The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
No bounce back today..This looks like it is heading for a slow descent into single digit SP..No share buying by the directors,even at this price.
Spot on..It has set back meaningful profitably for at least 2 years..In the end they will justify a capital raise by saying store expansion needed as stores are doing well..In the end l can only see two possible compatible suitors..Next and Zara owners..Let's keep our fingers crossed for any rumours to lift SP
The one really dumb thing the directors did today was announce an expensive strategy change at same time as company moved from profit over 6 months to a loss...Had they waited until they could show an increasing profit,and then announce the new strategy,the SP would have rocketed upwards..Right now it looks like trading losses with much bigger increase in expenses coming up in 2024... Strategy is excellent,but timing sucks.
The SP is down because investors believe the strategy of high cost physical stores will set back profitability for several years..However as usual directors have got their finger on the pulse,in identifying that clothing retailers these days need to be a mix of stores and online.. Particularly for sosandar as they do not cater for youngsters..However the shares are too illiquid for any meaningful bounce back...Sosandar is a perfect fit for Next and can only hope for a takeover..The company is profitable.
People who received shares for 30p in the placing are now selling down their original holdings and keeping the placed shares..A handy profit for which private investors were excluded..Papers reporting that the £3 billion mortgage sale will complete in 2024,due to complexity of separating out Metro portfolio..The SP will probably settle just about the 30p placing price.
80p..Not for some time..dilution from the share placing is between 3/4 times..So it looks like a depressed SP for some time..Let's not forget a £3 billion mortgage sale means lower profits for Metro..Market sentiment is against Metro and that takes a long time to recover
Once sentiment is damaged there is usually a limited rerating..It takes a long time for serious investors to recover confidence in order to take the plunge..Banks are very cyclical with their profits,so a growing economy means growing profits..A flatlined or contracting economy means lower profits and flat SP... Britain, according to the IMF will have lowest growth of any major economy for next two years...Hence very low SP ratings for all British banks
Once sentiment is damaged there is usually a limited rerating..It takes a long time for serious investors to recover confidence in order to take the plunge..Banks are very cyclical with their profits,so a growing economy means growing profits..A flatlined or contracting economy means lower profits and flat SP... Britain, according to the IMF will have lowest growth of any major economy for next two years...Hence very low SP ratings for all British banks
EasyJet is down in spite of very good trading because all their flights to Palestine/Israel have been indefinitely suspended (a lucrative route) Very high fuel prices are not helping..In the end it's an excuse to take a profit and buy back later at much reduced SP..
The timetable for placing of new shares,plus the bond reconstruction and mortgage sale should be announced in early November when the third quarter update is due..This should give the SP some impetus,and until then the SP will drift slowly downwards..However any rerating of the shares wil only be into upper 50s in my opinion.
It looks like Rev will become a teenager very soon..
Heavy dilution on the way for existing shareholders..Rights issue at 30p will see 3/4 times more shares in issue than at present.. However l still think Shawbrook will come in with a full bid later in the week,so it's a hold,but not a buy...