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I took a look at the half year results and compared them to the latest trading update. I noted following:
- Free cash flow guidance for FY2023 increased from $100m to $150m. They state this is "primarily driven by increased sales volumes in Gabon and deferral of some capital expenditure." In fact, most of it just a deferral of capex (fy23 guidance reduced from $400m to $370m) i.e. $30m of the $50m increased cash flow is capital they will need to spend later.
- Production guidance is showing a deteriorating trend. At the half year, it was reduced from a range of 58-64 kbopd to 58-60 kbopd). Now, they have stated it will be below the lower end of already reduced guidance. The water injection issues speak to the difficulties in keeping ageing, mature assets running as reserves deplete. This potentially means higher capex in future.
- the c.$800m of free cash flow at $80 Brent is not new news but FY23 is over and they generated just $150m of free cash flow. This implies over FY24 and FY24, they will generate an additional $650m of free cash flow. That seems quite a tall order based on their track record. We need to see more details when the final results are announced.
All in all, the trading update was broadly in line. Oil is strongly up this evening so it should provide good support to oilers including Tullow.
But I see nothing to get excited about with Tullow's results.
All IMHO DYOR
Happy
My 10-bagger babies have still only bitten into the meanie shorters with their milk teeth.
The best is yet to come...
Have a lovely weekend all
Happy
Will read overnight and post tomorrow.
Have a good day
Happy
He's been calling me out on BP bb. I didn't follow the trading update.
BRB, could you please clarify if you want me to take a look?
Best
Happy
Happy
Hi BRB
Thank you for inviting me back to this BB by calling me on the BP BB.
I wasn't going to post, but you obviously want me to take a look at Tullow's recent update. I will oblige.
All IMHO DYOR
Happy
Hi BRB
Do you want me to take a look at Tullow's update?
Fair enough, I'll see you over at the Tullow BB.
Best
Happy
Dividend yield is roughly 4.8%. And unlike many in the FTSE, it looks perfectly sustainable through the cycle.
As bonds yields and interest rates start to ease through next year, the dividend should look increasingly attractive to income investors.
I think there is scope to start scaling back buybacks and making more material increases in the dividend.
I would like to see buybacks replaced by a variable dividend element as many of the miners have and indeed some oilers (Pioneer etc.).
We would need only to tweak the financial frame. The amount we apportion to buybacks could easily be switched to variable dividends. Perhaps, with retention of a Q1 buyback to offset employee share options vesting.
I would prefer more cash dividends in my ISA.
All IMHO DYOR
Happy
Oil is very weak - sadly for my oil shares but very good for Boohoo.
Freight costs will ease again. In some areas, input costs might be in absolute deflation. I will try to find specific data. We can lock in benefit of this reduced inflation and/or deflation into further strengthening gross margin, which is already very strong.
It's crucial that, unlike ASOS, we're heading into Christmas with inventory well under control. This will reduce the need for heavier discounting and support selling prices.
Peak inflation is over. Credit conditions are already easing across the globe and headline central bank rates will start coming down next year.
Everything is set up for an excellent Christmas, I am optimistic our revenue decline will be arrested and we will beat current expectations.
All IMHO DYOR
Happy
I increased my trading long in response to SP fall. We are about 10% below weekly peak. Positive trend is firmly set against easing economic backdrop. I think it will bounce today.
All IMHO DYOR
Happy
That must be a near world record premium.
I don't hold any stock. Just wanted to say congratulations.
All IMHO DYOR
Happy
Mars buying Hotel Chocolat for a whopping 170% premium.
I'm not saying the same will happen to Boohoo but it potentially illustrates just how undervalued some stocks on the LSE are.
https://news.sky.com/story/mars-to-pay-163534m-for-hotel-chocolat-13009360
All IMHO DYOR
Happy
Apologies for typos in previous post
"Whether it *amounts to anything."
Spk999
Thank you for sharing.
It's very encouraging to see political opinion being galvanised against Shien and Temu. Whether it accounts to anything concrete remains to be seen. But if the Republicans are elected we are likely to see a much tougher anti-China stance in the US.
All IMHO DYOR
Happy
Agree, Jeremy. Same in my portfolio.
But if you look at stocks that have done very well over the past few trading sessions (both here and in the US), they are more likely to be underperforming the market today. For me, these are normal market gyrations and nice trading opportunities.
All IMHO DYOR
Happy
I know SP can volatile on low volume but does anyone know of any reason for the spike?
All IMHO DYOR
Happy
A bit of weakness across the pond due to better-than-expected retail sales putting some upward pressure on yields. That's permeating across global markets including London. UK shares are a bit weak.
According to Bloomberg, market is pricing a reduction of 0.5% by July in the Feds Funds Rate.
Very interesting time for economy watchers. I remain very bullish on Boohoo and, in addition to keeping my large core holding, I will try to trade these dips. I think our SP will firm when US opens (although it's near impossible to forecast very short-term movements).
My first target is 59.5p the one-year high reached in March 2023. I think the macro tailwind is enough to reach that level. Then, I will look to positive Christmas trading to provide the next catalyst.
This is gonna be a fun ride...
All IMHO DYOR
Happy
Pokerchips
Obviously you are right. But you're wasting your time with them. They are stuck in their ways.
To add, fixed mortgage rates which are driven by gilt yields and interest rates swaps have come down substantially, too. 5-year fixed mortgage rates of 4% may be available early in the new year or, possibly, even sooner.
All this puts extra money in consumers' pockets. Of course, there are risks but the economic backdrop has not looked this benign for a long time.
And management has taken the time to put our company in great shape for renewed sales growth.
All IMHO DYOR
Happy
https://www.estateagenttoday.co.uk/breaking-news/2023/11/hsbc-and-halifax-cut-mortgage-rates-as-price-war-continues?source=newsticker
I'm amazed the shorters didn't get out sooner. What were they waiting for? Powell and Bailey to tell them when lol.
Big short squeeze coming. Events over the next several trading sessions will test my thesis that shorters will struggle to find the shares. They certainly ain't getting mine lol.
All IMHO DYOR
Happy
Also, CPI inflation was 0% between September 2023 and October 2023. This much less publicised figure is important because it isn't subject to whims of big base effects that affect usual year-on-year comparison.
Inflation is headed back to 2% and rates could well be slashed in 2024.
All IMHO DYOR
Happy
Core lower than expectations
Big rally in UK stocks possible.
Fly my 10-bagger babies, fly ...
All IMHO DYOR
Happy