Member Info for CaneToad

SUPR is very attractive and on my watchlist, but is a very different beast at 8% vs 14% for RGL... I agree, RGL could still be attractive at 10% and that's about where I'd be budgeting.

Now yielding ~ 7.5% with a decent portfolio of high yielders. A worthwhile addition to HFEL (now 10%).

I've spent some more time looking at this. There are many positives, but the following two serious risks:

- The LTV has risen from 42% to 50% over the full year with covenants at 60%. Presumably they need to start selling assets into a depressed market if/when they approach this figure. That's going to further reduce earnings and require a cut to the divi.

- The unsecured 4.5% bond will likely need 10+% to refinance in Aug 2024. This on its own would add another £2.75m to interest costs, but looks manageable by a 10% rebase of the divi and doesn't overly concern me.

It could still attractive if you factor in a 25% cut to the divi.

Starting to get back to an attractive level for another trade?

This is beginning to look attractive even with the four problem loans at zero and a rebasing of the divi by 20%, giving a 8% yield? Granted, it could go a lot lower. Though all assumes that the credit analysis was done properly on the remainder of the portfolio...

@Terry: If only the directors had a crystal ball 1y back to see the copper/zinc price trajectory and the direction of the world economy. It's easy to comment from the sideline. I don't see that any mistake has been made. They're in a solid position, waiting in the wings for asset prices to drop and scoop one up. Yes, they would have (potentially) had to raise less as a percent of mkt cap, but the asset would have cost more.

"Central Asian metals needs another asset!"

There's no hurry. They're debt-free and Kounrad will continue to be profitable down to very low prices; it's one of the cheapest operators on the planet. At the point at which they switch to being unprofitable, most (90%) of other operators will have already ceased and gone bust. They also now have a stronger positino with the banks, having quickly paid off their last loan. They're now in a much stronger position than they were before buying Sasa.

I have no exposure here... I always look at technicals + fundamentals before buying.

@TerryMC1 - let's stick to what we know. That's your view, which is fair enough, but it's not fact...and it's not a disaster even if it is.

('margin of safety').

That margin of safety is around the 150p for me.

Issuing more shares in order to buy a good, accretive asset at the low of a cycle is not a bad thing. Some here are confusing it with emergency raises that (most) AIM companies do for working capital. CAML is not in that position. That said, I'm not holding or buying yet - I need a bigger safety of margin.

It is also not obvious to me at all how electricity prices feed into the fair value of those bonds in such a big way, unless they are very complex hybrid instruments; in which case, this is a more complicated and much riskier investment than it seems.

"Good assessment Trot. Although, thing I can't understand is SP seems to have inverse relationship with interest rates. "

That is exactly my question. If interest income has not dropped, are we meant to believe that the huge reduction in profit (from 108m -> 25m) is due to the change in the fair value of bonds under IFRS? That is a huge drop. It's not completely obvious and needs explanation before this becomes a no-brainer.

Clearly I am not understanding the nature of the underlying assets here. For a bond fund, the only way for profit to drop by this magnitude (from 108m -> 25m) would be if the value of the bonds themselves crashed by a similar amount OR if they defaulted or otherwise stopped paying coupons. I doubt that either has happened.

Given that this is primarily a debt fund, I cannot yet get my head around the enormous dependence on electricity prices. Bonds simply do not move in this way:

"Profit for the period of £25.8 million (31 March 2022: £108.9 million) primarily reflects the impact of lower electricity prices compared to the prior period."

No other bond funds that I hold see this dependence on the underlying businesses. That is their attraction...

I have absolutely no problem if they do a raise to buy an accretive asset at the appropriate time, but I suspect they'll primarily (or wholly) use debt instead.

Ok, this is more complicated than I thought. It's not really a debt fund. Their revenue is directly linked to renewable power sales. This sounds like the worst of both worlds, without any real control over the assets but beholden to them. And if power prices drop further, so will their revenue.

I thought this was primarily a debt fund, holding loans and bonds rather than physical infrastucture assets? if so, why is the management blaming the big drop on lower electricity prices? They clearly must have a significant amount of equity in these projects as well, which means it's not a debt fund...

This is starting to look interesting with the yield approaching 8%

My concern is what it will cost to refinance the £140m of unsecured debt due in 2024. They have an investment grade credit rating and Edison assumes it will cost around 5%, but what if SONIA is at 6% or even 7% by then?

@Agricore: One point. According to Edison, the £50m retail bond needs refinancing in Aug 2024 (1y time).

They look excellent; company is solid; dividend is attractive and well covered.