The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Exactly Mike.
The several hundred at the port will include drivers, crane operators, security, office and admin etc. But that’s not our part of the operation.
And bear in mind that our part is electronic scanning, which is essentially static - drivers will drive the containers to/through the scanning equipment. I’ve seen similar security set ups in operation and you can manage one single scanner with one or two staff at any given time. So even if when fully up and running we were running say 4 scanners, needing 2 staff per unit, thats still only 8 per shift. Add in a supervisors or two, to get to 10 per shift.
Probs need around 4 shifts tops (but this is Africa, so they may just work 12 hrs shifts) and a few spares for leave and sickness, so even at full speed/operations( which we won’t get to for some time), I doubt they’d need more than 40-50 maximum. So at this stage, 10-12 is probably all we need.
So seeing this photo suggests to me that we have what we need in place at this point and we can scale up from there as operations expand. Nothing to be concerned about at all in my view - quite the reverse in fact as I half expected they might just have a couple of people on site running the initial tests.
True, but with the ferry, they were missing key ferry docks, had a boat with too much draught and thus not suitable, and needed to compete with other local ferries for business.
This is squarely in their lap, no competition, with a lovely shiny new state of the art port , and ships already booked in. Very different prospect and good to see we have a team on the ground ready to deal with that.
Some more local media earlier today, confirming testing/simulation complete and the port is now formally open for shipping business
https://www.ghanaweb.com/GhanaHomePage/business/Tema-Port-expansion-opens-for-shipping-business-759347
Only just listened to PF’s interview - one small point struck me as quite interesting and significant - we will be paid for ALL containers going through the port “whether they are scanned or not”.
Not sure if that’s standard practice for such a contract in container ports, but certainly to our advantage.
I concur Mike - the assets are is indeed worth a lot more than 8p.
And for once I am broadly happy that the SP is this low - because I have some funds freeing up in the next couple of weeks and intend to buy more here at this crazy price. There are many views on how this will pan out, each to their own, but I see value at this price. And I see it north of the TE5 valuation. Others will I am sure shout me down. But if others want to sell at this level, I will happily buy them.
This looks like it could be a company maker:
https://www.myjoyonline.com/business/2019/february-25th/first-phase-of-tema-port-expansion-project-to-be-operational-in-june.php
This quote says a lot “According to the Chief Executive Officer of Meridian Ports Services, Mohamed Samara, when completed, the Tema port will be the biggest in the Sub-Saharan region.”
It is stated to be 80% complete now.
http://mps-gh.com/tema-port-expansion-project/
This one is older, but gives a couple of useful bits of info:
https://www.theafricareport.com/11234/ghanas-tema-port-flaunts-ambition/
“Traffic reached 836,000 twenty-foot equivalent units (TEUs) in 2018, representing 90% of Tema’s container volume. It is Ghana’s top port.”
Maersk effectively owns 35% via its APM terminals company - a very useful affiliation both to drive volume, and longer term for WSG
So if volumes pre expansion were 840,000, at the sort of charges mentioned earlier, this could be a very lucrative contract.
And also this one:
“Can you clarify the position with regard to debts, should an acceptable offer be agreed to sell Tendrara alone as an asset. Is it proposed that current debt would be repaid before funds are distributed to shareholders? If so, unless that debt is secured agains Tendrara alone, should this not be a matter put to a shareholder vote?”
I’ve asked several, but my key key is this:
“James has previously indicated that the seismic acquisition would provide additional value and that this alone had some value. An indication was given that we could expect a heavily discounted value for each undrilled TCF indicated via seismic and basin modelling. So my question is, against recent drilling at TE9 and TE10, does that logic and principle still hold true? I am not asking for a figure, but simply whether the principle holds or not?”
I’ve tried to frame in in such a way that it can be answered without conflict to marketing
I’m not at all surprised by the change in approach to this FSC. Nor should anyone else be, if you think about where we are at present in terms of actively marketing the company. Why?
Rothschilds were engaged specifically to handle the marketing/sale and as to advise the BoD on how best to do that. Logic alone suggests that as the for sale sign is now formally up, this also means being much more cautious about what is said publicly, which could impact on or influence any negotiations. So it’s very likely Rothschilds will be sitting on the BoD shoulders as they answer each question. That needs a little more time to consider each question before responding.
That also means it’s very likely that we will not get answers to some of the questions that PI’s might want answered. That wont sit well with some people I’m sure, but it we truly want the best outcome from negotiations, there is no point giving away views or thoughts from the BoD that might negatively impact any discussions, so that’s how it needs to be.
So I suspect that some PI’s will come away from tomorrow disappointed. But that should not mean there is not an opportunity to get clarity on a few things, so ask away. Just don’t be disappointed when the company can’t or won’t answer questions which may influence their negotiating position.
I disagree Trellis.
If the whole company is sold, then you are completely correct. However, if only the Tendrara licence is sold, then it is not as clean and simple as that.
I suspect it all depends on how the loans are secured. If they are secured against the asset we sell, then again you would be right.
If however, they are against the company as a whole, then that is less certain. We may elect to repay them, to enable SOU to crack on with other assets without carrying debt. If the asset sale was a very favourable one, then this might be a good option - but not necessarily certain as you suggest.
Not a bad question to ask at the FSC next week, so we have clarity on the BOD thinking on this.