Member Info for Megla

Beauty is in the eye of the beholder.

Some might see the company as a good investment post tender/divi. But for those that don’t, the tender will be a great opportunity to exit their positions.

I have no idea how the tender will work, but if its VWAP over a set number of trading days I’d bet the market will push up the price to something reasonable.

If the tender is TNAV, then that should be around 245p.

Tender is great for shareholders, just need the GOI to payout and then folk can either ride off into the sunset with their cash, or hold and see what the board can do with Egypt and the remaining cash.

Agree Barney.

£2.45 would be roughly tangible NAV, which would be a fair price in my view. I’d happily tender 100% of my holding at that price.

Egypt doesn’t look all that exciting, entitlement production is much lower than the headline figure and is mostly fixed price gas, so will struggle to ever produce any meaningful FCF.

Roll on payment date.

Baysil, you’re the one throwing insults around so you’re hardly going to get a cheery reply.

Egypt - $323m
Net Cash - $202
GOI - $1060
Earn out consideration - $180

Total $1,765 or £1.3bln. Divided by 498m shares = £2.60 - which I think you’ll find works out at tangible NAV

There’s no immediate upside to this, Egypt will take to time to prove its a good investment, so all the posts in the world won’t change that the fact that your 350p or 400p a share is utter fantasy land, regardless of how many reasons you dream up for potential suitors to pay a premium for a company mostly made up of cash.

The market may assign some value to the intangibles, it may also apply a discount to Egypt (like Pharos) until it’s proved it can produce meaningful profits/FCF.

I believe there will be a sizeable discount to NAV following GOI payment, mainly related to the earn out potential (which isn’t guaranteed) Egypt, and zero value being assigned to the intangibles (half of which we inherited with the Egypt transaction) hence my 219p conservative share price comp guess.

That’s still a relatively safe 10% return, provided the GOI don’t do anything silly.

If the price is higher (I hope I am being too conservative), great, but I think it’s a realistic assumption using Pharos as a guide, but each to their own.

Again Baysil, you write a post without paragraphs, which makes it incredibly difficult to read.

NAV will be around £3 per share once GOI completes, but more importantly, tangible NAV will be around £2.50 per share. With the majority of that being cash.

If you think really think someone is going to pay 350p or 400p for that 250p, you really are absolutely deluded.

Pharos energy trades at a discount to NAV, you know why, because they’ve yet to make Egypt work. The assets simply aren’t popular in the market.

As I’ve said, time will shine a light on your nonsense.

Baysil, don’t cry, it’s just a difference of opinion. Yours of which will prove to be utter nonsense.

If you’re doing more homework tonight, you might want to research paragraphs.

Baysil, you’re sounding a little emotionally attached to this.

If Harbour wanted/needed to increase NAV, they could just raise cash $2bln via a rights issue. NAV increases, market cap adjusts, debt goes down and they get ftse100 status.

They have absolutely no need to do that of course, their assets are in the ground rather than on the balance sheet, gearing also isn’t in the covenants, so all in all this would be an absurd idea. Another absurd idea would be paying a massive premium for a company that is mostly cash :)

As for the production element, I’m sure Harbour have plenty of other options.

A takeover simply isn’t going to happen. No one is going to pay a premium for cash and no one is going to pay a premium for the assets in Egypt, but if you want to believe they will, that’s up to you. Time will show who is right and who is wrong.

Banbury, the reasons don’t make any sense to me.

If investors in harbour wanted to own a FTSE 100 company, they’d go and buy a FTSE 100 company. It might be good for managements ego to move the company up a notch, but there’s no real benefit to equity holders

Secondly, if Harbour wanted to reduce leverage and the associated debts costs (they have absolutely no reason to do so) they could raise cash without using it to buy cash at a premium.

Okay, £2.80 is a little more realistic rather than some of the ridiculous numbers being thrown around. But I still don’t see anyone paying a premium for a company where the tangible NAV is mostly cash.

This takeover discussion has drifted into absolute fantasy land.

Can your imagine harbour (or someone else) going to its major shareholders and asking them to stump up cash via a rights issue (or whatever) to pay a premium for a company mostly made up of cash.

Hi guys, we’d really to buy the £1 that’s in Capricorn Energy’s pocket, would you be willing to stump up £1.30 for us to go and do it?

Egypt isn’t fancied (see discount to NAV of Pharos) and the balance sheet includes $300m of intangibles, but sure, let’s throw some ridiculous figures out there to try and justify a huge premium to NAV.

There is next to zero percent chance of a takeover, imho.

The share price won’t exceed 250p this year, imho.

Fingers crossed for a quick resolution on India.

Why would Marshall Wace increase though? These guys aren’t dummies, they definitely get it right more than wrong, but if the GOI do make payment there’s a huge discount to NAV at the current market cap.

Okay, they’ll get the benefit of the share price reducing on ex-dividend date, but as thunder says, they’ll have to stump up the divi to the holder of the stock so they don’t benefit at all. Moreover, I think most of us are hoping the share price will be higher before the dividend is paid.

Does the market really have such a dim view of the company?
Are they betting the discount to NAV will remain?
Is this part of a hedging strategy? Odd company to pick if it is.
Or some other complex tax thing that retail don’t understand?

“Trading below net cash is the new normal for old economy stocks”

That has to be the most ridiculous comment I’ve ever read. Do you know why I company doesn’t trade at a discount to net cash, Joseph? Because someone can buy the fking company, pocket the money and sell the remaining assets for a handsome return. Not exactly rocket science this one.

A discount to tangible NAV, maybe, but it won’t be anywhere near the discount implied by your share price predications. And you know why? Well, read above.

The wait probably is sending us all a little crazy.

Fingers crossed for a billon dollar Christmas present.

ATB

Bit dramatic Whitehat, do you know how the filter button works? It might be preferable to use that, rather than telling folk to STFU.

Who are these nasty derampers on here, PeePee?

Seems to me that’s there’s hardly any chat on the forum, so would be interested to know who you think is trying to talk this down? I’d also like to know why you think anyone posting on here can move the market cap of a £900m company?

This is like talking to a brick wall.

The share price will adjust on the ex-dividend date by roughly the dividend amount. Now let me repeat for the third time I DO NOT KNOW WHAT THE SHARE PRICE WILL BE ON THE DAY BEFORE IT HAPPENS (no one does), but yes I believe the share price will end up lower than the current price BUT shareholders will have 75p per share in their back pocket.

Moreover, if the share price ends up at 150p, either immediately after the divi or after the buyback (which I think it will), then that’s still a 15% return from the current price. Only fools like PeePee would consider that to be de-ramping.

Good luck with your £3 target, I think you’ll be incredibly disappointed but let’s see what happens.

Baysil, why are deliberately misquoting me?

I have never said the share price will be 110p post all deals. What I did say, is that the share price will reduce by 75p on the ex-dividend date. Now let me repeat, I do not know what the share price will be the day before this happens. It could be the current price of 192p, so 117p. Or it could be from 250p, so 175p. The divi is first, so the adjustment will take place before the main buyback commences.

Secondly, your calculator appears to be broken.

“Balance sheet is $1007.8m or £800m NAV before GOI.”

That actually works out at £740m based on the current exchange rate. Add in the £260m remaining from GOI after the buyback/divi and the theoretical NAV is £1bln, not £1.06bln.

Within that there’s $280 (£205m) of intangibles, so I'm not including them within my valuation (for now, obviously that could change). I also think the market will assign a sizeable discount to the Egyptian assets, just like it does with Pharos Energy.

Personally, I would guess at a market valuation of between £600m-£700m when everything is done and dusted, which would work out at between £1.50 and £1.75 per share based on the theoretical future share count of 400m. If I'm wrong and the discount to NAV is fully eliminated, then I'll be very happy, but hugely unlikely in my view.

Disagree wholeheartedly, how would someone ever work out whether to buy a company if they haven’t looked at the fundamentals and assigned their own personal valuation?

Cairn isn’t an overly complex business, it has producing assets in Egypt a few bits of exploration and some earn out consideration from the North Sea and Senegal. Surely anyone can look at the sum of those parts and come up with a valuation and decide whatever to buy or not?!

Sounds like your approach is pick a share at random and hope it goes up.

So you’re suggesting I’m ‘de-ramping’ by pointing out why I believe your comment to be nonsense? A comment that you’ve let others try and debate for you, without adding anything yourself.

Maybe explain your point, with numbers, rather than throwing disgusting insults around.

PGee, if you post something then it’s likely to get challenged, that’s kinda the idea behind these forums. Blatant ramping helps absolutely no one and misleads newer investors.

Please put me on mute rather than reverting to name calling.

Erbalaji, I think you're being far too generous to PGee, his post was just nonsense. Of course the share price will drop on ex-dividend date and 100% it will be lower than the current price of 186p.

Yes there's a debate on what the current share price should be, I personally think the brokers have it about right at 225p, but to suggest the share price won't change following the removal of $500m from the balance sheet really is just silly.

Even from 225p, the share price would end up at 150p, which is significantly lower than the current price, so no, they didn't really have a point at all.

The $500m special dividend won’t decrease the value of the company?! Lol. What utter nonsense PGee.