Member Info for mole_man99

Bit early to call it on rates peaking. They should, but central banks are not being logical. ECB just raised again.

The VOD catch 22. Borrow more to pay a div to maintain the SP to keep borrowing costs low on the money you borrow to pay a div…

It’s a thought.

Robina, VOD are shrinking, not growing. That is what the city don't like.

Even on the managements own 'adjusted' metrics, they plan to reduce EBITDAL by 9% and adjusted FCF by 31% in 2024 year, compared 2023.

Selling off some key assets and shrinking market share through planned mergers is helping distract retail investors, but the city are not buying it.

Div is also not covered by actual FCF, so need to borrow or use asset sale cash to pay it.

Dig deep into the figures and make realistic projections before investing.

Pension fund just launched a lawsuit against Amazon suing them for picking Bezos Blue Origin as the launch provider for Project Kipper.

They know this inside deal is going nowhere. Just a way for Bezos to get Amazon to feed cash into Blue Origin which has barely managed 22 launches since 2016. VOD should of done more DD before backing this. Hopefully they have not paid anything upfront.

For comparison, SpaceX does 22 launches every 10 weeks now, cutting that to every 2 months from Jan 2024. By the time Blue Origin have launched one sat, say 2 years from now, spaceX will of launched another 14,000 (12 launches per months 50 sats per launch). You see the problem?

https://www.theregister.com/2023/09/04/project_kuiper_amazon_lawsuit/

Moley always with the reality check. Project Kipper despite starting in 2019 have not even launched a sat yet. They gave the contract, no surprise, to Blue Origin, who are not doing too well.

Starlink meanwhile has 4000 up there. Just no need for another LOE net launched, eventually maybe, by very expensive one shot rockets.

VOD late to the party and partnering with the also ran with a higher cost base I’m afraid.

Where are the incredible cash flows? Barely 1.5bn according to their own accounts.

What value the big money assigns to VOD when they return to desks is really going to rely on what earnings growth rate they can plug into their DCF models.

VOD really need to show how earnings can grow. A one hit from inflationary price increases won’t convince. The big money will just worry they will lose market share.

The value they assign also depends on what bench they compare to. The risk free return from bonds and other sources has risen considerably. They will want a handsome margin of safety to hold VOD.

Just trying to explain the apparent lowly SP may not be that low when compared to alternatives. A key reason why big money is not piling in driving up the SP.

VOD need to prove a high earnings growth rate to convince price moving buyers.

A strange day of bad news is good, as weak economic data stateside suggests rate rises may pause. Housebuilders and the likes of VOD tied to exchange rates, rose over here in sympathy.

The high EPS includes proceeds from selling assets. They are one-off events so can be misleading when trying to judge the financial strength of a company. That is why FCF is also important.

FCF shows you what cash is being created or burned on an ongoing business basis.

VOD are projecting 3bn adjusted FCF 24, so when the adjustments that you do have to pay for are added back, FCF may be less than 1bn. From this they plan to pay over 2bn divs, so sell more assets or increase borrowing to cover.

You see the issue?

The signs are they would be foolish to raise the div.

It’s hard to predict SP moves but I do predict 1.40 is years off. It relies on rates falling to 1%, in the absense of a strategy and plans to grow earnings meaningfully. Selling assets and mergers that shrink market share do not grow earnings.

“ Do you know what , with the large amount of free cash coming into VOD I wouldn't be surprised if VOD increased it's divi next time to 6p.”

This statement needs correcting for the benefit of the easily led. From VOD’s own accounts, actual FCF is lower than the div payout.

This company has financial stress currently hidden by selling essential assets.

Define 'dead cert' please. It will be a first for the stock market if you have found one.

The bull thesis with VOD always seems to be, it's gone down so much it has to go up. You need to bang the spreadhseet to work out how it is going to grow real FCF substantially so you can discount the value back to see what big money is prepared to pay for it.

It is no dead cert that it can. If it can't, then you have to wait for interest rates to fall so the discount rate can be lowered.

Churn concern is back. Was the buzz thing to watch 5 years ago.

The RR thing does keep coming up here. I am afraid VOD don’t want someone coming along to tell the the buildings on fire and make swinging changes. The just want someone to keep paying a div. Currently achieved by selling assets.

Share trading you mean. Bad for your wealth.

Fidelity analysed its clients’ portfolios between 2003 and 2013 and found that the best-performing portfolios belonged to those who hadn’t touched their investments. Coincidentally, many of these thriving investors were already dead.

So, pick the right companies with a good chance of growing earnings next 5 to 10 years, invest and wait.

VOD still does not make it into my retirement fund though. I struggle to see the strategy for earnings growth with the plan to back it up.

'THIS IS THE WORST SHARE IN THE FTSE BY FAR'

Almost and depending on the timeframe.

SP only

1 year, Persimmon is the worst -40.25%, but VOD a solid second at -37.95%.

5 year, of consttituents that have been in for the 5 years, VOD is third from bottom, -59.39%. IAG takes the reverse gold at -63.01%

Great table from HL in link to play with. Some consolation for HL who did even worse than VOD last 5 years.

https://www.hl.co.uk/shares/stock-market-summary/ftse-100/performance?column=date_5y&order=desc

" '5 years -60%. FTSE -2%'

58% upside from here at least?"

So it will still be 37% down on the FTSE.

Maths is hard.

Oh the irony, eh Dan.

There are different ways to get to the figure. VOD are taking EDITDAal which has depreciation and ammortisation added back in (or not deducted), and then adding/deducting further movements from there to get the FCF.

Table Page 20 of the report.

https://investors.vodafone.com/sites/vodafone-ir/files/2023-05/Vodafone-FY23-Results-Announcement.pdf

'Mole - Vodafone Group annual free cash flow for 2023 was $12.395B (Dollars)'

Gary, I think you are looking at some American site that is compunding the shares for the ADR's. Divide that figure by 10 perhaps.

Page 3 of the company report,

Free cash flow was an inflow of €1.4 billion (FY22: inflow of €3.3 billion) partly reflecting a lower adjusted EBITDAaL,

higher licence and spectrum payments and tax phasing. Adjusted free cash flow was €4.8 billion (FY22: €5.4 billion).