The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
I think he wants everyone to bow down to his brilliance thats why he is getting so angry. We should just humour the simpleton. I don't think he would get the difference.
Just ignore him. He clearly has an Inferiority complex. They guy actually thinks he is worth 30 posters and can't comprehend that people who read what he posts can see right through his charade. If he was as good as he thinks he is, he would be on other boards telling people how much he has made on that share but all he does is spout nonsense. Worst thing is he will actually read this but will think its sour grapes because he is always right lol but the fact is the opposite. The guy hasn't got a clue and is just getting it right because we are in a bear market not because he is an astute investor
if a rights issue were to exclusively happen then the news that has been officially released would have said this. Instead we have been told there is a range of funding options which may or may not include a rights issue. Personally I feel it will be a Sovereign Fund taking a small stake of around 15%. Rolls Royce is a world wide brand that is attractive to any rich investor.
Chinese air travel is back to normal and according to Flighttracker near enough 98% of all major Chinese airlines are being utilized with significant flying hours per day with the the vast majority doing an average of over 8 hours per day. Now just read the first few lines of the following linked articles-
https://www.chinadaily.com.cn/a/201911/06/WS5dc263eca310cf3e35575c4c.html#:~:text=China%20Southern%20Airlines%2C%20the%20largest,purchase%20engine%20total%20care%20service.
https://www.csair.com/au/en/about/news/news/2016/1b0i389fqm37u.shtml
https://www.flightglobal.com/china-southern-selects-rolls-royce-for-a380-engines/64401.article
http://www.chinadaily.com.cn/a/201811/06/WS5be14dcca310eff303286ea8.html
https://cbi.typepad.com/china_direct/2018/11/rolls-royce-flying-high-with-china-eastern-deal.html
https://www.theguardian.com/business/2015/mar/30/rolls-royce-signs-1bn-engine-deal-with-air-china
http://edition.cnn.com/2010/BUSINESS/11/22/rolls.royce.china.contract/index.html
https://www.rolls-royce.com/media/press-releases/2015/pr-21-10-2015-rr-signs-agreement-with-hna-group.aspx
http://www.defense-aerospace.com/article-view/release/73169/rolls-wins-$500m-chinese-order-for-erj-145-engines.html
All these planes are in the air and are bringing in millions in revenue every day. The situation as bleak as some would have you believe.
Nothing more than a rumour. The same article also states the RR is not in need of immediate funding but no is mentioning that as that does not serve their purpose of trying to paint a bleak picture. Fact is RR has over £6bn liquidity and as long as air travel gets to the 70% pre covid level by 2021 then there will be no need to raise funds. Current air travel is around the 55-60% mark so within target of that.
It's clear that RR do not want to go down this route and are anticipating further growth in jet use. The sp will bounce back soon as the current value does not take into account the 2 profitable parts of the business that are still generating positive cash flow.
One thing I have realised from the covid situation is that covid cases peak really quick and then fall rapidly. This will happen this time round as well with the only difference being the peak will be smaller so will be a lot quicker to get back to less than 500 cases per day.
This will come good. one of the things I looked at before taking the plunge was how the business was before covid and it was doing really well. People are saying air travel won't recover for years but the moment covid is over or starts fading away then there will be an explosion in air travel. With low oil prices for the NEX the 2 or 3 years airlines will be able to offer cheap air fares. Plus one thing that this pandemic has shown is that if there is an activity that's people like to do which is then curtailed or if it is not safe to do,when that is lifted there is a lot of pent up demand unleashed. It has been proven in pubs, restaurants, retail and it will also be the same for air travel. Before the pandemic air travel was growing 3-5% a year. Those people that brought the plane tickets are still around. This is just one of those situations where patience is a virtue. In 6 months time we willl be wondering what the fuss was about
And it has sales of around 900m and operating profit of just over £100m. So what would the defence and power systems business's be worth. They both have revenues of over £3bn each and operating profit of over £400m and £350m respectively. They are at least £1 per share each. As long as these 2 sections are running as before then there will be a rally in the sp soon. People are getting fixated on the civil aerospace part but are forgetting that is only half the revenue. More importantly over 90% of last years profit was from defence and PS.
The next few days will be tough especially with the Ronaldo of the investing world givIng his wonderful insight by regurgitating common news but us holders will just have to bear. I suppose it will just make the subsequent rise that much more sweeter.
No point conversing with someone with such an high opinion of themselves. I know won't make a difference to your mind because you are one of those insufferable people but you don't bring anywhere near the knowledge that you think you do. The fact you think you are equal to 30 poster says it all. You're just a person in a bear market saying it will go down. That doesn't require any insight or skill. But I will leave you alone in your fantasy. It must feel so great to see yoursef as this brilliant financially astute wise. I honestly and truly wish I had the same delusions.
@ Toff -Just to liven things up do u want to place a wager. If it's a blue day
tomorrow then you agree not to post on this board for a month and if it's red then the same applies to me. Also to keep it civil there is to be no gloating/taunting/insults or anything personal against the losing person at the end. We've both made our points on this board and it's there in the chat history for all to read so there is nothing to lose for both of us apart from our need to constantly give our views wherever it's negative or positive.
For that matter any negative poster who wants to take up this wager please let it be known. EIther tomorrow it will go down and I'll switch off for a month or there will be one less negative person on this forum. If you are certain that you are never wrong as you have said in a previous post the you will have no problem accepting this.
Todays drop in sp is mostly due to the knee jerk reaction to the chance of a mini uk lockdown. UK based airlines like IAG, RYA etc have fallen as they will be financially affected but for RR the UK is a small insignificant market. Their engines are used worldwide especially in Europe, North America, Middle East and Asia Pacific. These markets have not deteriorated and are in fact gradually improving.
According to Flighttracker over 90% of the A350's are flying and many of them are clocking in over 50 hours of fly time a week. As well as this the 777's and 787's as well as the A330'and A340's are also being used extensively. Regional flying is also robust with the ERJ aircraft. The only one not being used is the A380 but this is only a few hundred engines out of thousands.
Worldwide travel is around the 55-60% level compared to 2019. This is much better than april when it was less then 10%. At that time RR price crashed to 250p level so the current price is not reflective of current market.
I know there is the issue of raising equity that is weighing down the sp but as the official rns said a rights issue is just one of the options being looked at and more importantly no decision has been made. If the rumours are to be believed then we will know by early october and until then its anyone's guess.
The only thing I am concerned with is worldwide air travel. We all know that RR gets paid or each hour a plane is in the air. In 2019 financial year RR had about £15bn revenue of which about £5bn was from civil aerospace service revenue. Taking into account 2 months of near enough zero revenue and the rest at around 50% of last year then for 2020 financial year they should get between £2bn-3bn revenue. There will also be a reduction in engine sale revenues but as these are normally sold at cost this reduction wont affect operating profit as much as services reduction.
Bottom line is the sp should be around half of pre-covid price which is £3+ based on current air travel. Personally am not worried as i am in this for the medium term (3-6 months) as by then this pandemic will be over and we will all look back and laugh at the hysteria of today
if it was going to be a heavily discounted placing then there would be no need to have discussions with sovereign funds. Simply do what IAG have done and offer sub rights to existing investors. The fact that a sovereign fund is involved most likely means little to no dilution and no heavily discounted placing.
Monday will be interesting. If the market takes the news as a positive step towards improving the balance sheet then a 10%+ rise is conceivable. And if £2 is breached then £2.50 is a realistic target for the end of the week.
I just hope the shorters get burnt.
The raise will lead to sp correction. Can see this hitting £3+ by end of October. Estimated cash outflow for second half of the year is around £1bn. With the £2.5bn raise it gives RR liquidity of around £8.6bn so its future is secure. Especially with the recent layoffs announced. I know someone who is an engineer at the Derby plant. According to him you can break down the engineers on the shop floor into 2 groups . Those who know what they are doing and have the specialist knowledge that is hard to get and the second are the ones who were lucky they even managed to get hired and have to be told what to do 90% of the time as they don't know squat and have to have most of their work double checked before it can be signed off. Hopefully people from the latter have been laid off leaving the valuable workers to get on with doing the job.
This could be the start of an upturn. The current price is due to uncertainty about finances. If £2.5bn is raised along with the current £6bn liquidity and upcoming £2b disposal then that more than covers the expected £2bn cash outflow for the second half of the year.
The sp has fallen rapidly over the last few weeks so can easily rise just as rapidly. Monday will be the litmus test. If the week starts with a blue day then it will be happy days
the current sp is based on sentiment not fundamentals. If you look at the the 2019 annual report then just from Defence the operating profit was over £400m. This part of the business has not been affected by covid so this bit alone would give and sp of around £2. Power systems is down slightly but that is still profitable and as for civil aerospace then that is recovering albeit slowly. There is no chance of going back to the situation in april/may when over 90% down in flights. The current market is only around 30-40% down. This is still massive but does not justify the current price. RR get paid for each hour the planes are in the air so even a few hours a day utilization is still bringing in revenue.
Add to this the cost savings that have been put into place and the expected disposals then RR have got the means to survive the pandemic. The same thing happened during 2008 financial crisis. Back then people were talking about how the economy was finished and it was going to be like that for years but by 2010 the picture was different.
This pandemic will pass. A vaccine will eventually be found. If there is one thing that history has shown its that mankind always finds a way out.
When the sp is falling then everyone will come on here posting its time to get out. But if you look at it logically selling now is foolish. The sp is at a multi year low. Those that say it has further to go are right to a certain extent but to go as far as saying this will go under 150p is crazy.
According to the 2019 annual report 90% of the operating profit and 50% of the revenue came from Power systems and Defence and these sectors are still holding up. Civil aerospace revenue will be about 50% down over the next 12 months but it will still be in the billions.
Apart from one every other broker has got a target sp which is multiples of the current price. If the situation was as bad as what some posters here make out then the professionals would also be reflecting this in their target price.
Fact is RR dont just supply engines for uk planes. They are a world wide company that supply engines to airlines everywhere including the middle east, USA and Asia. Even if there is a 2nd lockdown in the uk for 2 weeks it will not have a significant impact on RR.
For example one of their biggest customers, Singapore Airlines is currently operating at 70%. Also the regional market which RR also has a presence in via the Embraer ERJ jets are also doing quite well so its not all doom and gloom.
Summary is RR have stated in the last half year report that in the base case scenario of flights being at 70% of 2019 levels in 2021 then no equity raise will be needed and at current trajectory 70% is easily achievable by 2021
Having served for many years as the workhorse of intercontinental passenger jet operations for the world’s airlines, the Boeing 777-300ER widebody twin has been heavily impacted by the collapse in demand for international travel due to the Coronavirus pandemic.
While the aircraft offers the largest belly cargo capacity among twinjets, many operators are turning to smaller, latest-generation Airbus A350s and 787s, as their preferred choice for longhaul services during the recovery phase. Cirium classifies 63% of the global 777-300ER fleet as having in-service status – compared with 75% of 787s and 78% of A350s – although the type remains the most populous with more than 800 active.
As of 28th July, daily tracked flights for the 777-300ER were 56% down compared with the 364th day prior, on a seven-day rolling average basis. Flight hours, meanwhile, were down more than 62%.
Emirates maintains the largest fleet of 777-300ERs with 119 in service and four in storage, followed with Cathay Pacific (15 and 35) and Qatar Airways (47 and one).
Airlines are likely to pass by the end of this week the milestone of collectively holding fewer than one third of their passenger jets in storage as the gradual recovery in global flight operations continues.
Behind this topline figure, narrrowbodies were clearly most in demand as the mainstay of domestic and intra-regional trunk routes, with only 29% of the global fleet remaining inactive. Meanwhile 37% of regional jets and 43% of widebodies are yet to be returned to duty.
As of 10th August Cirium classified a total of 8,750 widebodies, narrowbodies and regional jets as having in-storage status, while nearly 17,500 were in service. More than two thirds of the global fleet has been in storage since late March.
By mid-April almost 11,000 single-aisles had been placed into storage, but this figure has since declined to fewer than 5,000 (including nearly 400 still-grounded 737 Max aircraft).
Rolls royce engines are specifically targeted at the widebody market. Apart from the A380 the rest of the planes which are Airbus A330, A340, A350, and 777 and 787 Dreamliner are in the skies and flying. I get that sentiment is negative at the moment but the fact is planes are flying and will need to be serviced. This time last year there were around 125k daily flights and currently is around 70k so close to 60% and improving so this is the bottom as far as i'm concerned
In the last report the base scenario in which no equity would be raised was for flights to be at 70% of 2019 levels in 2021. They are currently at around 55-60% so as far as I'm concerned there is nothing to be worried about. The only way there will be a raise is if there is another extended national lockdown and flights go back to the 10% levels which is highly unlikely.
If people can't hold for a few months then they need to rethink about wherever investing is for tjmhem or not. Also there is news of rapid testing being a trialled at airports that will most likely be rolled out. No government of any country wants to stop people from flying as they can't afford the subsequent economic transaction. RR has over $6bn liquidity so there is no chance of it going bust. Give it a few weeks and this will be back over £3.