The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Https://www.marketscreener.com/quote/stock/GAMES-WORKSHOP-GROUP-PLC-4001963/company/
Baillie Gifford & Co. 3,276,913 9.96%
Ninety One UK Ltd. 3,087,765 9.38%
Schroder Investment Management Ltd. 1,634,329 4.97%
SFM UK Management LLP 1,630,479 4.95%
MFS International (UK) Ltd. 1,611,343 4.90%
Artemis Investment Management LLP 1,588,680 4.83%
Ruffer LLP 1,555,198 4.73%
FIL Investment Advisors (UK) Ltd. 1,516,682 4.61%
BlackRock Investment Management (UK) Ltd. 1,450,085 4.41%
The Vanguard Group, Inc. 1,210,013 3.68%
In the absence of any market news / company updates I'm inclined to think that the markets have now digested the director sales (to Geely) and the dilution (placement of new shares with Geely). Considering that Geely is getting a board position and taking a significant stake in the company suggests that the deal struck at £3.35 is close to fair value when you have the opportunity to look into the companies books. We normal shareholders get this opportunity only in August when the 2Q23 numbers will be reported. The £95m received will take care of the majority of the interest payments due in May and November (£120m for the full year), so the danger of excessive cash burn is taken care of as well .
Since the market did not react with a sell-off , I'm inclined to think that shorters have to close their positions now and are driving the rapid increase today.
But this will take a couple of days to feed through and being officially reported ..
Currently 698,757,075 share outstanding and priced @ £.2.66 /share.
Adding 28,300,000 new shares and receiving £95m in exchange (£3.35/share) will increase the theoretical value to £2.69/ share (all else unchanged).
I can't see any dilution here.
AML sold 1,269 in 1Q23 compared to 1,168 in 1Q22 - that is an 9% increase, in line with the numbers now published by the SMMT for April for the UK motor industry. Extrapolating this to Q2 I would expect sales of no less then 1,638. That would take 1H23 sales to ca 2,900 cars. H2 is historically stronger in sales : 2021 3,277 cars; 2022 3736 cars. Selling 4,000 is not out of bounds and the DB12 looks promising (deliveries starting in 3Q23). Plus this is not even taking into consideration the increase in ASP / improved margins for each car sold.
presentation has been published here: https://www.sisplc.com/results_centre/investor-day-presentation-18th-of-april-2023/
PART II
The senior secured bonds are not redeemable until NOV'25 - the junior notes are to be redeemed in MAY'26
The £ interest rates at issuance was close to zero, we agree, and are now 4.5%, again agreed, but you never mention that the first traded price of the bonds was 104.7% (in a zero rate environment) and the bonds are currently trading at 99.97%. Giving the bonds a risk premium of 6.5% vs the riskfree rate.
You also never mention that the bond rating has been upgraded last year from CCC to CCC+ with a chance to go to B or better - bringing the risk premium down.
By all means share your opinion - we all do - but please use facts to substantiate your opinion.
Hi c2645sg,
I'm afraid your statement is incorrect and I'm grateful for you providing the reason why you are wrong at the same time: https://thumbsnap.com/gsXKDf5s
PART I
Lets start with that we both agree that the financing expense for 2022 were £368.2m - a fact.
However, from there onwards we start to diverge and at best your comments are reckless / at worst an incompetent and here is why:
The £368.7m for 2022 include £156.2m of foreign exchange loss on borrowings.... i.e. restating outstanding $ debt in £ as the pound depreciated vs the dollar in 2022: from 1.30$/£ to 1.20$/£ - this is a one-off event and cannot be used in a qualified forecast for 2023 , 24, 25 finance expense forecast.
A further £32.6m are cost relating to the early redemption of $200m senior notes - again a one-off and not to be repeated in forecasts.
I mentioned £120 cash interest and need to add lease and contract liabilities - so we are looking at ballpark £150m if the pound remains at $1.20 (it currently stands at 1.23$/£)
Please explain to me your forecast of £350m finance expense in 2023, 2024 and 2025.
For 2023;
Capex and R&D: £370m - increased on 2022 and peaking in 2023 as explained in annual report - lower going fwd.
D&A: 350m-370m - increased due amortisation of Valkyrie programme - final deliveries in 2023.
Financing costs: £350m - incorrect : financing costs are predicted as £120m (cash) based on same FX rates as 2022.
Target for 2024/25 is £500m EBITDA.
Minus financing costs of £120m
Minus D&A of £xxx m - after years of increased numbers (Valkyrie stretched), normalised figures anticipated.
Minus R&D of £xxx m - lower numbers than 2022 and 23 expected as 2023 is already investing in electrification R&D.
In my book that is £380m to play with for D&A + R&D and still end up at a black zero or better.
Fact check:
- debt is due to roll in Nov 2025 (not 2024)
- chewing through 80% of £635m : £200m of that was used to repay a portion of the debt. Cash balance has increased YoY including debt repayment, interest payments and CAPEX demands.
- FY loss in 2022 is largely due to FX revaluation (£156m, non cash) and amortisation of the R&D related to Valkyrie - the exact same R&D cost that have been amortised way beyond the normal life cycle of a new car being developed. Stroll grasps the nettle and brings this back under control . This is a mess made by his predecessors and he is in here to clean this up / turn it around.
Last year everyone moaned about the money they send to the F1 team. Now we can see the fruit of this coming through : more contacts/ more interest in the AM brand, more sales through this marketing chanel. I call this a vision - others call it charlatanerie..
DYOR.
I'm upbeat about AML and I expect a sideway movement of the shareprice in the £2.40 to £3.00 range over the next 2 months.
I think AML has truly turned a corner :
1) Supply chain issues resolved in Q4 (as confirmed by other car makers too , who are all upbeat about 2023).
2) Positive free cash flow in 4Q22 and expectation that this continues in each quarter of 2023 and onwards.
3) DBX is selling / has significant market share - over 3,000 sold last year - keeping in mind that 3/4 of the year were held back by supply chain issues (industry wide, not limited to AML)
4) Debt pile is enormous, but as long as J Hunt is delivering a steady budget the $/£ exchange rate will not tank like under Truss (and that contributed £156m to the net loss reported last year), so there is upside that the debt pile in £ is actually coming down if the $ weakens / £ strengthens.
5) The AM Capital Holding bonds are rated CCC+ - upgraded in Oct'22 from CCC, meaning as long as the company is delivering on its financial plans and keeps (amongst other things) FCF positive and achieves an significant increase in EBITDA, there is a real chance for the rating to be upgraded to B, meaning when the bonds are being refinanced the coupon payable is coming down and so will the interest expense
6) Until then we need to earn more $ : having a F1 car coming 2nd in the first race and with 3 races scheduled in the US this season, plus a general uplift in interest in F1 in the US I expect that the sales of AM in US will increase materially.
(In simple terms every car sold in $ will offset the FX risk on the $ debt).
I would even go as far as saying that with every podium placement (or exciting race featuring an Aston Martin) the share price will get an upward nudge due to increased exposure and interest.
With regards to the comment of "stuffing dealerships" - I don't agree with the conclusion on Karenable, simply because: retail inventories have been increased, but AML was open about it and commented on it in the FY report 2022 and expect wholesale to outpace retail. I would be more worried if there wouldn't have been a comment. Now they are open and honest about it and they still get a lashing.
Broker and investor comments are too negative in my mind - because they got burned previously and were too positive in their outlook. I think they are now too cautious and that is their prerogative.
By the way I did top up yesterday after calling the fall back to £2.40 (see my post last week).
I predict a sideway movement until early May when AML will be publishing their 1Q23 results. I expect upward movements if F1 goes well, but this would most likely driven by enthusiastic retail investors and not institutional investors. I see limited downward pressure at this point in time, but will wait for the 1Q23 results in May
Went briefly through the 300p this morning - squeezing more short sellers. I recon we will see a pullback to 240p over the next couple of days as the share is currently overbought and some people will want to take profits (+44% over the last 5 days / +71% over the last month). I will wait for the price to come down before adding some more as I'm in for the long run.
Good luck all LTH - we might have finally turned a corner..
Sales figures in Germany have been released: 18 AMs sold in Dec vs 38 in Nov and 30 in Oct.
Link: https://www.kba.de/SharedDocs/Downloads/DE/Statistik/Fahrzeuge/FZ10/fz10_2022_12.xlsx?__blob=publicationFile&v=3
Continuing parts & delivery issues or waning interest?
Limited to the German market only or a sign of things to come globally?