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I had these in my watchlist recently for a short term trade because they looked to have stabilised between c30p and c50p, not really to do with the fundamentals but more with the chart.
Then the continued fall in the oil price caused me to decide to avoid oil stocks for now as they were all getting driven down...thank flick I held back here.
I`ve read yesterdays trading update and I have to say that I can`t see why so many on here are so excitable claiming a quick rebound, and the market seems to have the same view...if it was going to bounce quickly it would have been much stronger today, up 0.78p is not a strong reaction.
Reading the RNS I can see why....
1) New contracts for 2019 not yet signed ie no guarantee they will be, with the consequence that the company is
expecting to be in breach of certain banking covenants! Expecting? so you mean you don`t know for sure??
2) Day rates expected to be `slow to recover in the next 12 months`...due to
a) Current oversupply of vessels across the industry against tender demand.
b) Extended contract award delays.
c) Volatile oil prices. (their words)
3) Oil prices aren`t volatile, they`re in a tailspin, a very strong falling trend, Brent Crude was $86/barrel only 2 months
ago, now its at $55!! a drop of close to 40% since early October.
4) The Company does not expect a recovery in its trading performance in 2019.
and...
5) The timing of the recovery in day rates beyond 2019 remains uncertain.
Wow!
Thats not a profit warning, its a shytecake!
No wonder the price got hammered down 75%, and all the time the POO is falling the Oilies will hold back on unnecessary expense, they always do.
Any short term price move back up will just be because its a traders plaything, not because of underlying value...and will quickly be sold into for a festive bonus.
They need the banks to be very `accommodating` with plenty of seasonal spirit against an uncertain headwind.
Good luck with that one then!
Always a good sign when the trashtalkers are about ;)
Whichever way you put it, its still £30m mcap vs £400m net asset
Anyway, page 18 of interims:
"In the event of a potential breach in covenants, the Group would approach the members of the banking
syndicate to seek a waiver from covenant testing for that period. The Directors believe that given our strong
banking relationships the banks would agree to grant any such waiver if required."
Wouldn't be surprised to see 100%+ from these levels... DYOR
"The Board is confident that the strong pipeline of contract tenders in the Middle East should eventually lead to an increase in charter rates. The Group's fleet is one of the youngest and well invested in the industry, with an expected future useful life of more than 25 years, which means GMS is well-placed to capitalise on a market recovery when it does materialise."
Just quoting from the RNS, so not trashtalking, just reading the facts as an outsider, which long termers don`t want to hear.
Don`t know if you`re familiar with how to read between the lines of such financial statements, but as you copied the words exactly you will recognise phrases such as..`The Directors believe that..` and `The board is confident that` etc!
These phrases are used to give shareholders hope, they use them because they are not in a position to state confirmations of favourable outcomes to difficult situations.
The warning signs were there in the Sept Interims when they said......` As discussed more fully in the Financial Review and note 2 of the condensed consolidated financial statements, there may currently be a material uncertainty about certain assumptions that we have made on the value and timing of future contract awards in preparing these financial statements on the Going Concern basis.
`Material uncertainty` ..there`s another one of those phrases that gives signals from between the lines, this time it wasn`t hope, it was a red flag warning that things are not rosy!
Not a trashtalker as you call it, more of a fact talker, as I call it!
Long termers now need a 250% increase in the sp just to wind the clock back 48 hours, to what was already a struggling trajectory.
Sometimes its difficult for shareholders to see the wood for the trees. So for now it will just be a traders plaything.
goodflyingduck, two things, first you say you could post at length but you don`t need to, then go on to post at length..that speaks of underlying worry.
Second you said that I said in my opening statement that these were looking attractive within the range that caught my attention, but you forgot the bit about it only being a short term trade on charting reasons which caught my attention, not the fundamentals, thankfully I avoided due to the oil price crashing.
Without chartists and traders the whole market couldn`t exist, fact!
Buy and hold for years can be a very elongated and depressing strategy, waiting for that blue sky, just ask those that bought in here two years ago in the 70p`s.
I bet they`d wished they had the mentality and rules of a trader!
Charty guys rarely have that much to say about fundamentals - for good reason ;)
I'd suggest the amount of blue seen today isn't really the point but the bottom to top on the day may be.
Who knows where it's going but a nice 30% on offer if you caught it right for a day trade.
Probably needs to stay above mid 7s now otherwise a threat of just under 5p imo.
GLA
You're not wrong there mate, I'm proper dying but money never sleeps :)
Not really supporting chart or fundy - I had a TA number in mind, took it and took the quick profit because other than straight on-the-day TA math I've got feck all else to go on.
I've never heard of this company and have no clue what they're about or what this fall is about but I heard talk of banking covenants which will usually murder an SP :) They almost always (IIRC) get sorted though so if you're brave enough then maybe there is a bagger+ on offer here but I couldn't put any more thought into it so I took the quick win.
Certainly plenty churned in/out at 7p today after two auctions so I certainly wouldn't *expect* it to go any lower then here.
I`ve not claimed the co will go under, I don`t have that kind of crystal ball.
But for some facts....Apr `17 ...75p
Nov `17...54p
Apr `18.... 30p
Brief rise but didn`t hold...end of May `18...high of 52p
End of Sept `18...high of 48p
13/12/18...high of 35p
One week later after news, opened at 20p and sellers took control driving price down to 8p!!
One day later, and 46m trades later, a flaccid dead cat bounce to 9p.
Are you getting the picture yet?
A question for the optimists:-
If the company is so worth investing in, WHY has it been in such a downtrend...even during a rise in the price of oil form mid Aug this year to Oct when the oil price went from $70 to $86, the GMS share price just about tracked it from about 42p to 48p but then quickly fell off!
WHY?
What has spooked investors?
A quick look at the financial reports over the years will immediately tell you why...
Im guessing you're here to 'warn' everyone?
Not claiming the news wasn't bad, but even you must bit the drop was significantly overdone probably due to the seller as per tr1
Now what's your opinion on the 30m mcap vs 400m net assets?