The Board will of course seek to mitigate the financial impact of this downside forecast, should it arise, and reset the RCF covenants if necessary. Refer to note 1 for further information."
Not sure I would agree Cleverinvester, STOB may need to call on shareholders again to raise even more cash after already raising £100 million, (see below) Also losing £2 million a month. STOB needs a vaccine for the virus, and soon.
Going concern
"The directors are satisfied that the company will have sufficient funds to continue to meet its liabilities as they fall due for at least 15 months from the date of approval of the interim financial statements and therefore have prepared the financial statements on a going concern basis. However, the substantial achievement of forecasts, the continued availability of existing facilities and the renewal of the Group's existing RCF by January 2022, represent material uncertainties that may cast significant doubt on the ability of the Group and Company to continue as a going concern.
The base case forecasts indicate that the Group will have facility headroom of c.£47m at February 2022. However, there is a forecast breach of some covenants in November 2021. The directors believe that given the need to refinance the RCF before the end of January 2022, a covenant reset will form part of these discussions and therefore should not result in the RCF being recalled in advance of its maturity."
Yes i did Gerry, here and MKS , like i said this morning we are heading for a blue day.
UKX
5,839.90
FTSE 100 Index
+53.13 (0.92%)
look at the FTSE 100 go
Well done Nige STOB often offers up trading profits, I made a little too this morning. Volcano did you catch a trade ?
G
Losing £2 million a month, glad to take a small profit, but good luck to all.
I'm not going to speculate here, TF, too much uncertainty, the BOD to need to secure a sale of Stobart Air, asap, I know that both you and I have understood the issues here since it bounced back into the balance sheet.
Looks like we will continue to watch and chat about events as they pan out over coming months. As you say on worst case protections more funding may be required.
I've no doubt STOB will offer up loads of future opportunities for us to debate. Lol.
G
I sold out @20.837p made a small profit of £102.17p
Burn shorter, time to loose your shorts.
and here is your ten percent
Stobart Group Ltd
STOB
21.00 GBX
+2.24 (11.94%)
nice.