Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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https://www.gurufocus.com/news/1663577/micro-focus-still-waiting-for-godot
Thanks Mark. That pretty much sums up why I'm also holding / adding. Even if they just deliver what they project, recovered confidence should deliver a SP of an appropriate multiple of the $500m free cash flow. And if their potential higher growth sales lines (Vertica and other analytics) can deliver real revenue growth, the upside is considerably higher. Management have successfully pulled off the build, implementation and transition of the single 'Stack C' set of systems and processes. That was a huge challenge, a major distraction from actually running the business and (potentially) as significant sales growth enabler. Hopefully that leaves them free to get the SP back up into the £20+ zone again (back in the days when they were targeting £30+).
It's funny how they associate the debt with bankruptcy risk though. I'm pretty sure MCR could spin off vertica and list it which would generate funds or even selling it which would clear the debt in 1 go. For me it's stupid to mention a risk when the sum of parts is much greater than the current market cap
>It's funny how they associate the debt with bankruptcy risk though.
I took it as a bit of a throw away, almost disclaimer
You know what they are like for suing over the pond
Probably right there! For me I keep saying I don't see the risk. If a company has no product or service that's in demand then yeah but in it big data / security or operations then all companies will keep investing forever.
I bought 60k Capita shares and they are in the same boat and in some ways much more penalised for it in the SP. Both companies revenue is multiples higher than market cap. Both turnaround companies and both declined over years. Both stocks will multi-bag imo over the next 10 years.
So as well as the "turning the ship around" return of the SP to a sensible multiple of cash generation, Monday's announcement of the Debricked acquisition has me wondering if Micro Focus is now returning to the "click and repeat" mode of acquisitions that underpinned the growth in SP back in the Kevin Loosemore days. That of course all stalled when the HPE acquisition went a bit off the rails. However now they have got the wider group on a common platform, it would seem to make sense again: buy a relatively small business with growth potential, provide it with scalable back office infrastructure, processes etc. cross-sell its product and to its customers.
The last couple of years have seen us hoping for a steady ship and a return to organic growth in cash generation. I wonder if we're now seeing early signs of something more than that.