Member Info for Guitarsolo

Morning All, has anyone received any communication yet from the platforms about the open offer? I hold SCE through HSBC Invest Direct, Hargreaves Lansdown and AJ Bell. So far only AJ Bell have any mention of it and only to say "it is coming".

I fear HSBC in particular will either not allow me to participate in the open offer (they didn't one one of the offers I recall) or, as I am often travelling and the timeframe is tight, it will happen while I am away.

Do we know the final date yet when we will need to subscribe to the open offer/ excess application.

GS (been royally shafted by the 40p/ 10p/ 1p placements)

I keep reading comments from SCE and brokers along the lines of Zeus' note; "The production team has now removed almost all the single points of failure and scrapping rates have reduced significantly in the past two months."

But how do we know? How can we have any faith that the manufacturing process has been/ is being fully resolved when we have been fed a whole bunch of bulls**t since last September (and possibly longer)? Unless manufacturing is sorted they will just burn through this cash as well. It's a pure leap of faith.

I'd appreciate other's views here because as a long term holder I've been wiped out. I either do nothing and need a 40-bagger to break even, or average down and "only" need a 10 or 20-bagger! It's an appalling Hobson's Choice.

SK, personally I think that most (not all) of the uncertainty around income and dividends it towards the upside. Planes coming into service, possible lease extensions (if you think that's possible), even Thai paying something for their aircraft!

My point is that even from here, the Emirates income distribution covers much of the share price. Which leaves the connundrum of what is the value after the leases v the time cost of money.

I hold a reasonable number but could add if the share price drops quicker than the finite income is paid out, and I remain positive about the post-lease value.

TB, my take on this (and there are much more knowledgeable folk on here) is that AA4 has a finite amount of income due from its Emirates leases and therefore, all other things being equal, the share price should reduce by 2p per quarter as that income is paid out. Hence the drop from 40p to 38p after the recent divi, which is about where I would put fair value at the moment. FWIW, I see that finite income as something like:

2024(r): 6p

2025: 8p

2026: 6p

2027: 2p (based on warnings that once the income starts dropping it will drop quickly)

2028: 2p

So that implies 24p of dividend income over the next c. 5 years. Of course, there are things that change that:

- Another Emirate A380 due back in service soon

- Depends on overall useage of planes (trouble in the Middle East?)

- How much spare cash does AA4 have that isn't in the dividends?

- Will Thai Airways ever pay for the planes they use?!

But if we do get c.24p of dividends up to the end of the Emirates leases then it means you've got the value of the planes for 14pps! See other discussions for what they may be worth (especially comments by simonm). We should get our first indication early 2025 when news is released what DNA2 sell their A380s for (if they sell them). It will be a year later that AA4 try with their first aircraft that come off-lease.

Anyway, that's my take on why we have a gradually falling share price. It's the starter before the main course!

Guitarsolo

Oiled-up today: "I sold at 498p".

Oiled-up on 22nd March: "NO ONE IS INTERESTED IN WHAT STOCK YOU HAVE SOLD TODAY !"

Oiled-up re Amanda Blanc: "...Amanda the man hater....."

Another knob-ette on the bullet-in board. I bet he thought he was always the best person for the job!

Thanks Krusty, but it wasn't what I meant! My fault, I put it badly.

What I mean is, they are returning 5.12% of the NAV (as at 31.01.24). But what have they had to let mature/equity sell to raise that 5.12%....If they had to liquidate 5.12% to pay us 5.12% (i.e. 100% conversion) then that would be a good sign. But if they had to liquidate say 8% to be able to pay us 5.12% that would be bad.

It's a complicated equation because there is significant debt repayment as well. We would need to know if there are any losses on the balance sheet loans and whether the equity is being sold at close to the level on the books.

We may not be given that information, so the next sign will be what happens to the NAV post the first redemption. Does the NAV drop by 5.12%, or more, or less?!

Guitarsolo

Well it is nice to know that the first capital return is not far away with the first $15m.

The question is, what % of the loans have matured and equity been sold to raise that $15m (money was also directed to repay debt)?

Thanks Damien, appreciated.

Kentio,

IMB: 3.70% by valuation; 3.76% by projected dividend income

BATS: 3.00% by valuation; 3.90% by projected dividend income

Guitarsolo

Thanks for your recent posts Rivaldo.

The pipeline of work for RNWH should remain solid and it clearly knows how to do this at an acceptable profitable margin. More of the same please!

It feels like we have had a bit of a silent re-rate. Nothing dramatic, no major announcements or broker notes with dreamy predictions. But somewhere between £9-£10 feels about right on a p/e basis.

Trading at 6 months was in line with expectations; read it will slightly under promise and over deliver at full year.

A decent earnings accretive acquisition will help push things along in the right direction.

Guitarsolo

Hello dadean,

Just to expand on your post, the history of NRR is not entirely rosy. I've owned shares in NRR since 2016 when the share price as well over 300p and the dividend was 21.6p! The company was smashed by Covid (easy to see why and of course that was no one's fault) but it forced the sale of the pubs business at a large loss to keep the LTV in check. That is why it is irksome when NRR's management use flowery superlatives to describe their performance! For very LTH this company will never recover to its previous levels and it is damage limitation.

I did add some down at 45p which has helped.

Guitarsolo

PS. also have too many Regional REIT which is another basketcase caused by poor management. REIT's have not been kind to me since 2020.

Hi Paul,

CLIG is definitely one of those shares where your buying price matters more than most. I first invested over 10 years ago (I think) at 240p when it was paying 24p dividends. That tranche has done well.

I've also added at what, in hindsight, was way too high in the 430s.

My take on CLIG is that it is a reasonable asset manager that won't set the world on fire but will pay a high dividend. I don't expect the dividend to increase until EPS is improving (and that depends on AUM).

Personally, I will now only add when the yield is over 10% (i.e. share price under 330p). I think if you do that you've got some protection against capital erosion, hopefully a chance at capital gain (at times), and a high dividend while you wait.

Just my thoughts of course!

Guitarsolo

On first reading it is another good set of results. Some of the details I quickly looked for:

(i) Robust solvency of 205% (FY 2022: 197%).....In my experience the solvency ratio is the real measure of CSN. It is way above their target range (140-160%) so the balance sheet is very strong at present.

(ii) 3% increase to the full year dividend (total 2023 dividend of 23.97p per share).....I guess this is why most of us are here. It's reliable, it's predictable.

(iii) Cash balances at group holding companies increased over the period to £124.1m...... We can expect future acquisitions that can be funded by cash. It will keep the company and dividend growing.

(iv) Increase in CSM of £53.8m (£42.4m net of tax) over the year..... The measure of "future profits". Nice to see this increasing although we should look for more details (PHNX's results recently said their CSM was increasing in the summary but when you drilled down into the presentation it had not.....It can be used for smoke and mirrors).

Overall, happy to still hold.

Guitarsolo

Thanks simonm,

OK, I see your point. If Emirates have certain half-life costs to pay anyway, why not return the aircraft and get your hands on some newer ones.

I did look at DNA a while back, but opted for AA4 in the end as I thought it had more possibilities to boost shareholder payouts. It's my first foray into this type of company so still a learning experience. Out of interest, are there "younger" versions of DNA and AA4 out there with longer-term leases.......But to airlines that actually pay, so not to Thai Airways!

"Im just a general Joe investor, with limited knowledge :D".....I suspect you're not, but grateful for your input either way!

Guitarsolo

Thanks Meconopsis, sorry didn't have time to go into that depth on a busy work day!

You would think there such be some rule about the summarised information reflecting the details?!

I would appreciate your thoughts when you've digested the full results, and whatever the Mrs has bought in Waitrose!

Guitarsolo

This was the bit I went looking for:

"Operating Change in Contractual Service Margin

Operating change in CSM is a new alternative performance measure introduced on the adoption of IFRS 17 and supplements the adjusted operating profit metric for the Life and Wealth segments. It represents the change in CSM during the period resulting from new business, interest accretion, experience changes and release of CSM to adjusted operating profit but excludes the impact of short-term fluctuations in investment return and accounting mismatches arising on the adoption of IFRS 17.

2023: £355m (2022: £129m)"

So they've added £226m to the long-term profits pot (equivalent to 9.5p per share). I'm happy with that as it provides support to the dividend in the long term.

Simonm, why do you say you don't think the Emirates leases will be extended (your post 17 Feb)?

You (correctly) mention below that Emirates wants to keep operating the A380 into the 2030s and beyond. They are paying to retrofit half their A380 fleet, including 5 of AA4's planes with the leases on those planes terminating in 2026-28. How long does a retrofit last? Another one is coming back into service very soon. Emirates would prefer to operate a plane they "know".

Are you saying that the lease provisions make it cheaper for Emirates to return the planes and pay the contractual dues? If that could be $40m+ per plane, that would be over $320m (treating 777s as similar to A380s for now) or about $1 a share.

I haven't been in an aircraft leasing company as it goes through the process to return an aircraft, so I am interested to see how it plays out.

Guitarsolo

I agree with you there Krusty! However, I'm interested to see what happens to the share price. Let's say the first redemption is 20p per share (that's a bit high), will the share price drop by 20p to the low 30s? Theoretically it should, but then the discount to remaining NAV gets even bigger. It might wake people up to the fact that the returns should be much greater than the share price.

Many thanks Damien for your reply. I will be looking into it some more...... But one thing that is not immediately obvious is why the NAV has reduced so much when the constituents are FTSE 100 companies which are holding their share prices. I just want to make sure it's not another HFEL dividend washing scenario!

Sorry Trotsky, I was being flippant in replying to Stargate's stargazing at a chart and wondering why there haven't been "incremental increases" to earnings!

I appreciate the explanation but no need, I work in the reinsurance market!