Member Info for Thunder2040

Took some here again today, oil market tightness plus all the money printing is going to send the price skywards again this autumn this winter, I have strong conviction in that view, and this is in a prime place to benefit.

The BoE has already capitulated and is now BUYING gilts again, despite the plan to actually be selling them and reducing the money supply.

The government has poured yet more petrol on the fire by capping energy prices, thus incentivising demand, and then further cutting taxes to again increase consumer buying power.

Pound vs dollar is trashed, so going to import loads of inflation from that.

All of which means under no circumstances would I want to be in cash and in most definitely want to be in cash generative stocks with super low p/e and strategic importance in the energy mix.

I.e - buy HBR now and in 3 months you will be over 20%.

That is my position. Take it or leave it.

Thanks

My thoughts are: if mortgage lending dries up surely volume would decline, but then there could be forced sells to counter I guess. If house prices do come down 20%, does that mean rightmove fees come down? Either way, p/e 20+ seems excessive atm

Am I missing something here, the company is worth £4.3b, turns over about £300m and had profit of about £200m p/e of 23 - 84% market share...fees already too high, so how exactly is this going to keep growing when the market for mortgages collapses? Absurdly overvalued.

Net debt north of £700m, and they expect a profit of about £25m before tax into a weakening market and rising rates - this will go a lot lower IMO

I spotted a couple of things on second glance, some ridiculously big write offs, one of circa €15m in Asia for bad debt and another chunky one for termination of an onerous contract of about €10m which frankly is not pleasing. The other thing was a bit of margin contract. Last thing was refinancing to come. But still, feel this is just getting taken down with the market. May dip toe in for a bounce, but unforgiving climate.

I swallowed 20% loss after the takeover collapsed, left a bitter taste. Few things annoyed me a lot: time taken in discussions and CEO involvement only for no deal, inside info for current shareholder and Odey somehow selling down before announcement, no divi, Caliente listing scrapped and not mentioned since. All this being said, the results seemed about ok to me so mildly surprised to see a dip of 10% on the day, still think it gets taken out for a lot of games played with this one, and in current climate market doesn't want that! When are the results ever really given on an non adjusted basis here too!

Hi Henry

I did endless research into this company when it initially dropped during covid and had bought at what I thought was the bottom then, it was then a far riskier proposition because revenue was tanking and the debt was larger - management wrote down assets, and the CEO did not inspire me, so I actually sold out but have been watching.

A few key things have now turned a bit more positive here in my humble opinion, despite the still subdued margins:

1) They managed to dispose of one the dive vessels and pay down debt with the proceeds - the other one they kept, Spearfish, is now fully charter for 2022 - this was dragging on them a lot last year as neither vessel was utilised. If they can get debt down to 2x ebitda that would be a game changer.
2) Tankships, the reliable cashcow is now getting back up to full steam now that lockdowns have ended, infact, with current energy issues, demand for tankers will likely be very robust and this was echoed in the H1 results I think - this provides a bit of an anchor in terms of profit to support the other divisions as they come back online.
3) A lot of the deferred projects will be coming back online now that covid has receded - although they seriously need to sort of Specialist Technical - no sure what is going on there. Marine Support will come good I feel in H2, especially if they can establish some work on LNG ship to ship to get Fendercare firing, as they were talking about on the H1 results call - demand for that must be high atm given everyone is screaming for LNG! I just sense that the tide is just turning a little (pardon the pun). They are saying H2 will be stronger and this time I see merit to this outlook.
4) The new CEO has a very strong CV in my opinion, time will tell, but I feel he is more technically minded than the previous one, I also like the FD, think he spoke well on the H1 call and knows the business - this has given me new hope that they are the ones to sort things out at JF with correct actions to restore the healthy margin they used to have. The track record of growth pre 2020 is very good, nothing changed longterm
5) The medium term/long term market outlook has further strengthened - offshore oil and gas, wind and even nuclear (energy and defense) are all prime for huge sovereign investment globally. This company has highly specialised engineering capability that will be utilised, of that I am certain - they need to bid on work that restores the margin and be confident in their expertise commanding a premium price. One thing that has not changed is the 'WIDE ECONOMIC MOAT' - this is the phrase I really must say is the reason I am in this share. Huge growth potential, and very strong defensive properties = big winner.

Obviously the economy is going to face some real headwinds in the near term, but I am confident enough to buy now and avoid missing the boat (apologies for the puns) as I feel they will be insulated to a large extent and feel down here at

I have been out of James Fisher for a significant number of months, primarily as I had very little faith in the capabilities of the now departed CEO and team. The new CEO seems to have far more relevant experience in offshore energy so I am willing to again place my faith in the ability to turn this around and note the bullishness is the tone of the last update with regards to H2.

Strategic reasons for the investment have also strengthened recently, with all James Fisher's key markets now looking to be in heavy demand for at least the next decade, given the pressing need to invest in all manner of energy infrastructure and defence, with much of this investment also likely to come from governments, who could provide lucrative and secure long term contract income. The Abu Dhabi’s NMDC Group strategic agreement is exactly the type of tie up this company needs.

I also note recent interim results, and in particular, was satisfied that the balance sheet, although highly geared, can withstand near term headwinds and thus the risk of a placing seems less pressing than it did previously. Also expect a material disposal in H2 to further delever.

Although the deep value play nature of this does come with a reasonable level of risk, the defensive nature of the business gave me the confidence to re-enter at a shade of 300p. I do believe this could double or triple within 2-3 years and provide a robust anchor investment for the portfolio for a good while, which is previously had for many other investors I have noted through my many hours of research.

This board seems to have a few novices, can we just be clear, the share price, will adjust down by the amount of dividends being declared, so it is fairly irrelevant and a non event - it is merely a capital distribution and nothing to get excited about. In particularly the guy that was saying the Chair share sales were suspicious in their timing because it was about to go ex div needs to sell his positions and go read some textbooks! Pretty obvious now may have been a fairly good good time to sell, if the shares were not held in a tax sheltered account. The question for anyone selling Harbour now though, is where are they putting the cash to mitigate inflation is a wilting market? - I can't see many investments that yield this cash return and have such strategic critical importance - the gas is what sets this apart.

I thought the spot market was super tight judging from the media this last month or so!? - surely it can't just ease in the space of 7 days - movements of oil price seem absurd atm - or perhaps a lot of smoke and mirrors.

Also Banbury, just to spell it out as I think this point may not have been emphasised enough in my sensitivity post, gas price is circa 100% higher than base case now - for 6 months until y/e that would be circa usd450m extra free cashflow subject to wt adj. based on their last guidance

Banbury..the freecashflow guidance is in USD btw not GBP. Also its clearly not an extra 25% tax because of the doubling of investment relief..Harbour need to drill lots of new wells in NS to maintain production - the imputed effective rax rate increase will not be 25% of that I am confident. Annoys me that media is talking about more WT...just because bp and shell raked in big profit...lots of which was not even derived from UK waters. Its the kind of move that banana republics make..seizing assets, changing tax rules etc, needs to stop.

As per Harbour's own presentation...free cashflow forecast for FY22 of $1.5-1.7b after paying £200m divi and tax is based on USD100 oil and 200p/therm gas. Sensitivity of the free cashflow forecast +/- 10% to these prices yields a sensitivity of +/-$150m for oil and +/-$90m for gas. Not sure how WT impacts that. But WT is tax on profit - has to be set against impact of increased investment allowance to 90p in £ on new capex..someone stupidly posted on here it was 25% of revenue..which is frankly ridiculous.

My main issues are EIG selling and the decommissioning liabilities are huge. If Truss gets in, WT stays same or reduces and oil and gas stay this level + Timpan and Zama come good - still think this is a winner over next 2/3 years with scope to double.

Did TTB ever have intention of bidding - or even actually have the funds lined up - I am not convinced. I think they were being opportunistic all along, and wanted the Tekkorp Caliente transaction to go through to derisk it at the least..in which case they would also be low balling like Aristocrat. They wasted everyone's time. How many of the Asian investors actually want to take this over vs how many want the status quo to continue - i.e services to unregulated Asian markets to continue. They could just as well block JKO as well. It's a complete mess in my view.

Good research, although is Malaysia production hedged at all?

Its been a while since I held enquest but recent price activity here and harbour has lead me to return, will get up to speed with it all again.

Unhedged new production is a boon I had not realised, thanks for that tip. What % of production is hedged atm?

Brokers often back their own horses - and slate the rest. Deutsche Bank do it with VOD and BT all the time. When is the debt likely to be cleared, any thoughts? HBR may be debt free next year, so could explain.

Says p/e of 1.2 x - is that right?