Member Info for Monkshood

Overall look to be on track. UK/EU production was nearly £1m ahead of Cenkos estimate (in Jan) which made up for a similar shortfall in the US. The US is not lost work, just delayed, and they are now build on their manufacturing there.

In a past presentation they commented about how GKN are good at supporting supply lines with credit and ensuring prompt payment this is highlighted in the rns so providing there are no major hiccups they should be OK for cash flow.

The second half will be key, if they show the expected revenues/profit then this should fly.

Yes, I thought from some of their previous comments that profits may have been tighter this quarter but it all looks Ok to me.

Having posted the above the AT1 markets then promptly slipped back a bit....
News today is that yesterday ' UniCredit said that they were calling their 6.625% AT1 bond. Lloyds are next up, with their call window opening tomorrow, Friday 28th April, and markets are very much expecting a call from them as well – and if they do so we think this should help bring further confidence to the AT1 market.' (Source Twentyfour)
Unicredit are not replacing theirs at the moment but with some strong results in from the European Banks it all looking positive going forward.

Not showing here -it is more extensive but key highlights below-
On 13 April 2023 the Board of TwentyFour Income Fund Limited ("TFIF" or the "Company") announced its highest ever quarterly dividend of 4.46p which resulted in a record full year (to 31 March 2023) dividend total of 9.46p. This is an increase of 2.69p from the 6.77p dividend total paid out in the previous year. The Company's long-term floating rate investment strategy has reaped the benefit of a year of consistent interest rate increases by the Bank of England, which contributed to the significant jump in income and was further supplemented by the investment decisions made by the Portfolio Manager.

In the Company's financial year to 31 March 2022 the average SONIA rate was just 0.14% The average for the 2022/23 financial year jumped to 2.26%; an increase of 2.12%. As the Company's portfolio consists of floating rate securities, all hedged to sterling, this additional 2.12% of income formed the basis of the increased dividend.

The additional income during the financial year has primarily been the result of the Portfolio Manager's reinvestments of bond repayments as well as the investment of share issuance proceeds at higher yields. While the UK may be approaching a peak in rates for this cycle, the 10.1% inflation print for the 12 months to March 2023 was higher than expected and may put pressure on the Bank of England to further increase interest rates, from the current 4.25%. Market expectations are for a further two or three more 0.25% hikes and no cuts in 2023 implying that interest rates will stay elevated for longer.

I have had an email to say it is going up on the Hardman YouTube site soon-
https://www.youtube.com/channel/UC7H8J3c_ZhH6unfiJWEMEKg

It's nice that it is up today, but listening to the presentation did, especially when he said that they have set many of the assays up post FDA clearance, leave me wondering why they did not have more of this in place prior to the clearance.
I remember, several years ago, one of the analysts quizzing them about monetarising Parsortix and AN saying how they were focused on this, in retrospect it seems that at that time they were not focused enough.
At least it seems like they are now starting to build the collaborations and develop the assays to generate income to grow the company .

Hardman talks usually are available post event.
It is worth listening to as you missed a very good talk, especially the Q&A's where they really tried to fully address all of the points raised.

I was rather disappointed with the valuation gains in the last two updates , most have now moved past the September lows but do not show the same uplift that has been seen in the listed market. It seems that in practice the managers were reluctant to mark valuations down in the first half of last year and have held them steady assumedly until they eventually even out again with the listed markets,
On a more positive note cash flow has been better than I thought it may, I had expected more calls and (even) lower distributions than has been the case. Hopefully, as indicated, they will be able to take advantage of depressed prices in their markets to add assets to the portfolio.
Blackrock have started to flag the potential for PE for the first time in quite a while, indicating that the best vintages appear after periods of downturn.
''we continue to favor sizable private market allocations in strategic portfolios relative to conventional portfolios.
But with increased macroeconomic volatility, we also see the potential for more opportunities within private markets
too. We find buyout vintages – a set of private equity buyouts made in a particular year – following an economic
downturn tend to outperform, reflecting more attractive valuations and future growth prospects''

It has been slowly recovering with the Ivz AT1 now (after a couple of bumps) now trending nicely upwards and is comfortably at its highest since the problems at CS, even although it is still well down from Februarys highs.
However, in a sign that confidence is returning , a Jananese Bank, Sumitomo Mitsui Financial Group Inc. just sold 140 billion yen ($1 billion) of AT1 debt, becoming the first major global bank to issue such notes since the finance-sector crisis erupted last month.
'The sale is one of the largest deals in the yen corporate bond market so far this year, indicating that at least in Japan there’s firm demand for the riskier debt sold by local lenders. Another big Japanese bank, Mitsubishi UFJ Financial Group Inc., is also planning a two-part AT1 bond deal as soon as mid-May.'
Although not likely to be imminent, the next big jump would come if one of the major European banks calls and reissues.

Hi Gavster, it's great the company is doing well but there certainly was something to be said for the period when it was noted that we had gone a year without anyone posting to this board!

It is reassuring to see them delivering targets on time; it is not uncommon to have early stage implementation glitches, so either they have avoided them or managed them well.
It all goes to build confidence for the relationship with GKN and also any potential future customers who are looking to use their service.
Given the pipeline of work the already have in place, at 34p it has now become cheap, so hopefully we will see a deserved rerate.

Monthly factsheet for March just out-
PY is now 11.27% with an MtM of 14.96% and a Wal of 3.4years (on a share price of 100.5p).
So for a similar share price to the previous month the PY has increased by over 1%

It will also depend on the default levels. There is enough margin for these to increase and for us still to have a good return; if the recession does turn out to be shallow and defaults don't get too high then the rewards could, as you indicate, be to the upside.

I don't know, I am sure that they will have traded some of the portfolio over a turbulent past year but how this has impacted on the distributable income figure is hard to gauge.
As I understand it the repo borrowing is essentially gearing so perhaps that cost them in the falling market but has now enhanced income as things have reversed? Bips treats the leverage element outside of the stated headline purchase yield, perhaps TFIF does the same.?

At the end of Feb (when the nav was 100.2) the purchase yield was 9.93%, the MtM was 14.46% and the wal was 3.3years. I am also looking at 9-10 p divi (depending on interest rate changes over the year) with a 12 % capital gain over the next three years.

This takes it to 9.46p for the year which is just over a 9% yield at todays purchase price.

More than I was expecting but it does explain the large share issuance.

I appreciate that it gives liquidity, but personally I think that they do it more to increase the aum which increases revenue to the company ...
If they issued them after the ex-divi date then there would be less dilution of the revenue account. I cannot remember which IT is was, but I do remember the manager stating they had a policy of not issuing new shares too near the ex divi date for this reason.
It is rather minor and certainly does not change my opinion of investing here but if the demand is strong why not issue at a 4-5% premium which would definitely mean it was of benefit to existing holders?
I will quiz them at the next opportunity.

Surely the EPS will effectively decrease by 1.2%? Also, in addition to the dilution effect there will be brokerage fees for the sales but also for the purchasing of new assets with the money raised.
I have listened to the manager of NCYF say that it dilutes existing holders if issuance is at much less than 5% premium.
' Considerable care is taken not to dilute the revenue account, and
the manager wants to be sure that any new issuance can cover itself in terms of
revenue income generated until the next ex-dividend date. It would appear that the
board is open to providing liquidity to the market at the 5% to 6% premium level'
I know that many IT's issue at around 2% but I am still to be convinced that it is for the benefit of existing holders, especially as in this case when it is so close to a significant ex-divi date.

Unless I am missing something then the answer is no!
9.2M shares at a 2p premium- difference between latest nav and issue price -(assuming no costs ) benefits existing holders by £184,000.
if the div payment is 3p/share for 718M shares that is around £21,5M in total, so a 1.2% dilution of this (9.2M/718M) is £258,000 and this does not take into account dilution of any other reserves.
Beyond the extra liquidity for the company to purchase new investments it is hard to see that there is anything but a loss for existing holders when we are so close the the ex divi date.
(and they still have over 30M left under their latest block listing)