Good Morning,
A hot day yesterday at Camp AV! For those that were there a
plunge pool and ice baths would have been brilliant addition, perhaps next year?
The ice-cream seller was in high demand and certainly a
It was good to catch up with a few people yesterday, some
previously unknown and others old timers. The question of the day was, who was
the lady with the body guards? We know the inquisitive were just interested in
the person rather than the lady's looks! We won't mention those totally
fascinated by the lady in question.
It was a pleasure to listen to some of those highlighting the
issues in markets, the Enron chap (CFO) Andrew Fastow. Disappointing that I
missed a significant part of but was very good for the little I did manage
to grab.
The rabble team quiz were jinxed from the off, with the system rushing
through questions and not submitting our last set of answers to the total. Not
that it would have made any difference to the winners, spending more time
revising! To next year...
The holiday season upon us, it’s time to close
positions, to avoid any issues and the need for management. One in
particular EMC:
Evraz, Steel and Sugar (April 2015). The credit here goes to Hugo for
our entry point being 205, and today's is no credit here for this trade, it’s
down to Hugo's technical analysis. The entry point would have been 187, post
breaking 206. An acknowledgement that technical analysis pays 202 it was.
Looking at the percentage rate, on the issue of 4-year
15 billion rouble bond (approx. $275 million), it tells the true story of
the issues facing EVR.
EVR have further woes with the South African unit Evraz
Highveld Steel & Vanadium (JSE: EHS) that's turnaround hasn't exactly gone
to plan. With the share price dropping 95%+ in 3 years, it’s not clear when EVR
will write-down the full value of JSE: EHS.
With the hard work done, it was the day (yesterday) to sell the
remainder of Sirius Minerals (SXX). The company planning an update in due
course after the approval.
With a significant amount of cash needed after an update on the fine print, it
suggests limited upside from here at the moment. For those in the longer-term, it’s likely the company
will take the asset to full production. If SXX haven't already been on the
phone to start the funding, they will be.
It was a coup yesterday, with HSS reporting on
Monday (EMC) the read across wasn't positive for Speedy Hire (SDY). SDY announced a profit
warning and a change in the board. SDY have they been unsuccessful in
'divesting' the remainder of the oil and gas division in the middle-east.
Having shut down the equipment hire operation business in the region, one
suspects any sale is going for a song now or closure. The board have also
identified some contributing factors to 'poor' trading:
- A
lack of available equipment during the network optimisation programme.
- A
focus on strategic accounts at the expense of SME customers. (*Addition
Small & Medium Enterprises)
- Poor
customer service caused by disruption during the implementation of a new
IT and MI system.
The statements suggest the company's eye has been taken off
the ball. With such items contradicting the very survival and purpose. If
one does not have the equipment, limited focus on the bread and butter (SME)
and "poor" customer service, you're not going to win many
friends.
SDY are quite likely struggling with margins on key accounts
as the sector as becomes more competitive. HSS's woes in cooling are not the
only thing felt by SDY. Date for Dairy, HSS due to announce on Wednesday 26
August 2015.
Having previously had woes SDY's with accounting
irregularities (gaping hole in the accounts for Gulf oil & gas) and now
being forced to be ultra-conservative with forecasts and the overall management
of the company.
Those with a risk appetite may consider SDY's soon to be ultra-conservative
approach as a buying opportunity. SDY will have to
increase equipment spending to fill the voids it’s identified. Greater customer
service costs will impact on margins.
SDY's relatively low net debt to EBITDA ratio (when compared
to HSS) will instil some confidence. Even allowing for a £25M increase in debt to £130M
with plenty of headroom in the (recently renewed) £180 million 5-year
asset-based revolving facility. Both companies are en par with
35% losses for holders. One hopes their customers don't stick the knife in
'after the news'.
When should HSS & SDY have informed the market? With
contradictory statements by HSS Q1 in line with expectations May
2015. Just 5-6 weeks later, the trading
update specifically states that April and May...
The Group's trading performance through Q2 was marginally
below expectations, primarily impacted by weakness in Key Accounts customer
activity across a number of sectors particularly in April and May, as well as
reduced demand for cooling equipment during the period. In June, we have seen
customer activity begin to return to more normalised levels, with order books
building into the second half of the year.
Standard life should perhaps be asking how on the one hand
trading is in line and then some weeks later it’s suddenly below for the same
period? Same for SDY whom initiated a board level review of the
business. What led them to this decision and what evidence did they have to conduct
a 10 week investigation and not inform the market?
After Phorm's (PHRM) woes EMC March 2014 nothing has changed for the company. To
quote in full, to save time.
Leggie, Phorm.....I wanted to do a lengthy piece until I
realised Tom W had, for which covers a lot of the items. What I will say is,
and as an assurance to Phorm, the fundraiser meets the criteria for a
huge short...I look forward to the news with glee.
(Edited: added in Bold).
Having shifted their strategy to China, the annual report reads of a chilling indictment of the
views 16 months ago. Over to Phorm to inform you of the operational
highlights.
Operational
- Successful
launch of the Company's machine-learning technology offering a solution
which can function without the requirement for an Internet Service
Provider ("ISP")
- Launched
operations in the United States with initial test campaigns being
converted into revenue generating commercial campaigns within a matter of
weeks.
- Shifted
strategy in China to partnership model, reducing cost base by
approximately $0.5 million per month.
- Focused
the Company's resources on its core markets; China, Russia and the US.
- Global
peak daily opted-in users achieved in 2014 of 148 million, including a
peak figure of 109 million in China.
- High
calibre board appointments in Lex Fenwick, the former CEO of Dow Jones
& Co. and Bloomberg L.P. and Johannes Minho Roth, a highly experienced
and respected fund manager.
Disappointingly there's limited downside potential for those
wanting to acknowledge the facts and ability of this company. Over to Phorm
again,
In April 2015, the Company raised £6.00 million gross,
via a placing and subscription, to fund the Group's general working capital
requirements. As at 30 June 2015, the Company had a net cash position of £0.9
million, which, at the current over-head run rate, taking account of additional
funds due and our ability to manage our working capital, is expected to last
until early August 2015. The Company is urgently exploring funding options with
a view to securing additional working capital in the short term.
Placing at sub 1 pence? Would you!?!?!?!?!?!?!?!
A few companies will be reconsidering their positions in
Zambia this week, Barrick Gold (TSX:ABX), Glencore (GLEN) and First Quantum
Mineral (FQM). With Zambia yo-yoing between budget deficits and milking the
miners, its not going to be easy for Zambian Miners. Zambia from memory
scrapped corporation taxes last year (sept/oct) to change to a 20% taxation of
revenue (open pit) and 6-8% for underground mining. Yesterday (1st July)
started the reversion back to the 30% corporation tax that is en par with the
20% taxation.
Not only is the corporation taxation an issue, Zambia are
now proposing a mineral export ban that have not been beneficiated in the
country? How Zambia will manage this will a reliance on hydro power and a
shortfall in capacity is another matter.
Had Christopher Yaluma, the Minister of mines, energy &
water development thought through his statements, he would have been wise to
outline how this "theory" of native beneficiation (processing) will be worked
through.
Not only are Zambia in danger of deterring any possible FDI
(Foreign Direct Investment), but companies would be wise to consider any further
investment on projects. The Government appear to have a complete inability to implement
sensible taxation and policy without considering it fully first (aka consultation).
Little time for Hargreaves Services (HSP), period
end trading update with more information to (EMC) review the company. The drop today was perhaps a
little harsh, but with the words 'coal', the market is likely to misprice the
woes. Staying with coal, the placees in Coal of Africa Ltd (CZA) will be far from chuffed with the failure of Mooiplaats. Of course they're continuing
discussions..........................
Premaitha (NIPT) pressing the button at a sensible time with
a sensible discount to the sp.
Atb Fraser
No comments:
Post a Comment