Member Info for Cpt.Hornblower

I strongly disagree.
Net sales revenue are forecast to be decline marginally for the next 3 years, so negative revenue growth.
EBITDA forecast to grow very marginally from 7.4b to 7.9b over 3 years
But net debt is forecast to grow from 17.8b to 19.7b.

So we have negative revenue growth, EBITDA growing 500m but net debt growing 2b.

Importantly the decline in RoE over the period, shows the 'value' of the business declining for each unit of share holder funds (or Book Value).

And then we still have the pension deficit on top of this.

This is why the market is not convinced, and this is why the share price is declining.

I strongly disagree.
Net sales revenue are forecast to be decline marginally for the next 3 years, so negative revenue growth.
EBITDA forecast to grow very marginally from 7.4b to 7.9b over 3 years
But net debt is forecast to grow from 17.8b to 19.7b.

So we have negative revenue growth, EBITDA growing 500m but net debt growing 2b.

Importantly the decline in RoE over the period, shows the 'value' of the business declining for each unit of share holder funds (or Book Value).

And then we still have the pension deficit on top of this.

This is why the market is not convinced, and this is why the share price is declining.

I Have been recently topping up on BATS adding another 500 units to the portfolio at 25.3, bring the total portfolio to 3,500 BATS shares.

As a long term smoker, I think my views as a customer hold weight. Quitting smoking is incredibly difficult. I smoke both traditional cigarettes' and use BATS's Vuse product. I live in Australia and the price of cigarettes are just crazy, nearly 15pounds for a no-name packet of 20. Yet I still smoke. As I am getting on, I am now trying to use Vuse during the day, and limiting my cigarettes to in the morning and before sleep.

So that's me.

Now to the BATS valuation:
I strongly suggest people use various free sites such as market screener to get a feel for future earnings and then relate them back to the current share price.

A quick view of BATS furture earnings:
BATS Enterprise value is expected to decline from 101b to 93b by 2023. This is good and is mainly a function of debt repayment.

Book value is anticipated to increase from 27.4 per share to 30.6 by 2023. Importantly during this time RoE is expected to remain roughly constant at 12% (but not through distortion of RoE through higher debt, remember debt is declining).

So once we have book value increasing, and RoE constant, we can be comfortable that there will be more profit available to pay more dividends.

Current dividends are 215.6p as declared by the board in Feb2021. But unlike some countries, the board pays the current years dividends from the previous years profit (ie this 215.6 dividend is paid from 2020 profits, even though its paid out over the course of 2021).

At 215.6 and a share price of around 26 pounds, this a historical dividend of 8.3%.

But the good news is that Feb22 is only a few months away now, that mean in Feb22 the board will announce the new dividend. Given no issues in FEB21, the dividend should rise by at least 3%.

This means the dividend rising to around 222p next year. At current share prices that represents a dividend of 8.5% on current share prices.

Most importantly I believe this dividend is not just sustainable but will continue to growth.

BATS represents a key part of my porfolio at around 8% of the portfolio.

And in summary using BG, WB etc: There is not a sufficient margin of safety in BT at current share prices to justify an exposure to the stock.

Have patience, build you margin of safety by letting the share price drop.

For those that just look at the share price. I strongly suggest looking at BT Group's enterprise Value.
The enterprise value dwarfs BT Group's market capital, and shows the true risk behind BT Group.

Those that just look at share price and PE are missing the true picture. The market knows this and this is why the market has been pushing BT Groups share price back down.

I also don't believe their current proposed dividend of 7.5p will be sustainable. They need every penny retained in the company to growth their infrastructure build out.

Net debt is still forecast to rise over the next four years, free cash flow has substantially rebased lower since 2020 and free cash flow shows no significant increase out to 2024. So net debt increasing, free cash flow at 50% of 2020 levels with no increases over 4 years. Throw in the risk of the pension deficit blowing out.

Most importantly then in my opinion, look at the market forecast of Book Value: its anticipated to slowly increase, but then look at Return on Equity, its forecast to decline. (And the ROE is massively inflated by the debt BT Group holds). So that increase in book value is nullified by the reduction in Return on Equity.

I was buying last year when it was around 1 pound, but sold all into the share price run up. I am waiting patiently before I buy again.

People wonder why BT Group share price is declining, well there you have it. These are the big macro factors effecting BT Group.

why would anyone sell prior to div, and especially when BATS is trading at the lower end of its trading band.

lol nobody in Australia has been called a Sheila in Australia since Paul Hogan days, and especially not a guy, likely to end up in a pub fist fight.

lol nobody in Australia has been called a Sheila in Australia since Paul Hogan days, and especially not a guy, likely to end up in a pub fist fight.

lol nobody has been called a Sheila in Australia since Paul Hogan's days, and especially not a guy.

I am starting to buy BATS. The last time i posted was on BT group and my return on BT group is now nicely positive.

I much prefer BATS to imperial brands, both because of its relatively better financial health, but more importantly because of the broader array of its brands. BATS is a market leader, Imperial Brands is not.

A few quick tests for others to do (I have done them):
A) Compare PE ratio over the last 10 years historical, and 3 years future forecast. How do they stack up against the current PE at current market price.

b) Enterprise value: over the last 10 years historical, and 3 years future forecast. How do they stack up against the current enterprise value? (and notice the nice spike when they bought reynolds).

c) Look at net debt over the last 10 years historical and 3 years future forecast: How do they stack up against the current net debt (and notice the nice spike when they bought reynolds)

d) Look at EBITDA/Enterprise value for the last 10 years historical and 3 years into the future: How do they stack up against the current net debt (and notice the spike when they bought reynolds)

Now:
e) Look at price to book value over the last 10 years and for the next 3 years into the future: How do they stack up?
f) Very important: look at the RoE over the last 10 years and for the next 3 years into the future: How do they stack up relative to book value!!!! Anyone spotting the establishment of a new trend???

Now for just future: (as its the future that really counts)
g) What is the EPS forecast for the next 3 years?
h) what is the movement in debt for the next 3 years?

I am based in Australia, so my focus is the Australian market, but every so often the UK market throws out some really nice opportunities for a long term investor.

I have initiated my buying run, I will be committed to buying on further dips to dollar average downwards if necessary.
And if the market continues to push BATS shares down, I am happy to commit to a limit of 5000 BAT shares (10% of my portfolio)

Cheez what crap. The reality of your post is that the first position should not occur until the trend is your friend regardless of fundamental screening.

The biggest headache that I have is whilst fundamentals stack, the elephant in the room is by defined pension liabilities.

If not for this I would be 20% of my portfolio in bt. Because of this risk I will limited my exposure to 5% of my portfolio. But having said this I am sure the market is taking a similar risk profile point of views, so to what extent is this risk being reflected in the share price???

Not only do the fundamentals strong stack up with intrinsic value being conservatively 50% above current share price,

But now technicals are starting to move in favour of buying BT as well.

50 day moving average at 104, next the 100 day at 110.

I increased my holdings by 50% over the last few weeks

Thank you so much, big help.
I appreciate it.
I am looking at long duration call options one to two years out

nobody?
doesn't anyone on this forum trade in options? or is it just very much discouraged for retail investors in the UK?

Hi,
Can someone please assist.
How can I see option pricing on BT Group.
I live in Australia, in Australia its relatively easy to find option pricing on large cap shares. But I am having trouble finding option pricing for the UK market.

Is there a site I can visit to show me pricing?
Much appreciated.

Velvo the problem with solely using the charts of individual companies, is that individual company charts ignore the overall market overlay. FTSE had a shocker yesterday following from the US. This has to factored into any analysis of an individual stock trend. I am still holding, BT is still holding up relative to the market, ie to doesn't seem to be showing excess stock position weakness relative to the ftse.

Given my greatest fear of investing in BT Group is that perceived future fundamental valuation grounds end up being a value trap, exposure to a value trap can often be detected through persistent and continued share price weakness, as the market as a collective whole 'knows' of the value trap and hence pushes down the price accordingly.

To me BT Group is still showing the formation of a base, with potentially a triple bottom at the 100-110p range. If this is subsequently confirmed then this is very bullish.

At this stage I will be only heavily concerned if BT trades under 100p on heavy volume. If this happens I am out, otherwise I am staying put and will continue to add to positions on any price weakness. (I added again today)

BT holding up, falling less than FTSE100.

As to the other recent posts on this thread, ignore whoever is Gollom2 or who ever is back. It wastes everyones most precious asset: TIME. I am very interested in Velvo's posts. The rest of the posts prior to Velvo's latest post on this thread has been a waste of my precious time.

BT stacks up on an intrinsic value basis (with an intrinsic value much higher than current market pricing)
In addition short term trading is now confirmed as bullish with BT pushing above 120.

Trend is now your friend together with fundamental underlying support.

I will be adding to positions

Any weakness in share price is to be bought into NOT sold.

Excellent news.
One must read between the lines.
British government realised it has to help contribute to the costs if they want to force Huawei out of the system.

With Lloyds trading at 50% of its net tangible assets, Lloyds needs to shrink to grow.
Reduce lending, and return the money to shareholders. All Lloyds shareholders at current share prices are effectively bank rolling the UK public with YOUR hard earned savings.