RE: New presentation precursor for newsflow?25 Sep 2020 07:55
Hey DCAT, when I saw the news yesterday my first thoughts were what updates have they made and why do them now?
With all due respect for the BoD these guys don't like to actively communicate to the market or shareholders, unless they really need to, so I assume that this is updated because more news is going to be released in the next weeks.
Since they released an updated presentation on the 24th September stating drilling was 'expected' to start in sept, I assume that will be the first bit of news to hit (not big I know but news flow is good and it's a tick in the box).
I am hoping for confirmation of trial mining license application and also a comment on 3rd party discussions.
Interesting that they are leaning towards the dry onsite processing as a preference. I liked slide 15 which articulates plan A & B. Also interesting to note that they specifically add a comment about the background picture being a dry processing plant on an iron mine (75km to west of Pitombeiras Project). a lot of detail there, maybe that was just to show it was being done in close proximity to our site.
The issue is the accelerated revenue decline. $1bn top line reduction in three years! 11.3% decline on the interims and if the company don’t pull something out the bag in the second half and get the decline below 10% we will be seeing low £2. The fact they refused to give any future market guidance concerns me.
Time for a change and a new leadership team actively communicating with the market and articulating a clear strategy for the company.
I expect a trading update after the end of October and the year end. Cash position was given in August, I doubt it has moved much since then.
Read through the July interims again last nights. Key will be showing a reduction in the overall 11.3% revenue decline, fixing the US maintenance and license implosion and steadying the ADM and ITOM product lines, . Need to get this back to the previously ‘acceptable’ overall decline levels of 5-7% which supported a much higher share price.
There doesn’t seem any basis for such a sharp step down this morning. However the trend is clearly continuing.
I am not sure what news there is to be communicated but the BoD need to communicate something, quick. Especially given the recent articles on the Micro Focus audits.
I doubt there is a share buy back as this would require and RNS and I also doubt the BoD for a $3bn company read LSE to understand what their shareholders think, it would be nice if they did though :-)
Oh forgot to mention the obvious positive effect of a divi!
(Didn’t mention it on my list of negatives as it was the correct thing to pull and many others have done the same thing this year, the issue is that for many, this was what was keeping them in the share!).
No problem Oculus. For those in the share at £3 there is great upside, just stick it in the bottom draw for a few months.
If the strategy can be fixed and articulated in a way that changes market sentiment, then this will move north quickly. Currently, I do not see that from the news the company is releasing. However, things can’t carry on as they are so something will happen one way or another by the end of the calendar year IMO.
The current SP and MCAP numbers make zero sense, the issue is the market has no confidence in what it’s being told.
Debt and loans are one thing but I think some of the issues are more associated with the overall company revenue and strategy.
Revenue has decreased $1bn since the spin merger Share price down 85% in the same timeframe. The company has not been able to execute on moving to a single operating platform and associated expenditure has spiralled out of control. They acquired an asset for $8.8bn and have a mcap below $1.5bn. So called ‘strategic review’ offered nothing of any substance. Accelerated revenue decline with only a couple of % attributed to Covid. Seems maintenance renewals are under pressure now and this was the #1 topic in the Q&A at the end of the last investor call. The new Chairman seems to have gone AWOL. To top it all off the company decided not to give any future guidance to the market! Hmmmmm
All that said there is clearly huge upside here. However, the required change in sentiment to get this back to a more sensible £5+ Is not there.
There needs to be a change from the top down and a new strategy presented which paints a picture of a progressive company and a longer term strategy. The Micro Focus acquisition model of old days has not worked with the HPE acquisition, there is an opportunity for the company to reposition itself, but it doesn’t seem as though the current incumbents want to drive a transformation agenda.
Just my opinion, again massive upside here but this share is where it is for some fundamental reasons.