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Poker - Dubai wasn't lost as far as I can tell either. It seems as though the contract was withdrawn. Transdev hasnt won it. It just disappeared.
I also think its reasonable and proportionate to have been updated when spending relatively large sums of precious cash particularly on acquisitions and to explain how it fits the desired ROCE targets or if it doesn't then why it is deemed as worthy of diverging from those goals. That particular acquisition feels more like a vanity purchase, without any clarity as to why they did it. Just 'saying nothing' in my view is not acceptable at a time when cutting costs, removing dividends and re-financing with higher interest burden. That purchase and others should provide an exceptional return, at least 25% ROCE (which from the stated margins in the press, it doesnt) or I have to question why they feel they dont need to stick to the plan, why they are spending important cash in that way and why thy expect continued support in doing so.
" 28% ROCE. I doubt that is sustainable "
well, these new contracts are capital light , so the ROCE should be high as a result of that
However , what is important is the Operational profit margin , because although they are not investing capital they are operational costs ...and it depends how efficient the Operation is and what the margin is...that matters
Wish I had more to invest right now but can allocate any more until Monday in new isa window.
Sorry with corrected typos
That may be true give. The lack of confidence in the shambles of a board. Take the CFO out and they might. If they can quantify the financial benefits to the bottom line of the recent price increases I think it will provide a nice relief rally
Any news of cash coming in to pay down debt will also trigger a rally
All in my opinion and that’s why I’m invested here
That may be true give. The lack of confidence in the shambles of a board. Take the CFO out and they might. If they can quality the financial benefits to the bottom line of the recent price increases I think it will provide a nice relief rally
Any news of cash coming in to pay down debt will also trigger a rally
All in my opinion and that’s why I’m invested here
Genghis - the last report was a 28% conversion at 28% ROCE. I doubt that is sustainable but would underline why I am still holding if it does continue. We await the update to find out.
Problem is xxxaccountant
The market nor investors will believe any 24 guidance until the proof is in the figures.
Wealthtransfer
yes agreed.... the Dubai contract must have been lost at the final hurdle although it never even got mentioned in the Annual Report, if so... although I searched and didnt find anything to confirm the French company had actually won it ?
and yes they tend to group together contract wins and then announce them in the following Update unless it is something the rules make them disclose because of its material size...
with Tenerife you can only assume it was an opportunity that appeared and as an operation already set up and running with little need for capital investment and possibilities for margin improvement was worth buying into.
The fact that there was a number of other interested parties suggests it could turn out to be a good addition to revenue with a safe,regular turnover
Given the number of stakeholders and responsibilities within the business, I can understand how private investors are way,way,way down the list of priorities
Agreed.
As soon as the Cosmens buy anything above current holding then we know a bid is coming
Clarity of FY24 is critical in gaining momentum back up again
Will test 90p within 2 weeks
Poker - I’m talking about the stated EVOLVE plan and ROCE which Tenerife doesn’t appear to provide unless I’m missing a huge undisclosed synergy. We have no idea if there is another indirect reason for this or travel agents in Portugal.
The board quoted £2b pipeline but also that US transit pipeline at £500m was the most successful area of wins without any further updates. Plus hints at large new school bus contracts, historical Dubai contracts hinted at, £1bn etc… with that one stated as down to last two but no update on the subsequent pulling of that contract or if possible, why!).
What I’m getting at is that although I appreciate the board are not going to continuously update on operational wins (or losses) they should update on material contracts especially when cited in prior updates. There is often a feeling of radio silence and no clear update on what they are doing and why it fits with their strategy. We are mostly left to figure things out ourselves or hear through 3rd parties. I think they could be clearer and more transparent with the owners of the company.
Do you also get the feeling that private shareholders are not considered particularly important?
"pipeline of growth opportunities ...."
that's wrong to say that. When you bid for contracts the conversion rate is a usually a small fraction, unless the market is seriously underserved
One thing outside of receiving any Results or Trading Update is the fact that there isnt any news on any new business tendering successes...this despite the fact that there is supposedly,such a high level of tendering opportunities
2022 - "Our pipeline of growth opportunities now stands at more than £2 billion in annualised revenue"
"but the sellers wanted Cosmen/Alsa to have it ,"
everybody in Spain / Portugal in the transport business must know each other and the Cosmens.. Its a bit cosy and why not..
"Buying up Tenerife bus company "
There were several interested parties but the sellers wanted Cosmen/Alsa to have it , and I suspect it will be operationally profitable
Cosmens' man.......
Ignacio has more than 28 years’ strategic, commercial, operational and business transformation experience in the freight and logistics industry. Previous roles include CEO Spain & Portugal and CEO Brazil at TNT and Senior Vice President for Southern Europe, France and Benelux at FedEx. He has a track record of leading international, complex, operational businesses to achieve clear strategic purposes, adopting an inclusive management culture in doing so aided by his focus on people.
Ignacio has a degree in international business from the American University of Paris and a postgraduate diploma in management and business studies from the University of Warwick.
My thoughts are that the CEO, due to location and background, has been on top of the ALSA business (or the regional CEO there is exceptional and should perhaps step up and run the company) and Garrat his eye off the ball in the US and UK. Which holds up as the two regional CEO's were thrown under their own respective buses and replaced.
Was it a lack of understanding of what was happening in the US and UK vs their local Spanish/Southern Europe markets?
FB for example acted faster and harder. Cutting debts early. Cutting UK route mileage has been cited by Analysts for example for some time. This was done successfully by others but not by MCG.
Overall Im confused on what they are doing now: I cant decide if its a lack of focus and market awareness outside of ALSA or they rolled a dice and thought they'd come through it and it didnt work or simply they had tied themselves up with contracts that couldn't adapt to a new higher cost environment. But the last option doesnt line up with their EVOLVE strategy or management statements in the annual reports.
Buying up Tenerife bus company's and Cruise Ship travel company's doesnt fit the brief either.
There needs to be clarity on what current operations fit with the strategy and which dont and how they are going to address that. Some real targets and clarity are needed as after investing for what I felt was a good direction and strategy I dont understand what they are doing now and where they are going.
This company needs to be more software process driven. Its got 44,000 employees and they can't all be driving buses
Other big outfits with lots of staff are doing this. On BA / Terminal 5 Heathrow its impressive how the check-in process has been redesigned. At some point they are going to get rid of everybody working there and use facial recognition to manage the process. You won't even need a boarding pass
MCG needs fresh thinking in this respect. The high cost of wages and staff shortages require greater productivity. That requires new management. Maybe MCH should get some Chinese consultancy, that's probably where the bleeding edge in managing people is right now.
"...the lack of hard nose decision making in cutting overhead costs/routes/passenger mileage "
They did cut the drivers in the US during the pandemic and cut back routes .....to cut costs....but then found the labour shortages and wage inflation that followed made it difficult to get them back again ..
the school bus contracts are often yearly , but they did take action to have dialogue and get support on price increases where they could
They took action and have a new CEO there who is very experienced
In UK bus I think they faced similar problems with labour shortages and wage demands .... drivers were better off working in Lidl , who upped their wages too seeking more staff, than taking on the responsibility of driving a bus
Public transport is becoming/is a political issue and I cant see Govt support or local support going away ... but agreeing new support levels is another timely process
you also have to factor in...that some of the solutions to their problems on bus prices came into affect last July and September 2023 ...and it is now April 2024 ....
The new CEO of UK/Germany should by now have indeed implemented more cost savings , but they have to keep their operations going so you have to be careful in terms of anything too "ruthless" all at once ..those garages should have been sold I suspect
US Bus ..a sale is a long process ... so I suspect they are getting closer to inviting more serious offers and set a deadline for them ...if they have indeed got that far .... no doubt had some interest ...
Great post wealthtransfer, and pretty much spot on.
The way things are playing out I'm writing this year off aswell, but I would feel so much happier if there was a change at the top, at least one of ceo/cfo to restore a bit of confidence.
Because now if there is a delay to the US sale or different direction is taken, the markets response will be completely ruthless imo, probably aimed solely at the board as opposed to the decision itself, if it were to happen.
JG - could well be that NA attracts lower bids than than the amount sought and therefore present a dilemma for the Board.
The real problem with MCG was the speed of response to the cost increases and the lack of hard nose decision making in cutting overhead costs/routes/passenger mileage to counter that, as has been done by others a year or two earlier. I think the board thought the would ride it out on the back of revenue growth and be bigger and stronger than the competitors as the world got back to normal. Unfortunately it is taking much longer than they anticipated and the rolled the dice and got it very wrong (could have gone either way but as proven was a risky strategy which other analysts were warning about).
That aside and now faced with having to realise the situation that was upon them they have finally responded. It will take another year, this year, to prove that they are now actually trying to actively manage the macro financials they are faced with and turn this year into a profit.
Given that this is being done, hopefully aggressively enough, we should play catch up as the business income and growth hasnt changed. People still need transport regardless of the wider economic climate. So as long as they cut hard and in the right places whilst maintaining what they are good at which is customer satisfaction then this will return but they could do with someone more ruthless at the helm to keep it going as they are now 12 months behind and need to catch up fast.
If NA doesn't happen then I don't think its the worst outcome as long as they get ruthless with the costs everywhere.
My view a year or so ago was get rid of UK and Germany and split US and ALSA, listing on their respective exchanges. That would still be my preferred option for ultimate value and is what the Cosmens will do in my view.
All we need now is a u turn or delay to sell NA due to current interest rate environment.
Can just see it now.
Ripe for takeover now. I think once 2023 results and 2024 guidance given, which I expect to be better than last year, somebody will make a move. My guess is in May
🚨Broke Covid low now
If it wants to sell off let it
Hopefully the whole market flushes anyway it needs one imo
I would have thought they’ll be finding ways to raise money to buy us out.
I am surprised by the impact of US 10 yr rates on the share price as 80% is on fixed rates until 2027….
Think the markets are just punishing the riskier shares and as the board has lost the confidence from the markets it’s hitting us
As the Omaha says “be greedy when others are fearful”