Member Info for Guitarsolo

Terry, you are entitled to whatever political opinion you like. But the truth is you are only making that demeaning comment because she is a woman. The workplace has moved on.

Sorry Chucka, but I disagree. The company can't do much about how the market (largely driven by algorithms) reacts. What happened this week was the company explained that go-slow government spending, for whatever reason, means they are unlikely to make the consensus operating profit of £79m but will still make more than the £71m they made last year. So a maximum "miss" of £8m that is mostly just deferred work not lost. For that "miss" the market reduced the market cap by ~£160m! That is ridiculous and beyond the board's control. As for funding, RNWH has about the strongest balance sheet of any company that I can think of. Their history of financing acquisitions and repaying debt quickly is exemplary, it's extraordinary really.

I've been building these since 90p (as have you I believe), so I am not going to criticise the board for the market behaving irrationally.

Guitarsolo

The last compulsory purchase (Feb 2023), at remarkably similar metrics, was accompanied by notice of an increase in the dividend from 1.50p to 1.75p. There's no such notice this time, although that doesn't mean there won't be something said in the near future. What is nice though is that this latest return of capital is like a release of reserves now not deemed necessary to cover the loans (because the planes are worth plenty). That means that the lease income is divided by 260m shares instead of 303m, so there is room for them to increase the dividend if they wanted. If they don't, I guess it's because they would rather have the funds to allow the divi to run a bit longer once the lease income begins to fall.

Another benefit or this week's news, perhaps even better than the above, is that the $17m half-life payment for the first A380 plus the sale proceeds (assuming it is sold) are split across fewer shares (14% fewer shares).

All in all, pretty good news all round.

Accountant, I read it that adjusted operaing profit last year was £70.9m and it was expected to increase to £79.1m this year, but it will fall short of that but still exceed £70.9m. OK, it's a shame but it does not warrant a 22% drop in the share price! Furthermore, it's a delay to rail spending (no doubt affected by both old and new government shenanigans), not a cancellation of rail spending. Plus, the water side of the business is ahead of schedule.

This is largely non-discretionary spending, with good earnings visibility on a costs plus basis. And RNWH's history of aquisitions and paying off debt is, in my opinion, exemplary for a listed company.

No advice intended, but I am more shocked by the market offering such a write down than I am by a supposed "profit warning".

Well I am pretty gobsmacked! Having been in RNWH for about 12 years this is the first time I can recall a trading update that has not met or exceeded expectations. BUT....and there is a but, it seems like a massive overreaction. The rail expenditure will still need to be done and it will normalise over time. There is an impact to near term earnings but probably not to long term earnings. I still have plenty of faith in RNWH and have added another slew of shares. But I must acknowledge that I read it wrong when I bought at 990 before Christmas.

Good luck all.

Guitarsolo

Very good Lending! And very true, if we're only talking about PAYE earnings which are always the easy target. But you could have two very different Man #10, one a high earner on PAYE being taxed at a marginal rate of 47% of his income (having earlier been taxed at 62%!). Or another earning just as much but not as "income", and then the amount of tax he pays depends on his accountant and it could be as low as 0%!

Crazy,

If you want a snapshot then take a look at the latest factsheet: https://cdn.janushenderson.com/webdocs/HFEI_JE00B1GXH751_WEB99_M_30112024_XX%28EN-GB%29.pdf

Management fee is 0.75% of net assets.

Https://www.proactiveinvestors.co.uk/companies/news/1064448/world-s-largest-chipmaker-tsmc-generates-record-profits-1064448.html

Looks like HFEL's largest holding (4.2% of portfolio) is going well.

Good news

Dividend Nomad,

I don't have time to answer specifically about 18 years, but choosing a few stocks off the top of my head and looking at 10 year charts (NB. some have been affected by rights issues which I don't have time to factor in if not already taken into account in the chart):

Aviva - 0% change over 10 years

LGEN - down 10%

LLOY - down 25%

NWG - 0%

VOD - down 66%

BLND - down 55%

IMB - down 5%

BP. - 0%

So that's 8 stocks from various sectors where the share price is either flat or down (or very down) over a 10 year period. Owning a blue chip stock is no guarantee that you'll get your investment sum back. Just ask the Japanese.......

Couerdelion, I think we are referring to holding gilts until maturity. Hence buying below £1 and being guaranteed to get more than your money back, and interest along the way. If there is something that is less risky than sovereign debt from a country that prints its own money, I don't know what it is!

Dividendnomad. Yes, inflation would eat away at the value of the £1 gilt as it would a £1 share if it doesn't increase. But in terms of where "risk free" sits, this is it. I wouldn't compare it to blue chip stocks, I would compare it to a savings account. FWIW, the majority of my investments are in blue chips, with the insurance sector a particular favourite for personal reasons and because I believe it is undervalued.

Correct Monkeyjack. The gilt will be redeemed in 2043 at £1 even if you paid 92.7p for it. There are shorter dated gilts available but they will probably be closer to par for obvious reasons. I don't have any gilts at present but it is always worth keeping an eye on them as a ultra-secure source of income (albeit that income will not increase).

Monkeyjack, today you can buy TR43 4.75% gilts for 92.7p, giving you an effective return of 5.12% plus a bonus ~7% in 18 years' time (if you held to maturity). Other gilts available with different dates.

No advice intended!

Triumph, there is an easy case to make of hypocrisy of Conservatives/ Brexiteers that wanted to curtail ties with our closest neighbours with whom we share many ethics, standards etc and instead to strike deals and relationships with all sorts of nations with whom we share no such ethics or standards. Rachel Reeves' trip to China is only fractionally influenced by Brexit but it is symptomatic of the faster growing economies with whom Brexiteers wanted to trade with more.

Terry, this whole "Rachel from" thing is extremely juvenile, not to mention misogynistic. Come on, you're better than that.

Indeed Jim: "Looking like you can get 5/6% at fixed rate without any risk or loss of capital."

It's a very simplistic view but the dividend yield can be measured as an amount over the risk free return. So if something like infrastructure expect risk free + 2%, and blue chip insurers (like LGEN, PHNX etc) expect risk free + 4% or 5%, then when gilts are returning 5.3% or so you get PHNX with a 10%+ yield. Now the absolute amount of the dividend is whatever it is going to be, so to reach the required yield the share price drops accordingly.

If interest rates/ gilt yield drop then the share price will rise. Of course, if the opposite happens.....!

And yes, I know it is more complicated than that!

It feels to me like the world has forgotten the value of cash earnings. We now have infra funds like INPP and BBGI, both strong and reliable infra funds with mostly inflation protected earnings, trading with yields of about 7.4%. This makes sense (in some small way) because it has always been the risk-free yield + say 2%. It's only because risk-free (gilts) are as high as they are that the yield here is. And as the dividend is set, the higher yield is reached by reducing the share price.

Hard to swallow for those holding from higher prices but I presume most hold for the long term. There is a chance to average down if you like. Or just hold through this period.

Older....good luck with your bottom fishing! There are plenty of bargains out there by the looks of it.

Guitarsolo

AoC; "The cash return and yield to LGEN of its bond holdings will be fixed, if held for the duration of the bond at the date of purchase; it will not increase with higher inflation unless Index Linked."

I think Hornblower was referring to new liabilities being covered by new purchases of gilts at the (presently) better margins. With LGEN and others taking on billions in pension risk transfers then today they can effectively cover those liabilities with a smaller outlay of capital. At least, that's how I read the comment.

Regarding the LA fires, it will all depend on where the reinsurance falls. You won't really be able to tell from the outside but they will be doing their own calculations and making provisions if necessary for the estimate $5bn+ of insured losses (so far). The good news is that Aviva's most obvious vehicle for having exposure, Probitas, doesn't write USA property (https://probitas1492.com/underwriting/property/). But don't assume that means there is no exposure as Aviva provides capital to all sorts of capacity providers.

On 8th January 2024 SCE gave a trading update (unaudited) for the FY23 period. Now dates and keeping their shareholders informed doesn't mean much to SCE, but perhaps we will get an update soon.

Reading last year's comments brought back some memories! To quote Kevin Johnson: "After a very difficult 18 months, and whilst the need to build our resilience continues, we now believe that the worst of our growing pains are behind us."

I wonder what he will say this year.

As at 1.55pm on 2nd January 2025, solar is producing 12% of the country's energy mix.... the same as nuclear! Not bad considering our latitude..... (OK, it's a sunny day).