George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Latest statement said that adjusted EBITDA will be considerably better in 2025 than now. Significantly, nothing was said about profit. Last 6 months was EBITDA was negative 16m but the actual loss was 120m. On that basis, I'm assuming that the actual figures for 2025 will involve yet another substantial loss. Furthermore, the cashflow remains negative at a time when old stock is being cleared. Will it ever be actually positive? I've lost a lot on this stock and still hold but wonder whether there are actually good reasons why the CEO has never put his hand in his pocket to buy shares here. I increasingly think that any upside dep[ends on a bid coming before potential dilution to deal with the bond refi down the line. Maybe I'm being too gloomy but looking at the hard facts, I can't see the where the real profit is coming from. EBITDA is pretty meaningless for a company with this level of debt.
It clearly isn't dead. You might be pessimistic about its prospects and you might prove to be right - that's the risk shareholders like myself are prepared to take - but it is still fighting for its future, has a lot of customers and has attracted interest from pretty savvy retailers like Mike Ashley.
Skier - 100% agree. It was effectively a 30% hit to income and so a massive devaluation of the UK shares held by pension funds and that devaluation played a big part in the demise of final salary pension schemes as well as the damage to the UK stock market. The huge damage to pensions may well outweigh any benefit to the government from the corporation tax grab but too late now to reverse it I suspect.
If you are nervous about the car finance issue then go with your gut feelings. The problem is the temptation to look at overall levels of car financing and then assume that all or most of it will give ground for redress. I would guess that a lot of car buyers were not affected as they would have looked around for the best deals. I think the administrative costs for the banks could be very high as the claims management companies will go into overdrive to start with but personally, I would be staggered if this is anything remotely approaching PPI and doubt it will stop Lloyds returning large amounts to shareholders. In the end though, you have to go with your own feelings. Although bank shares have rallied a bit, they are still low by reference to historic norms which may give a little protection as well. I suspect the economic picture will be more important to Lloyds' prospects than the car finance.
Will be interesting to see how the market reacts to a statement which is very lacking in detail. What's not quite clear to me is how much of the free cashflow improvement is just down to clearing excess stock rather than stellar trading performance. It feels worryingly like the former but perhaps I am misreading it. Once the excess stock is gone, will they be able to generate free cashflow from their ongoing business? At least there appears to be no immediate existential threat which is positive.
Good report and important because after the last positive trading statement just a couple of months ago, I think management would have lost credibility if they had been negative this time. Still cheap in my view given the plans to grow profits and the large yield which seems pretty safe.
Of course I realise that but at a share price of 44p the downside is limited to 44p whereas the upside is many multiples of that which is similar to the economics of an option where you risk losing everything for a large upside. That's the way I look at it because I'm of the view that my shares here could be wiped out. You can't value this as a normal investment at the moment.
I don't think I would read a lot into big investors reducing. There is a clearly a risk of total loss which for big investors may be unacceptable but the shares are more like an option play now with relatively limited downside given the low share price and a huge upside if things are resolved. It's a gamble and I doubt big investors have any more idea how it will play our than we do. Hopefully we will hear something soon.
Difficult to know the underlying truth but the justice system in Ukraine has so far come out heavily against the company. Last year, the head of the supreme court was detained on corruption allegations and so it is difficult to know whether a fair hearing is even possible. Attacking the subsidiary of a listed and internationally held company for the sins of a major shareholder certainly seems contrary to the rule of any normal law. Can only hope that there's somehow a quick resolution but not adding to my holding here.
The lettuce budget clearly hasn't helped showing how risks to companies with huge balance sheets can be unpredictable but the share price was only £5.36 at the time of the budget and so a lot of the fall had already happened. The vagueness of the consumer duty and costs of compliance and the risk of fighting continually against claims companies who will surely see it as a big meal ticket is probably hanging over the stock quite a bit as well. Hopefully the update will allay some of these fears but the share price will likely plummet if there is a significant cut in the dividend along with vague costs projections. Fingers crossed that doesn't happen and management are upbeat about the year ahead. I think on balance they will be given the positivity in the last update. We seem to be in an era now where any company making profits is seen as an indication that it has unfair operating practices and therefore needs more regulation. The heavy hand of government is after any profitable business. Only the big tech US companies seem largely immune to it. unimpeded.
I think there's nervousness with a lot at stake because if this is going to turn, it needs to do so fairly quickly because the cash burn has been quite serious. That needs to be firmly under control and I hope the release shows that it is. Jam tomorrow doesn't cut it unless the cash flow is under control. If the figures are poor, there will come a point when the big shareholders dilute the rest of us down to virtually nothing in an emergency cash raise. They won't lose.
West - Much as I hope you're right, i struggle to share your faith in the board. I think the refi was a 'rushing in desperation' and if this update is not positive - I don't mean waffle about how the plan is working but real positive cashflow etc - this could be in even more trouble if that is possible for a share which is already more than 90% down from its peak. At the end of the day, the likes of Next and M&S have achieved huge profit growth in the same environment that ASOS bemoans and blames for its failures. If it does have a quality business, it needs to show it with the next update. At the moment, indications are that the market is not expecting good news and I'm slightly leaning that way myself despite hanging on to my holding.
I don't think people underestimate the seriousness. However, the value is now really quite low and so it is increasingly more like an option play. Huge risk of losing everything but, if he company gets through this, huge upside. So big risk for potentially big reward. Feels logical to me but you wouldn't want too much in it.