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Thank you @Wylie.E.Coyote.
Also IIs paid 90p for over 375mil shares which was left over in rump placing today. This shows the confident in the company.
Hello all,
Friendly LTH with AML here and looking to understand the MB deal and its impact a little more. From what you gentlemen are saying, the SP in the short time could be quite volatile around December time due to the MB deal? But long term, surely we could be looking at a return to the peaks of £2+? Is that a realistic target in your eyes?
Interested to know your thoughts about the F1 brand too - i originally thought it could only be positive but someone mentioned about it potentially being a financial liability, which id never really considered. F1 isnt my strong point but i guess teams outside the top 3 run at a loss?
Test_test - I've jumped into both. Both give good exposure to holiday/travel and RR also has other businesses such as military so won't go under. Plus there are stories today that the Govt is going to ban takeovers that might affect national security so RR will be pretty protected..
Many thanks @MFGX .
It does make sense to use the price before the RI was announced.
I looked the market cap and the future.
Market cap before covid (31st Dec 2019) was 16bil (with around 1.9 b shares and sp was £7 with 0.7 billion cash in hand )
Now M'cap is around 8 bill (with 8 bil shares with lot more cash in hand)
We know that vaccine is round the corner and recovery is on its way.
C2645, I’m sure you’re right. Stroll & Co, highly successful and astute business people have not considered this at all. They’re just flying by the seat of their pants!!! Even if you said right now that MB’s 20% increase in AML ownership is £200 million of current mcap so that’s what they’re being given, the value of their tech and relationship far exceeds that imo.
So this is just an opinion...just as easily wrong as right. Prior to the RR pump and dump, the sp was at £1.75. I draw a line in the sand at that price and not the £2.50 + prior to the dump to about 68p. If you take the 3 for 10 and 32p and recalculate it come out at about £1.35, so in my view at 90p it is under. It surged to £1.37 the other day so based on todays announcement I would expect it to rise. Additionally, RR derive revenue from engine hours, so in that sense the sp should rise as operators get gong once the vaccine is being distributed. I apply similar logic to TUI but I would like to see the shares row back abit more before I buy.
Found this BB has got some really good people with some great knowledge around the fundamentals of the companies.
Any opinion experts,
Added some RR today @90, want to buy more but can't decide to go for RR or TUI.
Both have sorted their finances and their market cap is near 50% compare to Jan 2020.
Appreciate your opinion..
FYI: Still got my large core holding in AML.
The discussion around units sold relates to DBS, Vantage and DBX. Other models that come into the mix next year and 2022 are Valkyrie and Speedster. These are very low number models but total around £450 million in revenue, with probably considerable profitability. They represent 2,500 to 3,000 of mainstream models in terms of revenue so are considerable, even if spread over 2 years. Then there is the question of the Valhallah which was originally 1,000 units at around £1.3 million apiece. I wonder if the V6 mule that someone heard pounding round Silverstone was perhaps a development engine.
@c2645sg you need to read peoples replies rather than just pretending you know better.
It seems no-one can answer the siple question of how AML repay debt finance interest payments for the next 2/3 years.
I'll answer it for you.
Dilution.
If I am wrong, I'll give you the money myself ;)
c2645sg. You seem not to have understood my reply. In simple terms looking at whether a company made net profit or loss does not tell you much. It is the EBITDA that you need to look at as the alternative measure. The net profit or loss will include depreciation and or amortisation of historical costs that have already been paid for with past cash flows. The EBITDA measure ignores this and looks at cash generated. EBITDA is easier to understand than the cash flow statement for the average person.
Exactly Crank.
So I'll ask again, if they don't make any profit for the next 24 months, how are they going to repay 180 million in interest payments (2 years x 90million per year)?
Firstly it is not £90m. The second is that the cost of the bond is exposed to FX and as such Brexit will have an impact on that. IMO it is unlikely that GBP/USD will stay where it is. In terms of how it will be funded, again I think in terms of EBITDA AML have over £1bn of intangible asset and the difficulty with that is the level of impairment recognised. Accounting contrivances, otherwise know as policies or the basis of measurement, which are subject to change and as a result can be misleading. The EBITDA numbers reflect cash generated and if you take 2018 and 2019, they absorbed a significant cost in finance either equal to or greater than the cost of the current bond. In 2020 I anticipate the costs to be higher as there are likely penalties in early settlement of the old bonds, plus there is a cost for the new issue. In the short term the shortfall will be met by the funds created by the bond issue, so shrinkage on the bank balance. In the medium term this is about selling more units. I note that the product mix demand has skewed towards the Vantage, and as a result this will require more units to be sold as the contribution to EBITDA from the cheaper car is less. A pure guess on my part is that they will need to shift circa 6,500 units to stand still. The broad cost of running the business appears to be circa £300m, with financing costs, lets say £400m. This will require about £60k contribution per car, contribution being direct materials and direct labour (fully loaded) deducted from the price the unit exits the business for. This excludes the amortisation of development costs and tooling.
It looks very doable to me viewing it from the out side. The issue that Stroll will have to grapple with is keeping the O/H down as unit numbers ramp up.
Crank, no need to apologise, directness is fine with me.
Stroll also said they didn't need to raise funds at the Q2 results. Don't believe everything he says.
When do you see AML returning to profit?
And how much profit will that be, roughly?
Crank, no need to be facetious, more detail please?
They sold 345 DBXs in Q3 and made a loss overall.
AML are projecting losses for the next 2/3 years, hence why they took new bonds out which are due in 2025 rather than 2022/23. How do you repay bonds when you are making a loss?
MFGX.
How do you think AML are going to pay for the £90million interest payments every year on the new bonds?
DunnieBoy:- AML have not been listed long enough with earnings as such to have developed a reliable track record in terms of p/e. My preferred metric is EBITDA as this strips out any issues related to IFRS or US GAAP. The EBITDA in 2018 was £247m and £119m in 2019. As at period ending Q3 2020 the EBITDA was negative, but I have assumed nil for the full year as Q4 will be a net contribution in all probability. My estimate of the rolling three year average for EBITDA is therefore circa £200m. using a range of x17 to x25 and based on the number of shares in issue today, this provides a notional share price range of £1.83 - £2.70. As such, an sp of 62.5p would suggest that the enterprise is undervalued. Obviously people will have their own view of where the sp should be, so I will leave that to each.
The shares we are giving away are completely new shares, so ultimately it costs the company nothing.
But dilution is like inflation, 20% more shares mean your shares are worth circa 20% less.
What's 62p minus 20%?
You guessed it, 50p ;)
C264, it all forms part of the deal, are you suggesting that we give shares worth £150m(aprox) away,? I don’t know the finer details but it’s all priced in to the overall deal.
We agreed payment of @28m because we had to, Merc know exactly what they are doing, win-win for them.
It's obvious the SP was going to 62p now, for Merc's first tranche. It will be interesting to see where the SP goes next, my guess is closer to 50p for the dilution in December.
62p in 2 years is an easy thing to promise, even if the SP was below 62, they do whatever they did this week to get it to 62p for a few days.
Why's that Dunnie?
It all depends on how you define 'payment'
I specifically read that we still have to pay for all parts.
Whether that is full price, or a 'mate's rates' because we gave 20% of the company away is anyone's guess, we'll probably never know.
C264, it must form part of the payment otherwise we wouldn’t have agreed compensation of upto 28m if our sp price falls below 62p in early 2022.
We ARE giving the shares away, we still have to pay for every part we take from Merc, over and above the dilution.
We gave 20% of the company away to forge an alliance with Merc.
Giving them free shares does not entitle us to free parts.
Yes carpy but for far more than we payed for them hopefully!!!
MFGX, what p/e would you apply to AM?