Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
After reading the underwhelming results, I had expected a sharp drop at opening. Proved wrong as usual: share price seems cool as a cucumber. I suppose the price is now supported by the presumed A v. A competition. It’s some comfort to know that I am in such distinguished company, since like them I bought too high and am nursing a nasty loss. I'll probably top up sub 20p.
In response to Nickshaw's earlier question: I topped up at 12.50 and will do so again if fragile sentiment pushes the share price down further. Since the gas has been there for 8 million years, I am willing to wait a little longer for my reward.
You are right to flag this up. But I see that the adjusted Selling General & Administrative expenses (£419.1m) include (1) an unusually high net impairment charge for right of use assets (stores?) of £37.6m (2022: £14.4m) and (2) depreciation and amortization of £55.8m (2022: £ 48.7m).
I am wondering whether these high numbers, to the extent that they may be untypical and somewhat “transient”, are contributing to an overly pessimistic view of the company’s inherent profitability.
The largest element of SGA (wage costs) rose year on year by just over 5%, which seems not unreasonable, given inflationary pressures.
For what little it’s worth, my view is as follows. (1) the big sellers exited BOO long ago. But there are probably many weak holders (PIs) all the way up to 100+ and beyond, who are still waiting to get out at a better price than current levels; (2) the bad news and negative perceptions of BOO are already factored into the price, and I doubt if there are any company specific issues that could push the price down much further; (3) BOO is most likely stuck in a trading range between 30 and 40 for the time being and an eventual breakout to the upside is more probable than one to the downside.
I am well under water on this share but plan it sit it out, patiently waiting for better times!
It depends on how much conviction you have in the company’s turnaround strategy. If you think it is viable, and believe there will no new unforeseen headwinds, then it is reasonable to hope that there will be “sufficient resources to continue in operation and meet its liabilities as they fall due over the period to April 2028” (quote taken from the latest Annual Report). The biggest uncertainty is the liquidity headroom. This is clearly the Directors’ main concern: hence the IP sale, equity raise and the two (expensive) borrowing facilities. Given that “cash is king” these days, these were the right moves, IMHO.
Although it faces similar challenges, hopefully SDRY won’t go the same way as Joules, whose founder failed to act quickly to improve liquidity, then resorted to some ethically questionable measures to save his own skin at the expense of the shareholders.
The unduly negative posts which appeared on here and the other site explained why the share price had fallen so far; but were not a reliable sign that it would fall further. When sentiment is so negative, this is usually a good indication that a bottom has been reached and that a steady recovery may begin. This now appears to be happening (touch wood).
The Trading Update on 30th January contains the following sentence: "In respect of the three-months ended 31 December 2022 rent collections have taken place in the ordinary course and the Company has not experienced any material changes to its rent collection of the nature that has recently been reported elsewhere in the homeless accommodation sector, which is not a service generally provided by the Company."
This is clearly intended to be read positively (and that's basically how I read it) but the drafting is a bit contorted, when a simple statement about collections would have sufficed and would have helped to dispel any investor twitchiness.
All hypotheses are worth considering, given the clouds of obscurity which envelop the motivation and circumstances of the major shareholders. On the face of it, the settlement with Allianz was not particularly favorable to BWNG, and the agreement was clinched earlier than necessary, implying a desire to clear the decks, for whatever reason. But who knows… Another assumption is that, blood being thicker than water, all the Alliances are acting – or will continue to act - in concert and in coordination with each other, which may not necessarily be the case. Different family members may not see eye to eye on the future of the company, may have their own interests and priorities, and may view the value of the IHT dimension differently.
Lease incentives are a means to incentivize tenants to sign up to long leases. They could involve a rent reduction (or even rent free) for the initial period of the lease. Another type of incentive would be funding support for repairs or enhancement of the property.
Very interesting analysis, Beechhurst, which looks to me soundly based. All things considered, there are good grounds to be optimistic about the medium to long term prospects for the company and the share price, even if there are a few twists and turns along the way. Hopefully we can enjoy many a coffee morning, without fear of a coffee mourning!
Yes, the trend is your friend – until it isn’t the trend anymore. I am a strong holder and fully subscribe to the long-term case well made by Brighty. The only snag is that, the better the case for BWNG’s long term prospects, the more difficult it is to fathom Schroders’ decision to sell at a bargain basement price. Maybe more information will emerge in the coming days; and perhaps Andy Brough will explain. Anyway, I sold 14% of my holding at 40.20p – for risk management purposes. I would buy back into weakness and probably sell another tranche into strength. I'm about 2p away from breaking even, which - compared with less than a month ago - is a nice feeling!
Following is an attempt to make sense of this conundrum.
Andy Brough may have decided to sell because (1) he sees better investment opportunities elsewhere and because (2) he believes, from what he knows of the Alliances and Ashley, that neither party is going to be willing or able to mount a successful bid, for a variety of financial, arithmetical and psychological reasons. Had he not sold, which is what has triggered the bid speculation, the share price would most likely still be at 28p-30p, the level at which he was willing to offload his shares in the first place. By selling when he did, a short-term surge in the share price has been created, which will be sustained only if there is a successful bid, an outcome he has concluded (rightly or wrongly) is not going to be achieved.
Brough could have continued to hold the shares, on the grounds that BWNG is substantially undervalued. But people – including Brough himself - have been saying this for years yet BWNG retains its lowly rating. He may have decided that enough is enough.
It seems plausible that, as evidence emerged that the Alliances (Lady Homa) were buying, Ashley stepped in because he feared (rightly or wrongly) that a move to take the company private was afoot and he wanted to preempt this. My guess is that such a move was not afoot and the purchases were in fact defensive. Ironically, rather than discourage Ashley, they forced his hand.
As Beechhurst has helpfully demonstrated, Schroders are not the only ones who have decided that enough is enough and there is another big seller in the market. Most likely this is one or more of the other funds, but there is perhaps an outside chance that one of the Alliance family members is also looking to scale down their holding. (Before Schroders RNS, I toyed with the idea that David Alliance was the mystery seller, but we now know that this was not the case. Had he been the seller of part of his stake, the chances of an agreed sale with Ashley would have looked promising. Since there appears to be no inclination to move in that direction, a protracted stand-off looks more likely.)
As a holder myself, I would be pleased if there is an agreed sale, at a level significantly higher than today’s market price, which would unlock value for all shareholders. As has been commented elsewhere, if Ashley does bid, a cash plus equity offer looks considerably more probable than an all-cash offer. That would of course still push the price up and give shareholders the opportunity to exit profitably (hopefully).
I am sure that CIM feel under pressure. That’s natural, given the poor share price performance. So I would expect self-advocacy and a robust defence of the business model and performance. I’d be more worried if the RNS didn’t have this. But it does. On risk management etc, there’s a lot of detail in the 2022 Annual Report which is easily accessible. No one disputes that there are risks, as in any business, but opinions differ on whether these risks are manageable and already priced in.
I totally agree, Luke. Before seeing them, I echoed your views on the other site. I bought a tranche on 23-Jan at 54.50 and am glad I did.
Helpful comments, all. But I had expected clarity today on the identity of the seller to Ashley, yet unless I am very much mistaken, this is still shrouded in mystery. I find this surprising, because the answer to this question should have a material effect on the share price, short term and long term. I am happy with today’s 14% increase in the share price, but would not add at these levels unless there was more transparency, or at least solid clues, about exactly what is going on.
Beechhurst, you must be smoking some pretty good stuff in your metaphorical pipe – good enough to convince me that you’re right to suggest that it’s implausible that Schroders are the seller. We have all the pieces of the jigsaw on the table in front of us, but they don’t fit together because we have been arranging them in the wrong way. You give some good reasons why David Alliance must be the seller and I would agree and surmise that, like a good chess player, he has sacrificed material – selling one third of his shares cheaply – in order to open up the game. Perhaps the offer price has already been settled between the main parties; or perhaps there is still much to win and lose. Either way, tomorrow looks interesting for all shareholders.
If it is indeed Schroders who are the seller (and we should know very soon), there must be some logical reason for them to do so. Barring some quid pro quo or other factors of which we are unaware, the only rationale for them to sell out at these relatively low levels is that they have calculated – rightly or wrongly - that a bid by Mike Ashley, even if it materializes, will not be successful; that Ashley would then cash in all or part of his chips; and that the share price would then consolidate at a level not very far from where it is now.
From what little I know of Ashley, he is a clever man who will want to emerge from this a winner whatever happens: Plan A, get the company on the cheap; Plan B, nice trade.
The Alliance family, if they act in concert, can block a bid. We cannot of course be sure that they would, in all circumstances, act in concert. But blood is thicker than water, so it is a reasonable assumption that they would stick together, regardless of any private differences (which undoubtedly exist).
My gut feeling is that the largest shareholder does not want, under almost any circumstances, to see the company fall into the hands of Ashley, and absolutely not on the cheap. Lord Alliance is a remarkably resourceful, intelligent and determined man, whose motto is “There is no such thing as ‘can’t be done’”. As long as he is in command of his faculties, he remains a formidable adversary. That tips the scales heavily in favour of the status quo, for the time being.
It’s probably unwise for me to opine when everything is in such a state of flux. Like everyone else I am intrigued and excited by the latest turn of events, but am trying to remain cool and analytical!
Beechhurst, I’ve much appreciated the clear-headedness you bring to the discussion: reading your posts, though, is rather like sucking a whole tube of triple strength mints in one go!
I have noted, as I am sure you will have done, that Schroders’ almost 15% shareholding, if added to the family’s 60%, would bring them to within spitting distance of the required 75%. No need, perhaps, to worry too much about the other turkeys, when the time comes.
I am with you, Brighty and others in assuming that the move to AIM was for IHT purposes and that nothing will happen unless and until there is a material change affecting the situation of the largest shareholder. But I am intrigued by the confluence of recent events: (1) the unexplained resignation of the CFO in November after barely 2 years in the job; (2) the early settlement of the Allianz case for a surprisingly large sum, suggesting “deck-clearing”; and (3) share purchases, almost certainly defensive as you suggest, by the largest shareholder’s ex-wife, with Schroders’ cooperation. All in the space of 9 weeks. Although it would be unseemly to speculate over matters about which we know nothing, I sense that more news may be expected in the coming months. Given that the recovery of BWNG and its share price is still at a very early stage, I’m afraid that taking the company private soon would not fully reward shareholders for the patience and endurance they have shown up to now. All the more reason, therefore, to hope that the status quo continues for as long as possible.