The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Guys, have i got it right regarding the current financing here now. With the new bond to replace the bridge to bond we are now reasonably solid (going concern wise) until 2028. So assuming revenue remains on the up & hopefully ROCE improves there should be no major finance stuff due until then. The short term drop i can bear as long as this is looking sustainable until the macro starts to improve which is starting to look like it's going to take rather longer than expected.
While it's not pleasant to see the SP take a good pounding, this could have been much worse. A RI would completely destroy your investment. they nearly always do! I'm sur the lenders are behind the decision to cut the divi & the planned asset sale. Long term this hopefully could be a good move. Depends how much they can get for NA business i guess. If they can shore up the balance sheet with that disposal this may not be a bad thing.It'll take a while to improve & like most shares now largely dictated by macro events. Once the interest rates/ inflation start to show a marked decline things should improve. Need a multi year outlook on this though. These are times to accumulate stocks like this & many others. The further the markets drop the larger the inevitable rerates when they happen.
Synthomer has been a bloodbath with a RI/share consolidation in one, & the SP close to the RI price now. I worked out if you'd bought that at 60p pre consolidation/RI your shares are worth about 10p now. While yesterday's update was a bit of a disaster here i feel the drop was overdone but the markets want change at the top for sure. These 2 have no credibility & must go. I've always taken a long term view on this one & i'm confident this will turn around with the right management. I thought with the bond refinancing sorted this was due an upturn but clearly not. Surely a NA sale would bring in a significant amount.The MC here now is looking extremely low!
Wow, took a look at this this afternoon & saw 60p so i thought they'd announced a RI. But, no. Axed the divi & cut the forecast. What ineptitude from Garat & Stamp to cut a divi straight after reintroduction & how can the forecast have changed so much in 12 weeks? A complete joke.These 2 need to go & go quickly. The market will not have any confidence with these 2 at the helm. They have overseen a complete value destruction with what is a fundamentally good business. 30% drop seems a bit overdone but really is no surprise. I can see it drifting sub 50 over the coming days/weeks if no decisive action is taken!
As i mentioned on here a few weeks back. this is a great little earner. I've been in & out of this a good few times. A wonderful stock. Great little company this & every time it fluctuates to the downside is an opportunity to make a chunk of dosh. I' m holding for a while this time though as that TU was very positive. !st slice off when it hits the 150!
All the clowns will vanish overnight once the SP turns here. Off to view the next one to talk nonsense about. This company has always had a high debt level as you expect from a high CAPEX business. The debt here is lower than it's been for a few years & is perfectly manageable. Ignore the noise. This BB has really become a bit of a waste of time now so i'll come back once the worm turns and all the fools have left to pastures new! GL to those who are invested & Dipper good luck with TUI; ASOS; Avidity. All your hot dips doing great as expected!
JC, the question you asked was a bit rhetorical. The question you need to be asking is why you took a position here in the first place? Then ask yourself has much, if anything (aside from the SP) really changed with this company when you took that position? You need to ignore all the noise. The markets are irrational atm & sentiments are rock bottom. That will change at some point. It always does!
From a long term perspective the only real concern here would be if interest rates continued going up relentlessly & revenue started to fall. We need to see a vast improvement on ROCE in US & UK to the same levels (28%) that they are returning from other contracts. I think it will only be a matter of time before inflation starts to recede & interest rates peak & start to fall. As i see it at this SP this really is a bit of a no brainer but of course short term we could see it dip a bit lower i think but surely must be near a bottom now. With their cash in the bank they could buy back over 50% of the entire issued shares which is totally bizarre!
In what way shocking? you can't really judge them based on the SP alone. Yes if they don't deliver on FY promises it's time for them to go but SP aside i'm not sure what more they can do. This share needs time.Too many impatient hands here!
Poker, yes the ROCE number is key i think there. Looking pretty bad that atm but they've sacked the underperforming management in those areas. If they can turn the ROCE around that is key here. Interest rates/inflation etc are outside their control but the ROCE is a number they can influence.
JC, it was a tongue in cheek comment. I really think people need to stop micro focussing on the daily SP here. The markets are currently in turmoil & are illogical. Need to ask yourself: Is this company running OK? Is there any thing different to the operational business compared to pre covid that cannot be resolved in time? Is there a going concern risk? Is their enough operational cash? For me the day to day business is fine. The problems are outside of the control of the business. Therefore the lower prices are just a buy opportunity not a reason for panic & i am continuing to accumulate!