The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Potentially good news coming as market seem to be spiking, FTSE 100 and poly all together.
Potentially see something today as it appears just a matter of wording before agreement for specific issues.
Either way evr is suspended so not ramping or deramping ...
Well balance article !
https://www.investorschronicle.co.uk/news/2022/03/16/future-is-cloudy-for-evraz-shareholders/
I don't mind it's in a halt right now as evr is not sanctioned anyways and to be honest the uncertainty right now probably have negative impact on the sp, but when this war is all over then definitely would like evr to throw in the kitchen sink to get the halt lifted or force RA to sell his shares.
@ fossilfool:
https://ar2021.evraz.com/download/full-reports/ar_en_annual-report_pages_evraz_2021.pdf
Check out page 182 for their balance sheet position. Looks pretty healthy to me.
@Porsche:
https://www.reuters.com/article/us-kaz-minerals-m-a-nova-resources-idUSKBN2BI0UM
Correct me if im wrong but didn't KAZ got brought out by the major shareholders (russians) for a huge sum? Happy to get brought out and EVR delisted for a reasonable amount.
Could be wrong but I think:
1. Their net debt is only 2.6b with only 100m due in 2022. Source: annual report so doesn't inc. their Jan-mar cash generation if any.
2. RASP demerger suspended, I think we will get share of any profits until they are officially split
3. Rasp is the largest coking coal producer in Russia, only 3% of sale goes to Europe so I expect they are profitable given the high coking coal price
4. Share buyback is not possible as it'll increase RA share holding % if we retire more shares hence big dividend payouts
5. Can't remember but I recall someone mentioned evr debt bond was sitting at a 60% discount which is a bargain if evr can buy a meaningful amount
6. Steel sale to EU is only 7%, UKraine is not part of the EU so might be some positive for the future.
7. Evr north America is trading as per normal (no sanctions or restrictions)
8. Even sanctioned companies such as gazprom, lukaoil, roftnet is still able to sell oil and gas so when it opens in moex it'll certainly have £. BP might sell 20% but it won't be for £0.
9. Rouble has recovered 35% since Monday against the USD
10. Both Ukraine and Russia is hinting a peace deal is coming.
Wouldn't worry about evr short term debt, they only have 100m debt to be repaid in 2022 and 1.4b of cash as at 31 Dec 2021. If anything evr should use the money to buy back their debt bonds back in the market as its current trading at a steep discount.
I would say the optics is bad with the banning but if evr is still listed and not sanctioned then we will be more than ok based on the current share price.
Most volumes are sold domestically, china and non-european markets. As raw material (not labour) is their main cost base it would mean it'll be offsetted as we don't need these raw materials anymore. Also this is a EU banned, I would imagine when Ukraine needs to be rebuilt evr can extend a hand (as we have the geographical, cost and infrastructure benefits) at no margin to offset any volume loss from EU. I'm quiet happy for evr to not make any profit if the steel products goes to Ukraine.
A very bright indication that things are getting better is that the rouble has rebounded today and is only 35% off pre-war Vs USD, if ceasefire happens moex probably would reflect that imo when it opens.
Thanks for that but really want to clarify that FCA requested the trading halt NOT sanction per your comment below. A very important point.
'FCA have requested the sanctions not LSE and are therefore bound to abide imposing such sanctions.'
Totally agree that it's not the worse thing evr is in a trading halt right now. So much news flowing through (and mostly bad right now I admit) that it's a perfect stock for traders.
With UK sanctioning another 370 people it's looking more positive to me that they are targeting more the individual and selected products than companies (esp. a FTSE listed one).
As evr is halted, it might be better for it to quietly operate and generate income to pass the storm. Fingers cross for a ceasefire this week !
It's almost like death by association with RA.
End of the day, still no evidence evr supplied steel to make tanks or RA is controlling the company.
Innocence until proven, evr not sanctioned and it's business as usual except for the EU steel banned part which is a small portion of the P&L which is more than offset by sp dropping from £7 to £0.8!
Worse case it can be relisted in the Moscow stock exchange at the minimum. If anyone thinks that the moex will never open again is out of their minds.
Evr already went from £7 to £.8 so their asset is materially under value and a big portion of their revenues is outside Russia, and the Russian produced steel is mainly used domestically or to China. Once evr can proof profitable I can see investors piling in again regardless what exchange it's in. Does anyone really think companies like gazprom, roftnet, sberbank etc... Is all going to goto £0...
I think we will make progress in ceasefire this week and some sanctions will be starting to get lifted in April.
In this extreme case then it would be delisting and then say relist in another exchange. We still hold the same shares and if assume evr is still profitable we will still entitle to the profit it makes. The north American business is worth at least twice the current SP, so even if it's a fire sale it'll be higher than the current price.
Ra can potentially cut a deal to reduce, sell or donate his holdings inorder for evr to survive.
It's only been day 3 of halt, so maybe we are all overthinking it and just need time. Remember when oil was negative ..
I would perfectly accept putting evr on X months halt if FCA says so in a RNs, but things feels so fluid right now and theories galore.
Good analysis blacksteel, I think it all comes down to the impact on the war and their supply chain/customers, FX issues and any disruptions. Biggest concern is how long the war goes on for me. I'm trying to search myself how companies like gazprom are doing but not a lot of info out there. The below estimates looks juicy i would be happy that we make half that and PE is still less than 1.
It would be good to get an operational update from Evraz this week, otherwise wait until Q1 reporting.
£70m isn't exactly a big amount of shares, furthermore we probably be still in a halt for awhile so IF war is over and business back to normal then when it does goes back to the market things would've changed and potentially institutional investor comes back in.
Alot of IFs and Maybes, but if they are fundamentally profitable post-war and able to pay a healthy dividend then the financial will do the talking. I hope they can divest the north American business as it seems quite valuable and will protect jobs and shareholders interest.
Looking forward to the Q1 update in April!
I would worried too much on Putin nationalising assets, if that happens the west will just do a like for like retaliation. Apparently more than half of russia's elite wealth is stored overseas.
AB's wealth can easily subsidised EVR's non-russian shareholders 50 times over.
Would be interested to know at least we get a reply back from FCA on a timeframe, but everyday that its unclear means EVR is NOT sanctioned and can trade as per normal (besides EU steel ban). If we have to wait months then we hope to get rewarded by the dividends yet to be paid.
To be fair I don't think anyone here gives a toss if Ra is sanctioned as long as evr survives. There are many avenues that Ra can do to save evr (IF it's even needs saving). Below sums up quite well on another oligarchs sanctioned but the company survived:
https://www.standard.co.uk/business/roman-abramovich-evraz-board-resigns-sanctions-sir-michael-peat-en-b987498.html
The UK government yesterday also hit Abramovich’s former business partner Oleg Deripaska with sanctions, casting a pall over his aluminium and energy company En+.
Last night the company argued the decision had “no impact on the Group or its subsidiaries, and they remain free from sanctions worldwide.” That is despite the fact Deripaska owns almost 45% of the company.
En+ struck a deal with the US in 2019 to cut his voting rights to 35% and avoid sanctions after the Trump administration placed restrictions on Deripaska. The company argues the arrangement applies to British sanctions too.
EVR production facility is right next to Ukraine, it's probably the most efficient and cost effective way to help Ukraine rebuild, further more I would expect RA to probably use his philanthropy to help Ukraine.
UK is more interested in locking RAs assets which they have successfully done but the majority of non-oligarch interest are non-russian owned and I would imagine 99% of these holders does not agree with the war and for that we should be ok or at least have a chance on legal proceedings.
We probably should stop saying evr is sanctioned because it hasn't.
RA sanction doesn't mean evr will be unless proven otherwise. Further more there are many work around for evr to distance from oligarchs and I'm sure RA can help with that (i.e. selling his shares or reduce his voting rights). It doesn't appear RA needs the money and might do what he can for evr.
To keep all the sanctions that the west has imposed will cost millions of jobs and destroy the Russian economy, this will push russian into ww3 (like Germany in ww2). It wouldn't make sense to keep majority of these sanctions if ceasefire agreement is negotiatied and Russia is willing to compensate Ukraine. Market wants stability and everyone wins by withdrawing the sanctions and I'm certain withdrawal of sanctions will be part of any deal.
Evr would be one of the companies that would imo benefit and contribute the most in helping Ukraine to rebuild, there is opportunity for evr to broker a deal with the Ukraine government and put both evr and Ra in a good light (remember Ukraine specifically asked Ra in the negotiation table on their side!).
I guess we will know very soon who is right. So glad we are in a trading halt so nothing we say will matter.
On the contrary I disagree it's a trick by Russia purely on the amount of economical backlash and loss of life it has been for them. If they had the winning hand maybe but unless they want to become the next North Korea it makes sense to do a deal and give Putin a chance to ramp down on an unwinnable situation.
Straight from Russia's state media channel (the one that russians read, so i assume its a state approved message):
https://ria.ru/20220313/progress-1777935859.html
Google translate:
****sky announced significant progress in the negotiations between Russia and Ukraine
Deputy ****sky: there is significant progress in the positions of Russia and Ukraine in the negotiations
MOSCOW, March 13 —RIA Novosti. Compared with the beginning of the negotiation process, Moscow and Kyiv have made significant progress in achieving a result, said Leonid ****sky, a member of the Russian delegation and head of the State Duma Committee on International Affairs.
According to him, the parties have made significant progress.
“According to my personal expectations, this progress can develop in the very next few days into a unified position of both delegations, into documents for signing,” the politician told RT.
As ****sky pointed out, the agreements between the parties will help reduce tensions and "save many people."