The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Analysts at RBC Capital Markets have estimated the car financing problems, which have echoes of the payment protection insurance scandal, could cost Lloyds £2.5bn, more than any of its rivals
So the Lloyds liability may be more than 5x their estimate of £450 million and obviously CBG do not have any clue at present what their final liability will be
If it is anywhere near the worst estimates of £1 billion then it could easily lead to receivership and liquidation for CBG
Giving an estimate is not really going to change anything for CBG as nobody really has any clue at present what the final liability is going to be
For CBG the figure is somewhere between zero and £1 billion, and so what good will it do for them to give a best estimate when the higher figure could mean a highly dilutive rights issue for CBG at best, and receivership and liquidation at worst ?
100p will be the new floor for the share price here before the inevitable takeover bid at about £2.50 comes from either Playtech or Draftkings
And even without a bid there will be a gradual increase to £2.50 as the eps increases over the next 2 years
Market screener has a consensus forecast eps of 25p and this gives a share price of £2.50 assuming a market average PE of 10
When the dividend returns it will certainly be nothing like the previous levels near 70p which was not even covered by earnings
A dividend of 30p is probably the maximum
It is probably better for investors to just completely avoid oil companies that rely on the UK for their profits
The UK Government is only going to steal everything away from their shareholders
This is about the only thing that UK Gov does well
Stealing money away from ordinary UK taxpayers to give to their scam green projects and their scam net zero projects and their millions of migrants who get everything for free
Much better for investors to buy the big Norway oil companies such as Equinor, Aker BP, and Var Energy
Stevo12
Did you take a look at Var Energy?
The valuation seems very cheap according to this article
https://moderninvesting.substack.com/p/var-energi-norways-dividend-monster
CABP largely depends on corrupt countries in Africa for business
This is probably not a very secure future for any company
The shares may retest the recent lows below 50p
https://www.investmentweek.co.uk/news/4142629/investors-accuse-cab-payments-limited-risk-disclosure-ipo-prospectus
The PE is not 4 it is nearer 10
There are many financial companies on far lower PE such as Lloyds, Barclays, Natwest, etc etc
CABP operates in corrupt countries in Africa and they will also soon lose their early mover profitability as other companies move in to these countries
Dividends are also very unlikely for a very long time and maybe never
CABP shares seem to be very overvalued now when compared to the big banks on a PE of 4 and dividends of over 6%
Sell or Avoid
The Seeking Alpha article shows the many huge risks of investing in CABP
1. There is a huge number of shares waiting to be sold by Helios which will continue to push the price down
2. The lock up period has now ended and this will create even more selling pressure
3. The huge risks due to their operating in corrupt countries in Africa
4. The huge risks from parallel markets in Africa
5. Competition for CABP has not even started yet. They are currently enjoyed early mover profits but that will end very soon when the competitors start to move in. The Seeking Alpha article uncovered over 50 competitors such as Western Union that will take away CABP future revenue and earnings.
And that is only a very few of the many risks that were mentioned in the article
And there are many excellent banks and other companies on lower valuations than CABP
The main UK banks are all trading on lower valuations than CABP for example and they are also paying high dividends
So not much reason to take all of these risks with CABP when you can get a lower valuation with Lloyds or Barclays and far less risk
Would not be very surprised to see CABP retest the lows at below 50p
The Seeking Alpha article is at least willing to list the many huge risks of investing in CABP
1. There is a huge number of shares waiting to be sold by Helios which will continue to push the price down
2. The lock up period has now ended and this will create even more selling pressure
3. The huge risks due to their operating in corrupt countries in Africa
4. The huge risks from parallel markets in Africa
5. Competition for CABP has not even started yet. They are currently enjoyed early mover profits but that will end very soon when the competitors start to move in. The Seeking Alpha article uncovered over 50 competitors such as Western Union that will take away CABP future revenue and earnings.
And that is only a very few of the many risks that were mentioned in the article
And there are many excellent banks and other companies on lower valuations than CABP
The main UK banks are all trading on lower valuations than CABP for example and they are also paying high dividends
So not much reason to take all of these risks with CABP when you can get a lower valuation with Lloyds or Barclays and far less risk
Would not be very surprised to see these retest the lows at below 50p
Avoid
Alas Smith
That is fine but it was your reference to GRAPHENE that I did not understand
Graphene is a material that is made up of carbon
Is there some connection between Graphcore and the material graphene or was it just a typing error?
Steph
What is your target price here and why do you think the shares are so weak?
And can the management not do buybacks here to get the price moving up?
I think you said that you had remortgaged your house to buy more here so it sounded a bit worrying
Alas Smith
You said :
“There has been comment on Graphcore and if it has anything to do with graphene, then it is correct to write it off as a distraction and without any meaningful revenue”
What do you mean by this statement exactly? It is not very clear
What is the connection between Graphcore and graphene?
And why is any connection between the two of these things negative?
And why would any connection between Graphcore and graphene mean that Graphcore as a company is worthless?
The statement is not very clear and does not really make any sense
Does anyone know the reason for the 8% share price fall today?
The NAV is £7.35 and even that is at a 35% discount according to the last annual report
So the actual NAV is about £11.30 and the share is at £2.38
So the discount is now almost 80% !
What is actually going on here? These shares were over £11 not so long ago
And can the management not do anything to increase the share price such as very large buybacks?
Does anyone know how the expected switch-off of terrestrial TV and Radio is going to affect Arqiva ?
Presumably all of their TV transmitters and infrastructure will not be needed after the switch-off ?
So will the switch-off not be a huge negative for Arqiva future revenue and profits and business model ?
Is there going to be any need for these TV transmitters and infrastructure in the future ?
https://www.telegraph.co.uk/business/2022/12/07/bbc-must-ready-end-terrestrial-tv-broadcasts-decade-says-tim/
No comparison with Equals
Equals is a very reputable company dealing in very regulated countries
CABP gets most of its income from dodgy countries in Africa with almost no regulations and huge levels of fraud and corruption
The market and Institutional Investors therefore demand a huge risk premium
CABP is actually very overvalued when compared to real banks such as Lloyds and Barclays on a PE of 4 and a high dividend
Would not be surprised to see CABP drift back down again to about 50p
Avoid