Member Info for tommy15

Same, my shares have now appeared in my II account.

Has anyone received their Franchise Brands shares yet? I’m also unclear on the timing.

Oof, at least another year until dividend reinstatement is not what I wanted to hear. And that's without any additional impact from Omicron.

Also surprised that the news didn't really move the price one way or the other. So the theory that this was rangebound due to merger uncertainty goes up the swanny... although to be more charitable, it could well be that Omicron uncertainty trumps that!

Holla, bit of a chicken-and-egg argument. TBH if what you say is true that’s worse - if NEX aren’t running services despite demand being there then the company isn’t as well run as I’ve been led to believe.

Here’s hoping that they really are on top of the demand out there and the services offered reflect it

Your maths is right, and that may be a helpful starting point for figuring out a target price. But there’s a bunch of other stuff to take into account:

- have the last 2 years of losses reduced the value of NEX as a company?
- what is the post-pandemic competitive landscape going to be like? For a while the narrative was that NEX, as the giant of the industry, was able to pick up routes and contracts from distressed competitors. Remains to be seen how much of a real difference this will make.
- are people going to return to coach travel to the extent that they were before? It’s still too early to tell, but early signs are not super positive tbh - demand still seems to be low, probably due to a mix of competitive train fares, some people (especially the elderly) still hesitant to travel, and people having gotten used to remote interactions (work or personal)
- at what point will the dividend return? NEX used to be a stalwart of any income portfolio, and as such it’s price was held up by all sorts of funds focused on income. That support is no longer there; hopefully it will come back in the near(ish) future.

And this is all before you start thinking about the potential merger.

Yuri, if you don't mind me asking, why did you decide now was the time to sell?

Update was fairly neutral, nothing we didn't already know; we'll just have to wait to see if business really takes off.

Anyone know why the drop today? Pretty annoying given the constant positive news recently (fitch upgrade, positive analyst messages, US reopening, COVID pill etc etc). Looks like a sharp drop too - as if some news came out that I've missed.

Between this an the Fitch rating change, I wonder how much longer AKO can justify their short.

US opens at 1:30 this week (they apply daylight savings changes a week later than us). So I don't think it's a clear link.

Agree with Ossingh, this feels like good news for NEX.

If SGC does get bought out by PE instead, which is the more likely medium-to-long-term scenario: the PE firm turns it into a lean and mean competitor that damages NEX's business, or the PE firm strips it for assets, lays off most of the staff, runs the absolute minimal bare-bones service that they can get away with, and NEX profits from the absence of a decent competitor.

I'm exaggerating to make a point - but it feels like PE taking over a competitor is likely a good thing for NEX. Especially if the premium paid triggers a re-rate for the sector.

Agreed, this must explain yesterday’s trading.

And while it’s good news for NEX, I can’t help but feel angry about the advanced notice clearly enjoyed by those in the City. All part of the game I suppose…

*happen soon. Are there other shares out there that will give a better return over the next 3/6/9/12 months than NEX? Of course there are. Are there any that I feel I can identify with the same level of confidence that I feel about NEX, with the same trade-off of minimal risk of the company going bust, and potential upside if things just get back to normal (let alone go exceedingly well)? Not that I have come across in a while.

So please everyone, sit tight, stop freaking out about the daily movements (even though they are grim to see), and just keep an eye on the bigger picture.

(amazingly I had to do a RECAPTCHA to post this and the puzzle was to click on busses - it's a sign!)

What's happening with NEX is a great illustration of the pros and cons of value investing.

We - or at least most of us - believe that we have identified a stock that is undervalued relative to its performance and potential. This seems to be mainly because of market sentiment - I agree that there is nothing in the fundamentals that explains the current price.

(as an aside, if you go to Yahoo Finance and plot NEX vs EZJ and IAG over the last 6 months the charts are strikingly similar. As many have said, it seems NEX has been lumped in with the UK passenger transport sector, which is lazy/inaccurate because it's a relatively small part of NEX's business).

These undervaluations due to irrational market sentiment are exactly why value investing works, and are exactly why the little guys - like us on this BB - have a chance against the people who do this for a living.

BUT there are two big downsides to the value approach:

- value traps - where the "undervaluation" was in fact accurate; likely because the wider market knew something you didn't. This is a particular risk for us "little guys" since we tend to have less access to information than the pros (legitimately or otherwise). I have certainly fallen into a few value traps in my time (including some very recently), but NEX really doesn't feel like one - it's such a solid, well run company. There are a few question marks - will the driver shortage be a big problem long term? Will COVID keep popping up? Will the general shift away from coach towards rail that has been happening over the last decade or so continue? But I don't think any of these bring enough doubt to make NEX a true "value trap", although they may limit upside.

- we have NO IDEA when the market will "come to its senses" and appreciate that they have undervalued a particular share. We hope it will happen after a positive update - there is typically some catalyst - but the market can be stubborn and irrational, too distracted by the shiny new toy, or too worried about some far-off cloud, to pay attention when we think it should. This is just a fact of this kind of investing, something that we have to accept and plan around. Sometimes we will identify a brilliant "value" share, but for unknowable reasons it will never come good. Sometimes in the intervening years things will go wrong and that true "value" share will turn into a value trap, and that's just bad luck. And sometimes you wait patiently for months or even years and end up with a multi-bagger.

The key things are 1) patience and 2) continual re-evaluation. Coming on this BB every day and complaining about the short-term fluctuations is never helpful. Thinking critically about whether your original thesis is still valid is essential.

For me, the recent TU has helped me keep my confidence. NEX is a good company with good opportunities. A return to profitability and the reinstatement of the dividend are both realistic catalysts for a re-rating which should ha

I also had to miss the Q&A unfortunately.

What I did see was uniformly bullish - almost to the point where I wish they'd addressed the potential headwinds head-on. And all with annoying corporate background music. But on the whole left me feeling positive about the company.

I’m not sure what’s wrong with extending the merger talks? I’d rather they take their time and do their due diligence rather than rush it.

Also, my bullishness on NEX long predates the proposed merger. If anything I have a slight preference for it not to happen, as it presents a potential distraction at this time when it’s so important the execs keep their eye kn the ball.

But I also get the arguments that there would be good synergies and cost savings.

So overall I’m pretty neutral on the merger, and this delay is, if anything, a slight positive.

As others have noted the entire travel sector is down today, which certainly won’t be helping.

Lets hope there are some positive noises coming from the capital markets day. Not in the hope that the SP will get a bump - that’s pretty forlorn given the apparent market sentiment - but so that we can feel even more confident about the medium-long term, and continue performing strongly and wait for market sentiment to turn around (presumably when people start taking holidays at 2019 levels again)

Looks like the revenue is at 83% of pre-covid overall. Which is pretty good. And as Monk says, when tourism returns properly we can expect that to go up further.

Nitro where did you get that "92% of pre-covid revenue" from? That's not in the trading update.

I thought today's update was broadly very positive, but I was disappointed that the UK coach passengers numbers are still so low.

The UK coach operations is a significant chunk of NEX's business, so these numbers matter.

The period in question - July - September 2021 - is one with basically no more COVID-related restrictions, and with all at-risk people who wanted a vaccine fully vaccinated. So why are the numbers so low?

It seems that the numbers are similar for rail and London Underground passenger recovery. But there's a bit of a difference - rail and tube are widely used for commuting, which will continue to be hit by work-from-home. But people don't tend to commute by coach.

If anyone has any insight into this I'd be very interested to hear it!

Oh wow, there's some really interesting stuff on here, unfortunately quite negative.

The point about demand coming back much more slowly than anticipated is particularly worrying.

The bit about "little old ladies" forming an important part of the market for certain routes who in particular haven't been making journeys like they used to is also worrying.

I'm beginning to think maybe the rest of the market has a better idea about what is troubling NEX than we do (this is aside from driver shortages and wage inflation, both here and in the US).

There's a lot of fear and uncertainty in the market in general at the moment.

I imagine that if positive results are posted (e.g. in the TU in late October) that could be huge, as it may finally trigger a decoupling of NEX (and similar) from the broader travel industry.

If the results are not-so-positive - which we need to accept is a real possibility, given the driver shortages in the US, and the likely small-but-significant drop in passenger numbers here reflecting those people who are still a bit nervous and unwilling to travel - then basically the nay-sayers were right and we'll need to re-evaluate whether this is still a promising long-term hold.