Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
Looked and sounded just like this on IDS just before the Kretinsky bid. SP had just broken a key 4 year old support on technicals, flushed out the stop losses, then cue leaked news of a bid being prepared. Up 30% in an hour, up 60% in a month.
Suddenly a lot of very concerned people about a profitable company with solid FCF, a modest debt pile, 80% locked at low rates until 2028-2031. The 20% that will need fixing next year isn't an existential issue. The bond market doesn't care, and neither should you. That market still sees MCG as a safe bet. This is just a dump and pump in progress.
Dropping the dividend and buying a profitable business with it is what they ought to be doing. The easiest way to deal with debt is to increase one's income. Through that lens there is little wrong with that acquisition.
The furore caused by the recent broker's note seems rather overblown to me. 80% of the debt is fixed till 28/31, a resolution for the 20% will not be overly difficult for a business with growing revenues, recovering margins and healthy underlying profitability and FCF. Exceptional fuel and wage cost inflation is now consigned to last year's books, and things have already begun to normalize this year. Plenty of companies have terrifying debt burdens that they will likely ultimately succumb to, but this isn't one of them. Ocado (with no disrespect to holders of that) has more debt, less revenue, an expanding operating loss at half a billion a year, and is still holding onto a 2.8bn mcap, 10 fold that of Mobico. On paper, Mobico is a far better business. This is one of the market's bargains this week. An exceptional takeover tarket.
"" Looks nicely set up."
for what??"
Yesterday it formed a nice looking morning star doji, closing squarely at the opening price and on higher than average volume, which is a decently accurate signal for a reversal. Buyers came back in in enough volume to cancel out the sellers. Today looks likely to confirm that reversal in momentum.
At IDS/Royal Mail, management backed by the biggest shareholder, czech magnate Kretinsky, ran the business into the ground; destroying the service, decimated the workforce, ran massive losses, for Kretinsky to white knight it, swoop in and buy them out for a song, just as all the much belated modernization drive might start bearing fruit. Expect something not dissimilar is happening here. Kitchen-sinking all the bad news, bad management, bad prospects yadiya, for a cheap bid to look like a rescue and el dorado to the other weary holders.
Looks alright actually. A flush lower through that strong 52.5 support line to sweep up all the tight stop losses, now it's formed a bullish flag into lunchtime. Will probably close around 53.50, back above the support line, not confirming the breakdown.
Fairly oversold on the daily. There's a key trend line it's been testing since yesterday, seems as yet uncertain if it wants to break down below it or not. Not much further below that is another strong trend line at 205 though, so I would imagine selling pressure will be dissipating rather than increasing. Might depend on tomorrow's inflation prints for the point when buying pressure returns.
What's to stop RDW chasing BDEV down if the merger and otherwise poor results there are seen to be unfavourable? Now that RDW are essentially pegged at 1.44x BDEV. If BDEV falls to low 400s/high 300s, then RDW's holders will see no premium whatsoever, no?
No, me neither, much prefer to invest rather than short, but it worked well enough shorting from these same levels and conditions last week. Nothing personal against Mobico, it just looks like quite a tenuous rally based more so on hope and speculation than substance.
Who's bashing the company? It's just a comment on the balance sheet and finances in relation to the share price, that's all. It's a fine company that got hammered by a pandemic, and through little fault of its own now finds itself quite over-leveraged.
I agree, it could be, but similarly the chart from October looks like the chart from Mar to June '22; a 3 month melt up into a blow-off top. I think this relief rally might exhaust itself soon. But this is just my opinion and is as much speculation as anything else written here.
Likewise, good luck to all though. No hard feelings, just sharing opinions.
Just not so bullish that this rally has much underpinning it, that's all. Would only short once it starts to turn. Some of the posts on here sound a lot like the posts you get at the top of a euphoric rally.