The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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
Snowcap are just two very bald and very wimpy looking brothers talking their own book
They have just made up and forecast the most damaging figures about DEC that they can to try to make a profit from their short bets and then they have publicised the news all over the internet
It should be illegal
The analysis by several major brokers with a £30 Target Price for DEC and by the Oak Bloke are all just as valid research and analysis for DEC as this nonsense from the Snowdrop baldies who are just talking their own book and short bets
The dividend will not be cut and DEC will be fine
hxxps://www.afr.com/companies/energy/snowcap-behind-the-mystery-uk-firm-that-went-after-agl-20220603-p5ar0i
Snowcap are just two bald brothers talking their own book
They have just made up and forecast the most damaging figures that they can to try to make a profit from their short bets and then publicised it all over the internet
It should be illegal
The dividend will not be cut and DEC will be fine
https://www.afr.com/companies/energy/snowcap-behind-the-mystery-uk-firm-that-went-after-agl-20220603-p5ar0i
The takeover of Kindred today shows just how much 888 is currently undervalued
FDJ paid about 2x Revenue for Kindred
If 888 was to be taken over at a similar valuation to Kindred, the takeover price for 888 would need to be about £8
It would not be very surprising to see a £4 bid for 888 some time this year
Stevo12
Thanks
The Modern Investing article suggests that Var is undervalued on various levels when compared with the large oil companies such as Exxon and Shell
For example, Price / CFFO of just over 1, and Price / Reserves of just over $4
None of the very large oil companies come near to these low valuations
Where are you getting 8-10x FCF for Var ?
The author says in one of the comments that :
Var is pushing it’s tax rate down by investing a lot of money into new projects, but let’s conservatively assume that all CAPEX is needed to substation the business. Then we get to the following numbers:
~ 1.350 Billion $ CFFO after tax - ~ 650 Million $ CAPEX
= Free Cashflow of 700 Million $ per quarter * 4 = 2.8 Billion $ per year
This is at current prices a Free Cashflow yield of 42% !
So it looks like Var is able to support their 15% dividend
And you said that HBR will be similar to Aker BP
So are you expecting a HBR share price somewhere near £7.50 ?