The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Just think of it that your getting a free house, the settlement date is a year away, the rental income generated (if any) while in transit is still with the current owner. The current owner can take it all or share some with you but it's his choosing.
That's how I see it anyway
The way I see it is that rasp is still happening but delayed. So if rasp generated a profit this year while the demerger is delayed, and rasp paid out to evr then us current shareholders will reap the rewards. This is because the demerger has not happened yet.
Eventually when rasp does get demerged the people brought pre-x will get the capital gain benefit.
The silence from the fca is outrageous. I can only hope the payment goes through. This is the type of reason why I feel evr will struggle for rest of the year as the western nations are gung ho on punishing anything Russia and RA for political gains.
It's a very simple solution for the UK govt. Continue to Sanction RA but continue to let EVR to trade unless proven otherwise.
They have also already taken russian off as most favoured country and banned steel imports, they have achieved their objective already. I do however hope it'll reopen after Q1 results as if it's open now sp can get quiet messy.
I certainly hope that your right when in Q1 they will report 750m npat. Q2-4 we assume we won't be loss making but in reality we can in this current climate. We could have the cheapest product and no one will buy it, hence china is going to be critical as a trading partner.
Alot of opportunities missed as our investment is stuck here, I do hope several months from now this is justified.
That's true blacksteel. Either way I think the current evr holders will reap the benefits if rasp were to do well and things delayed as I believe the demerger also means transfer of debt at some sort of ratio (probably needs to be recalculated one demerger is back on).
So perhaps if we get no dividend from rasp then part of the demerger rasp will get more debt when it's being recalculated. Zero sum game. By all means our assumption is that rasp is profitable, so the risk / reward goes both ways.
I think rasp demerger is only delayed. Still a positive because any profits generated now (which we desperately need) will go to all the current shareholders. However at some point when it does get split the original holders that brought before the split will be benefitting from the split.
So it's a delayed for now anyways and current evr holders will reap 100% of the profits (or loss).
Given evr owns 90% of rasp I would be up for it if they buy up the other 10%. Could be a bargain price.
At this moment it might be more advantageous to export as much of their coal to China as possible (even at a discount). They pay in USD and we will reap the benefit by paying the workers in rouble. One of only a few positive that we can bank on during this turbulent times. Evr / rasp is Russia largest coking coal producer I think.
Our steel vol is likely going to be much lower than last year, and domestically there could be an oversupply of Russian steel as others cannot export as well without losing margin / sanctions / reputation, we will probably incur higher corporate cost (like legal) and potentially interest rate payments / FX.
That's the benefit of having a full value chain, while steel might struggle this year it'll be offset by coal. We should forgot that evr is going to be making £b, if it does it wouldn't be at this price, if they can make say 750m npat this year that would be a fantastic result.
Likewise, I suspect good Jan / Feb to make Q1 robust. And if for rest of the year we can breakeven then it's pretty good already if there was no peace agreement. I assume coal and evr na will do ok but offset by the rest.
Will Q1 reporting coming for all the suspensed russian companies it would be interesting to see the damage this has done and the outlook they are providing.
It's quiet fortunate evr has no immediate debt repayment and have a large cash pile, at times like this cash is king as they say. If they can come out profitable / breakeven at this terrible times then it's a good sign they can sufficiently hold out until a ceasefire occurs.
Crimea, Georgia was both lasted .5-1.5 month, fingers cross that the peace talks are real.
Alot has happened in less than a month. I do hope it ends as quickly as it comes.
Evr employs almost 80k workers, it would be devastating if their livelihood is also uprooted.
Can't see evr going to £0 because of what happend in the last 4 weeks. We just need time. Gla!
I could be wrong but since EVR itself is NOT sanctioned there is no stopping them paying dividends or divest assets.
If they can sell off their evr NA they would practically be debt free so I think evr still has value but might be a long hold thats all.
To be clear from my end, Evr is not sanctioned but their russian operations will have direct impact due to countries sanctioning Russia.
I believe evr is still operationally positive as long as china is friendly and EV NA should be ok for now.
Share price has dropped 90% already, it won't goto £0 but it won't be back to £7 either. I believe the company still worth something so well be ok. Happy to be taken out private.
Since we probably going to be in a halt for awhile I think it doesn't harm to layout the pros and cons at this moment. Imo I think q1 we should see some good numbers because of Jan / Feb month but as long as the world is sanctioning Russia I really can't see the steel side to generate much profit if at all until it's lifted (e.g. I'm seeing Korea, Japan, Taiwan etc.. as customer base and no doubt Russia/china can ask for discounts now that Russian steel is being restricted). But the rasp coal side and ev NA might be ok as long as the sanction isn't long enough to cause irreversible brand damage. I do wish EVR to sell out Evr NA as I think we can fetch a nice price and further preserve our cash position.
The bottom line is that we shouldn't be using historical measurements and revalued things as it is and then revalued again if the situation changes. At this moment I do think we will be anywhere near fy21 result, but that's more than reflected in the share price. I don't need evr to generate 3.1b of npat, even if it does 1/4 of that it's still 750m and gives a PE of 2 on a very bad year.
We cant sell anyways but Q1 reporting is going to be interesting.
What are the chances NYSE will accept us if LSE doesn't, also RA will never vote for a NYSE listing. I think if RA continues to be sanctioned for a very long time it wouldn't surprise me he'll vote for voluntary delisting and then either relist in moex or take evr private and buying us out (which I would be happy to accept).
Imo the health of the business is the upmost important thing right now and trade with China is going to be critical. I would be quiet happy they just breakeven until the dust settles. Fortunately evr do have enough cash to regroup and strategied, I for one would avocate them buying back their corporate debt in the market.
Signed up to the petition today as well.
28th April is the Q1 qtr update, fingers cross peace talks will be finalised well before then and operations not hugely impacted (or at least future operations can go back to normality). For now I think it doesnt hurt to have evr in a trading halt. Gla
-Q1 coal sale would be quiet strong due to the cold winter this year (Russia supplies 15% of the world's coal). I suspect china would be a very strong buyer in Q1 and also in the future (cold winter, Aust coal ban etc ..) so having rasp back into the p&l is helpful.
-iron ore back is 150 USD / ton today, judging from results of Rio / bhp and continue supply issues with vale again I think china can and will soak up alot of the vols
-steel, probably going to take a hit tbh in Q2-4 due to bad press, but I still think it has a role to play in rebulding Ukraine as evr as is FTSE listed and NOT sanctioned.
I hope RA will do his part in helping evr like he did for Chelsea.
End of the day it comes down to Putin giving up his ambition to invade and hope he doesn't nationalised the asset. Very bad man, no soup for him!
I would like to know too as part of me is prepare to brace for a long wait. Shorters will still get burnt anyways as they will probably need to up their margin if evr does pay any dividends. Ra portion can be escrow.
Not entirely out if the woods yet as Putin is cray but it's the first admission since the war that he mentioned sanctions and its impact on the Russian people. Sufficient compromise there for him to down ramp so please stock the bombing.
The article for me is to see what the expert think IF evr were to get delisted and the type of options that was available to us shareholders.
Not certain but would be good to know if a suspended FTSE listed company still be able to pay dividends and sell parts of their business (e.g north America)? Again just curious as perhaps if evr is profitable they can still pay us dividends (less Ra share) while we wait it out.