Member Info for Sneedway

JG

My perception of value here is that it's potential balanced with risk. MCG is trading at something like 0.14-0.20 of price to sales at estimated 2023 FY revenues which is obviously crazy low. P/E wise it's probably trading about right if not slightly generous given the context.

You've got interest payments eating a major chunk of cash flow and regional operational difficulties. One or the other wouldn't be too bad but you've got them combined. The shares essentially have the risk of not recovering priced in and your value is the potential recovery. It's not a business as usual situation. You've got a margin of safety in the sense that it's still cash production positive with the worst (at this time) more or less behind it. Even getting half of the 2019 EPS would mean more than doubling the share price.

IMO if you struggle to tolerate a 40-50% down for a number of years you should stick to index funds. S&P 500 is up and has the best risk and reward ratio and objectively outperforms almost all stock pickers. On the other hand, if you're not prepared to hold a stock for 10 years you shouldn't have it for 10 minutes as Buffet says. Or cut your losses if you don't think the reward outweighs the risk. My first share ever bought was PREM (worthless garbage) as a teenager and it took probably 7 years before it was in the green.

Personally I don't see how the company does not recover over the next few years given strong demand and stabilizing costs/chance of return to rock bottom interest rates. Just a case of pricing catching up with costs. You've also got ALSA making profitable expansions everywhere as your organic growth case. Nothing to say it can't all go wrong though. I do wish they would just hold onto US school bus and tough it out until rates calm down. USA is THE place to do business and make money, not a good thing reducing exposure to that.

Thanks. I'm struggling to wrap my head around the provision particularly on the actual cash impact.

There is a cash charge associated for every financial year. Forward looking provision has to be made for an expected loss on the contract which goes on the balance sheet.

The provision may be reversed if economic conditions change e.g. changes to energy prices.

Is that about right? Although I don't quite understand why you'd adjust the cash element out of EBIT on the year since this is a loss already incurred.

The provision seems chunky

Looking at 2022 Annual report - they had a 21.9m onerous contract provision for Germany in 2022. Another 40-70m on top of that over 10 years. That pretty much wipes out all projected profits from the contract? Although the circumstances can change over time.

The provision is adjusted out of EBIT if you look at previous reports, but there is a cash element. It's not just an accounting charge. So I think this is basically another profit warning? Adjusted EBIT looks a bit funny if you just adjust all the cash loss making bits out of it. Not quite the same as a goodwill impairment.

what a ******* ride

hl showed me a 69p buy 20 minutes ago, now 80p

Just went 15% down. Ouch.

Doing a couple volatility trades here. RSI went under 6 briefly, never seen a Ftse 250 go that low, crazy stuff.

A rare UK beat on inflation saved the day

And shorts have reduced another 0.10%

You're looking too much into the SP movement. 10p is barely anything on the timeframe. If anything the SP is good given the events of last year. They might get what, 8-10p adjusted EPS this year? 175m operating profit -75m interest, -21m hybrid interest and then tax.

Being valued at 10 P/E is a boon for a UK stock in the situation it's in with so many uncertainties.

Key things for me

Numbers wise - continued positive free cash flow, meeting EBIT guidance, specific EBIT numbers by regions particularly UK which is lagging and hoping for continued ALSA outperformance.

Others - info on plan to get UK bus back in profit somehow, US sale update probably will be a separate RNS in next few months. More info future growth from geneva, portugal, saudi arabia and US shuttle/urban transit etc and future opportunities.

Missing the downgraded guidance would be very bad. If they achieve the upper end of guidance though it's barely off the original mark and probably drive SP upwards.

This is why I do not day trade

Expecting a rough day today based on the US reaction to the fed q&a yesterday.

Hopefully in 6 months the chat will be stressing about the stock dipping to 115.

Core CPI is still at 5.1% which way too high.

BoE aren't hawks but they'll more likely still push back on cuts until that shows more convincing drop. Or not? Our economy is so weak it cannot function on these rates.

A recession would unironically do MCG some good. Rate cuts will tank the £ and the bus sale will pay off more debt when converted from $.

It's establishing itself into the 90s nicely. Price volatility expected.

My average is £1.35 after reducing my position minutes before the October dump into 50s. Shame I overextended myself buying on the way down above £1 but the loss is shrinking and hopefully breakeven this or next year. A good lesson that low can go lower.

It's on the lower end of production guidance and AISC was a little above guidance (still ridiculously low) and uncertainty with no permanent CEO in place. SP volatility is always a big factor on gold miners.

West Midlands management has been replaced, hasn't it? They played far too gently with the local authority. That's the biggest contributor to the profit warning.

You can't have private companies subsidizing s country that inflicts austerity upon itself. Especially when in parallel you have train operators making jokes about free money for non functional services. They need to cut routes aggressively or get more money. Likely former as the council is going bankrupt.

But it's what has been expected. Market took it relatively well given it's trading at £1.40 and moved in line with housebuilders on inflation news. The share is super low for a reason in the first place.

Disappointment implies missing expectations but they haven't.

Fish

Regarding the 500mil bond. It's a euro bond which converted to something like 425 GBP at the time of issue so not quite adding an extra 100mil

Why do you think so?

Maintained guidance in a rough environment. SP held up pretty well in the contextual broader drop.

US core dipped down to 3.9%, though. UK core stayed at 5.1% which isn't great at all.