RE: DBX Profit Margin Vs Debt3 Nov 2020 14:27
Rox,
The new bonds are almost @1billion at 10.5% interest per annum.
That's around £100Million per annum interest payments.
These new bonds are to replace the old debt (old bonds, goverment covid loan etc. Interesting that was only 2.5%, but they can't pay it back unless they take on these new bonds to access cash, at 10.5%!!!), which mostly matured in 2022/23.
AML know they cannot pay this debt off as they are still making a loss.
So they need enough cash to last them a good couple of years while they turn the business around.
They had no choice, you don't pay those debts, you're bankrupt.
So £500M in cash means they can pay the interest every year for 5 years tops, but there will be other expenses too, so it won't last that long. I'd say around 3 years.
Remember they still have to buy parts from MB, they aint free just because we gave them 20% of the company
AML have to start making a profit and chipping away at that debt, but that's 3 years away imho too. 2020 is reset year get all the bad news out the way, cash raises etc. 2021 is stabilising the company, improving efficiency, designing new cars, diminishing losses, improving credit rating, improving brand image etc.
2022 is releasing new products, and hopefully turning a profit by 2023.
I'd say 50p valuation is fair right now, we've been heavily diluted 2/3 times in the last 6 months, so holding 50p is actually 'gaining', as that's equivalent to the old old 38p, or the old 46p.
Stroll is pumping more of his own cash in each time he dilutes, which is good because if he didn't, I would sell up and leave. He is shrewd.
So this is a long term play, talk of 80p soon if it happens will be short-lived, just like 62p last week. I reckon most folk here are traders and sell the spikes, then folk wonder why it drops.
I wouldn't worry too much about profit margin for the DBX, worry about making a profit overall, and what that net profit is.
EBITDA confuses too, stick to net profit, then compare to net debt.
Ferrari make circa 7-900 mill per annum and have 2B debt, totally manageable, only take 2 years to pay off the dent in theory. AML are nowhere close.
Our new bonds are junk status because the private lenders want a high rate for the risk of lending a loss-making company, you would too.
So basically, they have bought themselves time, around 3 years, to do what they need to do.
Sign In
Follow the stocks
