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Apparently favourite to take over at the election
https://www.simonlightwood.org.uk/post/labour-s-plan-for-better-buses
Interested to get everyone’s thoughts
Could our Uk bus profitability improved or lost altogether? Researching this weekend when I get the time. Important question to answer.
This kind of stuff presents an opportunity for MCG. But the contracts have to be watertight to ensure a healthy return & if they are not be prepared to walk away!
I watched the results presentation again today. Don't really see any huge issues with this for the long term. Just being hammered down due to headline numbers as far as i can see!
Just had my AA membership qoute.
Last year £67. This year £90. That's a 35% increase. There lies our problem. Fares are way too cheap. Prices need too go up big time.
This mess all comes down too management.
Ignacio Garat needs to go.
Share holders need too call a vote of no confidence and show this man the same door as Stamp
Everyone putting up their prices a good slog, the fare increases simply werent enough
Unless they’ve got any more nasty surprises to unveil over the coming months you’d reasonably expect there to be a decent recovery in the share price by end of the year to reflect the long term value in the business. Interest rates should slowly reduce and unless there’s some catastrophic wider market event you’d have thought that most of the worst case scenario is already priced in at these levels. We were in the 90’s only a few months ago and thanks to the ineptitude of Stamp find ourselves 40pc off that level when none of the metrics have really changed apart from the issue in Germany. Sentiment rather than numbers has dropped us to these levels and once trust in management was gone in hindsight it was inevitable that the price would crash. But sentiment can change as long as they start to perform to guidance and the change of CFO in that respect is crucial though personally I’d have liked to have seen Garat out the door too for his part in this fiasco. I still see a good business here , bus transport will grow and it can’t be beyond imagination to think that they either cut / sell loss making parts of the business or they will increase fares to restore profitability. As has been said MCG isn’t a charity and as shareholders invested here why should we accept that OUR money is being wasted on supporting loss making routes such as WMB ? The new CEO at RR would surely sort this mess out very quickly were he in charge here, it’s not rocket science to get the sums right . I said it the other day but I’m grateful to some of the posters on this forum who consider the bigger picture and are thoughtful about their views and analysis on this company. It’s been an absolute dog of an investment for me and paper losses are sickening today and there are times that I’ve been very upset with myself for calling it wrong. And on more than one occasion I’ve been sorely tempted to sell the lot , accept the losses and chalk this down to a bad experience. You can’t win every time. But like others have said we are perhaps at a bottom , or near to anyway, and eventually patience will be rewarded. I’m feeling that this could turn big once sentiment changes or we get a bid and that’s what keeps me here. It’s the hope that kills !!
Smokey, watch the presentation. it kind of addresses the pricing stuff amongst other things. Quite reassuring i thought anyway!
That is exactly what the shorters prey on: Weary PIs selling their shares at huge losses. When the panic selling stops & people realise the longer term value, the shorts reverse. Simple as that!
Will do Paddy. Everything just seems to be against us at the moment and while we can chat all day on here that this is a good company which don't get me wrong it sure is, it just needs a change in direction and innovation. Shorts are just playing mind games, ones that have held this long won't fall for their tricks !
Can you send a link for presentation ?
No, for me the shorting is an opportunity here & i'm going to buy again next week if the drop is sustained. I see this turning before too long & this price level is just too tempting to miss out on as i see it. Might regret it but well i'm going to get 3 shares for what i paid for one share originally. My mistake was buying then but buying at 50p odd will reward well i'm sure
Https://www.mobicogroup.com/investors/results-reports-and-presentations/2024/
I looked a bit more into the 500mio hybrid…this will need to get refinanced by November 2025 at much higher rates…current spread for hybrids over a corporate bond is around 2.4%…so as it stands the yield would be around likely 7.5-8%…in line with HSBC forecast of an additional 20mio annual cost…if not called, Mobico would lose the 50% equity component…
“However, Mobico will lose the 50% equity credit on its GBP500 million hybrids from 2026 onwards, because Fitch deems the first coupon step-up date in February 2031 as the effective maturity date. If not refinanced with another hybrid bond ahead of that, then the equity credit of 50% would change to 0% five years before the effective maturity date, leading to higher leverage, as per Fitch's criteria.”
In sub continent, Indian jungles hunting in olden times was very interesting. Main hunter used to stay in a safe place. Whereas other hired servants beat the drums and make noises around the prey to push him towards the hunter side who then easily hunt him.
I don’t know why Increase of shorts reminding me this story
Maybe take the pills you should be taking and you will remember?
From what I understand about the hybrid the interest rate resets in Feb 2026 e.g. "reset date". It's not refinanced as such, just the rate gets reset.
It's not a given the % interest would rise - they note it could be lower than the initial on page 20 of the hybrid document. The new rate would be in reference to UK gilt yields so depending on how things go with BoE it could actually be cheaper if we head back to zero rates.
It's a pretty hard document to read, though.
Looks like the reset interest rate in 2026 will be sum of Reset Reference Rate (e.g. UK gilts) + Margin of 4.125%, going up to 5% if the hybrid continues to 2031.
So it looks guaranteed to go up in 2026 to some degree. Could also just be refinanced with normal bonds for cheaper e.g. Euro bonds but I think that would be an accounting problem for the covenant gearing/leverage?
It’s very uncommon for hybrid bonds to get extended and it would lose all of its equity component…when the hybrid was issued, rates were at 0%…hence it has to be refinanced at a much higher rate.
I don’t think we will be able to issue a regular bond as it will break our covenants
Or paid off when they finally dispose of NA schools.
Any guesses on what the NA schools business is actually worth assuming that it’s not a distressed sale situation?
Mavswf
I think I recall some brokers initially talking about figures circa 1.2 billion 6 months ago, but really unsure now.
Can anyone clarify the reason for delaying the sale until around q3 after the schools bids contracts are finalised?
Is it to demonstrate to potential suitors the improved profitability margins on future revenue / contracts given the current inflationary headwinds?
I think they stated they hope to complete the sale by year end.
JG 68
I am wondering then why this hue and cry? Do some of us believe they will not be able to sell at all? US school bus business was very attractive before pandemic and after rout instated, driver hired improved contract it will again be on track . So there are plenty of options for the company to navigate and that is why Cosmen are buying.
Who knows Laralara, probably just sentiment and revised guidance. Hopefully things will settle in a while until July!!!
I would think it is as JG alludes, to give time to demonstrate the business potential. By doing that it should stand up and attract wider interest. Only when potential bidders sense competition around them will they lose hope of getting it on the cheap and instead bid decent prices. So it pins on how actually attractive it is and how much interest it garners. Can it reliably deliver margin for the buyer > their borrowing cost? FY23 2.4% does not deliver that, but I think they said Q4 run rate implied 4.5-5% margin in 2024 and if by Q3'24 the new leadership can bolster this upwards it might just become attractive?
If those estimates are anywhere close to accurate on the NA bus sale then surely the share price for what’s left should eventually be multiples of where it stands today ? Maybe that’s a too simplistic view but it does seem a no brainer that these are a longer term hold rather than a panic sell today …