The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Definitely not that often you get a chance to buy this far below what the IIs paid, when it is this type of funding for an actual project through to production. I'm not expecting to get any of my buys right the bottom of wherever we end up on this current drop - if I do then it will be pot luck rather than anything else! - and I'm just happy to pay what I believe will turn out to be a cheap price long term, and one which I will ultimately be able to sell well above at some point in the future.
To be buying more at these levels - and hopefully even lower if it does continue heading that way! My view of the project and confidence in that being delivered haven't changed - if anything they have greatly increased (especially with the extra funds raised giving much more of a buffer for potential cost escalation), and I would expect that come 2023/24 the share price will be well above where it is today!
At the same time I'm not that surprised to see the share price movement here, although it has gone lower than I thought it would, as it has always been popular with traders, which has contributed to the big share price swings we've seen in the past. In future though there will be far less shares in public hands.
Reading some of the comments on this board today reminds me why I rarely bother looking at or posting on this site these days! By all means disagree - that is after all exactly what makes a market - but its comical when people feel the need to resort to insulting, or even threatening, each other!
Interesting that La Mancha has come onboard as has always tended to stick to precious metals, but has been looking to expand into EV metals. If we look at their investments most tend to be long term over a period of years (Society des Mines for instance, which La Mancha held from 2012, and still does via Endeavor Mining these days, after it was sold to that company in 2015).
Steeplejack - from what I can see the cost of finance during pre-production is factored into the $135 million of working and other, listed under the 'use of funds' section.
Specifically states: " Other includes pre-production operating costs, financing fees and costs, land acquisition and interest during construction.'
MarkBell - must admit I’d gone on my own figures and hadn’t looked at the broker ones, but it could well be the case that costs have risen. I was extrapolating from when net operating income was at a similar level to the forecast, and based on the 50% of profit dividend policy. I’m disappointed by the share price movement but am happy to keep holding despite being sat on a loss of circa 10% so far!
Unfortunately net operating income isn’t profit - based on the guidance and if we were to make the assumption that costs were similar to 2020, then that would imply a pre-tax profit of somewhere in the £100-110 million range. Based on that I would expect the dividend for the full year to be in the region of 15-16.5p.
Fair comment and always possible that none of the listed bidders will get it and it will go to one of the existing partners (Maurel and Prom quite possibly)
Surely Block 3/05 is the more interesting one, given that it has already been producing around 23,000bopd? Although there is more competition for that one.
Hopefully have seen the bottom and in my view is too cheap. Dividend for this year will hopefully be around the 16-17p level (based on a policy of a 50% payout of post-tax profit and my expectations of that profit being around £100 million, given the revised revenue guidance range). So that gives a yield of in the 6-7% range and a sub 10 PE ratio (if EPS is around low 30s), at the current share price.
The stated dividend policy of the company is to pay out 50% of post tax profit as a dividend. I’d expect somewhere around 16-17p this year - although some guesswork involved as it’s hard to know if costs will be similar to past years, but if so, then the revised revenue guidance range should yield a post tax profit of around £100 million I would suspect.
Not too disappointed if they do accept the offer from the GOI as that was always the outcome that I expected once the law was changed in India.
JEF_NIC, I tend to agree and especially as seizing and selling assets won't be as straightforward as some seem to think. You also have to consider the politics involved - especially as India is growing as an economy and many countries (including the UK) want trade deals etc with it. I think what we can all agree on though is that at some point Cairn is going to receive a substantial amount of money, in the context of current market cap and allowing for the value of its existing assets! I'm happy to keep it as my largest holding, even after the recent rise!
You need to weigh up a number of factors - including the risk of not being paid at all under the arbitration award, or not receiving the full amount; any costs that will be incurred as a result of having to try and seize assets to recoup that award; and of course, the opportunity cost of maybe spending years getting that money, as opposed to a quick payout for a lower amount that could then be utilised within the business to purchase producing assets. I personally wouldn't be too upset to see them take a deal now (ideally one which doesn't involve having to pay UK tax on that amount!), if the alternative is that we may still be sat here in five years time waiting for the arbitration payout and occasionally seizing small assets owned by the Indian government (obviously the Air India case would be big news but I wouldn't bet the house on that being a favourable outcome as it is a complicated case). In terms of a payout under the new bill, if the amount offered was the original tax demand which caused the sale of Cairn India and the seizure of dividends, as opposed to the amount actually recovered by the Indian government from that, then that would go some way towards keeping everyone happy I think (that was for Rs10,247 crore - roughly £1 billion).
Will certainly be interesting with the taxation side of things - especially as some of the tax bill that India levied was settled via the confiscation of dividends due from its stake in Cairn India. From what I can see, the maximum that the new legislation allows for is repayment of the money that was wrongly taken by the Indian govt, with that claim being for around £1 billion, but Cairn never settled the full amount of that - although given the way it’s stake was sold off could maybe argue that true market value wasn’t achieved and that the full amount of the tax claim is due? Also have to consider how courts may view the situation in terms of potential Indian overseas asset confiscation, if legislation has been put in place to repay the tax that was taken, or if they’d stick with The Hague arbitration judgement. It certainly makes things more complex. Basically seems as though they have two choices - either go for the full arbitration amount including damages, interest etc, or take whatever deal is on the table from India. Either way, the amount of money coming in should be substantial in the context of the current market cap.
The full tax demand equated to almost £1 billion anyway, although not all of that was paid by Cairn at the time. Even if they do accept what the Indian government are offering under this revised bill, it will still be a significant amount of money, and they will have to consider whether this is a case where the old adage of 'a bird in the hand...' is relevant. Currently Cairn is my largest holding - most of which was bought between 126-130p.
Under the terms of the new bill, no damages, interest or costs will be paid - only the amount that was previously seized under the 2012 bill - and companies will have to agree not to take any legal action against India in future. Even if Cairn were to get that money back though that was originally seized, and get a quick resolution, I would view that as a positive and it would add value to the current market cap (especially given what Cairn could potentially do with that money in terms of buying an asset - although I'd expect some to be returned to holders via a special dividend as well).
It's worth a lot more than that with an international arbitration ruling behind it - even if they end up doing a deal with India to write off the damages and interest. The good thing is they aren't the only company going after Indian assets overseas and it will make things very difficult for India if they have to look over their shoulder all the time - especially if the Air India case goes against them and it is deemed that it is part of the government, meaning planes could be seized wherever they land (it could still be deemed that is a separate entity run independently of the government, even though it is the national airline). It all depends on whether India want the hassle or not, as to how far they fight it and how much they are prepared to back down.
These timelines are largely irrelevant - probably only given as they have to give the market some idea of when they expect things to happen - as long as it ultimately gets financed, I personally don’t care too much when that happens (within reason!)