Member Info for joseywales

It's not explicitly stating UK bus is losing money. Revenue challenged by passenger volume, but nothing about negative profit. The EBIT drop is for whole UK and that contract hire business should just be closed. Big business should never play in the 'mum and pop' space ... very rarely does it end well.

Sounds like the new guy will bring more commercial astuteness to the game and run out the low margin/non profitable stuff. I imagine there was a sales culture and reward package geared to revenue.

I really don't think there was anything too surprising there. The summer was brutal and the exodus form UK/European equities is reflect is general trading volumes and 'seemingly' hammered SPs (a bit like this one today)!

It's a company without debt, paying a divi, and now substantial room for capital growth too. To be in the 70's is unbelievable really.

Q4 just depends on rate direction I imagine. Might be H1 next year before any decent pick up in AUM.

The way the SP has been brutally cut makes little sense if they actually do what they say and sell the school bus business. They had something like 1.5bn total debt for YE22 so the sale would nigh on eradicate that. Then they'd be left with a c. 2-2.5bn revenue delivering something like a 3-350m EBITDA in 2024 (if they sort UK).

This SP has been hammered as if an RI has been announced, not an asset sale to deleverage.

AKASM, I imagine they acquire as the difference between that and trying to win it become negligible. The asset heavy investment cost in newly won business (coaches/depots etc) vs acquisition of a company and it's assets already deployed is likely an equation they employ in this logic. Then the money spent goes to the asset side of the balance sheet with revenue and 'profit' instantly accretive.

JG, it wont be sold for that.

My personal view is:

It's the thick wedge of 1bn revenue and with the driver issue sorted + new business + pipeline. I'd have thought 1.2-1.6bn would be target window for them. Probably 1bn mark cash and balance deferred type deal.

You're left with a £2-2.5bn type business which should (on the basis they sort UK) produce at least 300m ebitda really. Debt becomes negligible so let's say it's worth £1.8bn ... so £2.75-£3 a share in the long term. Probably more upside than that but it really depends on the team actually delivering.

The risk is margin erosion. Personally I think you will see this in multiple businesses over the next 6-12 months as the impact of spend behaviours as a result of inflation/rates continues to change. Behaviour has been maintained by debt and that's the next barrel of fun in this cycle.

JG, yes you have got it. The A is the amortization of your intangibles. Goodwill is a bit different and subjective. Typically you'd ascertain the lifecycle of the intangible and writedown annually over the life period. Obviously that's where an intangible can be said to have an expiration such as a brand license.

I abhor goodwill on balance sheets. It's the most ambiguous element on there and if you acquire a business with it, first stance you take, is to trash it by various means. You don't want to buy someone else's version of goodwill!

Trenners, it works only if you hold something like 100-150K shares and then spin off a third. You mitigate risk and make £500 or so a turn or just increase holding by 3K shares or so. I think this has been the 4th or 5th spin of the wheel so it has to be close to breaking into the 18's/19s.

I honestly think its the only way to play this share. We could easily see the 16.3 type stuff again on Monday or 18 ... who knows!!

Their conversion is very strong JG ... I'd not panic about that. 175 EBIT is still profitable on the net and I'd fancy the cash generated will be used to shut down the 3 hubs they mentioned and a bit more in restructuring cost elsewhere.

Risk certainly has not gone away here. In my view they need the beauty parade complete and possibly some non bindings this side of Xmas to win a bit of market faith back. DD can complete Q1 and then close Q2. BOD just needs to up their game and earn their crust.

Last thing we want them doing is buy that business in the Canarys. Hopefully that's been shelved for now, just like the divi.

Agree Paddyboy. Problem is, the MCAP on this has always looked low. The market just doesn't seem to think so.

It's all a bit like armchair football managers this. Has anyone considered what might have happened if they presented the downside in July and how that bond might not have been achieved .... you'd have had an RI like SYNT as for sure covenants would be vulnerable to say the least. Yesterday was an opportunity to sell on the news and then get close to 30% more shares than you started the day with.

The sale of the US school bus business could actually be executed by the end of H2. It's a the sale of a part not the whole so it's a carve out into newco/acquirer. These can be effected quickly. Its the price which will be tricky as the vultures know you have a distressed seller now.

I'd fancy an RI was also discussed with major shareholders who re-buffed the idea already. I am sure they will also re-buff any 'whole business' approaches no-one will buy on forward earnings outlook right now.

This share has certainly been painful but the long term outlook still appears decent. Just going to be a long, bumpy road on route I guess.

Well Candid, I think you might be right about the bad news piece. I did not like the bit in the Croda report last week about industrials not being profitable for them still. The demand cycle could still be in that trough which SYNT now have the money to manage .. or survive at least.

In terms of shorts, you are right Poleaxe. Just like JUP's holding goes to something like 3%. You'd expect some substantial short increases in coming days I imagine.

We won't see Goldman's updates on holdings any more but see if that last increase correlates to another minor increase by KLK in coming days.

If anyone, Apollo ... 3rd time lucky in the UK maybe.

Pie in the sky if you ask me. Cosmen family will be blocker to any acquisition. Wouldn't surprise me if they increase their holding.

Wondered when we'd start seeing these comments ... obviously late starters in the morning!

Shorters can't control this today. They will be accumulating ready for a week/month or so's time when it's back in high 70/80 territory.

Well said NickRubens! Our country is an embarrassment. All started when we were sold down the road by pensioners and the halfwits behind them that believed the tripe Mogg and his cronies were spouting on about.

You're not wrong Teddy. SHI was another one this morning that got hammered on far worse than this news. I got at 26's but I think they went lower than that. Market is massively spooked by even the slightest negativity at the moment and business 'values' are out the window. Thing is, on many stocks the negative has been priced in for a while!

Not quite 888. They had a much worse 'risk' hanging over them in the the early days of that severe oversell. I think this just has to be 'punished'. MCAP stands at 2 x that reduced Ebitda forecast at 60p. Once the analysts have done their US business valuation and what the company could look like post a sale, I imagine some broker re-rates may shine a positive light on an otherwise disappointing run for MCG!

There won't be a special divi. They need to clear debt as that ebitda will be a cash drain too. The bond just means they won't need to do an RI hopefully.

I think buying back in at these levels will give opportunity to double/treble. They could not make up more news that the market hates ... lower ebitda/ no divi / sell to pay debt down ... it's a treble you don't want to hear!

I don't know if this is still a no brainer. I bailed at 77 and just started buying again. 50's seems too low but will buy in tranches and see what happens and how low they take it. Selling the US business to reduce debt still leaves a decent sized business worth a lot more than a 350m mcap (which I think it becomes in the 50s).

When is the next trading update ... is one due in October?

Having written the below I then saw Goldman RNS so will increase what I hold. Sways the odds for me a little.