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Highest discount to NAV in sector, highest yield in sector, constantly in decline versus peer group despite attempts by management to stabilise with analytical reports, share buy backs and even major corporate activity. Baffling - and getting to a point where its beyond ridiculous. SB
Bought some more of these today to drag my average into he mid 70s. Yield almost 10% now.
Looks like the market is already starting to adjust GCP NAV discount rate to that of GABI - and has probably been occurring for last two weeks as details leaked out. This was always a likely short term outcome which I am sure the BoD would have anticipated….doesn’t make it any easier for shareholders though who continue to see large scale capital hits. SB
I can't work out if the debt GABI holds is more or less risky than that of GCP. Seems to be a bigger discount to NAV, so potentially more upside but if more risk, more downside. Confusing stock this
Aberdeen doing the same thing, tidying up smaller capitalised trusts.
Invested here recently due to discount and yield. I'm also an investor in GABI which, even with the discount rate adjustments, has had issues on underlying assets and now sits at an even bigger discount / yield.
Interesting RNS this morning, finally some movement on consolidation and enlargement of the business. The GABI Scheme proposes a combination of GCP with the (smaller) GABI fund to drive economies of scale amongst other potential benefits. Since both are effectively in the Gravis stable, and both Boards support the combination, it looks certain to proceed IMHO.
In addition, GCP has announced that it is one of the two concerns who have been in discussions with RM Infrastructure Income regarding the combination of the enlarged GCP/GABI with most of the assets of RMII, where I also hold shares.
As with all these things, the devil will be in the detail, most of which has yet to emerge. On the face of it though, both of these developments could be beneficial to all 3 entities, and I look forward to hearing more as things develop. K
Yes, some volume has entered since open.
This is a great result so far given x-divi day as well...
... only 1 sell and price drops, go figure
IMO, the risks are priced in. Divi should be from debt interest so shouldn't be cut. Like most here I'm worried I've missed something but seems good yield whilst SP stays suppressed, with recovery to the upside back to NAV (at some point).
First small purchase when markets open monday.
This year my monthly investments have been defensive divi payers, earlier invested in sequoia to get a few regular quarterly divs in on a !monthly basis.
My only concern has been is that I am a small holder in GABI wh ere some concerns on the underlying assets. This on e seems more secure especially at this level.
NAV only down a couple of pence at 110p. Unless they’re going to cut the dividend down the line, these must be considered cheap.
Yes I’m going to buy some more. These are ridiculously cheap unless we’re missing something 🤷♂️😂
That didn't take long. I'm continuing to accumulate. Risk priced in only upside from here.
Bought some more of these under 80p yesterday taking a punt on which way the inflation figs would go today. Great yield and huge discount to NAV still. Fingers crossed they won’t go back below 80p again.
CaneToad, Not sure where you get your 30% figure from. Latest interim accounts suggest 10% equity, 40% senior debt and 50% subordinated debt.
Any ideas what happened to the buyback? Two weeks since any purchase - and plenty of cash left? Could be closed period prior to July NAV? Or something more significant in the background. SB
The reason is not simply discount rates; it is because 30% of the portfolio is 'equity-like' (with this portion being within the renewables exposure) - confirmed by IR. I'm happy with the risk/reward here though and will probably take a small position at some point.
Government bonds being bought this week so yields falling which, in turn, ,makes this look very attractive risk return with 9.4% yeild
Oversold ? Been dropping and dropping of late.
What's the reason this is up 5%?
Thanks for the explanations Trots..appreciated
Deepjoy, The difference between senior debt and subordinated debt is where the debt ranks for repayment if everything should go"tits up". Senior debt always ranks above subordinated debt and is always repaid before subordinated debt (the latter is subordinate to the former, hence the name). The quid pro quo is that the interest rate charged on senior debt is generally lower than the rate charged on subordinated debt (to reflect the lower deemed "risk"). Subordinated debt ranks above trade creditors and shareholders.
CaneToad, It's been my recent experience that markets are increasingly reading the headlines e.g. profits down 75%! and ignoring underlying factors (whereas in the past markets were quite happy to ignore upwards revaluations they now jump on any downwards revaluations). Inflation is undoubtedly gnawing away at returns (given that most of GCP's loans aren't inflation-linked) but discount factors can be very fickle.
I'm not a great fan of IFRS; it seems to more often confuse matters rather than clarify them. IFRS was supposed to make accounts more understandable for the layperson! The IASB are having a larf! They couldn't explain themselves out of a brown paper bag!
For the upteenth time, electricity prices affect the discount factor applied to the debts. If the discount factor rises, the net present value (NPV) falls and vice versa. E.g. if the discount factor rises from (say) 5% to 10% then the NPV of £100 receipt due in one year's time drops from £95.24 to £90.91. You still receive the £100 (assuming the debt doesn't go bad) and, for accounting purposes, the discount factor is reverses over the term of the loan.
The discount factor doesn't make it a "hybrid instrument"; think of it more like "personal" inflation. E.g. headline inflation in the UK is currently 8.7% but that doesn't mean each individual is suffering the same rate of inflation (it depends on their own "personal bag" of goods and services; some will be experiencing a higher rate and some will be experiencing a lower rate). The discount factor on GCP's loans is being correlated to the electricity price because that's where the majority of its loans are made.
- Profit for the period of £25.8 million (31 March 2022: £108.9 million) primarily reflects the impact of lower electricity prices compared to the prior period. For further information refer to the financial review below
Ok the profit for HY22 was £108m but HY 21 was only £3.8m... They still paid the dividend then! and the year before.
- Company NAV per ordinary share at 31 March 2023 of 112.24 pence (31 March 2022: 112.75 pence)
NAV remains high. 30% higher then here. Hard to figure out why this has dropped?