The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
Well there we have it - Bid recommended by management at 213p. The question is will others be prepared to come forward? Like you winski, I was here for the long term yield and growth so I'm slightly disappointed, and I don't know whether other bidders will come forward. Still, the price is now underpinned at 213p, so worth holding out for a bit to see what happens I think.
...except leverage was c 3x when they negotiated this. Looking like nearer 4x by the end of this year. They will need to make a dent in this prior to 2024 to get similar terms IMO.
Been giving the interims more thought and actually got around to listening to the webcast. I think I have a better idea now as to why the stock has lost 20% since the announcement:
- Fanciful hopes (some on this board) of a return to growth this year or next have been corrected. Revenue stabilisation still not targeted until FY 23 (ie end October 2023).
- AWS related revenues will only kick in second half 2022 (ie April to October 2022)
- CF is ok, but FCF hurt by (hopefully temporary) items which will continue in 2nd half of this year, so don't expect a big reduction in debt
- With EBITDA still falling quicker than net debt, leverage continues to rise, and will rise further in the 2nd half (3.8x? 4x?). This is possibly the big one, as I think some investors are genuinely worried about whether the recovery will be quick enough, and large enough to bail them out before debt is renegotiated in 2024.
Balanced against this is the fact that the stock remains very cheap: 0.7x sales, 2x adj EBITDA, 4.5x earnings. So, there's a lot of bad news in the price, and if MCRO can move into a virtual circle, of growth and FCF paying down debt, then the upside is huge. No-one should be fooled into thinking that there is not significant implementation and financial risk here, and I would advise against putting a serious chunk of your wealth in MCRO. I remain invested, but as part of a diversified share portfolio. GLA.
Squad - Just coming back on this. Essentially, they want to show growth rates excluding currency changes (so true underlying rates). It doesn't actually matter what rate they use for this as long as they use a consistent rate for both years being compared. Normal practice is to use the rate at the end of the last financial year (ie end June 2020 for DT) which is the 1.23 and 1.12 figs you see in the report. So it is only the % change I would look at rather than the actual figures. If you want to compare actual figures including currency changes then it's actual revenue (+40% for 2021 to $278m, +c30% predicted for 2022). Hope that helps.
These guys are the worst in my experience - low quality research. They are also a bunch of individuals, and so quite often they actually disagree with each other in print!
Clearly, the takeover is not welcomed by GCP. First they publicised it without agreeing this with the bidder, then they talked about a 'material increase in valuation' to up the price, presumably they hope, beyond the level which the bidder is prepared to pay. Interesting stuff.
I think 15x next years' revenues is easily justifiable, and this would be c£8. I'll re-evaluate nearer this level I think. I wouldn't be surprised if we get a pull back at some point along the way which might even allow some of to increase our holding further.
That works for a bit, but ultimately, if fundamentals don't support the new price, it goes into reverse!
Who said anything about selling?
:-)))
Well no dice for me at 5.95, so I still all-in like the rest of you. Let's hope tomorrow's statement is a stunner!
Price equalises demand and supply at any point in time - it basically what a stock market is for! :-)
I've put a cheeky sell order in with a £5.95 limit for today only to sell 25% of my holding ;-) Let's see if it get's back there today!
Anyone else here thinking about letting a few go here ahead of the results? I have very much enjoyed my 70% gain here, and I have real long term belief in this Company, but I do wonder whether all the short term good news is in the price here, and the statement tomorrow might leave some traders disappointed ? Before I get a stream of 'de-ramping' comments, this is purely from a trading standpoint, and not on the long term view.
Tom might have a point though - the largest Index funds tend to be FTSE All Share or FTSE 350, and IG will remain in both of them regardless. Still think there would be some benefit from FTSE 100 inclusion but it might not be huge. We'll see (hopefully...!)
Stock went up 30% based on the fact that it listed on a new exchange - that was always going to be hard to justify. I see the price now back down to levels which the fundamentals justify. Stock went below £5 today where I said I would buy it back, but am on hols this week so I missed it!! Still, I think we'll see it go below again before it recovers.
Nice. Empiric up over 4% as well!
...is that consensus thought that the contraction in sales was going to be achieved in H12021, and that AWS was going to start contributing to revenues this year. It surprises me that the market thought this, but I think that's the clear indication from the share price today. It is clear that investors will not give the stock the benefit of the doubt in any way at all, and will not appreciate substantially until the numbers show no more sales contraction. Don't be surprised if we remain range bound until then.
Yep, the numbers are fine because the six months from last year only contained 1 month of full lockdown, versus this period with some form of partial lock down covering the whole period. Still looks like they should be gunning for around £1 eps this year putting the stock on a 5x multiple. We will defo need to see some growth next time though I feel.
GS - Not quite. They have been blocked as an exchange provider, but this does not stop you trading on their website. They have now (temporarily) stopped allowing investors to deposit with then via bank transfer (though you can still do so by debit/credit card), but withdrawals are unaffected.
Hi Opt - Mined and staked crypto are extremely volatile as you say, and that's why I stick to stable coins which are fixed in the value of there currency and hence the only vol I have is USD vs £. USDC is particularly safe as it's backed 1:1 with $ reserves. I'm actually now characterised as a professional investor with IG, but only for the lower margin requirements and greater flexibility.