Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I suspect the current ongoing strategic review may well end with the technology being absorbed into a much larger organisation - probably due to hear more in the next couple or more weeks given their last update that expected to receive "proposals" in early April.
I would guess they have about 9 months or so cash left, and progress in monetising their technology has struggled to achieve any step change forward. Clearly they won't be able to continue as is into 2024.
I've mentally written off my small investment here, one of those punts that hasn't come off.
Don't "know" anything Freddie2.
"Expect" to get one share in each of the 2 businesses for each share held of Melrose currently. Key question will be how will those businesses be valued. I'd expect them to be worth more than the current c£6bn market capitalisation (otherwise why split ?), but how much more ? Only thing I think is sure is that the aerospace business will be valued more highly than the automotive.
I assume, to fit with their previously announced timetable, that the annual results 2 weeks tomorrow should clarify everything ?
Interesting couple of recent TR1 announcements, indicating that Capital Group Companies inc has increased its stake and now owns 15% of the shares / voting rights. While Melrose strikes me as being a valuable investment full stop, I suspect this might also be Capital taking a "position" ahead of the upcoming split ?
Even with the recent rise the share price is still well below the last reported NBV of around £1.85 per share.
Annual results announcement scheduled for 2nd March, and would expect some announcements regarding the upcoming split / demerger by or before then. I can understand people taking profits, but for me this remains a hold for a while yet.
Suspect most are awaiting the inevitable upcoming cash call and how that will be organised. Given 68% of the shares are held across 9 financial institutions, what they want to do is probably going to be key.
I suspect that it's more a case of there being little prospect for a trade sale of the GKN components in the forseeable future that has driven Melrose down the demerger route.
Aerospace is also likely to carry a higher rating / p/e ratio than automotive - so the demerger may enable better shareholder returns for that business, free of any "drag" from the rest of Melrose.
As other posters have indicated, possible recessions are never good for the business's that Melrose takes on. But I suspect the fall is also driven by the likely time it will take to complete the demerger - sell now to pick up on other investment opportunities over the next few months while Melrose does all the lengthy work it needs to.
Interesting webinar today. Not much new on the technology, but - and I may be wrong - I sensed a measure of underlying confidence amongst the senior guys making the presentation. I have a feeling there may be some upcoming positive announcements, hopefully driving revenue upwards.
Wonder what any other attendees felt ?
Completely agree Funkyfish. It is a start up, they've raised capital, the question is can they monetise their technology into sales ?
The next few months will determine things either way. As the results stated, they will enough cash for around the next 16 months. If they cannot generate meaningful sales in the next few months, I'm not sure what would be attractive to potential investors to provide that cash going forwards.
I agree with C26's view on Moers - he is critical to AML going forward, to achieve the necessary cost efficiencies that will enable improved sales to generate a profit turnaround.
My own very simplistic model has, at the operating level, AML losing £100m in 2022, breaking even in 2023, and then getting into a healthy profit from 2024 onwards. This is on the basis that AML does sell increase its sales 10,000 cars in 2025, improves its gross margin to 40%, while also keeping opex per car and D&A under control.
That still leaves AML losing £250m+ after finance costs are factored in in 2022, hitting breakeven including finance costs in 2024, and generating pre-tax profit in 2025.
There are a lot of ifs in the assumptions that I've used - a lot has to go right for AML to become profitable. I have a small shareholding - essentially a punt - and I've not been tempted to add to it even as the share price has dropped over the past months. I remain of that view - my next review point will be the Q1 numbers due, I think, in early May.
Newcomer to Mirriad, interesting webinar last week.
Question in my mind is how they monetise their impressive technology to a point where they can make a profit ?
Assuming their cost base settles, for the forseeable future, at £20 million, then how many clients / activity does the business need to get to breakeven ? I think Mirriad aim to take about 25% of the value of an advertising campaign, so I guess that means they'll need to be involved in £80 million of advertising campaign / spend to cover their fixed costs and breakeven ?
Wonder what the average value of a campaign is, or how many campaigns / spending clients they need ?
Welcome any insight.
Yes, the share price fall says more about the city than it does the company. The results are good, over-delivery if anything, with the prospect of further improvements (and increasing value) going forward. But why invest in this when you can buy overvalued shares in businesses that lose money on small turnover while burning through cash - in the hope that one of them will be another amazon.
If you want one reason why the UK fails to earn enough to pay its way, and is becoming ever more reliant on selling swathes of the family silver to maintain its lifestyle, here is one laid bare.
I think the results were good, and reflect the successful execution of a lot of initiatives within the business. However, with all this effort generating an operating loss of £74m, and post finance loss of £212m, they also demonstrate how far the business still has to go to achieve a decent level of profitability.
AM needs 2 or 3 years of continuing excellent execution, and no external disasters to impact performance, to get to that point. That remains both achievable and still a big ask, and I think the value the share price puts on the business reflects that reality.
My comment is the comparison is a bit meaningless without taking into account the market capitalisation :
Lloyds : £37,721 million
Metro : £179 million
Virgin : £3,092 million
Barc : £34,544 million
And of course the number of shares in issue.....
No idea where the share price will go this afternoon, but recent fluctuations probably support the view of sell after a decent gain as I see Paul has done. And maybe buy again in a few days. Perfectly understandable.
I'm a long term hold of the shares, both for prospects of an increasing dividend and further capital growth over the next 12 months.
I think any thought through comment - positive or negative - should be welcomed as attempts to inform everyone. We may not like that content (especially if we're holding shares and the comment is negative), but if it has a basis in fact then it merits reading.
My view - as expressed previously and commenting as a shareholder in AML - is that 1) it is obvious that the company needs to increase sales and profitability (through more efficient production), 2) that it seems to be putting in place the mgt required to deliver this, 3) this is not yet coming through in the numbers, but we are still in the early stages of the AML recovery, 4) the debt looks a big issue now but may not be in a couple or three years if financial performance does improve significantly, 5) the extent to which all this will drive share price increase is unclear.