The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
NTC,
Quiet in here, seems that a lot have gone to bed, overslept and forgotten about breakfast.
I don't think Tufan was joking about hurrying up. The UK govt may be happy with a rudderless (nay self destructive) energy policy and happy paying 5x the cost in China for energy. Others out there on the continent may actually believe differently and think that preserving their industrial base somewhat essential and requiring urgent attention/action.
Svend, no problem, wasn't inferring that you were inferring that ;-) Vaguely remember something like an expected 10% jump but looks like we might see even more. It might not change overall flight numbers much but will lift airline utilisation factors and profitability which has to be a good thing for the whole industry and future purchasing commitments.
Svend, thanks, not looking to misrepresent anything, flagged up on Kobeissi Letter on Twitter and thought I'd got the current stat link. It is apparently up there at record 22% level still (from the chart they posted showing 2024 intentions).
Remarkable uptick in percentage of US citizens looking to travel and holiday abroad over the next 6 months. Expectations were for a sustained growth in civil flying hours but even that might have been an underestimate if anything like this stat is replicated elsewhere. Intentions peaked at around 15% pre pandemic, now standing at over 21%. Is there even the spare capacity to accommodate this?
https://www.reuters.com/world/americas/record-number-americans-plan-traveling-abroad-next-6-months-2023-08-29/
Europe's and UK's energy supply is a mess, the transition to Net Zero is a fools errand anyway but that is not the point, what is being proposed will put the energy supply and electricity supply in particular under such enormous strain that unless there are very significant and quick improvement we'll be seeing blackouts and if we get anything like a bad winter. Whole scheduled blackout sequences were drawn up a couple of years ago for the UK. Specific to EV's away from home charging rates have got to the price point where it is pretty much cheaper to drive a petrol/diesel vehicle so even now this early in their rollout users are doing the basic maths and working this is not going to work for them. Same goes for the economics in retrofitting heat pumps.
Solar - fine in summer and swing season months, useless in winter, wind - fine when it is windy, useless when calm. you still need huge baseload to fill the gaps. If you are not going to power gas or coal generators you need to generate that electricity somehow, hence there is a huge need for the rollout pretty damned quickly of something to replace the capacity that has already been demolished. |Every single EV sold is putting further pressure on the grid and generation generation. It is no coincidence that new regs ensure fully connected home chargers, government are already setting up the situation where they can all be turned off remotely to prevent either local power cuts or worse large sections of the grid falling over.
"I don't see how we have the additional skill set or supply chain volumes necessary"
Would have thought CNC machinery will take care of most of that (internally or externally contracted). Once you have the appropriate programming sorted if you have the space then going from x machines to 2x machines is not rocket science. Set up time and just monitor the machines do their stuff or just make larger batches of each component as you go and save on set up time. Accountants don't like factory input costs and work in progress but sod it if you have kit to make, just make more and store more ready for assembly.
"Royce's are going to run out of capacity at this rate - just how many engines can they catually build???"
As from 2025 after the recently announced £55m investment across the board the main plant in Derby is supposed to be able to produce and support 40% more than the running production from the decade earlier. Investment going into German plant too. Seems like an aggressive target, CEO doesn't seem to be your average plodder. so who knows, we'll see.
OJ, no good getting loads of contracts if you don't make money on them, the big overhaul of the mix of products and costs is part of the re-rating. If you run a tight a tight ship and also increase your turnover with new ranges of products then it is a double win.
Comment in regards operating margins.
Civil Aerospace has the biggest step change, improving from 2.5% in 2022 to 15-17%.
In Defence we plan to improve from 11.8% in 2022 to 14-16%.
In Power Systems, our shortest cycle and most diverse business, we plan to improve from 8.4% in 2022 to 12-14%.
Retirment, don't get the interest rate thing at all, yes good for the market but absolutely nothing to do with RR. materially. The growth in civil the next decades is in Asia. If we're skint thanks to mortgage payments yes civil miles will be effected. Nothing like significant proportions of Europe's manufacturing shutting down thanks to short / unfordable energy supply. If anything the rest of the market going down will highlight the potential winners that have growth and potential in them and invest accordingly.
Oj, pre pandemic the whole of Europe and UK still had a largely functional energy market supply, there was no talk of rolling blackouts and industry shutting down thanks to energy price/availability. 30/40% inflation price changes since - anybody's guess really as numbers are rigged. Also nobody really saw much immediate requirement for having to replace military hardware. Basically the situation is not even comparable. If a company is lucky enough to have strong footing in all those camps with a good CEO all bets are off.
The biggest threat to Apple is AI , it could be a pretty existential one for them. Nobody knows where AI goes in terms of interfaces - Visual / Audio / Neural even. Nobody knows how far models will go in terms of their ability to code and dramatically reduce the time to create a whole software ecosystems and nobody knows what hardware that AI is going to run on in a handheld form - have a look at the Rabbit R1, a product you've likely not heard of that came out of nowhere.
Barriers to entry for well established companies are important in terms of valuation, RR's are much higher.
Accipiter, same goes for a lot of northern europe, cold climates need copious energy, shutting down your existing energy supply was never sensible choice before an alternative is in place. RR could make notifiable steps towards SMR introduction with a list of countries in Europe at any point in time, including before UK decisions are made. Germany on the sidelines as they have canned nuclear politically, southern europe with better climate and solar a more viable reliable source of year round energy are also not likely first / major adopters. High energy costs are crippling european manufacturing and personal living standards so the political pressure is high for pushing through some plan to tackle the problem. The CEO may not have been bluffing in regards needing to make a decision promptly.
Terrapower - they failed to mention in that article that the fuel supply that design needed was from Russia, putting it at least two years behind schedule. Agree though, no trust at all in UK political decision making process.
Tufan doesn't seem like a character that is going to bluff and hang about, if the deals are ready to go elsewhere other countries may get a bigger slice of the spin off investment from rollout.
Might be due to being bounced around at key trading level - top of channel and resistance line, right old ding dong going on. 3 bites already around the 380 mark, if it breaks through it not much stopping it, or the bears win short term and it goes lower within the channel. All the time (for now) though trend in upgrades and broker estimates is rising adding more pressure to upside.
As well as all time highs also bumping around underneath the very top of the current trend line at the moment too (according to MarketScreener chart I'm looking at). Looks like an interesting setup either way.
Government forced to step down on gas boiler install tax, the heat pumps are not working in many cases, cost many multiples of the prices for a full install for conversion and not suitable for vast majority of exiting housing stock without ridiculous secondary work (if at all), besides there isn't the electrical energy infrastructure (either generation or distribution) to even support a mass rollout. In regards technicals completely changes the medium and longer term financials as the penny drops there is going to be no sudden switchover to electric only, penny dropping with EV's as well, many chasing the benefit and kind tax breaks don't want them a second time around, regardless of the savings.
Meanwhile Germany announcing gas power plant expansion deal this week, a realisation that without an energy supply they won't have a manufacturing sector left.
Bankboy,
There has been some variability in buy backs, largely the same amount per day but some others half the rate and the odd late notification the day after.
Rather than concentrate on the weeds though it is possible to fundamental misunderstand the situation here. If you have an engineering background and not finance it is patently obvious that any shift to green energy supply has already failed on its promises, prices are higher not lower and no amount of political blathering is going to fundamentally make a jot of difference in the ability of the grid and electrical sources to be uprooted and turned on its head in a matter of years. There isn't the money, there isn't the infrastructure, there isn't the supply of materials / components and there aren't the skilled bodies to do the work for anything other than a multi-decade switch.
No energy, no country, Germany is going to learn a lesson or two about about that and also what happens if you try and cripple your food supply - mass main artery road blocks in progress.
As for shorting having looked at the rest of the FTSE100 plenty of high / overvalued stocks there in sectors that are already faltering - housing, retail, and others and failure in those will expose the banks. The public have already had a year penny pinching as much as they can on energy but shivering in your darkened house under a heated blanket nothing but a short term stop gap, if it comes to it slashing expenditure elsewhere will be far more amenable to improving day to day life.
This is not a situation brought about by the energy companies themselves but one almost entirely via a compromised rabble of politicians. If those energy companies don't survive / thrive over the next dacade or so the country will go down with them, simple as that.
How do you compare the situation here and Centrica and make any reasonable comparative value statement?
Octopus FY 2021/22
Revenue £4.2Bn
Operating Loss £141m (would be near breakeven if not for absorbing wholesale costs)
Just raised £625m
Valuation just raised to £6.2Bn (according to Bloomberg).
Tep, Market Screener are showing analysts' expectations tracking back up again for '23, turnover down from the estimates that spiked over the summer but still beginning to go up again, currently sitting at around £30Bn, EPS nearly 30p and dividend 4p for '23.