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Looks like shorts are finally reducing a bit.

Fitch downgraded mobico to BBB-…but that should have been expected anyways after a similar move from moodys earlier…

Anyone know when the half year result are expected to be announced

Disagree with you Geng…while its not the most friendly financing conditions at the moment, this is a highly attractive business for financial sponsors and such an asset doesn’t come up for sale all that often…they are the #2 ranked by market share and both #1 and #3 have been taken privat previously…so there will likely be competing bidders which will help

I think in their recent report hsbc valued the na business very conservatively at 750mio usd…while a sale would help to reduce net debt, let’s not forget that it also lowers ebitda. Also, the hybrid has to be refinanced and at current stage would most likely increase interest from current ~4% to 10%…hence one can argue that the majority of the sale should be used to repurchase the hybrid without replacing it.

I will really get concerned here once Cosmens are reducing…but hopefully they add again soon.

Do we know how much we paid for it

You are right, apologies…misread it

Wealth…according to your calculations the share price of Mobico would be negative….you gotta account for net debt of ~1.2bn, hybrid of 500mio, other liabilities 250mio…so u need almost 2bn to arrive at a sp of 0

HSBC sees the value roughly as

Uk 440

Spain 1500

Na 1130

Admin -240

It’s very uncommon for hybrid bonds to get extended and it would lose all of its equity component…when the hybrid was issued, rates were at 0%…hence it has to be refinanced at a much higher rate.

I don’t think we will be able to issue a regular bond as it will break our covenants

I looked a bit more into the 500mio hybrid…this will need to get refinanced by November 2025 at much higher rates…current spread for hybrids over a corporate bond is around 2.4%…so as it stands the yield would be around likely 7.5-8%…in line with HSBC forecast of an additional 20mio annual cost…if not called, Mobico would lose the 50% equity component…

“However, Mobico will lose the 50% equity credit on its GBP500 million hybrids from 2026 onwards, because Fitch deems the first coupon step-up date in February 2031 as the effective maturity date. If not refinanced with another hybrid bond ahead of that, then the equity credit of 50% would change to 0% five years before the effective maturity date, leading to higher leverage, as per Fitch's criteria.”

I have taken off the majority of my earnings punt but am still holding a large core long.

As long as we can avoid a capital raise and taking on even more debt this should eventually come out ahead…

Key risks are

Increased interest payments

Removal of remaining covid support

50mio higher reinvestment compared to last year as mentioned in the earnings call

Renegotiation of the existing hybrid

Fuel costs

Wealthtransfer, I think the rates will reset…atleast according to HSBC who is expecting an additional 20mio cost for the hybrid

https://www.investing.com/news/company-news/mobico-group-stock-price-target-cut-on-profit-downgrade-potential-93CH-3389274

“Even after accounting for a £20 million increase in hybrid expenses expected in 2026, the analyst finds the shares to be attractively priced at 4 times the projected 2026 earnings per share and 8 times the enterprise value to earnings before interest and taxes (EV/EBIT).”

I don’t think funding is secured until 2028…if I am not mistaken, the hybrid will reset by end of 2025

Is it just me or were the information provided in the q1 trading Update very limited…might be due to the fact that they reported earnings on the same day I guess

Tx wealth…didn’t he say that they will start accepting bids once the bidding season is over? Maybe I understood this wrong

Does anyone know when the NA school bus bidding season is?

I was hoping for a bit higher adjusted operating expectations for 2024…but fcf looks pretty decent

Any early thoughts here?

Good luck everyone for tomorrow.

May the odds be ever in your favor…

@m097j…I told you I was adding 25% 😉…jk

Yeah, I see a downside of max 10% on disappointing earnings but believe it could rally as much as 50% in case of an NA sale…20% in case of a positive outlook…let’s see

I really expected shares to rally after the rns given it removes a tail event of them delaying earnings again…famous last worse but I think it will take a very bad update and some nasty surprises to push the stock even lower…believe that the stock will rally a lot on a decent update/outlook and jump in case there is a positive NA update…just added 25% to my position…

gla