Markets Live chat transcript for the chat ending at 11:36 on 11 Oct 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT
NH
Hola
NH
rabble
NH
sorry we are a bit late
NH
I’ve just been watching this
NH
priceless
NH
this is also good
NH
I must turn it off
NH
very distracting
NH
Right then
NH
are we up and running?
NH
Bryce are you in?
NH
stop watching Kriel
NH
and getting tips
BE
Oh, hello everyone.
BE
Mr Kreil’s an endless source of entertainment on quiet days.
BE
Do you know he’s going to space?
NH
is he
NH
a one way ticket i hope
BE
Ha. Very good.
NH
with Branson?
NH
on the Virgin Shuttle?
BE
Now that’d be the dream team for launching into orbit. Slickback and the Beardy Jumper.
BE
But, no.
NH
BE
BE
26 Posts
Institute ofTrading posted this 5 days ago (Oct 5, 2011 8:01 PM).
26 Posts
Institute ofTrading posted this 5 days ago (Oct 5, 2011 8:01 PM).
Space: “The Final Frontier”
Its official. In January 2014 Institute of Trading and Portfolio Management CEO, Anton Kreil will be travelling into Space on the Lynx Xcor MKII with Space Expedition Curacao. The spaceport is located on the island of Curacao off the coast of Venezuela. This is where he will be launching from. In the cockpit of the shuttle will be Anton Kreil and NASA astronaut Colonel Rick Searfross.
NH
NH
we should organise a send off
BE
The shuttle will be launched officially at the end of Q1 2012 in the United States. Training will begin in 2013. The first thing Anton will have to do is G-force training in an L-39 Albatross fighter jet and G-Centrifuge, similar to the one from the James Bond movies. Weightlessness training will also be required by taking Zero G, parabolic flights, to get used to the sensation of floating in Space. Altitude chamber training will also help him aclimatise to being 105km above earth. Space is officially 100km above ground.
BE
“similar to the one from the James Bond movies” ….
BE
What a charming man he is.
BE
Right, anyway, we could waste a day on this stuff.
NH
we could
NH
and it’s a none too subtle way
NH
of saying
NH
there ain’t much happening today
NH
anyway
11:10AM
NH
FTSE 100 is down
NH
off 35 points at 5,364
NH
people trying to pin it on the Slovka EFSF
BE
SLOVAKIA VOTE FEAR. UNCERTAINTY. JITTERS. DISCOMBOBULATION.
NH
but it’s not that
BE
No.
NH
it’s just that we have gone up rather a lot
NH
on rather little
NH
now we are giving things back
NH
once City traders
NH
get their next line of Bolivian marching powder
NH
we will be off to the 
NH
with Anton Kriel
BE
Hm. 9% on the FTSE in four days and no news.
BE
I’m all for this coke-driven rebound theory.
NH
Oct. 10 (Bloomberg) — Italian Prime Minister Silvio
Berlusconi’s Undersecretary Carlo Giovanardi said the government
will study if it’s feasible to conduct drug tests on stock-
exchange traders, with the help of the Milan Bourse and the
country’s market regulator.
Giovanardi, who is in charge of family policy and drug
prevention, said that the abuse of drugs including cocaine might
explain part of recent stock volatility. Giovanardi made the
comments in an interview published on KlausCondicio’s website.
Berlusconi’s Undersecretary Carlo Giovanardi said the government
will study if it’s feasible to conduct drug tests on stock-
exchange traders, with the help of the Milan Bourse and the
country’s market regulator.
Giovanardi, who is in charge of family policy and drug
prevention, said that the abuse of drugs including cocaine might
explain part of recent stock volatility. Giovanardi made the
comments in an interview published on KlausCondicio’s website.
NH
well
NH
it makes more sense
NH
than some of the explanations I’ve heard
BE
So, to summarise, we have no substantive news about anything and the FTSE’s having a bit of a retrenchment into four days of idiotic gains.
BE
Stick a “traders said” after that and it could be a wire market report.
BE
However …..
BE
We have an hour to fill, so what are we going to fill it with?
BE
Movers? Up or down?
NH
er
NH
both a little difficult this morning
NH
but let’s have a go
NH
what’s up with Man Group
Man Group plc (EMG:LSE): Last: 165.00, down 5.9 (-3.45%), High: 169.90, Low: 164.10, Volume: 2.56m
NH
what’s happened to the dead cat?
NH
BE
Ran out of lives, I guess. Can’t see anything negative out there.
BE
Think people are just using any kind of strength to reduce.
BE
And today that’s despite a push from KBW
BE
Hang on – will just check the AHL daily reading.
NH
good idea
NH
elsewhere in the sector
NH
Ashmore under a bit of pressure
Ashmore Group PLC (ASHM:LSE): Last: 320.00, down 7.2 (-2.20%), High: 326.90, Low: 316.90, Volume: 767.08k
NH
been a pretty poor performer
NH
ever since joining the FTSE 100
NH
blue chip curse
NH
and Deutsche Bank has lowered numbers today
NH
7% cut to FY12 EPS highlights recent deterioration in operating environment
Ashmore will report its end-Sept AuM on 13 October (7am, UK). Since the group’s
FY11 results on 8 Sept, Ashmore’s share price has fallen 25%. This has been
driven by a) a fall in emerging market bond indices for both external debt and local
currency debt, b) a particularly sharp decline in EM currencies and c) recent
outflows from EM debt mutual funds. Ahead of the results we have cut our FY12
EPS 7%, and retain a Hold rating
Ashmore will report its end-Sept AuM on 13 October (7am, UK). Since the group’s
FY11 results on 8 Sept, Ashmore’s share price has fallen 25%. This has been
driven by a) a fall in emerging market bond indices for both external debt and local
currency debt, b) a particularly sharp decline in EM currencies and c) recent
outflows from EM debt mutual funds. Ahead of the results we have cut our FY12
EPS 7%, and retain a Hold rating
NH
Ahead of the group’s end-Sept update, we have cut our AuM forecast by 5% to
US$63.7bn. This would represent the first absolute q/q decline in AuM since
3Q09, and primarily reflects the recent sharp decline in EM debt indices (both
dollar denominated and local currency). In addition, EM equities have also been
weak, with MSCI EM Equity index down -13% in 3Q11. We expect the tougher
market backdrop could have resulted in lower flows, so have trimmed our net fund
flow forecast to US$2.5bn, from US$2.9bn.
US$63.7bn. This would represent the first absolute q/q decline in AuM since
3Q09, and primarily reflects the recent sharp decline in EM debt indices (both
dollar denominated and local currency). In addition, EM equities have also been
weak, with MSCI EM Equity index down -13% in 3Q11. We expect the tougher
market backdrop could have resulted in lower flows, so have trimmed our net fund
flow forecast to US$2.5bn, from US$2.9bn.
NH
Valuation– 12-month target price cut to 370p
Despite its share price falling 19% in 3Q11, Ashmore is the best performing asset
manager YTD, down just 3%. Ashmore trades on 9.9x FY12 EV/NOPAT, a 10%
premium to the sector. While we believe its strong brand in a structurally growing
asset class merits a premium rating, we believe the current rating is up with
events. Our lowered 12-month SOTP target price of 370p (from 420p) is 14%
above the current price. We retain a Hold rating.
Despite its share price falling 19% in 3Q11, Ashmore is the best performing asset
manager YTD, down just 3%. Ashmore trades on 9.9x FY12 EV/NOPAT, a 10%
premium to the sector. While we believe its strong brand in a structurally growing
asset class merits a premium rating, we believe the current rating is up with
events. Our lowered 12-month SOTP target price of 370p (from 420p) is 14%
above the current price. We retain a Hold rating.
NH
looks like the best might be over
NH
and don’t Ashmore have plans
NH
to buy a big EM equities business?
BE
That was an idea put around at the last results
BE
After management stalled on a proper cash return
BE
Though I don’t think that’d go down well at the moment.
NH
no
NH
it wouldn’t
11:20AM
NH
Moving on
BE
Having shed very little light on the fallers, how about we do the same for the risers?
BE
Starting with top of the pile, ITV
NH
pass
ITV PLC (ITV:LSE): Last: 64.70, up 1.35 (+2.13%), High: 64.70, Low: 62.35, Volume: 4.58m
BE
Someone was pushing yesterday
BE
Because people like Twitter
BE
And people who watch X-Factor tend to tweet about it.
BE
Hang on, I’m sure I have the note somewhere.
NH
not sure I follow this
BE
Panmure. That was it.
NH
I though the X-Factor ratings
NH
were poor
NH
2.5 hour show
NH
with 30 mins of ads
BE
It’s thematic, though.
BE
Showing TV isn’t dead
NH
what like it’s trending?
BE
Kind of, yes. Communal experience.
BE
Only provided by the terrestrial broadcasters.
BE
That kind of hokum.
BE
Here’s Panmure to explain itself.
BE
We upgrade ITV from Hold to Buy. Our revised target price is 80p
(from 73p). Current trading is sound, the outlook for FY 2012 is a
catalyst and the risk-reward for the shares skewed on the upside in our
view.
(from 73p). Current trading is sound, the outlook for FY 2012 is a
catalyst and the risk-reward for the shares skewed on the upside in our
view.
BE
Current trading better than expected: In spite of the sombre macro
backdrop, H2 advertising growth is shaping up well. September has come in
at 5% growth YOY, well ahead of our expectations. Advertising is ITV’s
largest revenue stream, and our FY 2011 EPS forecasts look comfortably
underpinned now.
backdrop, H2 advertising growth is shaping up well. September has come in
at 5% growth YOY, well ahead of our expectations. Advertising is ITV’s
largest revenue stream, and our FY 2011 EPS forecasts look comfortably
underpinned now.
BE
Time to focus on FY 12 Olympics benefit: As the UK’s largest commercial
broadcaster, ITV is well placed to benefit from next year’s London Olympics.
We expect this to add materially to the addressable UK advertising market,
taking into account the number of major multi-nationals already involved as
sponsors.
broadcaster, ITV is well placed to benefit from next year’s London Olympics.
We expect this to add materially to the addressable UK advertising market,
taking into account the number of major multi-nationals already involved as
sponsors.
BE
Complementary to social media: Amongst traditional media, TV benefits
the most from the rapid growth in social media (eg Twitter, Facebook). This
should help it to take advertising market share going forward.
the most from the rapid growth in social media (eg Twitter, Facebook). This
should help it to take advertising market share going forward.
BE
(See?)
BE
Self-help potential still valid: ITV is already back on the dividend list.
However, there is further upside potential to forecasts from a more efficient
balance sheet structure, and improved content sales internationally in our
view.
However, there is further upside potential to forecasts from a more efficient
balance sheet structure, and improved content sales internationally in our
view.
BE
Valuation attractive: On near trough multiples of 8.4x and 7.9x P/E
2011/12, the market has already priced in major cyclical downside risk to ITV
forecasts. Any stabilisation of macro sentiment should see the shares perform
very well from current levels.
2011/12, the market has already priced in major cyclical downside risk to ITV
forecasts. Any stabilisation of macro sentiment should see the shares perform
very well from current levels.
NH
it’s cheap
NH
agreed
NH
probably for a reason
NH
i.e.
NH
the rise of disruptive technology
NH
but cheap
NH
what else is moving
NH
I was looking at
Standard Chartered PLC (STAN:LSE): Last: 1,391, up 5.5 (+0.40%), High: 1,402, Low: 1,378, Volume: 1.56m
HSBC Holdings PLC (HSBA:LSE): Last: 514.90, down 4.2 (-0.81%), High: 517.60, Low: 508.80, Volume: 4.66m
NH
in the wake of the Chinese bank share support operation
BE
Details, for those who missed it?
NH
hang on
NH
just getting
NH
BEIJING—China’s sovereign-wealth fund stepped in Monday to buy shares of the country’s battered banks, which have been caught in a selloff that analysts say reflects a broader loss of trust in the integrity of corporate earnings and government statistics.
The skepticism of investors comes as China has become increasingly exposed to global markets, largely through stock listings of its state-owned enterprises and other companies, but more recently through its currency and bonds, which are now traded in Hong Kong.
NH
The market rout began among a group of small U.S.-listed companies accused by investors of misrepresentation and has quickly spread to other Chinese assets available to overseas investors. Stock investors are fleeing China’s state banking giants partly on fears that they aren’t coming clean about their bad-debt problems after several years of blow-out lending.
NH
I rather like this story
NH
investors shunning Chinese banks
NH
because of Sino-Forest etc
NH
and the authorities step in
NH
to support the banks
NH
and this bad debt topic
NH
is very interesting
NH
have they been taking the right provisions?
NH
anyway
NH
it’s all apparently good news
NH
for Stan
NH
well Merrill thinks it is
NH
Over the last few months StanChart and HSBC have been dragged lower by the
turmoil in Europe and worries about China/global growth. Both banks are down
c20% for the year.
With overnight news that China will buy shares in its largest banks and the
Eurozone planning a plan to solve all their troubles we could see a further rally in
the UK Asian banks.
For investors looking to put money to work in the sector, but scared to buy
European Banks, having a look at StanChart would make a lot of sense, in our
view.
turmoil in Europe and worries about China/global growth. Both banks are down
c20% for the year.
With overnight news that China will buy shares in its largest banks and the
Eurozone planning a plan to solve all their troubles we could see a further rally in
the UK Asian banks.
For investors looking to put money to work in the sector, but scared to buy
European Banks, having a look at StanChart would make a lot of sense, in our
view.
NH
We added StanChart to our Most Preferred portfolio ahead of our banking sector
conference. Management confirmed that 2011 targets were all still in the bag,
effectively underpinning consensus for 2011. Whilst they are concerned about the
lasting economic impacts of the crisis, they remain convinced that they are
extremely well positioned with a c80% loan to deposit ratio and a Basel 3 core tier
1 >10%; arguably one of the few Western listed Banks that can boast this.
Hence if a recessionary/sovereign tidal wave is coming to wash away some of the
Eurozone banks, StanChart should be positioned on a high sand dune at the
back of the beach – it would still get wet, but it wouldn’t drown.
conference. Management confirmed that 2011 targets were all still in the bag,
effectively underpinning consensus for 2011. Whilst they are concerned about the
lasting economic impacts of the crisis, they remain convinced that they are
extremely well positioned with a c80% loan to deposit ratio and a Basel 3 core tier
1 >10%; arguably one of the few Western listed Banks that can boast this.
Hence if a recessionary/sovereign tidal wave is coming to wash away some of the
Eurozone banks, StanChart should be positioned on a high sand dune at the
back of the beach – it would still get wet, but it wouldn’t drown.
NH
If investors did want to go long, then we would hedge it with HSBC, which we
have in our Least Preferred portfolio. Why? Unlike StanChart, we do not think that
HSBC will be able to stand up at its 3Q results and say everything is still on track.
In our view, consensus has yet to reflect the turbulence of 3Q IB earnings into
HSBCs forecasts, has failed to capture the lower rate outlook and despite
impairments already being sub-normalised continues to expect continued bad
debt improvement – given the environment all this points to earnings risk and
therefore it feels like there is at least a 10% relative earnings trade to aim for.
Also, unlike StanChart, HSBC is reliant on earnings retention to grow into its
Basel 3 capital ratios, so any downgrades will impact investors capital and
dividend perceptions.
have in our Least Preferred portfolio. Why? Unlike StanChart, we do not think that
HSBC will be able to stand up at its 3Q results and say everything is still on track.
In our view, consensus has yet to reflect the turbulence of 3Q IB earnings into
HSBCs forecasts, has failed to capture the lower rate outlook and despite
impairments already being sub-normalised continues to expect continued bad
debt improvement – given the environment all this points to earnings risk and
therefore it feels like there is at least a 10% relative earnings trade to aim for.
Also, unlike StanChart, HSBC is reliant on earnings retention to grow into its
Basel 3 capital ratios, so any downgrades will impact investors capital and
dividend perceptions.
NH
actually an interesting line in there on HSBC
NH
It won’t be able to say anything positive with Q3 results
HSBC Holdings PLC (HSBA:LSE): Last: 514.90, down 4.2 (-0.81%), High: 517.60, Low: 508.80, Volume: 4.68m
NH
(@Chuck Norris – ITV shareholders, I think you will find, care greatly about the X-Factor)
BE
Ok.
BE
Since we’re on banks,
BE
Did I notice another circular from Ian Gordon this morning?
NH
yes
BE
With his pro-bank rhetoric spiralling further into the ether?
NH
yes
NH
he’s touting himself
NH
for Angela Knight’s job
NH
when she leaves the BBA
NH
I reckon he’d been quite good
BE
Livelier, certainly.
BE
To be fair, I think Ian Gordon writes very well.
NH
(Itzman – yellow. Well below your normal standard)
BE
Even if his conclusions are, not to put too fine a point on it, barking.
BE
So, give us a look at the latest.
NH
The appearance of the ICB panel before the House of Commons Treasury Committee yesterday afternoon made for depressing listening. There is still no recognition, let alone acceptance, by the ICB panel of the destabilising impact that its key recommendation (the creation of more narrowly defined “ring-fenced” entities) would inevitably have on the UK financial system should the Cameron government be stupid enough to implement it. Indeed, in our view, the ICB recommendations have already cast a dark shadow over already paralysed senior debt markets, so the ICB may yet play a role in extending and/or deepening the current crisis as well as being the primary architect of the next.
NH
it goes on like that
NH
bank apologist stuff
NH
the British version of Dick Bove
NH
(@martingredo. No. Yellow card)
BE
So the ICB recommendations have paralysed senior debt markets?
NH
yep
BE
Interesting theory.
BE
Sorry – we’re otherwise engaged for a moment.
BE
Let’s get some more Ian Gordon to fill the dead air.
NH
ok
BE
A price worth paying? We get the impression that members of the ICB frankly
aren’t too worried about who suffers the base cost of their recommendations –
which they themselves estimate at £4-7bn per annum – in perpetuity. The ICB
cheerfully expects shareholder returns to suffer further material damage over and
above the impact of existing measures, and the Treasury Committee appeared
somewhat sceptical at the ICB claim that the incremental cost to bank customers,
if expressed as an addition to the cost of borrowing might, on average, be
approximately 0.1%. We heard little evidence to substantiate this view.
aren’t too worried about who suffers the base cost of their recommendations –
which they themselves estimate at £4-7bn per annum – in perpetuity. The ICB
cheerfully expects shareholder returns to suffer further material damage over and
above the impact of existing measures, and the Treasury Committee appeared
somewhat sceptical at the ICB claim that the incremental cost to bank customers,
if expressed as an addition to the cost of borrowing might, on average, be
approximately 0.1%. We heard little evidence to substantiate this view.
BE
“Anyone like to venture an answer to the simple question?” We can
understand the MPs frustration in probing the ICB panel for a view of what benefit
their recommended structure might offer. On growth, the answer was “a neutral
impact”, or if pushed, “lower volatility of future growth”. Clearly we beg to differ.
understand the MPs frustration in probing the ICB panel for a view of what benefit
their recommended structure might offer. On growth, the answer was “a neutral
impact”, or if pushed, “lower volatility of future growth”. Clearly we beg to differ.
NH
enough
NH
I think
NH
quick round up of the other banking stocks
Royal Bank of Scotland Group PLC (RBS:LSE): Last: 24.96, up 0.35 (+1.42%), High: 25.16, Low: 24.46, Volume: 44.89m
Lloyds Banking Group plc (LLOY:LSE): Last: 35.92, up 0.2159 (+0.60%), High: 36.51, Low: 34.87, Volume: 29.23m
11:37AM
NH
Just bear with us for a moment
NH
there’s some filming happening right behind us
BE
(@Mo06: we used to have that option. No-one used it.)
NH
the head of Lex for something or another
NH
We are having to be quite as mice
NH
and not shout out any obscenity
BE
Which is tricky, as shouting obscenities — largely at you lot, ROTR — is the only thing that keeps us sane during these daily therapy sessions.
BE
In the meantime, what should we turn to next?
NH
small caps?
NH
given the lack of anything interesting in the FTSE 350
BE
Sure. Go on then.
11:40AM
Rockhopper Exploration PLC (RKH:LSE): Last: 180.75, up 11 (+6.48%), High: 181.75, Low: 156.25, Volume: 4.16m
NH
dry well
NH
shocker
NH
(ear plugs please)
NH
(too loud)
BE
(Of all the places to film a video, they pick next to my chair. Hellfire and etc.)
BE
Right, anyway, let’s stay focused
BE
Rockhopper.
BE
Falklands. Dry well.
BE
But resource upgrade.
NH
as usual the statement was full of jargon
NH
that only three people in the world understand
NH
In addition, the results of wells 14/10-7 and 14/10-8 have successfully demonstrated that the reservoir is well developed outside the areas of high amplitudes, therefore increasing the areal extent of the low and mid case for the SLMC post well 14/10-8 even though 14/10-8 itself proved to be water wet.
NH
water wet?
NH
does anyone know what that means?
BE
Um …. It does sound a bit tautologous.
NH
Following wells 14/10-6 and 14/10-7 the Company has undertaken a review with its technical consultants and as a result has refined its methodology for the depth conversion of seismic data over Sea Lion. This revised method proves an improved fit to all of the wells and provided an accurate prediction from 14/10-8. It also brings an increase in gross rock volume above the OWC within the SLMC.
NH
gross rock volume
NH
are we talking about traders again?
NH
anyway
NH
this well
NH
was to the side of Sea Lion
NH
and it doesn’t look
NH
as if
NH
there is any oil
NH
but no matter
NH
because
NH
Rockhopper has upgraded
NH
the resource estimates for Sea Lion today
NH
and thus
NH
the share price has risen
NH
hang on
NH
I will get the sector watcher
NH
in the meantime
NH
a reader
NH
provides
NH
an explanation of Water Wet
NH
Drilled into the perceived reservoir area and found water.. thus probably indicates that they have drilled into a probable area but not at the right point to find oil… better than a total dry hole as they can correlate back on the 2d or 3d to the pinch point of the reservoir and drill again
BE
(@Gladys: but the “water” bit surely implies the “wet” bit. Or is it important to define that they haven’t found steam or ice?)
NH
Whilst the initial reaction to a dry hole would typically be negative, there is a compellingly positive slant to today’s news from RKH. Although 14/10-8, located 4.1 km to the south south east of the discovery well, was dry, it encountered good quality reservoir sands. It is understood that the well penetrated a restricted area of the Sea Lion Main Complex that is separated from the structure by a fault to the north.
NH
Incorporated with the result of the previous well (14/10-7) implies that the areal extent of the field in the low and mid case is actually larger than previously thought. On a P50 basis Oil On Place is now estimated at almost 1.3 billion barrels compared to just short of 1.1 billion barrels previously, a 19% increase. Assuming a 30% recovery factor therefore suggests reserves of almost 400 million barrels. The next well in the programme, 14/10-9, is located 6 km south west of the discovery. Our target price is currently 871p/share and we rate the group a Buy.
NH
871p
NH
BE
(@OJ(at)Home: Thanks. I’ve quickly discovered that I don’t actually care.)
BE
Ok – ta for that.
BE
Here’s some more comment, from Westhouse.
BE
The results of the 14/10-8 exploration well once again demonstrate that Rockhopper
has an excellent understanding of the geology in this part of the North Falklands basin.
The reservoir sequences that they encountered were all high-quality with respect to the
net-to-gross ratios and porosity, but unfortunately were not hydrocarbon charged.
has an excellent understanding of the geology in this part of the North Falklands basin.
The reservoir sequences that they encountered were all high-quality with respect to the
net-to-gross ratios and porosity, but unfortunately were not hydrocarbon charged.
BE
In our risked SOTP valuation of the company, we were carrying a geological chance of
success of 90% for the SLMC B15 sand and 20% for the Casper and Kermit prospects.
Adjusting our NAV for the exploration result and the increased resources on the SLMC
structure to 1,297mmbbl, our target price increases slightly from 643p to 658p per
share. We retain our BUY recommendation.
success of 90% for the SLMC B15 sand and 20% for the Casper and Kermit prospects.
Adjusting our NAV for the exploration result and the increased resources on the SLMC
structure to 1,297mmbbl, our target price increases slightly from 643p to 658p per
share. We retain our BUY recommendation.
BE
(@Cockers: the sector watcher operates under anonymity.)
BE
And here’s Canaccord.
BE
In conjunction with its technical consultants, Rockhopper
Exploration has refined its methodology for the depth conversion of
seismic data over the Sea Lion oil field offshore the Falkland Islands.
This revised method provides an improved fit to the wells drilled to
date and has resulted in an increase in the estimated gross rock
volume above the oil-water contact (OWC) within the Sea Lion Main
Complex (SLMC).
Exploration has refined its methodology for the depth conversion of
seismic data over the Sea Lion oil field offshore the Falkland Islands.
This revised method provides an improved fit to the wells drilled to
date and has resulted in an increase in the estimated gross rock
volume above the oil-water contact (OWC) within the Sea Lion Main
Complex (SLMC).
BE
As a result, the group has increased its oil in-place estimates for the
SLMC by up to 39%. If we apply a 30% recovery factor to the new
numbers, then the field could contain reserves of more than 250
mmbbl even in Rockhopper’s low case. In its high case, the
corresponding figure would comfortably exceed 400 mmbbl.
Meanwhile, in the group’s mid-case, reserves would be 11% ahead
of the 350 mmbbl used by Rockhopper in the conceptual
development plan presented at its recent Capital Markets Day.
SLMC by up to 39%. If we apply a 30% recovery factor to the new
numbers, then the field could contain reserves of more than 250
mmbbl even in Rockhopper’s low case. In its high case, the
corresponding figure would comfortably exceed 400 mmbbl.
Meanwhile, in the group’s mid-case, reserves would be 11% ahead
of the 350 mmbbl used by Rockhopper in the conceptual
development plan presented at its recent Capital Markets Day.
BE
Using an oil price of US$87.50/barrel alongside a 12% discount rate, we now estimate
Rockhopper’s NAV to be 880p/share (previously 871p/share). Our NAV hinges on our
estimate of the group’s cash position as of 30 June 2011 plus our estimate of the value of
the SLMC assuming it contains recoverable reserves of 390 mmbbl. We have risked the
result at 75% ahead of a formal CPR evaluation, which we would expect in 2012. Unrisked,
our NAV estimate would stand at approximately 1,155p/share.
Rockhopper’s NAV to be 880p/share (previously 871p/share). Our NAV hinges on our
estimate of the group’s cash position as of 30 June 2011 plus our estimate of the value of
the SLMC assuming it contains recoverable reserves of 390 mmbbl. We have risked the
result at 75% ahead of a formal CPR evaluation, which we would expect in 2012. Unrisked,
our NAV estimate would stand at approximately 1,155p/share.
NH
and sticking with oil
The next supermajor, potentially sitting on 60bn barrels of oil in Kurdistan. Loved by muppets across the globe.
Gulf Keystone Petroleum Ltd (GKP:LSE): Last: 133.75, down 4 (-2.90%), High: 141.50, Low: 133.75, Volume: 1.50m
NH
not much hto say here
NH
Gulfkeystone Petroleum (GKP LN) has announced that it has spudded the Ber Bahr-1 exploration well. The well is located on the Ber Bahr block, situated North West and on trend with Shaikan and Sheikh Adi blocks, Kurdistan. The block is reported to hold 1.5bn bbl oil-in-place. Gulf Keystone holds a 40% working interest.
NH
is this the one
NH
they are trying to sell?
NH
to fund their operations?
NH
talking of which
NH
do we have any idea
NH
how Rockhopper
NH
funds its development
NH
it needs a serious amount of cash
BE
Farmdown.
BE
Or sale of the company.
BE
Or a 100-for-one rights issue.
BE
Who knows?
NH
(thanks Bohemia)
BE
(Yes, thanks for Bohemia. We should have said GKP is trying to sell Shaikan.)
BE
(Oops. Akri-Bijeel.)
BE
(/flamebait)
A term of endearment used to describe BB share promoters on FT Alphaville.
NH
enough muppet news
NH
let’s get back up the market cap scale
11:53AM
BE
Ok then. What now? We’re not even at midday yet.
CSR PLC (CSR:LSE): Last: 185.40, down 9.2 (-4.73%), High: 190.30, Low: 185.00, Volume: 368.16k
BE
Ok.
BE
What’s happening?
NH
Citigroup bearish I believe
NH
in some big sector note
BE
Can’t blame them. Product delays, questionable acquisitions ….
NH
Defensive Growth — Although most end-markets have only seen relatively minor
adjustments and a meaningful deceleration seems to be priced in at this point, in an
environment of lower macro visibility, our investment thesis stresses defensive growth,
either in the form of structural dynamics or through resilient business models. We note
that after the correction over the last three months, relative technology valuations look
attractive and the sector scores highly in terms of balance sheet fundamentals.
adjustments and a meaningful deceleration seems to be priced in at this point, in an
environment of lower macro visibility, our investment thesis stresses defensive growth,
either in the form of structural dynamics or through resilient business models. We note
that after the correction over the last three months, relative technology valuations look
attractive and the sector scores highly in terms of balance sheet fundamentals.
NH
well some companies do
NH
but not CSR
NH
which is still going ahead with that strange acquisition, no?
BE
Yes, the imaging chip thingmymob.
BE
Despite no synergies anyone can see.
BE
And not much evidence of cross selling yet.
BE
To CSR’s customer base, many of whom are in a strategic cul-de-sac.
BE
I also note CSR has no longer got a display at the Science Museum.
BE
I’m not sure that’s an orthodox bear signal, but that’s how I’m reading it.
NH
hmm
NH
right here’s the Citi comment on CSR
NH
Although CSR substantially reduced its
handset exposure from ~50% of revenues in 2008 to ~25% today (mainly
Bluetooth &Wifi connectivity), it remains the company’s biggest single market
segment. We believe the lack of platform control (given the dominance of
basebands and apps processors) makes it difficult to compete against powerful
competitors introducing semi-proprietary interfaces. With regard to collaboration,
we are sceptical whether CSR will receive a fair share in ‘virtual platform
partnerships’ with baseband companies that lack competitive connectivity
solutions. We are monitoring with interest CSR’s activities in the emerging
segment of Near Field Communication (NFC), but need to see further evidence
of design wins.
handset exposure from ~50% of revenues in 2008 to ~25% today (mainly
Bluetooth &Wifi connectivity), it remains the company’s biggest single market
segment. We believe the lack of platform control (given the dominance of
basebands and apps processors) makes it difficult to compete against powerful
competitors introducing semi-proprietary interfaces. With regard to collaboration,
we are sceptical whether CSR will receive a fair share in ‘virtual platform
partnerships’ with baseband companies that lack competitive connectivity
solutions. We are monitoring with interest CSR’s activities in the emerging
segment of Near Field Communication (NFC), but need to see further evidence
of design wins.
NH
— Broadcom’s recent exit from
digital TV operations highlights in our view the difficulties in winning DTV sockets
(in particular from Japanese manufacturers) against MStar (DTV SoC) and
MediaTek (that in addition to SoC also has offers connectivity WiFi and BT), that
have grabbed the main share of mid- to low-end of the digital TV markets and are
likely in due course going after Zoran’s North American Tier-1 sockets. While we
understand that Zoran has some design wins (likely to ship in early 2013) for its
‘connected TV’ strategy, we need more conviction that CSR’s #5 position in DTV
can result in profitable growth in a market with a tendency to commoditise.
digital TV operations highlights in our view the difficulties in winning DTV sockets
(in particular from Japanese manufacturers) against MStar (DTV SoC) and
MediaTek (that in addition to SoC also has offers connectivity WiFi and BT), that
have grabbed the main share of mid- to low-end of the digital TV markets and are
likely in due course going after Zoran’s North American Tier-1 sockets. While we
understand that Zoran has some design wins (likely to ship in early 2013) for its
‘connected TV’ strategy, we need more conviction that CSR’s #5 position in DTV
can result in profitable growth in a market with a tendency to commoditise.
NH
Execution risk around Bluetooth/Wifi combo — While the expected volume
ramp for the Bluetooth/WiFi combo product (9800) was confirmed for H2 next
year, management talked about a slight delay in the tape-out of the chips to
ensure full technical maturity. While we believe that the 9800 Bluetooth/WiFi
combo is an advanced product, we see risk that the delay will result in more than
the miss of a few smartphone model launches.
ramp for the Bluetooth/WiFi combo product (9800) was confirmed for H2 next
year, management talked about a slight delay in the tape-out of the chips to
ensure full technical maturity. While we believe that the 9800 Bluetooth/WiFi
combo is an advanced product, we see risk that the delay will result in more than
the miss of a few smartphone model launches.
NH
Weak outlook given consumer-end market exposure — While Q3 looks still
okay, CSR’s end-market exposure (DTV, cameras and other consumer
electronics markets and also considering the company’s PC) with a challenging
Q4 (seasonality is normally in 10-15% range sequentially), likely means the
company has a few challenging quarters ahead.
okay, CSR’s end-market exposure (DTV, cameras and other consumer
electronics markets and also considering the company’s PC) with a challenging
Q4 (seasonality is normally in 10-15% range sequentially), likely means the
company has a few challenging quarters ahead.
BE
Yeah – that all seems reasonable.
BE
Struggling to get competitive products into a commoditised market.
NH
yes, not an ideal place to be
NH
should have slotted the company years ago
NH
HP would probably have snapped it up
BE
You can never write off that possibility. They’ll buy ANYTHING.
NH
as we discovered
NH
moving on then
12:00PM
NH
Right
NH
time to unleash the rally monkey
NH
unlock the cage Bryce
NH
this should be good
NH
for a couple of hundred points on the FTSE 10
NH
RTRS- SLOVAK OPPOSITION-LEADING PARTY OFFICIAL SAYS CONFIDENT SLOVAKIA WILL APPROVE EFSF EXPANSION AS SOON AS POSSIBLE
NH
it’s coming
BE
Ah yes. Uncertainty about this was the reason we were down, of course.
BE
So we can now assume FTSE by 5400 by the end of the day, at very least.
NH
yes
BE
And Wall Street to stick on a percent or two.
NH
BE
Just as soon as the US traders work out that Slovakia is actually a place, and not like Narnia
12:03PM
NH
Someone was asking about
Centamin Egypt Ltd (CEY:LSE): Last: 99.40, up 4.05 (+4.25%), High: 99.75, Low: 97.05, Volume: 2.11m
NH
biggest riser in the FTSE 100 at the moment
NH
good trading update
NH
everything back on track
NH
because they have been able to get some explosives
NH
to blast all that gold out of the ground
BE
FTSE 250, you mean. So the small local difficulty regarding who to bribe has been straightened out?
NH
NO
NH
i’m not saying that
NH
but they have found
NH
who is in control of explosives in the new government
NH
anyway
NH
everything is no fine and dandy
NH
says Evo
NH
EVO TAKE – The most important part of today’s release is that Centamin
has reiterated its previous gold production guidance of between 200,000 –
210,000oz at a cost of US$550/oz. The group will need to produce at least
57,000oz in Q4, but this doesn’t seem too much of a stretch given that the
blasting issues have now been resolved. We therefore see this target as
achievable.
has reiterated its previous gold production guidance of between 200,000 –
210,000oz at a cost of US$550/oz. The group will need to produce at least
57,000oz in Q4, but this doesn’t seem too much of a stretch given that the
blasting issues have now been resolved. We therefore see this target as
achievable.
NH
DETAILS – Centamin Egypt has reported its preliminary Q3 gold output
with the full financials expected on 31 October. The group has produced
50,539oz of gold during the quarter, a 5% increase on Q2. Post the
blasting issues which the company faced in Q2 and early Q3, underground
and open pit production rates returned to budgeted levels in July. At
964,000t, plant throughput represented a quarterly record. Importantly,
Centamin has been able to increase its run of mine stockpile during Q3,
which should give the group more flexibility in the future.
with the full financials expected on 31 October. The group has produced
50,539oz of gold during the quarter, a 5% increase on Q2. Post the
blasting issues which the company faced in Q2 and early Q3, underground
and open pit production rates returned to budgeted levels in July. At
964,000t, plant throughput represented a quarterly record. Importantly,
Centamin has been able to increase its run of mine stockpile during Q3,
which should give the group more flexibility in the future.
NH
VALUATION AND RECOMMENDATION – We reiterate our Add
recommendation and our 142p target price.
recommendation and our 142p target price.
NH
of course
NH
one might have expected today’s update
NH
to be be positive
NH
directors recently bought stock, no?
BE
They have. Allow me to grab the details.
BE
September 22
BE
Josef El-Raghy – Director and Chairman
BE
Purchase of 500,000 fully paid ordinary shares in Centamin Egypt Limited
NH
hmm
BE
GBP 1.10763
NH
still underwater
BE
Think he bought earlier in the month as well.
BE
Purchase of 500,000 fully paid ordinary shares in Centamin Egypt Limited, executed in 2 trades
NH
skin in the game
BE
104.192p and 106.400p
NH
talking of mining, I have been dying to try something for our friends at Brunswick
WARNING!Crowded long. Every hedge fund in London owns this Greek gold play, even though it’s just sold to Qatar for a disappointing premium. In the words of one analyst:”Not the outcome that we believe the majority of shareholders would have preferred.”
European Goldfields Ltd (EGU:LSE): Last: 637.60, up 17.6 (+2.84%), High: 640.00, Low: 632.50, Volume: 30.39k
NH
just wanted to get that out there
NH
they didn’t like the previous auto quote
BE
Rather wordy, but it gets the message across.
BE
Yes, the previous one about the permits was out of date and required an update.
BE
And I hope that suffices.
12:10PM
Petrofac Ltd (PFC:LSE): Last: 1,280, down 18 (-1.39%), High: 1,305, Low: 1,267, Volume: 586.39k
NH
interesting flash
NH
we didn’t think it likely either
NH
but the Unicredit note
NH
was interesting, however
BE
Yes. It is a tremendously unlikely takeover story.
BE
And here’s that Unicredit note, for those who missed it.
BE
Talking about the bit that created Enquest
BE
As a kind of incubator for getting fields up to shape.
BE
Petrofac starts to report under its new reporting structure in January 2012, with the
main feature being the creation of Integrated Energy Services (IES), building upon the
existing Energy Developments business which clearly enhanced shareholder value, as
demonstrated by 2010′s Enquest demerger. We believe the equity market has yet to
‘get’ what IES means, and the increasing importance it will have on group performance
– by 2015 management expects IES to generate around a third of group earnings,
which are targeted to have doubled from 2010 levels. The market needs to have a better
understanding of the mechanics of IES. In this note, we intend to help the reader in this
quest. In our view, management’s aspirations seem entirely plausible, and IES will be
one of the key features that differentiate Petrofac from its more prosaic peers.
main feature being the creation of Integrated Energy Services (IES), building upon the
existing Energy Developments business which clearly enhanced shareholder value, as
demonstrated by 2010′s Enquest demerger. We believe the equity market has yet to
‘get’ what IES means, and the increasing importance it will have on group performance
– by 2015 management expects IES to generate around a third of group earnings,
which are targeted to have doubled from 2010 levels. The market needs to have a better
understanding of the mechanics of IES. In this note, we intend to help the reader in this
quest. In our view, management’s aspirations seem entirely plausible, and IES will be
one of the key features that differentiate Petrofac from its more prosaic peers.
BE
We value the shares at GBp 1,835/share, based on a blended value using 2012
multiples; based on 2015 target earnings, which our analysis suggests can be achieved
in 2014 and implies a blue sky value of over GBp 2,400/share. Petrofac shares are a top
pick with a strong Buy recommendation.
multiples; based on 2015 target earnings, which our analysis suggests can be achieved
in 2014 and implies a blue sky value of over GBp 2,400/share. Petrofac shares are a top
pick with a strong Buy recommendation.
BE
Here’s the story
We have performed a bottom-up analysis of the various contracts entered into by Petrofac’s
IES division, headed by Andy Inglis, formerly CEO of BP’s exploration and production
business.
We have performed a bottom-up analysis of the various contracts entered into by Petrofac’s
IES division, headed by Andy Inglis, formerly CEO of BP’s exploration and production
business.
BE
Our analysis concludes that:
■ IES is capable of exceeding company guidance for 2015 divisional net income of approx
USD 300mn, although this will require at least a further major contract award.
■ Any new contracts entered into by IES of a similar nature to recent endeavors (Berantai,
Ticeleni, Pemex) suggests significant enhancement to group earnings.
■ As well as earnings for IES, the project outlays on capital can in large part be expected to
flow into Petrofac’s Engineering & Construction (E&C) division, generating net income
margins of some 11%, and further enhancing group earnings.
■ As a consequence, we view management’s goal to more than double underlying earnings
across 2010-2015 as being entirely realistic; our forecasts have this being achieved by
2014.
■ IES is capable of exceeding company guidance for 2015 divisional net income of approx
USD 300mn, although this will require at least a further major contract award.
■ Any new contracts entered into by IES of a similar nature to recent endeavors (Berantai,
Ticeleni, Pemex) suggests significant enhancement to group earnings.
■ As well as earnings for IES, the project outlays on capital can in large part be expected to
flow into Petrofac’s Engineering & Construction (E&C) division, generating net income
margins of some 11%, and further enhancing group earnings.
■ As a consequence, we view management’s goal to more than double underlying earnings
across 2010-2015 as being entirely realistic; our forecasts have this being achieved by
2014.
BE
■ Although these contracts create negative free cash flow for IES in the short term, owing to
capital commitments to projects, these are low risk, and over time we expect a smoothing
effect as older contracts roll into significant free cash generation, more than offsetting
capital outlays.
■ The risk associated with the capital outflows is low in our view, and the returns appear very
attractive.
All told, we believe IES will be a key differentiator for Petrofac, being unique amongst
engineering sector peers, and offering a compelling equity story for investors looking for
strong earnings growth at low risk.
capital commitments to projects, these are low risk, and over time we expect a smoothing
effect as older contracts roll into significant free cash generation, more than offsetting
capital outlays.
■ The risk associated with the capital outflows is low in our view, and the returns appear very
attractive.
All told, we believe IES will be a key differentiator for Petrofac, being unique amongst
engineering sector peers, and offering a compelling equity story for investors looking for
strong earnings growth at low risk.
BE
Bit messy, but you get the drift.
BE
Oh, and while we’re debunking bid stories
BE
RBS doesn’t think much of this idea that Rentokil’s a PE target
NH
nor do i
NH
will we ever have a RAW takeover story
RAW is market chatter – information that has not been formally tested through traditional journalistic channels (PRs etc). The story might be complete rubbish, but if we believe there is some substance to it we will say so. Either way, Reader Beware.
NH
that ever happens?
NH
I’ve lost count of the number run up the flag pole in recent months
NH
anyway
NH
what do RBS have to say
BE
Oh, I can’t find the flipping comment now. Never mind.
BE
“Bobbins,” is the upshot.
NH
right
NH
while Bryce tries to find that
NH
we have some Eurostresstest news
NH
and its not good for RBS
NH
which has gone up on the news
NH
RTRS-EU BANKING REGULATOR EBA DEMANDS CORE TIER 1 RATIO OF AT LEAST 7 PCT IN CURRENT INTERNAL STRESS TEST – SOURCES
Royal Bank of Scotland Group PLC (RBS:LSE): Last: 24.78, up 0.17 (+0.69%), High: 25.16, Low: 24.46, Volume: 48.56m
NH
RTRS-EU BANKING REGULATOR EBA DEMANDS CORE TIER 1 RATIO OF AT LEAST 7 PCT IN CURRENT INTERNAL STRESS TEST – SOURCES
12:13 11Oct11 RTRS-REMAINS UNCLEAR HOW CORE TIER 1 CAPITAL WILL BE DEFINED AS PART OF STRESS TEST – SOURCES
12:13 11Oct11 RTRS-REMAINS UNCLEAR HOW CORE TIER 1 CAPITAL WILL BE DEFINED AS PART OF STRESS TEST – SOURCES
NH
as a reminder RBS
NH
was only just above 6% in the past test
NH
which was the pass mark
NH
they will claim
NH
lots has been done to de-risk the company
NH
but it will be interesting to see
NH
if they can get above 7%
NH
or if the govt has to be in at 50p a again
NH
RTRS-BANKS THAT FAIL EBA TEST WILL BE ASKED TO BOOST CAPITAL – SOURCES
12:16 11Oct11 RTRS-SIGNIFICANT NUMBER OF BANKS LIKELY TO FAIL THAT TEST – BANKING SOURCES
12:16 11Oct11 RTRS-SIGNIFICANT NUMBER OF BANKS LIKELY TO FAIL THAT TEST – BANKING SOURCES
BE
(@Milky: yellow for being self referential.)
NH
yeah Milky
NH
some really good news
NH
has just come out of the EBA
NH
RBS
NH
might have to ask the govt for more money
NH
zap
Warning to rude and abusive commenters – your ability to comment will be terminated immediately and permanently, without warning. Henceforth, FTAlphaville has instituted a One Strike and You Are Out policy. We’ve had enough. We are going to clean up these pixels once and for all.
BE
(That was brief.)
NH
and none too enjoyable
NH
anyway
NH
interesting tweet from an ex colleague
NH
Peter Thal Larsen at Reuters
NH
on the basis of the EBA flashes
NH
he’s just got the Breaking Views Sovereign Debt calculator out
NH
crunched the numbers
NH
and come up with this
NH
RBS wld need €5.4bn extra capital w/ Gk 60% haircut RT: @peter_tl: W/ EU stress test demand of 7% cap banks need E100bn j.mp/p7rnCK
NH
and RBS still up
Royal Bank of Scotland Group PLC (RBS:LSE): Last: 24.83, up 0.22 (+0.89%), High: 25.16, Low: 24.46, Volume: 49.02m
NH
this is a strange market
BE
(@Milky: Sock puppeting gets a zap and a life ban. Ok?)
BE
It is. It transcends all rational comment, actually.
BE
Which makes this job rather wearing.
NH
it does
NH
before we go
NH
one more thing to look at
NH
actually two
NH
some fantasy M&A bobbins from SocGen
NH
40 companies that could
NH
but won’t be acquired
BE
To be fair, I think their last list had Autonomy on it.
BE
Which we certainly didn’t see coming.
NH
if you throw enough darts
NH
one will hit the bullseye
BE
True true true.
BE
So let’s see then.
NH
here’s the darts
NH
Meggitt, MTU, Zodiac Aerospace
Auto & Equipment makers GKN, Valeo
Capital goods Invensys, Rexel, IMI, Vestas
Chemicals AZ Electronic Materials, Arkema, Akzo Nobel
Construction & Construction materials CRH, Imerys
Hotels & Restaurants Edenred
HPC Reckitt Benckiser
Luxury & Sporting goods Burberry
Media Havas, PagesJaunes
Metals & Mining Xstrata, Antofagasta, Acerinox
Oil & Gas BG Group
Oil services SBM Offshore, CGG Veritas
Pharmaceuticals Qiagen, Shire
Retail (General) CFAO, Next
Software & IT services Altran, Atos, Logica, Sopra
Technologies TomTom, Alcatel Lucent
Telecoms operators Belgacom, KPN, Mobistar, Portugal Telecom
Utilities EDP Renovaveis
Auto & Equipment makers GKN, Valeo
Capital goods Invensys, Rexel, IMI, Vestas
Chemicals AZ Electronic Materials, Arkema, Akzo Nobel
Construction & Construction materials CRH, Imerys
Hotels & Restaurants Edenred
HPC Reckitt Benckiser
Luxury & Sporting goods Burberry
Media Havas, PagesJaunes
Metals & Mining Xstrata, Antofagasta, Acerinox
Oil & Gas BG Group
Oil services SBM Offshore, CGG Veritas
Pharmaceuticals Qiagen, Shire
Retail (General) CFAO, Next
Software & IT services Altran, Atos, Logica, Sopra
Technologies TomTom, Alcatel Lucent
Telecoms operators Belgacom, KPN, Mobistar, Portugal Telecom
Utilities EDP Renovaveis
Burberry Group PLC (BRBY:LSE): Last: 1,258, down 3 (-0.24%), High: 1,275, Low: 1,245, Volume: 443.96k
Reckitt Benckiser Group PLC (RB.:LSE): Last: 3,343, down 50 (-1.47%), High: 3,398, Low: 3,342, Volume: 438.59k
NH
possible I guess
BG Group PLC (BG.:LSE): Last: 1,301, down 14 (-1.06%), High: 1,314, Low: 1,293, Volume: 1.21m
NH
and that one too
Xstrata PLC (XTA:LSE): Last: 918.20, down 18.9 (-2.02%), High: 936.80, Low: 905.60, Volume: 3.94m
NH
Glencore would like to
NH
but recent market vol
NH
has ruined any chance of a deal
Next PLC (NXT:LSE): Last: 2,573, up 15 (+0.59%), High: 2,575, Low: 2,541, Volume: 158.27k
BE
They’re all plausible. But remember, post Cadbury, when some of the more excitable ends of the media were talking about every company (bar BAE) as a bid target?
NH
don’t see a buyer for that
NH
or Logica
Logica PLC (LOG:LSE): Last: 84.75, down 0.15 (-0.18%), High: 85.15, Low: 83.65, Volume: 802.22k
NH
they are sitting on a profit warning
NH
or at the very least gloomy statement
NH
a buyer would be best advised
NH
to wait
NH
for that to emerge
NH
and staying with this theme
Bumi PLC (BUMI:LSE): Last: 726.00, up 6 (+0.83%), High: 749.50, Low: 725.00, Volume: 18.48k
NH
Glencore linked with a bid over the weekend
NH
but it seems
NH
what’s happening is a bit more subtle
NH
Bank of Glencore
NH
refinance the Bakrie loan
NH
in return for rights to sell their coal
NH
here’s the Reuters take
NH
(Reuters) – Glencore International Plc (GLEN.L) is pressing the Bakrie group for more rights to sell coal and an option to buy shares in its London-listed unit in exchange for refinancing a $1.35 billion (863.88 million pounds) short-term loan, sources said on Tuesday.
NH
A 40-percent fall in the share price of the unit, Bumi Plc (BUMIP.L), has triggered the mandatory repayment of the one-year loan and a source with knowledge of the deal said lenders are urging an immediate solution.
The Indonesian family-run group is in advanced talks with Glencore, the world’s largest commodities trader, and is also holding discussions with at least three other parties, two sources said. These include Vitol SA and private equity firm TPG-backed Northstar, they told Reuters.
Bumi’s London-listed shares were trading up 3.5 percent at 0820 GMT.
Bakrie, Northstar and Glencore declined to comment. Vitol was not immediately available to comment.
The $1.35 billion loan to Bakrie firms Bakrie & Brothers (BNBR.JK) and Long Haul comes due in March 2012. It was arranged by Credit Suisse (CSGN.VX).
NH
Britain’s Sunday Telegraph was first to report the Glencore-Bakrie refinancing talks.
Bumi does not want to lose control of its mines, and is therefore looking to structure a financing deal that helps it retain control while addressing the margin call on the $1.35 billion loan, a loans banker said.
The Bakrie group is controlled by the family of Aburizal Bakrie, head of Indonesia’s biggest political party Golkar and a politician with presidential ambitions.
The Bakries were in a similar tight spot in 2008, when concerns over a debt repayment hit shares of the entire group. Trading was halted in six Bakrie companies then, amid panic selling.
They formed Bumi Plc by joining forces with the Rothschild banking dynasty in a deal aimed at cementing their dominance of Indonesia’s coal exports sector.
Glencore, which is seen as the most serious candidate to lead the refinancing, is the main marketing agent for Jakarta-listed Bumi Resources (BUMI.JK), while Singapore commodities firm Noble Group is the main agent for Berau. Both Berau and Bumi are units of Bumi Plc.
Glencore has in the past used its deep pockets to bail out debt-laden or troubled firms in exchange for equity stakes.
The most striking example is Katanga Mining in Congo, a copper miner in which Glencore now holds more than 74 percent after bailing it out in the aftermath of the global financial crisis.
The internal rate of return for that investment has been a spectacular 50 percent, according to a prospectus released by Glencore earlier this year ahead of listings in Hong Kong and London.
12:30PM
NH
Nothing else is there?
NH
FTSE 100 down 34 points
NH
no doubt poised for another face ripper
BE
I think we’re done. As days go this one’s stone dead. No point in forcing blood out of it.
BE
So it just leaves us to say thanks for all your comments.
NH
thanks
NH
hang on
NH
one more thing
NH
bid for Goodmans
NH
remember them
NH
maker of cheap electrical goods
NH
into set top boxes now
NH
and called
Harvard International PLC (HAR:LSE): Last: 38.50, up 9.5 (+32.76%), High: 38.50, Low: 36.50, Volume: 135.58k
BE
Oh – Harvard International.
BE
Freesat boxes
BE
And those iPod accessories they sell in HMV.
NH
he directors of Bidco, Geeya and Harvard are pleased to announce that agreement in principle has been reached between Harvard, Geeya and Bidco on the terms of a Possible Offer for the entire issued and to be issued share capital of Harvard by Bidco, a wholly owned direct subsidiary of Geeya. Geeya reserves the right to implement any Offer through another of its wholly owned subsidiaries if it so chooses.
NH
45p a share
NH
from China
NH
Geeya is a public company admitted to trading on the Shenzhen Stock Exchange in China. Geeya manufactures and supplies digital television network equipment and its products include a full series of digital TV products from head-end to terminal-end, including digital television support systems and consumer digital appliances, including digital set top boxes. Geeya was founded in 1999and is based in Chengdu, China.
As at 31 December 2010, Geeya had consolidated total assets of RMB809.9 million (approximately £79.4 million) and reported a net profit for the year ended 31 December 2010 of RMB53.8 million (approximately £5.1 million).
NH
not sure I’d wait for the deal to close
NH
might slot now
NH
Harvard is a public company admitted to trading on AIM (trading symbol: HAR). Harvard operates within the global consumer electronics market focusing on added value digital vision products, such as TV set-top boxes and recorders, targeting specific local market opportunities such as the UK’s popular, free-to-air TV services. In addition, Harvard markets a range of accessories for Apple’s iPod, iPhone and iPad products in the UK under the iLuv brand. It is also a major supplier of digital vision, radio, and other personal consumer electrical products in Australia. Harvard has comprehensive product development, procurement and logistical operations based in the UK, Hong Kong and China.
BE
Were I a nervous holder, I’d agree.
BE
Not wishing to be derogatory about all Chinese buyers, of course …….
BE
But transparency may not be perfect here.
BE
Anyway, let’s close this.
BE
Thanks again for all your comments.
NH
That’s MOST bid story
NH
for those interested
BE
(Though we could really have done without the ones about chemical castration.)
BE
And good afternoon, everyone.
NH
cya