Member Info for CaneToad

You always need to take PAID research with a grain of salt. Their previous article (25 May 2023) was called:

'Maintaining high dividend distribution' ... I think we're highly likely to see another dividend cut and/or issuance of new equity.

It's always entertaining to hear from Porchetta1946! Like clockwork, he arrives like a fly to something messy on the sidewalk with his little shorts.

I see no reasons why the sp will not return to >200p in the 6-12m time frame, if improving financial metrics, excessively low valuation and past price history mean anything. Let's first see if it can regain 125p and recover from the March 2022 calamity.

"The Board is pleased to report that the momentum that was starting to build at the end of FY23 has continued into the new financial year, as the Group continues to successfully execute its growth strategy."

@tickhilltim: Regarding the retail bond. I might be mistaken, but I see a Running Yield of about 4.7% on the RGL retail bond:

Buy:£96.30

REGIONAL REIT LTD (RGL1) 4.5% 2024

Is this the bond you're referring to?

It could be interesting if they manage to sell the void space, but more ilkely they'll also have to sell income-producing assets which will hit EPS further. We wait for a plan; until then, this one is now in the 'pure-gamble' basket.

Nice 10% divi rise; yield now a respectable 7.5%, paying monthly. LTV of just 23.7% and weighted average interest rate of 3.6%.

Hmm - WTF?

Somebody is making a lot of money here... I'm not sure that it's the shareholders!

All looking good to me:

"Foresight Solar continued to deliver strongly against its core operational and financial objectives, despite the challenging macroeconomic environment in the first half of the year. Electricity production across the portfolio was 2.8% above budget, driven by strong operational performance and good irradiation, and, with assets in all geographies performing well, cash generation was exceptionally strong."

"We are well on track to deliver our 7.55 pence per share dividend target for 2023. Based on the strong cash distribution from the portfolio and the certainty provided by the high levels of near-term energy price hedges, we forecast a 1.5 times dividend cover to at least 2025 on a cash covered basis."

@Notrex: I'm happy to have any of the facts that I mentioned disputed/discussed. Do you consider close to half a billion pounds of debt to be small? How will they reduce the LTV by more than 10% without selling properties? Once they sell properties, how will the EPS not decline?

Only a crazy person would short a stock like this; I don't short any stocks. I couldn't give a toss if you believe me or not...

If you only want to hear positives, then I suggest you look elsewhere. I report facts as I see them.

@Tony - give it a rest. Not everybody here idolizes you. This channel is not about you... I try to stay away in order to avoid you... There is a lot more to investing than writing a spreadsheet and insulting everybody....

(small correction - I reduced by 75%. This is now in the VERY HIGH risk category; it looks like a certainty that the divi will be further cut. That uncertainty is likely to smash the share price)

I spent some time working through the results and have downgraded my opinion of this share. I only had a micro holding here, but have reduced it by half.

The problem is the debt: £437.4m. That is a terrific amount of debt for a small company (more than half a billion USD...). For a UK/REIT, an LTV of 51.9% is dangerously high and they have made it clear that it needs to be lowered. It will require selling a sizable chunk of the portfolio, which will hit EPS further, making it likely that another savage cut will be made to the dividend in the coming 6-12m. I think another 25% cut is a bare minimum top expect.

It is also possible that interest rates will go higher, further depressing property prices. The damage could become terminal for this reit, as the portfolio will be permanently and significantly smaller. It could stil be attractive for newcomers at a lower price, but not for those anchored up higher.

For these reasons, I see further, significant share price pressure and the possibility of the sp dropping below 30p. I'll have another look after Mr Inglis takes action.

The reit model is good in theory. The problem is that most take on excessive gearing in the 'good times', so they in-essence, become risky finance companies rather than a 'safe-as-houses' type investment...

"It's not clear what the new annual dividend will be."

My assumption is currently: 4*1.2p=4.8p

I expect further/larger asset sales will be required though, so 3-4p annual divi is probably more realistic. I'll stand back for now and wait until the dust settles.

Who are the doom mungers? I suggested that the divi might be cut - which is what happened. I'd modelled 25% as a wild guess and it came in a bit higher. The problem will come if/when rates rise further and that is now on the cards, because at least one BoE official want that and inflation looks to be ticking up.

I still think this is still attractive if you're buying at these levels; less so if you're stranded at a much higher cost basis with lower yield.

I've been digging deeper as the yield rises and becomes more attractive, but this company has always seemed very opaque to me. From what I can tell, they carry on two activities:

1) Private Equity

2) Private Credit

The credit business looks like a US Business Development Company (BDC), but it won't have the same tax advantages nor the pedigree. Some of the BDCs hold equity stakes to boost their returns, so POLN is not that unusual in that respect. Most BDCs yield around 10%, so this is not that unusual, but it seems to me that there is much less info on the precise makeup of the portfolio, non-accrual status, previous default levels etc, so I'm not super excited to invest here yet.

RHMP shooting up 60% on a buyout offer should hopefully give a boost to Mr Market's assessment on the NAV here!

@Monty: "I’m a bit worried they will chop the dividend down. Can’t be paying 15% I reckon (Too good to be true)."

Cutting the divi would be catastrophic for this share. It would totally collapse. Hopefully they realise that.