Member Info for rob295

Gut feeling is that Aviva come back in the 270p range with a formal offer and see it rejected. Bidding 300p+ feels too high from an Aviva perspective and the deal approval on the DLG side would come from the people who would be an obvious cost duplication as you're not going to see two CEOs and CFOs etc - that feels like a barrier. Personal preference would be an all share deal and then pay out a dividend once its combined, but that's more from the tax angle than anything else. But ultimately 200p seems like where this should be anyway right now - did sell a percentage out last time though and rebought after it retreated at a good discount.

To be honest while Germany has a few structural issues that are hard to get around, the UK business should perform and should really perform well. For me one of the challenges is that if you go to the route map and click on any location to see the available routes it too often mirrors the train network :

https://routemap.nationalexpress.com/

Partly this is because the motorway network mirrors the train network. But there are routes that could be delivered via alternatives that would seem to make sense from a viability perspective.

For example York to Windermere is a particularly bad route by train but a probable route on the tourist trail. Time on the train is 3.5 to 4.5 hours. By car 2.5 hours with the obvious route being A59 then A65 with obvious stops at Harrogate, Skipton, Settle, Kendal and Winderemere.

Just an example, but I do think there should be more expectation for more performance from the UK coach network as it is a very strong brand and there is the potential to do more. Just might have to extend beyond business as usual and not just be a cheaper travel option mirroring train routes through London. The gaps in the train network seems unexplored and seems like it should have a wealth of routes where you can charge the same as the trains instead of a £10 special because its better (who really wants to make a load of train changes and take an hour extra when you can get on a coach and arrive at your destination in comfort).

“ £111m they don't have, imho”

247 + 135 = 382 which imho > 110

Checked in on a calculator and it comes back as £272m of liquidity by year end which actually would be enough to cover the £111m of H2 twice in 2025

Remarkable for a business that will - checks notes - go out of business in mid October.

There’s talking down a share price and there’s putting clearly factually wrong things in the public domain for whatever reason. It’s all a bit nut. Personally I’ll not bother with this board anymore so good luck with it.

But FYI “ Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse. This could lead to an unlimited fine and up to seven years in prison”

I can believe there are issues on the manufacturing side and that would fit with putting in place a general slowdown in production and a look to improve costs, efficiency and quality. I also wouldn’t trust Stroll with my ice cream. But I don’t think I just heard a CFO and CEO say what they did on the webcast when the company has a few days of cash left. I may be blind to one of the great corporate fraud cases of our times. But for me, the CEO seems keen on things running well, the CFO seems careful in what he says and I just hope Stroll takes a backseat and trusts the team. I have a some doubts about 2025 and 2026 but it’s definitely getting closer. I think doubts about under delivering, meeting promises and execution are all highly valid. Blatant fraud I hope is not the case here and I believe the CEO and CFO believe what they say. So for me cash outflows in H2 I have down as being materially improved with some buffer to downside.

There is no transcript. I transcribed the key section below. It looks pretty clear and the key bit is clearly in the RNS… that sits quite differently to £2m a day outflow in H2 and strongly suggests no capital raise needed, instead a materially improved outflow. Then guidance maintained on targeting positive cash flow in 2025. All in 2025 looks pretty promising once you look beyond the noise.

From the RNS : "H2'24 free cash flow, while materially improved compared with H1'24"

From the webcast, I once got rejected for a job many years ago writing up a financial call to a transcript for too many errors, but since you can listen along I'll do my best :

20:25 "From a liquidity point of view, yeah, we're okay, so the, as you know at the end of the first half we had around £250m of liquidity and then following the reverse interest on the bond we tapped, so we raised another £135m or so, so from a liquidity point of view, I don't really see it being materially different to perhaps where we thought we would be at the end of the year prior to that. We're referenced in the RNS that unfortunately we no longer expect the second half to be free cashflow positive, but that we do indeed expect it to be a materially reduced outflow versus the first half of the year and we've previously guided to Q3 being that versus what we've seen in Q2 and I still expect that to be the case so as we move through the second half the outflow will be materially reduced."

To be clear 112p average on new chunk of shares, still sit higher overall but we'll see what 2025 brings to see if that is an issue or not.

Notes from webcast are below : (well worth a listen using the link on the RNS and then you can hear for yourself rather than relying on a chat board for info)

(1) production of new models started on time

(2) issue has been delayed delivery of parts which has led to increased re-work, with disruption coming from blue chip suppliers

(3) production orders are there to deliver in 2024 and confidence is there in the reduced cadence of production with those supply issues

(4) double digit percentage of cars have required rework and incremental cost to maintain production schedule would have been in the tens of millions

(5) will look to add additional protection to protect against supply shocks

(6) total ASPs for 2024 should grow from last year, positive trends in core ASP

(7) retail cover has been overtaking dealer orders which is preventing a full coverage of dealer cars but there is a plan to get those delivered

(8) on the China issue, China is on a different configuration of DBX. Stock clearance is on-going with a shift to DBX707 which aligns with other markets, re-launch of DBX at back end of 2024

(9) from a liquidity position, the £250m at end of H1 was referenced plus the £135m addition, with no material difference on liquidity seen. Cash outflow will materially reduce in H2

(10) the delay will mean a pinch in H2 though as that carries high launch costs while 2025 has minor launch activity

(11) 1st January should have full complement of brand new cars in the market with demonstrators

(12) specifically on Vanquish, press launch starts next week (from date of webcast), press have not driven yet, but sold out in multiple regions and orderbook is 'fantastic'. Will launch this year but won't arrive early enough to get much volume of delivery in 2024 and instead deliveries with really be noticed from 2025

(13) aim will be to have well balanced smooth production through 2025

(14) focused on delivering against 2025 objectives including being cash flow positive, no details yet on exact dates for that

(15) relative cost structures and earning potential reviews show room for growth

General vibe is that 2025 should be clearer versus 2024 with demonstrators in place, new models launched and through the initial ramp, smooth more sustainable production allowing more focus on efficiencies etc

Got enough confidence myself to release more funds into a top up dropping the average to 112p since the updated deliveries. Key for everyone is likely to be thoughts on 2025, even with supply issues there should be no real excuses in 2025 as everything is there to deliver. Obviously I hope they do, but do your own research and good luck all whether buying or shorting.

The guidance given to me suggests those numbers, but yes it’s a big step H1 to H2 which is why this guidance doesn’t worry me too much, if they achieve the revised guidance it’s terrible messaging but okay I think. And yes the numbers suggest to me a small operating profit in H2, I checked it as I wasn’t expecting it. All I’m doing is piecing guidance and using historic numbers to fill gaps and trying not to use exceptions. Whether they achieve it and 2025 numbers (which I think were maintained in the guidance) is the big question, but for the price I’m willing to risk it. It’s not a certainty. The guidance could be wrong but I hope not.

Since you asked for the numbers... (would be keen to hear opinions good or bad, mine isn't an emotional investment, just a financial one - there is a bit of guessing and bits will be wrong but I'm not trying to cheat myself out of money)

My maths says volume in 2024 is probably expected to be around 6,090 (8% down on 2023). I have gone for income per sale averaging £250,000 which is down on Q1 and Q2 but up on 2023 average adding non-car revenue I get £1,635m revenue (same as as year really) - this would be H2 £238,000 per car on my maths. Then using 38% gross margin I get gross profit of around £620m. For H2 that would see revenue £1,030m and gross of £388m. From RNS "FY 2024 wholesale volumes are now expected to decline by high single digit percentage compared with FY 2023", "FY 2024 gross margin now expected to be modestly below 40% (previously targeting c. 40%)"

EBITDA I get £302m (last year £306m). I'm feeding through values from last year but assuming no change in inventories, payables, deposits etc. There is a bit of guesswork but I think it is fair. From RNS "adjusted EBITDA now expected to be slightly below FY 2023"

Operating loss estimate I have for 2024 is £98m, pre-tax loss of £207m. For H2 I get a small operating breakeven (not sure if that is right but figures I'm using to me look okay). Do your own maths on a revised revenue and gross profit and see if you agree. Net Profit Before tax for H2 I get -£50m.

Cash is a lot harder to work out as you get more variance year to year but I get a cash outflow of £76m in H2 (was £162m in H1) - which includes £61m interest payment. From RNS "H2'24 free cash flow, while materially improved compared with H1'24, will remain negative (previously positive free cash flow generation in H2'24)"

If the view was that is tying with the RNS then I'd put down an estimate of a £70-100m cash burn in 2024 (adding some buffer on the downside). We can contrast the other view of £2m a day cash burn but that gives £365m in H2, in which case I think we have a lawsuit justified by the "materially improved compared with H1'24" comment. For me materially improved means at most £100m cash out flow in H2.

If this were right then we'd be coming towards the end of the cash position with little room for further cash burn as deposits can decline on deliveries etc.

The good would be that 2024 would still be a historically strong half of the year - the bad is that it would not be enough to generate positive cash so 2025 would be even better. So for me the view is between the extremes. I feel it should be okay to get into 2025 without a big cash raise or anything major raised. On the other side they have to deliver that positive cash in 2025 to show success, but at the numbers in H2 I'm not sure it would be too far off. I'd say go download H1 and FY23, do your own maths and see where you end up.

Obviously I'm not saying this is correct as I don't know what correct is, but interested

I’m not sure there is enough detail to say yay or nay on a CR. For absolute value a CR isn’t ideal but I have left room to buy more if that happens. Would assume worst case £1 CR but I don’t see them being bad enough to not bridge to positive cash flow in 2025. It isn’t that hard to do. Then even a return to £3 and I’m happy. It’s got its risks but I like to have a few riskier investments with high upside and can live with some risk. Wouldn’t bet my house on this one but sometimes dumpster diving can deliver big upside.

Topped up today for what it’s worth. Has to be one of the worst companies for failed targets but a price of £1.20 to £1.30 prices in an awful lot of doubt, if the market believed the targets we’d be at £3.50 again. Just need one good year of performance so hopefully they belatedly can deliver something decent in 2025. If not there is always 2026 ;)

If iron ore prices are decent this is very undervalued

Any thoughts on why someone would sell in one go rather than get someone to drip feed the position down? Can’t really see a scenario where this seems optimal even though it is hard to trade out a large position in these types of stocks due to low trading volumes.

Normally on a company like this I’d say you would look for a PE of 10 but it’s likely to sit below due to oil price risk I think. It’s a good hedge for anyone exposed to falling oil prices ie a good compliment to oil investments or currency linked to oil prices for those it’s probably worth buying up to PE of 10.

Feels significant that we have broken past 70p. It’s been a good day all round for companies with a reasonable debt position, but it felt like 70p was an upper limit but might keep going now.

“ The first deliveries of the AMB 001 Pro have been made worldwide. Just 88 examples of this unique, track-only, hyper bike will be produced.” - LinkedIn post today

https://www.astonmartin.com/en-gb/our-world/partnerships/brough-superior-pro

No idea what revenue share AML get but it’s 88 ~£100k bikes made by Brough Superior

Routes are being changed which hopefully will mean no loss making routes :

https://www.itv.com/news/westcountry/2024-09-03/national-express-scraps-503-penzance-to-london-coach-service

MP for North Cornwall Ben Maguire has launched a campaign to bring the service back.

He also wants National Express to consider creating more routes through the towns of Bodmin, Bude, Camelford, Launceston, Padstow, St Columb Major and Wadebridge.

“This route for those in certain areas, such as Launceston (with no nearby railway station or other coach routes), served as a very useful transport method indeed," he said.

“But now that the 503 service is being scrapped, residents and visitors alike will have to travel even further to be connected to the rest of the country.”

The Liberal Democrat MP also called on the government to tale steps to ensure coach services are available to people living in and around towns in rural areas like North Cornwall that are not served by mainline rail services.

You’d hope to see £300m revenue from Vanquish in a full year (1000 car max). Not enough to move the needle much on its own but probably higher margin end of the sales so you’d hope £100m+ gross.

Some supporting press :

https://www.forbes.com/sites/kbrauer/2024/09/02/all-new-2025-aston-martin-vanquish-world-debut/

https://www.autoexpress.co.uk/aston-martin/vanquish/364221/new-aston-martin-vanquish-unveiled-roaring-823bhp-v12

https://www.topgear.com/car-news/first-look/new-extra-long-aston-martin-vanquish-most-powerful-production-am-ever

Feels like there will be a lot of positive press again.