Member Info for tenobas

Fixed rate long term debt:

2023: 10863 2024: 12757 2025,H1: 13068

So not rising but is it an exposure?

I believe that interest rates are set to rise but I dont know how that would affect AHT.

+ Customers cannot buy instead of hire.

+ AHT might be exposed to rising borrowing costs they could not avoid.

Thoughts?

Why no Trading Update?

Results have often surprised on the upside but I don't think this will happen this time.

My only transactions are buys at 118p and 106p.

Big tranches are coming in at a heavy discount.

Somebody must know something.

Why would commodity markets be a problem? Surely chemicals are no more than 10% of costs.

As to the macro economic environment if there were a recession surely consumers would switch to generics.

Any ideas?

My first impression is that this resembles Melrose in that profits from disposals are much higher than profits from operations. This can be a successful business model because the value is in the identifying the business and then making it look more stable by being part of a larger organisation. It can be a little uphill because corporation tax is paid on the capital gain.

Is this a growing business? Is the boom in materials science going to burst? Probably not but the historical performance is not impressive:

15 16 17 18 19 20 21 22 23 24 25

Spectris

T/O 1190 1345 1525 1604 1632 1336 1292 1327 1449 1200?

P exc disposals 32 160 160 74 (4) 162 115 145 130?

ROCE 16.8%

The ROCE is quite high but offset by the tax.

I have a suspicion that it is common for management to see shrinking growth opportunities and turn to ERP software to squeeze out the last few drops only to find that they are being taken for a ride and the cost and disruption is not worth it.

My take on this is that the life of products is rather short and that with the march of IT technology this is becoming a people business rather than an IP business.

+ Award of £900,000 Long Term Incentive Plan

Dealings (+ is buy):

+ CS + 21K

+ AM +20K

+LM + 9K

+ MC -40K

+ LM +10K

+ MS + 10K

Holdings now (I think)

CS 169K

MS 123K

PI 78K

LM 73K

MC 114K

The turnover for this company is not growing.

The growth in profits in recent years looks to have been due to significant savings in pension costs and roll-off of TUPE regulations and cannot be repeated.

I see no reason to buy this share.

Whilst this share is on a low P/E I think that it might not be the bargain it seems:

1) £0.5bn nuclear profits due to end imminently.

2) Shrinking gas production

3) We are approaching the point where renewables exceed demand. This already occurs in the US.

4) Shrinking gas demand and corresponding standing charges.

5) Shrinking demand for gas storage.

6) In the 10 year timeframe shrinking gas boiler maintenance revenues.

Basically all the revenue sources are under threat.

Marielle Claudon sold some shares to cover tax on the options.

This seems to be a solid movement. Do the shareholders know something which we do not?

I think that Eren Holding has a highly integrated operation which goes all the way to individual cardboard boxes. https://www.modern-ambalaj.com.tr/

https://www.modern-ambalaj.com.tr/urun/kutu-21

That is in Turkey but I guess that in time it will be here.

I said I would buy at 110p. We arrived there today but I am not buying yet.

I think that today's fall is due to:

Eren Holding said its new plant would process a quarter of the waste cardboard the UK currently sends abroad, and focus on creating containerboard - used to make packaging and corrugated boxes from recycled paper - as well as tissue products.

The question I think is whether there will be more vertical integration in this industry

Https://www.enr.com/articles/9458-are-equipment-rentals-cyclical-or-secular

I guess that financing rental fleets is easier and that the thing which discourages operators from buying is uncertainty and that these two factors make AHT counter cyclical.

I would guess that the quants are all over this:

2020 - 2021

June-Aug 2022

Oct - Jan 2022

UK hirers show no such correlation but maybe we could view the UK a super-lagging the US at present.

United Rentals however shows the same correlation as AHT.

I was considering buying but this is very disappointing.

One expects a little kitchen sinking with losses but there is not even much evidence of that.

We are asked to believe that their investment in automation will bring the savings to turn a loss of 900K into a profit of 1200K but with staff costs of only 7300K it is hard to believe in that.

They impair customer relationships and goodwill as two different items and I suppose that it is some comfort that only £4m of goodwill remains.

A P/E of 8 is just too low for this company.