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As I have mentioned on various other boards when a bid situation arises, stock exchange rule 8.3 is implemented which means that any organisation holding more than 1% of a target company's stock is required to declare it and any subsequent changes. As a PI it is useful because it means the big boys are playing poker with their cards face up. For anyone who wants to try to understand what is going on this page
https://www.londonstockexchange.com/stock/AAL/anglo-american-plc/analysis
is invaluable.BUT, be aware that ALL is not always as it seems, major investors use swaps,CFD's options,any ruse they can think of to conceal their plans and motivations.
For sad geeks like me, it is great fun and I'll probably bore you with my interpretations(whether accurate or not?) over the next few weeks, feel free to ignore .....
All here will be aware the SP is now ABOVE the estimated value of the BHP bid, and the frantic action yesterday with high volumes and literally millions of share trades going through the LSE " late reported" and the negative noises from the SA Gov. makes it clear that BHP will have to improve the deal substantially to get it through.
They can do that in a variety of ways, e.g. put some cash into the deal (a last resort IMV), persuade AAL to set in train the float of the Amplats and iron ore elements BEFORE the takeover, add a larger element of its own stock....the variations are numerous.
I don't give advice, but I am waiting to see where this goes: the absolute worst case in the short term is that the deal collapses BUT, that will leave AAL with a much higher perceived value than before, it will prompt AAL to "tidy up" its structure, probably by the divestment mentioned above (and De beers?) and make it primarily a copper and fertiliser play (both of which have good growth prospects). I'd be happy to hold long-term on that basis and would expect to see a steady SP recovery. Meanwhile, I expect lots of conflicting news, comment and further announcements from both companies....
To make it clear, the BHP offer implies that AAL shareholders will get one share in "Anglo platinum" , a new company holding AAL's platinum interests, notional value 486 p at the MO. One share in Kumba iron ore, notional value 340p , and 0.7097 of a share in BHP ,FOR EACH AAL share they hold.
At current values (all of which will vary over time) that is worth £25.08 for EACH AAL share , which is why the SP has risen to just below that price.
As usual what follows next may be a better deal from BHP, a competing offer from another source(though only a very few are large enough)or the rejection of the offer by the AAL board.
I'm not sure I want three miners in my folio (or four as I already hold GLEN ) so I will probably sell my AAL before the deal completes , hoping to time my exit better than I did With SMDS!!
Update see this
" as part of the terms of the offer ANGLO said the proposal would be preceded by separate demergers of its entire shareholdings in its platinum business and Kumba Iron Ore to its shareholders. The two parts of the proposal would be inter-conditional."
Slightly surprising, I would have thought the De beers diamond business would be one to jettison...
Ss is the current fashion, stronger co's are offering ALL SHARE takeover options , which means that they dilute their own stock BUT do not have to fork out cash. If the T/O proceeds you will find yourself holding shares in another miner , not a bad option IMV. The preliminary terms will no doubt "leak out" today and I would expect the SP here to bounce sharply. My usual reaction to a nice profit is to take it (see my SMDS posts recently ) but times will be interesting here for a few weeks.It's worth bearing in mind, as I said back in DEC, BHP is monster, with a MCof ~£120bn so this is a relatively easy morsel to swallow.
As reported " Since February, we have taken delivery of a further two new CFM powered A321neo aircraft from Airbus in line with our agreed delivery schedule, with both paid for from our own cash reserves."
In addition they will have paid to block book hotel accommodation for the summer season, which will be recouped from customers ..The bit of the RNS which has prompted the selloff is this "although recently, pricing has been more competitive, particularly for April and May departures."ie they are probably cutting prices...
Usual unthinking overreaction from market bots. This morning's RNS narrowed the profit forecast BUT the midpoint remains exactly the same(UP 33%) at £517.5 m. It holds cash on the books worth over a third of the company's MC. This is a company with excellent control over its input costs and in a market where demand is growing. At current figs, the PE is around 6. I may add a few at this level.
Alessandro, opinions make markets, I'll check back in a years time and we'll see how it turns out. As an aside, I do hope those who take and hold IP make a profit, that success will cost me nothing (except a bit of regret!) IMO my money will be better deployed elsewhere...
GLA
The agreed deal is for SDMS shareholders to get 0.1285 of an IP share for each SMDS share held. At present rates of exchange and with the IP SP closing at $35.38 that equates to a value for each SMDS share of £3.67. Expect the SMDS SP to hover at or very slightly below that value until the deal closes, unless, as I half expect the IP SP falls a little . I sold at 341p a while ago and have missed the opportunity to sell at recent highs , well done to those of you who did sell more recently, not a great additional return for those still holding.
As an aside it's worth noting that IP has P/E in the 40's having made only $300m last year on a net income of almost $19bn. Would I hold? I leave you to guess the answer.....
Slightly disappointing RNS this am, organic growth 4-6% everywhere except NA where integration and a stronger than anticipated £ has impacted. I am happy to hold , expecting both to change over the next 2 quarters. Recent figs suggest UK will reduce rates before US (and hence£ FX rate will fall), US housing market is likely to recover sharply and also RTO's US integration will start to bear fruit. Still comfortable with an estimate of >£5bill revenue and PTP of ~£700m. Looking for a forward P/E in the teens and an SP of ~600p before I consider selling .
Hi I made a point about the latest accounts on 22/3 identifying that the latest numbers included a loss on interest rate swaps (and some other financial wizardry), which negatively affected the numbers and IMV caused the SP fall. I have finally got around to a comparative analysis of these figs over the last few years and they make worrying reading.
NOTE all figs below are extracted from Annual reports and are summary only , things are NEVER quite as clear as they seem.
In Year 2020 JDW made a loss of £ 122m, of this £33m Loss was due to IR swaps.
In year 2021 JDW lost £133m despite a profit of £55m on swaps.
In 2022 JDW made a profit of £50m which included swap profits of £44m.
In2023 JDW's profit was £79m of which swaps contributed £23m
To repeat these sums are shown in the various AR's BUT depending on categorisation differ in various notes to the accounts. My point is simply this , JDW is a high sales, high costs business with wafer-thin margins, I have
known the variation in accounts is highly sensitive to the way in which JDW's finances are managed, but didn't fully realise the impact of it. Having sold lately I am wary of re-entering .......will be back sometime in the future if my
vie changes.
GLA
....Is in highest level of Contango ever recoded at $105 above the "spot" price. That suggests dealers (who generally know their stuff) expect the price to rise sharply .Copper is AAl's second largest earner and contributes about 0ne third of Ebitda ....
TS cruising is a rapidly growing phenomenon, estimates suggest numbers will rise from 31.5 to 35.7 mill this year , a trend which has continued (except for Covid years )for two decades.
CCL has about 50% of the market. Like all cruise companies, they are in recovery mode. Their operating losses were $10.2 bn in 2020,$9.5bn in 2021,$6.1 bn in 2022 and break even last year. I expect that trend to continue and for them to post a substantial profit this year.
The debt profile is , in fact diminishing sharply... from$10bn in 2020 to$7bn in 2021,$5.1bn in 2022and4$.7bn in 2023.
It won't be clear in this FY but it will be a significantly lower drain on operating costs than before.
It's very simple really , they have a cash-generative business , full ships and significant revenues, BUT In order to survive the "Covid " years they incurred debts, the cost of servicing those debts last year was $2.06 bn (sufficient to wipe out the OP of $1.9 bill). During 2022/3 they issued a little over $10 billion of debt. That problem is diminishing as revenues continue to flow in but it hasn't gone away . IMV it will, over the next 1/2 years and CCLwill return to being the cash cow it was pre-covid. I hold quite a few at an average of
Added at 1179 a few mins ago, whatever the short-term oscillations, this will rise , full bookings, massive debts being paid off / rolled over at lower rates, and an in-demand product. I was in Arrecife recently , almost every day an AIDA, Cunard or P&O cruise ship was in port, all full, and chatting to a few customers all lovin' it.
Hi Boyo,, Via Ocado retail MKS get to shift £2.5 bn of their goods per annum(at current volumes) that they might otherwise not sell and it captures >1mill of customers who they otherwise might not have . The profits from that activity flow through to MKS results, so my point remains . BOTH sides benefit from OCDO retail, even if it doesn't directly make profits.Clearly it will do so in the longer term and IMV may well become a different entity at some point , owned fully by MKS or reverting to a more typical OCDO relationship where they collect a fee...I still hold to my view that for OCDO its greatest value is as a large-scale working model of their solutions.....The benefit for other customers is NOT that the model per se is profitable but that it is a necessary tool in a changing world and will support their main business of selling groceries...
I've said it here before but it bears repeating, Ocado retail is a full-scale demonstrator for the real product which is OCDO tech solutions. Its primary purpose isn't to make money BUT it is now on the cusp of doing so. Todays figures are OK , not stunning, but sound , they illustrate that large volume home delivery of groceries is a business that can be profitable and as habits change will become more so. That is a concept accepted by large-scale retailers in UK, US, France, Spain, Korea......In fact in ALL developed countries.
I have been adding here at recent low levels because I know that the OCDO tech solutions business will eventually be the core of a very profitable company.
I'll finish with an anecdote. I Was talking to a wealthy US citizen while on my hols . He works for an investment company and his comment on home delivery was
" It costs me $5 dollars per delivery , I make that every minute , why am I going to spend an hour going shopping , queuing to get into the car park , pushing a trolley round and then unloading it at the checkout, bagging it and doing the same at home .... It's crazy, in the US everyone in work will eventually take home delivery , that's a hundred million households....."
That's my case for holding here...