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Hi BaysilHope,
Thanks for taking the time to reply. Although I'm *not* a trained accountant, I can certainly see the sense in what you say. The potential tax allowance, also, is something to bear in mind. And of course the fact that whatever total dividend "pot" can be afforded now gets divided between very significantly less shares, not just as a once-off but going all the way into the future (unless they change their capital structure). There are a number of factors that (somewhat surprisingly) the market doesn't seem to be pricing-in at the moment, which, as a long-term holder, are good news. I look forward to seeing the full-year result results in April, when hopefully for the first time we'll be able to see a "clean" balance-sheet reflecting all the recent changes. Of course the slight cloud to this silver lining will now be the increase in corporation tax announced yesterday (but probably to an extent anticipated).
All the best,
Mike.
Later this month we can expect the share price to rise anticipating the results and the opening up of the economy. TSCO is IMO oversold currently. JJ
will the tesco sp ever reach £2.30 again,
Hi Mike,
Thanks for your reply, in answer to your point, as an old bean counter I - IMO I would look at the double entry relating to the £2.5bn bank payment, firstly reduces cash on the Balance Sheet, secondly it reduces the pension deficit liability on the Balance Sheet , the cash does not leave the Tesco entity unlike the SD, where the cash physically leaves the Tesco entity as a distribution. The £2.5bn cash now sits in the pension fund yes, not available for Tesco to use, but does positively eliminate the Pension deficit liability in the Balance Sheet - improving Net Assets (Note 18 or 20 I believe). IMO this fact is no appreciated in the Mkt cap calcs , its a redirection of profit earned on disposal within the business entity and should get full tax allowance (if I'm correct) set off any profit on disposal for Asia sale. . Hope that helps. GL. On another point of distributions, what I like is the increase in the final divi to 7.8p on 7.732m shares costs less than the 6.5p? on 9.78bn old cap. Smart move.
Hi Mike,
Thanks for your reply, in answer to your point, as an old bean counter I - IMO I would look at the double entry relating to the £2.5bn bank payment, firstly reduces cash on the Balance Sheet, secondly it reduces the pension deficit liability on the Balance Sheet , the cash does not leave the Tesco entity unlike the SD, where the cash physically leaves the Tesco entity as a distribution. The £2.5bn cash now sits in the pension fund yes, not available for Tesco to use, but does positively eliminate the Pension deficit liability in the Balance Sheet - improving Net Assets (Note 18 or 20 I believe). IMO this fact is no appreciated in the Mkt cap calcs , its a redirection of profit earned on disposal within the business entity and should get full tax allowance (if I'm correct) set off any profit on disposal for Asia sale. . Hope that helps. GL. On another point of distributions, what I like is the increase in the final divi to 7.8p on 7.732m shares costs less than the 6.5p? on 9.78bn old cap. Smart move.
Amazon can be the technology behind cashierless tills, more throughput , less staff, more profit and of course go back to click and collect and pick your amazon parcel up from Tesco instead of it being stuck behind your wheelie bin in the rain.
I think AMZ will buy Tesco.
This dog sank as profits was ****
Basily, ever thought of leverage if have limited funds, maybe an option to consider in the future.
I appreciate that they should be going back up in values and will, Tesco is a strong healthy Company, just have to be patient mate, so many shares like bp boo, Lloyds take ages to make nice inclines.
As for Amazon I'd love that to happen! SP probably go through the roof!
BaysilHope,
I'm not sure I can follow or agree with your analysis. You say:-
"...What I don’t understand is the enterprise Market Cap post SD. Previous £23.6bn was calculated after the inclusion of £4bn pension deficit, pre-disposal, with 9.74bn shares in issue, or £2.41 SP. The distribution was a negative £5bn – cash out, but no account has been taken for the elimination of the £4bn deficit, especially with 60k staff leaving the business with the disposal, so the net reduction is my mind DYOR is (£1bn), or £22.6bn with 7.732m shares in issue = £2.92, after the results highlight the massive positive impact of this transformational transaction upon the balance sheet. So at 7732m share in issue at £2.19 value TSCo at £16.9bn – what a bargin! Especially in consideration that the removal of the requirement to fund pensions for some years - frees up cash for further share buy backs on top of the divi, accelerating investors returns...".
You seem to have credited the balance sheet with £4bn elimination of the pension deficit (turning your £5bn outgoings to net £1bn reduction), but don't seem to have included the fact that £2.5bn was paid out to achieve that (or contribute, along with other measures, to achieving it). So surely by your figures, the overall net reduction should be £3.5bn, not £1bn, taking calculated market cap down to £20.1bn, not £22.6bn. A considerable difference!
Mike.
Morning Basily, ditto on getting it right patience wins, I think caution is wise atm Chinese can read tea bubbles.
Tsco should be a safe haven
And good luck with your portfolio onwards and upwards hopefully.
Budget:- Higher tax for retail coming up. Well done Tesco in giving back your golden handshake from the government, during the pandemic, that could of been used for debt etc. I suppose Rishi boy will let you off scott free as a return of favour... not.
Oh and the share price is the same as before consolidation...not. Come on Tesco sort this car crash out. Come amazon buy these guys out. A lot of money invested in Tesco and draining down the plug.
Only a small matter of Amazon doing the same as them but more efficiently, cheaper and with good customer service
No reason for the weekly drop, looks a goodun.
Morning Stormer, I missed AV and a big mistake, I have limited funds and I don't pretend to understand Gold Pur etc, what I did go for in a limited way was ITV and BP (modestly) and am now out of both, too early unfortunately, never seem to get it right. Good luck with your portfolio - hopefully some of our shared investments get a lift., next few months.
This share will be just above £2 by the end of April. Watch the slide coming soon.
You been copying my buys Voda,Serco, Tsco, I bet you've bought some Pur, Cey and Av.........
Fird, didn't do it just for profit, just cleared off, to start fresh, to get it showing correctly with hl, should have said, i bought back four times what i previously held, sold at 222.50, and re purchased, 220.50, point i was making is just hoping, this is near to the bottom price, have kept some reserve back in case of further drops later, difficult to say where this is going at the moment
cheers
Robleo,
You sold at 222.50 and bought back at 222. On a thousand shares you made £2, taxman made £11 and broker made at least £12 in commission. Was it worth it?
In a market that pushes up IAG to 2.12p on'bookings' , Easyjet etc etc especially when the FT warns 20k travel jobs will be lost through Brexit. I personally take comfort in the fact that contrarian pricing is taking place, especially when SP's like VODA, Serco are also down, despite enjoying similar prospects as TSCO - huge upsides. US Stimulus is to pass on the 14th March and soon it will be too late to get in sub £2.20 and get a forecast 7.8p divi within 2 months. It definitely seems the market is 'furloughing' or masking the SP's of desperately struggling companies, i.e. Card Factory (Nothing against the share) , all stores shut SP +100% as it agreed to defer its banking covenants, I could go on ad infin - My risk set does not allow me to venture into those areas and shorting 'contrarian priced shares' is utter suicide. I'd rather play safe and be patient -'All good things come to he or she that waits'. Over time, with 21% less shares in circulation, coupled with improving finances and macro economic backdrop - will reap the desired return - that's in my projections, this year. IMO DYOR good luck. The II's voted for the SD and it is a cash windfall into their coffers, I believe they owe TSCO a debt of gratitude and some loyalty over time, when they get the price they desire to re-invest a part of their distribution. GLA
Just checked my share portfolio and all up except Tesco’s. what is going on?
Agree the valuation is mystifying regards SP levels. My concern is that on this and other BB's, many seem happy when shares fall and so buy-in levels are attractive, but at some point, the likes of TSCO MUST see a sustained increase, we cant always have sustained falls for buy in, there no value in that as the price will settle lower than a genuine Market Cap valuation and shares will stay depressed. I sold JET2 near its 1500p top and put into TSCO for the SD as a quick buck, but didnt happen as the SP continues to languish circa 220-225p, 6p above my buy in. Personally I would like to see a SP rise rather than ongoing spiral, as i dont want to buy more and want to see a profit on whats already in the pot.....
Sold off all my tsco holdings earlier at 222.50, and repurchased an increased amount at 220, so I have my average price showing correctly with hl, just hoping my purchase is reasonably close to the bottom price
This will come good.We are going through unsettled times.
There will be winners and losers with the SD,that is life.