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does this take into account 3rd and 4th quarter losses which will be substantial ???
"The firm will face what’s known as a "pinch point" towards the end of 2021, when GBP3.2 billion of debt will have to be repaid. "
Toff,
that is right
...but as I understand it...the £1.9 billion of RCF due then only has to be repaid if they use it ( which they havent yet, as far as being reported !) and this new funding may mean they have this fund raised £2 billion instead ..plus the money from the new bonds ..so things might be slightly different now the fund raise has "taken over", as it were ..with regards that RCF
RCF - Revolving Credit Facility
Sometimes you have to take a step back and try not to get caught up in the negative soup du jour!!
Hovering around the £4B market cap puts RR at risk of dropping out but I don't think this would happen with the increased liquidity and future recovery prospects
http://www.stockchallenge.co.uk/ftse.php
After a volatile period post RI, all we need is some positive sentiment to return to the stock and this will most likely be achieved through some sort of vaccine news. Unfortunately Covid ain't going anywhere short term but I'm comfortable that RR will weather the storm and return long term shareholder value.
Good luck to you!
BigBowler
You present a good argument for value in Rolls
But there’re plenty of obstacles to overcome before they’re out of the woods.
The firm will face what’s known as a "pinch point" towards the end of 2021, when GBP3.2 billion of debt will have to be repaid.
And that’s just one example.
BigBowler,
Good post
I like positive energy !
Now, here is a question for you :
Do you think RR will stay in the FTSE 100 ?
I don't know about the rules of the FTSE100 club membership , but I think it is important that they can stay there from the point of "Recovery" , because a lot of the FTSE trackers funds & institution would buy their shares.
Cheers & Good Luck
Having worked with RR, I have a good feel for the business. The current situation is dire for both the company and us weather beaten shareholders. However, I do see the potential upsides as a long term investor. Please see my brain dump below and feel free to comment.
Total Shares after RI = £8.376B
Current Mcap + RI Capital Raised
(2.26 + 2) = £4.26B Mcap
Therefore share price should trade @ £0.5 post RI (4.26/8.376) with Mcap of £4.26B albeit I think this will go a bit lower.
The average Mcap over the past 5 years for RR is approx £16B at the lower end.
Pre covid the share price had already taken a hammering with the existing and newly announced Trent 1000 IP turbine issues (which can be fixed), the share price was £6.50 with Mcap of £12.5B.
So, the question I ask myself is - in 2-3 years after Covid is a distant memory, can I see the Mcap climbing back to that pessimistic value of £12.5B which had already been beaten down? ... and the answer to that is ....YES!! The current valuation is crazy considering the Defence and Power Systems segments of the business. Even within commercial aerospace and the future innovations including the geared Ultrafan technology and R&D into electric propulsion/supersonic travel, I firmly believe that there are many growth vectors ahead.
Now as a sidenote, with the reduction in headcount and the consolidation of the Repair and overhaul sites reducing costs further RR will be a leaner business moving forward generating much higher FCF which will allow the dividend to be reinstated (in time) driving the SP up higher.
When I take out the RI offering with an average cost of £0.75 I am confident that RR will return to a minimum Mcap of £12B within 2 to 3 years, which equates to ~2X return
Break Even Mcap = 8.3B (shares)*0.75 = 6.27B
(Minimum target Mcap/B.E Mcap)
12 / 6.27 = 1.98X Returns
Using the same method above, any new investors picking up shares around the £0.5 mark can 3X their investment.
C'mon the rolly polly!