Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
I've been checking their website for an update. Probably won't move the SP much since it was sort of expected I suppose.
https://www.moodys.com/research/Moodys-Ratings-downgrades-Mobicos-rating-to-Baa3-ratings-on-review-Rating-Action--PR_489728
Interesting that Moody's is predicting they will refinance the hybrid not before 2025. Makes sense given previous discussion that the hybrid is more pricey than regular bonds, but then it makes the gearing look worse.
Looks like Labour took it, news just broke. The candidate stated he wants Birmingham bus services to go into public control.
Franchising might be a better option and maybe MCG would get a windfall from the government buying back depots etc. Perhaps not a bad way to dispose of a failing asset.
Looks like the reset interest rate in 2026 will be sum of Reset Reference Rate (e.g. UK gilts) + Margin of 4.125%, going up to 5% if the hybrid continues to 2031.
So it looks guaranteed to go up in 2026 to some degree. Could also just be refinanced with normal bonds for cheaper e.g. Euro bonds but I think that would be an accounting problem for the covenant gearing/leverage?
From what I understand about the hybrid the interest rate resets in Feb 2026 e.g. "reset date". It's not refinanced as such, just the rate gets reset.
It's not a given the % interest would rise - they note it could be lower than the initial on page 20 of the hybrid document. The new rate would be in reference to UK gilt yields so depending on how things go with BoE it could actually be cheaper if we head back to zero rates.
It's a pretty hard document to read, though.
The remarks on positive lead indicators probably made the market take the update well. If HY falls short then it could struggle still. Obviously this sector will recover and do well, it just could still get worse before it gets better.
UK bus and german rail are basically in limbo for the next year. The provision isn't just a write off; it will have significant cash outflows associated. US bus is recovering rather slowly and a quick/good sale is now less likely given margins haven't yet improved at FY. Only ALSA is thriving. So there isn't really anything on the horizon to boost the sharp price.
Paired with interest rates keeping higher for now, I expect that is the reasoning for increasing shorts.
I don't think 40s are unlikely, actually. There is no quick turn around for any of the struggling business segments, with US bus recovering slower than expected, UK bus in limbo and german rail locked into onerous provision. And meaningful rate cuts now less certain.
The whole company will be in limbo for a while. Cash flow is there to keep them treading water, at least. The hybrid bond is still trading fine at £1.04-5 which suggests no cash flow concerns for those obligations.
Finished the webcast.
It looks like UK bus will continue to bleed money for 2024 - their plan is to cut network from 2025 if TFWM doesn't pay up with subsidies. They're talking about having an automatic mechanism to pass through cost increases onto fares in UK bus. Can't imagine TFWM would like that kind of approach. Moving onto franchising seems rather likely.
German rail provision is 30m from a bid error from the initial 2015 bid which is non-reversible and 10m from discount rate changes. So something like half of the provision should be reversible if they successfully negotiate it with the relevant authorities.
For US school bus, Stamp suggested that FY2024 should produce about £20m more in 2024 based on the last quarter of Q3 2023 doing well.
Mixed bag, really. The FY report uses a lot of "ifs" regarding the school bus sale and it certainly seems like it won't be a quick cash injection. However, if H1 actually shows those margins in school bus it would be optimistic.
Some encouraging growth figures in some areas.
ALSA outside of Spain 61% revenue growth
Irish business 48% passenger growth
US shuttle/transit 13%
Will look at more details later, some good in here. The US bus lagging is probably the reason for today. I don't think anybody expected UK bus to turn a page but the fact US bus margins haven't moved is large uncertainty moving forwards
Looking over interest.
Looks like they paid 75m this year so slightly above forecast. 85-90m guided for 2024 which is rather punishing . US inflation dragging with consequent fed rates likely to be kept at peak for longerm. Nobody really knows. It would be a lot less than 85m if they begin to cut at some point.
Not a surprising fall. With lack of real margin improvement in US at this time it really creates uncertainty for the foreseeable future.
UK bus can be overlooked, I suppose. But US bus was once more profitable than ALSA and a stall in recovery is a worry. Both for sale purposes and as a profit generator in meantime.
Looks like UK bus is still losing money and I think that might not change for a while, with UK coach making up the shortfall for UK overall. Some comments on them looking to cut unprofitable routes in 2025 if they can't get a good enough subsidy package.
US School Bus adjusted margins at 2.4% so same as at half year.
ALSA keeping company alive.
Pretty lukewarm. Bit of a concern that NA adjusted margins are the same as at HY, those were supposed to improve with contract increases.
How bad could it be? The German provision guarantees a statutory net loss, I think. Which is reflected in the SP. Free cash flow should be positive but if it's negative that could be a real shocker.
US inflation is really awkward now since the rise yesterday was broadly fueled by housing costs which is majority rent and interest rates don't really help that. Can arguably make it worse.
It makes it awkward for UK even if inflation is good next week cause cutting rates if US doesn't has potential to majorly fuel inflation because of £ devaluation and oil being quoted in $
It will be interesting to see if the Fed acknowledges shelter costs as the sticking issue and their inability to do anything about that
Https://www.pmi.spglobal.com/Public/Home/PressRelease/12901bc3ebe74e888a7e6fa91e15ad9c
PMI at 50.2 meaning a very humble expansion. Encouragingly the trend of housebuilding activity is trending to a rise above 50 as well. Early days for sector recovery still.