George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
You really ought to use correct figures - as none of your revenue figures match to annual accounts. You also post debt figures in £bn and revenue figures without the £m. I guess it’s in your interest to post negativity with your short position but please do use facts. The company is expected to produce profits of £110m this year and £114m the year after. JP Morgan bought circa £2.5m of shares this morning. Goldman Sachs still own £13m. US and Canadian central banks recently lowered their interest rates. We should see this trickle into lower coupons for their bonds as some of their are variable above LIBOR. This will significantly lower interest liability going forwards.
The company floated 5 years ago with £3.2bn in debt so the debt has been reducing.
Interest rates are likely to fall rather than rise with the US feds cutting rates by 50 bp yesterday. It’ll be a matter of time before the BOE follows suit.
Albert Bridge capital added extra 0.7% to increase their total holdings to 12% today.
Charts are starting to look bullish. It is the first time in 6 weeks to see a candlestick close above the 8 EMA (also known as the T line which usually indicates an uptrend). I've drawn the chart below as a reference but in summary:
- Double bottom chart pattern established
- RSI closing above 50 usually indicates a change of trend
- MACD histograms in positive territory with a golden crossover (also bullish)
- Volume shows high trading activity in the past two weeks which marks interest from investors - primarily from institutions. It can also indicate investors topping up on their positions. I've looked into large trades by volume and there have been several large buys in the past two days.
https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=uk%3Aaa&time=7&startdate=1%2F4%2F1999&enddate=12%2F18%2F2015&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=5&maval=8&uf=8&lf=2&lf2=268435456&lf3=4&type=4&style=320&size=4&x=68&y=10&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
Topped up £9k at around 45p. Good luck all, I do think the potential rewards greatly outweigh the risks given a 2-3 year time frame.
@f15jcm I wouldn't worry so much on the shorts - you see shorts in companies with extremely bullish price action, for example, Ocado and Tesla. The short sellers were "short squeezed" i.e. having to buy shares to crystallise their short position losses which further exacerbated the bullish movement. Goldman Sachs own 28m of AA shares and they are rarely wrong in their trading results from their 10k (annual) reports. It's really down to interpretation which makes investing difficult. Current broker consensus show Liberum Capital with a target of 130p, Citigroup 200p, and Berenburg 30p.
Having worked in financial industry for several years, I wanted to address the retail investor concerns over AA's debt as this seems to be main topic for discussion.
The bonds shown below are the 3 earliest that are expected to mature.
A3 - £200m - 4.25% - 31/07/2020
A5 - £372m - 2.88% - 31/01/2022
B2 - £570m - 5.5% - 31/07/2022
The rest mature in 2023 - 2027 which can be refinanced.
Here's how I believe AA are expected to service their debts.
For A3 bond - this can be serviced from the cash reserves. I would expect a dividend cut to raise further cash. In addition, there is a £200m floating-to-fixed-rate facility, £60m working capital facility - both which are currently undrawn.
For A5 bond - I would expect this would be refinanced to a later maturity date due to its low interest rate. Prior to refinancing in February, the A5 bond was £700m i.e. £375m was refinanced and £3m paid off during the refinancing transaction.
For B2 bond - This is what I would expect the management to tackle as this has the highest interest rate and principal. The interest rates actually go down from 5.5% to 5.0% after the expected maturity date and hence less of an issue when compared to senior notes. Given the timeline, and the current positive update on recent RNS updates, they are in good position to raise positive cash flows from the strong rates of policy growth to service this also.
In conclusion, I hope this eases the minds of those who have concerns over AA's ability to continue trading. It seems like they are in a good position to tackle their debt pile for the foreseeable future. A release of its full year results in line with annual earnings, if materialises as expected, will see a quick recovery in the share price.
References:
https://www.theaaplc.com/investors/bonds/rating
https://www.theaaplc.com/~/media/Files/A/AA-Plc-V2/documents/200205-aa-psr.pdf