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With the inflection point for highly geared, deeply depressed assets on Oct 27th (see previous post about Real Estate, AIM, Gilts) the rally needs something to sustain it.
Next week, the UK CPI data is likely to fall to 4.8% vs 6.7% in September. A showing below 5% is symbolic in my opinion. It will help draw a line under the grossly inflated wage demands from doctors to railway drivers. Public sector wage costs rose over 12% in the last year (vs around 6% private sector) and is hugely responsible for the UK having higher inflationary worries than other developed nations.
On top of this potentially great news is the fall in the oil price over the last 6 weeks.
Brent is down 15% to $81. If maintained, this is likely to help further stimulate lower inflation forecasts.
Rotation away from safe, bigger companies, into the unloved is still in play...in my opinion.
I guess we can all see the importance of the SP closing above 16p. Should it happen, the charts (yes, i know they are fickle) suggest a sharp move back above 20p.
If i was short...i would seriously be thinking about why i am short...Funding?
Going under? Not enough revenue vs cash draw?
Hate the management?
Clearly, all those reasons look less likely to stack up.
Conclusion...cover ya shorts!
A brief research of Austal shows the maun shareholder as Aussie billionaire Andrew "Twiggy" Forest via his company Tattarang Ventures. He has a large fleet of Iron Ore carriers and support vessels. He is obsessed with low carbon shipping. My take on this is it is a milestone and game changer. Having built over 340 vessels, Austal has a global reputation and its shareholder list includes many Eurooean and US institutions. These same companies will now see this and maybe, just maybe, ask " Who is HW?"
For me, choosing Appledore is a sign that Austal wants in on the coastal vessel market around the UK. Wind farm support, fiseries protection, ultra fast Defence and...fast ferries. All of these variables are in demand and clearly have incredible growth potential.
I congratulate the company on this deal and just hope the MoU is completed.
Si...I agree, it would cost far too much to ship a fabricated unit that far considering the contract is so small. I guess its design or advisory. I think the main point was to announce a new customer. You are slso right, the office has been there longer than six months. The real reason is to get cruise ship repairs, wash and brush up. I hope we see more from that area soon as the cruise industry is doing very well.
BaE have announced they wish to outsouce bow sections of the Type 26 frigate construction. . The article on UK Defence has a headline but no active article. Is it an old story i missed previously???If not, clearly, the rogue Scottish yard responsible for the ferry fiasco are pushing hard but as BaE have used Appledore recently, one would hope we are in with a shout.
Getting close to the £200m 2024 revenues fcast which i hope leads to an upgrade to say £225m...heres hoping.
The 20 day moving average crossed above 100 day this morning so the direction of travel is positive.
Si...totally agree about the covering of the sophisticated sonar,radar and weaponry. The right hand side of the dry dock is the finishing side with stores and small engineering facility. The left-hand side (looking out to the sea) is the laying down side with the huge steel cutting and shaping plant. There is an interesting steel bed which was used to shape the bulbus bows of the new aircraft carriers. Steel deliveries come in from doors on that side .
I think you need to look at sector rotation to understand the SP rise. Since October 27th both the AIM 100 and the FTSE Real estate indices have risen 10%. Without doubt, the primary driving force is the reversal of interest rate expectations. The 15 year gilt yield has dropped from a high of 5% on that date, to 4.67% today. Thats a major move.
On the same day, stocks such as Kingfishet (B&Q) and heavy engineer, Balfour bottomed out and have bounced nicely.
As an addition to my previous post about the AIM index low point on 27th October. The same day saw a low point for the FTSE Real Estate Index (-35%) and a high (in yield but low in price) for the 15 year Gilt yield. Lets hope this is an inflection point where institutions rotate back into our world.
As a side, the FTSE Aero/Defence Index hit a new high today. BaE big driver of that.
Last week saw the index hit its 52 week low, down 30% over that period. This low roughly corresponds with the 2013 and Covid low of early 2020.
Once markets had rallied out of the Covid slump, the index set a new high in the summer of 2021.
The peak, around 6,500 slowly faded in the autumn of that year as inflationary fears grew. When the Bof E finally bit the bullet and raised in December 2021, the index started its long march down. The rotation by institutions, away from domestic, usally high debt companies, saw the market decline nearly 50% top to bottom...if last week was the bottom???
With European inflation yday and the UK shop data today, it is clear that ex conflict/energy, inflation is crashing back to earth. Hopefully, this marks the end of tightening and given the tripple low of the index, might we start to see the first buds of a reversal of that rotation back into smaller companies.
Stokey...in my many years of mis-pricing contracts the reason for my poor costing was... factor X.
In other words...the unknown. Until you start breaking ground or dismantling, you have no idea what unforseen issues will arise. Just ask Hs2 management. They know a thing or two about raising estimates or the builders of the Scottish Parliament. Lets not talk about the Scottish ferry fiasco
Good update from JW which hinted at further updates in Q4 of new cruise bookings plus we anticipate, according to brokers Cavendish (formerly Cenkos), an additional barge contract...should these additional revenue streams be confirmed the 2024 revenue backlog would be nearing the forecast £200m.
What are the chances that the forecast is raised? Even a guidance of £200-230m would be significant because it raises the spectre of positive EBITDA and cash flow.
Yes, i know i am looking through (sea) rose tinted glasses but hey ho, ive been waiting four long years
LSE03. Good article. It highlights that the American investor is spending £300m into one port. HW have negligible debt considering they have 4 newly refurbished facilities plus a £1bn order book.
Nice post re US investment Synoogold.
Today saw the UK and Europe release their respective PMI data.
These show the current and prospective performance of both the industrial and service sector.
Weakness across the board has led many commentators to believe they signal recession in both areas.
Since the Bof E started raising interest rates, small and medium stocks have underperformed larger companies by around 30%. This is a normal reaction due to the domestic nature and debt profile of the smaller companies.
Today economic data point to the next move being down...in my opinion...If the wider market starts to come to that opinion, we should expect portfolio rotation to benifit smaller companies. Of course, it will not float all boats...see what i did there...but lets hope it floats a shipbuilder...