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Another article about how chronically undervalued the Pru is. This one suggests PRU would still be modestly valued even if it hit a target price of £21, and is undervalued compared to it's UK peers. The demerger is identified as the reason, with the M&G part being a particular cause for concern. If the author is right, surely the market is being incredibly harsh - M&G are not exactly a basket case, and are actively preparing for Brexit. I would have thought there were other reasons for market anxiety: the apparently reducing long range profit forecasts, worries over the sustainability of Chinese growth and disposable income, and the likely general economic downturn due to idiots being in charge worldwide.

: https://www.ii.co.uk/analysis-commentary/prudential-catalysts-drive-significant-re-rating-ii507096?&utm_source=IBMW&utm_medium=email&utm_campaign=ii_afternoon_newsletter_051118&utm_source=IBMW&utm_medium=email&utm_campaign=ii_afternoon_newsletter_051118&utm_content=&spMailingID=4442858&spUserID=MTIxNjc2Mzg5MzQ0S0&spJobID=1150336575&spReportId=MTE1MDMzNjU3NQS2

I'm surprised so many long termers take Jeffries' enthusiasm at face value. Seems to me Edison said something very similar in their initial comments and have steadily backed further and further away from those illusions. Like all newcomers here, Jeffries see breakeven just over the horizon, but given the multiple false dawns we've seen, I'd expect their naivety to be questioned a little more. Market visibility was supposed to become clearer in the last results, but the clarity seemed only to reveal that there was zero progress in the display market despite continual positive noises about it from the company and here on these boards. The huge amount of positive posts referencing innumerable products and potential partners amounted to nothing. Given that the only market we seem to be making progress in is rather opaque and to a single unknown customer, profitability seems to have deteriorated into a very vague long term hope, rather than anything remotely quantifiable in terms of time or money, but the history of this company tends to suggest that "long term" means decades.

The main factor behind the recent drops is surely the Fed rate rises, which seems set to continue in December. This triggered sell-offs starting in the US and then around the world. It is increasingly attractive to take money out of risky shares and put them in safe savings accounts, and the logic is self-sustaining as shares tumble. If the rises represent the end of quantitative easing, then the prop which has been holding up share prices for the last decade is being kicked away.

Over the last 12 months, however, the FTSE100 is down about 7%, the Hang Seng about 10%, but Pru are down around 20%, so it's not just the rate rises, Pru has been de-rated by the market. The proposed demerger seems like the most obvious and specific reason. Beyond that, the US trade war on China, and China's own international misbehaviour seem like more important concerns for Pru than Brexit.

Fear and loathing caused by Trump's dangerous mismanagement, dishonesty and incompetence, and his disgraceful encouragement of murderers in Russia, North Korea and Saudi Arabia, and sexual predators at home. The Chinese secretive abduction of the head of Interpol, demonstrating contempt for international law. Brexit confusion, division and uncertainty. The Fed interest rate rise. Widespread gerrymandering, racism, and voter suppression in the US midterm elections.

We walk in the autumnal garden of this turbulence, so redolent of Weimar Germany, awaiting Trump's equivalent of the Reichstag Fire Decree, and the downfall of democracy in the US. On the other hand, the dividend is increasing, so it's not all bad.

Morgan Stanley still see Prudential as massively undervalued, and point out that the reduction in Sterling's relative value has exacerbated this undervaluation rather than the expected opposite effect.

Despite this, they reduced their target (from 2,481p to 2,469p) AND moved the date for hitting this target by a full calender year to FY19 - overall a significant reduction from their previous target (and a tacit acknowledgement that it was hopelessly wrong?) .

Reasons:
- Demerger "execution risk"
- Increased uncertainty about market valuations after demerger
- Slightly reduced earnings estimates over the next three years

Interestingly, they describe the "potential" demerger not as a geographical split, as it has previously been described by the company, but as a product based split between asset management and insurance. Perhaps this puzzling reinterpretation is the source of their increased uncertainty?

In other news, the FCA announced yesterday an end to their probe into fair treatment in the Life Insurance sector, which a sudden uplift in share price which has continued today. It is remarkable how the mere lifting of a potential problem rather than a material change, can have such a big effect - it demonstrates how the low share price is currently based more on perception of risk than actual performance.

It looks like my gloomy prediction of -£3M profit was in the right ball park, but too optimistic. The market was obviously not expecting such a poor revenue performance. When you consider some revenue comes from contracts in Life Sciences and Lighting, the vaunted display division must have been truly dreadful, yet again. Looks like those seeing signs of a marked increase in production based on the type and level of recruitment, have been decisively proved wrong.

Milestone payments are our only lifeline, yet even they seem to be unreliable. In May Nanoco said "The total value of milestones in this programme triggered to date is £2.6 million." Yet 3 months later, it's only £2.5 million. Are we through the looking glass, running to stand still? Will it be £2.4 million in another 3 months? Funny business.

"Since Nvidia already supply autonomous driving hardware and software to Tesla and Apple have not once in their history provided components to any third party"

Thank you. So your two itemised reasons for it not being Apple are in fact irrelevant when challenged. If you don't even know what your reasons are, it's somewhat amusing you are so vehement about your conclusion. It really doesn't matter, we're just guessing: no need to make up spurious reasons to support your guess.

Neither Apple or Nvidia are likely to launch an autonomous vehicle in January. The deal is small relative to both Apple and Nvidia. Why rule out one based on this reasoning, but come to the exact opposite conclusion for the other?

Presumably Hong Kong regulation is much lighter than in Europe. The part of the Pru coming under this regulator may well be the envy of the UK financial sector. Expect fewer rules and bigger bonuses. If all goes well, others are bound to follow, if they can.

"Is it worth it? Let me work it
I put my thing down, flip it and reverse it"

"The demerger is unlikely to happen before Prudential completes its sale of 12 billion pounds of annuities to Rothesay Life. After that process is completed, both Prudential and M&G Prudential are likely to be included in the benchmark FTSE 100 Index of the U.K.’s biggest companies."

https://www.bloomberg.com/news/articles/2018-08-08/prudential-s-asia-profits-soars-ahead-of-u-k-business-demerger

https://www.bloomberg.com/news/videos/2018-08-08/prudential-ceo-on-first-half-results-asian-growth-video

10 minute interview

Ping An means "safe and well". It's listed in Shanghai and Hong Kong, and seems to be yet another of those Chinese companies whose structure, ownership and strategy is unclear. Seems to be, at least partially, an investment vehicle for family members of a previous president who got favourable treatment when he was the "emperor": https://en.wikipedia.org/wiki/Ping_An_Insurance

A takeover is unlikely, and the markets seem unexcited: https://www.bloomberg.com/view/articles/2018-08-09/ping-an-s-prudential-tilt-hints-at-home-troubles

Interesting that analysts at Panmure Gordon value Pru's Asian assets at about £40 billion though: the current market cap is less than £47 billion for the entire company! Should be fascinating to see how the market values the two separate parts when it splits.

Market didn't think so until it saw the interim results. Undervalued below £20, imo.
Rumours may push this higher short term?

https://www.reuters.com/article/prudential-asia-ping-an-ins/chinas-ping-an-insurance-looks-to-buy-prudentials-asia-business-bloomberg-idUSL5N1UZ5PM?rpc=401&

Another solid set of results, ahead of forecasts, and an increased dividend.

https://www.prudential.co.uk/investors/results-centre

http://www.cityam.com/290454/prudential-says-making-good-progress-mg-demerger-profits

Are the overenthusiastic optimists here seriously expecting the FY results due in a few weeks to show a profit?

As the swivelled-eyed Vortex of Doom, I'm guesstimating we're still in negative territory: possibly around -£3M.
That would still be better than any of the last 5 years, but don't let that fact raise your spirits.

This might be relevant (from a month ago):
https://www.insidermedia.com/insider/yorkshire/private-equity-firm-exits-york-music-retailer

"The IMF maintained its 6.6% growth forecast for China's GDP this year, down from 6.9% last year. By 2023, the world's second-largest economy is expected to slow down to a 5.5% annual growth rate." http://www.lse.co.uk/AllNews.asp?code=o5fs45ul&headline=IMF_Asks_China_US_To_Settle_Trade_Dispute_Sees_China_Growth_Slowing Opportunities for the Pru in the East remain compelling.

'Quantum Dot' is not a scientific term'. That's a Trump-like alternative fact, easily disproven by widely available evidence. Quantum dots were discovered by scientists. It's a term invented and used by scientists. Scientific papers routinely use the term, as do patents: https://www.sciencedirect.com/topics/pharmacology-toxicology-and-pharmaceutical-science/quantum-dot https://patents.justia.com/patent/20180142146

ME recently compared agro-lighting systems using the specific terms LED lighting and QD lighting, so there is a clear distinction between the two types. QD LED lights are relatively new, but hardly completely new, nanoco are already supplying them to Sportsturf, for example. Professional scientific journalists ought to be alert to the difference, yet they seem to show remarkably little curiousity about the key technology at the heart of the story, i.e. the actual science bit!

The question related directly to G4M and the state of their business. It's a relevant and legitimate question for an investor to ask why the relationship with Edison suddenly broke down so soon after it started. Perhaps it was part of a cost-cutting exercise, for example, or perhaps there is a real problem of some kind, or maybe it signifies a waning of investor interest in G4M? The reason we should care about losing Edison coverage is that they had access to more resources and more information than us and made it available for free. Even if you disagreed with their conclusions you could glean insight from their reasoning. The useful factual financial information they used to provide is difficult and expensive to compile from other sources. They also tended to mention aspects of the business which the company itself had not disclosed, giving a wider insight. Edison have a policy of issuing short notes when there are major rns announcements, which would have added knowledge, interest, and understanding.