A good, detailed review of the business-
https://sprott.com/media/5766/221003-scp-rsg-initiation.pdf
Down 15% on 20 year average (government seems to have moved to this from a 10 year figure). High electricity prices will have more than compensated though.
Aside from the discount element, is part of the sp collapse across this, and other infrastructure holdings, related to the liquidity issue for the pension funds which required the BoE to restart QE?
This is an extract from an article on Bloomberg-
'Pensions have been asking fund managers to redeem holdings in equities, bonds, and also UK open-ended real estate funds in order to maintain their LDI positions, Bhagwan said.'
“Any pension funds which has used even moderate levels of leverage are struggling to keep pace with the moves,” Mackenzie said before the BOE intervention. “You have a bit of a death spiral potentially where pension funds in particular are being forced to sell because they’re breaching their leverage agreements with their LDI counterparties.”
The main trend seems to be the company buying shares back from the profits - which they then award to themselves.....
£8M is around 5% of next years profits. It cost £28M last year. which was 10% of the amount paid out to shareholders.
Given the halving of the share price over the past year perhaps the requirements for them being awarded the options should be a lot higher.
Most valuations are now post June which was the market low (around where we are now), so they should not be to far off.
With the £/$ at 1.16 at the end of August there will be more fx gains backed in as well.
I am not so bothered by the discount - if they keep delivering then at some point it will narrow back to historical levels, even at higher inflation rates their long term rate of growth would be sufficient to give a reasonable rate of return.
When you compare their results to those of John Lewis you can see what a good job Dunelm are doing of running their business.
Whilst I am all for rewarding this performance I am still not very impressed that they took out nearly £30 M from the profits for their performance options though.
Nice to see that todays interims have led to an upgrade by the brokers.
Zues-
‘Following upgrades to our estimates, our DCF-based valuation is lifted to 140p per share from 110p (a c.30% uplift).’
FinnCap -
‘We increase our price target to 100p/share (from 80p)’-20% uplift
Looking at GEAR's accounts there does not seem to have been any production at Ravenswood. They have had a fund raise and are looking to expand the production capacity at the site (this year?). Hard to see that they can meet the 500koz by 2024 with a target of 200koz p.a. There is however a rather ambiguous fudge in the Ravenswood sale rns about this -
'Payment of the Gold Price Contingent Payment is subject to the cumulative ounces produced from Ravenswood following Financial Close exceeding 500,000oz of gold over the four-year period and is subject to adjustment if the production plan adopted by the Buyer is reduced or lower than expected.'
The last sentence indicates that the production target is also dependent upon a 'production plan' as the exact details of this have never been specified (at least in an rns) it is hard to know how to interpret this.
I have requested the information from both RSG and GEAR but neither have responded. Given that RSG even referred to the A$200 in the presentation in todays rns you would think that they would be a bit clearer as to what the situation is with regards this potential payment(s). I thought that they were now being more open about their finances now but perhaps not....
At some point they will need $100m to go underground at Tabakoroni, I was hoping that some of that would come from the Ravenswood payments but I am not sure that these will happen.
I've dipped my toe back in. The last quarter looked OK and the conference call was very positive about the next. With each management change and better cash flow they seem to be clearing out previous financial 'fudges' which will encourage larger investors (as seen with the recent increased holding by Baker Steel).
They seem to have got the sulphide recovers on track and they are now looking at a higher throughput (to go with an expected announcement of expanded resources?).
I am still trying to find out whether Ravenswood Gold are actually producing gold any yet, anyone know? They need 500k oz before March 2024 if RSG are to get their A$50M, the other criteria (gold price) looks to have been met.
With a proposed annual production of 200koz there is not so much time left.
Apologies, I forgot Hornsea was CfD. Still at 175HWh and with inflation likely to be high again next year it will be making a good contribution. to their profits.
This increases total production by around a further 10% . With todays price at £570MWh this will start significantly contributing to income.
Official data for July comes in at 3.9% down on the 10 year average, much better than the 27% reduction last July. The the average next day price for the month was £243MWh, compared to £94MWh last July, August looks like being around an average of £350MWh (£107MWh- 2021), I think they are a bit lower on wind speed so far this month but with such high prices they will have had a very strong first half of the 3rd Quarter.
At the moment over 2/3 of the income is Merchant (the intention was for this to be 50% over the lifetime of the portfolio).
They are (or at least were last year when I saw a report on it) the least hedged of all of the UK companies in the renewable sector.
I have a shed full of logs, the oil tank is full and I fixed my electricity prices for three years last summer. The only gas we use is for the cooker hob (about 9kg per year). The government handouts more than cover any direct additional costs for us, but I have friends in professional jobs who are already struggling. The increases in mortgage rates and energy bills are going to be incredibly hard for very many this winter. I really fear for some some of the small business around me as they will not be able to cope with the increased energy costs .
Up to£539MWh !
Even if there is a longer term reckoning with decoupling of electricity prices from gas prices they will be banking a lot of money at the moment, this is over 10x what the price was in 2019.
NYT- 'Two Ethiopian Airlines pilots reportedly fell asleep at the controls and missed their scheduled window to land in Addis Ababa, Ethiopia’s capital.'
Incidents like this highlights the need, and will drive, the widespread uptake of DMS (PMS?) in aviation.
So , they exercise options for 70 k shares (£0.58M ) then purchase them back into treasury . They could have purchased the same shares 200p cheaper late July/early August so it is questionable it was the best use of our capital.... seems more like they are looking after their own interests.
Too much volume, I think it is more likely to be an II. I guess they waited until the seller looked to be out and then started buying.
I had not seen the articles, added more yesterday thinking it was II's and then wondered if I had slipped up with it just being a response to tip in the Times when that was mentioned, strong buying again today does seem a bit too much for it to be retail investors though.
I have seen that there has been some slowdown flagged in forward guidance for a couple of US eyewear vendors ('Both National Vision and Warby Parker have downgraded their outlook for the 2022 financial year, as strong inflation is weighing on U.S. customer demand'), so I have not gone all in on this, will see what the company have to say in September. The management who bought at 290p in June clearly do not see an issue though.
Not sure that I would agree that the 'share price never lies' I have had a nice run up from 600 to 900 in the past two weeks on no news in watr.
The problem for most small/micro caps at the moment is that there are no larger buyers. The big boys are generally avoiding this sector at the moment because of the recession risk . I read an article a couple of weeks ago where F&C said that they had sold all of their small caps holdings to 'de-risk' for this reason.
I don't think that we will see a very large re-rate even on good results as there are so many other 'bargain' small caps (and mid caps) around. So long as the next trading update is OK I will be happy enough to see us back in the mid 4's for now with the prospect of a more significant step up next year.
Personally , I would be delighted if they can find value in the other parts of the business but I am not expecting it.