Ashtead Share Discussion Threads

[disc0dave45] 15/6/2022 14:05

Been tipped as a buy in the Times.To counter:Marlborough fund manager Richard Hallett has reduced his holding in equipment rental business Ashtead (AHT) over concerns about its exposure to North America.Hallett holds the stock in his £274m Marlborough Multi-Cap Growth fund. In his latest portfolio commentary said he had 'scaled back' his holding.'This was because, although current trading is strong, we have concerns about its exposure to construction activity in North America,' he said.Hallett said policymakers at the US Federal Reserve have 'ratcheted up their rhetoric about monetary tightening and indicated that demand destruction is needed to tame inflation'.'At the same time, a worsening picture in Ukraine and a partial shutdown in China have combined to increase recessionary fears,' said Hallett.'On the positive side, however, we continue to see share price weakness creating significant value opportunities among quality growth companies we believe have strong long-term growth prospects.'

[fenners66] 15/6/2022 13:49

Sorry if the maths got too difficult

[fenners66] 15/6/2022 13:48

ok dave you are so wedded to the idea of BB

that explaining just how you could have a better dividend by reducing the debt instead

or just paying the buyback money to you

becomes something you do not want to contemplate / understand.....

The world works the same way.
Tell people in sound bites what they want to hear , they will swallow it .

[disc0dave45] 15/6/2022 13:30

A decent place to put the extra 12p / share you will receive due to BB :)HTTPS://england.shelter.org.uk/donate?reserved_appeal_code=20220401-IG-29&gclid=Cj0KCQjwhqaVBhCxARIsAHK1tiM6FCQilb9WpHgKZJBc4reX5vjrKlow7aJT7ZRag2ikfOHUBZRgkAAaAtQ6EALw_wcB&gclsrc=aw.ds

[disc0dave45] 15/6/2022 13:28

Post 60865:Now add 12p from reduction in shares and I am expecting that better than 12p increase in dividend should accrue to shareholders.

[disc0dave45] 15/6/2022 13:25

fennersNo disrespect but your numbers don't answer my question, tbh couldn't even be bothered to digest them.'See this view of BB leads to higher future dividends - its garbage'You posted up that it contributes 12p to the dividend, are you now saying what you previously posted is garbage?

[fenners66] 15/6/2022 13:19

disco if you do the maths

without the buyback and debt lower by £1.3bn the saving on interest based on the 30th April 2022 Balance sheet is about 11p /share on the original 499m shares.
Add in the refinancing costs which last year at $47m equate to 7p /share on the original number of shares


So buyback cost £1.3bn but could have had pre-tax savings of 18p/share

That's the One year equivalent let alone the interest and finance costs going back over 5 years.

Add in an EVEN lower possible interest rate across All the debt , lower leverage, lower risk , lower cost

and you More than pay for the 12p - so the buyback has achieved nothing the alternative could have delivered.

Remember dividends stable for 3 years.

IF they wanted to keep debt as is now , they could have paid out £2.59 to each original shareholder instead.


So if anything they OWE the shareholders.

See this view of BB leads to higher future dividends - its garbage - they most likely will Never pay out £2.59 per share in dividends
at 12p /share it would take over 21 years....

[disc0dave45] 15/6/2022 12:52

fenners
Wasn’t really my question.
You want increased dividend which the BB contributes to that but you completely disagree with BB.
Grealish analogy - the supporters still cheer and applaud when the team overall are performing well, irrespective of whether or not a part of the team isn’t to their liking, they don’t boo incessantly at every single match even when they are winning!.
Ps - I assume as you don’t believe in the buybacks that 12p of your dividend will be donated to a worthwhile charity?

[fenners66] 15/6/2022 12:35

disco - the 12p was a gun to their head based on the total amount of buybacks remember the dividend had not changed (basically) for 3 Years before this

2019 40.00
2020 40.65
2021 40.15

So absolutely they cannot have the buyback and not increase the dividends.


Pefido the £bn spent on buybacks is not regarding the one year , the balance sheet and the debt reflects the sum of every year and if its not spent on buybacks its not in the debt now.

So add it up -

2018 £158.2m
2019 £460.4m
2020 £186.7m
2021 £182.1m
2022 £305m

Total = £1,292.4m

[perfido] 15/6/2022 10:11

Good morning fenners,

Re 'Exceptionals?

Q? The substance may be correct. But what does it add?' (fenners 60924)

A: Full disclosure strictly in accordance with accounting rules which I for one welcome?

Edit:
I am struggling to find the £bn you state was spent on buybacks. The accounts indicate this was £305 million ($414 million)
To anyone to whom this came as a complete surprise, it is worth reading the 'Capital Allocation' plan...

Facts from the full year actuals:
-- $2.4bn of capital invested in the business (2021: $947m)
-- $1.3bn spent on 25 bolt-on acquisitions (2021: $172m)
-- $414m (GBP305m) allocated to share buybacks (2021: $nil)

'...the amount allocated to buybacks is simply driven by that which is available after organic growth, bolt-on M&A and dividends, whilst allowing us to operate within our 1.5 to 2.0 times target range for net debt to EBITDA pre IFRS 16.'
.

[disc0dave45] 15/6/2022 10:06

fennersYou posted 12p extra on the divi due to the BB, would you prefer not to have gained this or not?You have gained due to the BB but you slate it all the time, completely contradictory IMO.

[fenners66] 15/6/2022 09:53

disco

The reduction in the $/£ has added far more to the dividend than the buyback has done this last year.

Perfido - the rules on exceptionals are known , clear and followed.
The substance may be correct.
But what does it add?
Please ignore these costs like they have not happened , because.....

because they will happen again before the debt runs to term next time and every other time and since we are a business that currently could not survive without the debt , the repetition will go on forever its a part of their standard approach to business.

[disc0dave45] 15/6/2022 08:55

fennersI would agree that reducing debt, or an increased dividend, would be preferred to the scale of their buybacks, but please give it a rest constantly dissing the company, yet the BB has increased your dividend to way beyond your 52p, so it's of benefit when it suits you.Yes, IMO you should sell if not happy with your investment, no doubt an investment that's rewarded you handsomely over the years yet all you do is moan, I truly don't get it.

[perfido] 15/6/2022 07:46

Investopedia:

Despite the name, such items are considered to be ordinary business charges but they must be separated out for the sake of financial reporting clarity. An exceptional item is noted separately to avoid confusion with routine business income and expenses.

Don't confuse exceptional items with extraordinary items. Both are unusual expenses or sources of revenue that are large enough to have an impact on the financial results. However, extraordinary items are not part of a company's ordinary business dealings. Exceptional items are.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

[fenners66] 15/6/2022 00:17

Oldhand1 - I have been banging that drum for years some agree , others say things like "if you don't like it sell ! "

That's a bit like saying to say a Man City supporter , "If you think Grealish was a waste of money , stop supporting Man City"

That may be a bad analogy but its late.

Simple fact is you don't have to agree with everything a company does and still like the company.

But last years buyback (as I said before the event ) was clearly a waste of money and has resulted in higher debt (some refuse to see the link between spending and debt) and therefore higher finance costs and lower profits.

[oldhand1] 14/6/2022 21:06

What an absolute waste of our cash. £400m spent on overpriced shares through the share buyback scheme rather than reducing debt or having a special dividend like the builders. Ridiculous.

[disc0dave45] 14/6/2022 18:11

Hargreaves & Lansdown:Ashtead's been making hay while the sun shines. The group's been able to flex its operations to deal with a challenging environment, adjusting plans to sell its existing equipment to cope with supply-chain delays on new deliveries. This allowed it to take full advantage of the post-pandemic construction boom.In addition to servicing the pent-up demand as the world reopened, Ashtead also benefitted from contracts with the NHS to support covid testing. That make up almost a third of its UK income, but now that testing's been abandoned it will create a sharp drop-off in that division.But the group's progress broadening its end markets, particularly in the US should offset this loss of business. We're already starting to see the rewards in the US, where diversification has been called out as a driver of sales growth.This top line growth is essential as operations return to normalcy. The group put off spending throughout the pandemic to protect cashflow, but management is turning the tap back on. Delaying capital expenditure is probably a strategy that works best during a short-sharp downturn and gave Ashtead lots of financial flexibility, despite having a high proportion of inflexible operating costs.This ties in with the fact Governments are planning massive fiscal stimulus over the coming years, particularly in the US, an area of focus for the group's investment, where planned infrastructure spending still has room to run. That would be good news for the wider construction industry and could spark a surge in rental demand. This remains a growth driver in our view, but a looming recession could temper spending somewhat in the near-term.The balance sheet is in reasonable health, and means the group can invest to meet the extra demand - opening new stores, expanding its rental fleet and pursuing its strategy of bolt-on acquisitions, where appropriate, too.Just over $400m was spent buying back shares last year, as part of the share buyback scheme, over a period when the shares have been trading at a significant premium. Buying back expensive shares has been a common way to destroy shareholder value in the past - and we would really rather that cash was either deployed within the business or paid out as a special dividend. Moving forward, we don't expect the current level of buybacks to be sustained with capex back on the rise.The combination of a positive outlook for the group's end markets and a strong balance sheet means the company's well positioned. And a competitive position in the fragmented equipment hire business provides scope for long term growth. The valuation has rerated significantly over the past 6 months and that makes the entry point attractive. However, global uncertainty poses a risk and if economic conditions take a turn for the worse, construction spending could come under fire.

[bracke] 14/6/2022 15:27

Good day disc0

"When the market takes fright the good goes with the bad."
=========================================================

Answers your question.

I agree the results were good but when the bath water is thrown out the baby goes with it. Fear stalks the market. It's what the market does. I've seen it a few times during my trading lifetime.

The market sees the negative indicators but ignores them until the catalyst arrives and then POW!!

Company fundamentals are overlooked until sentiment changes and confidence emerges and off we go again. We watch and wait for signs of market basing and then buy at what we hope are advantageous levels.

Somethings never change.

[disc0dave45] 14/6/2022 15:00

Good afternoon Mr bThanks for your TA.Any views on why such a negative reaction to results, I thought they were good.Possibly the increase in debt and fairly conservative Rev growth forecasts but the latter are in excess of the last 5 years or so CAGR (Rev +11.6%, their forecast 13%).Still seems decent value to me but wtfdik lol

[bracke] 14/6/2022 10:31

Another waterfall drop. When the market takes fright the good goes with the bad.

I suspect most viewing this share will be considering when to buy. You don't need me to list the cause of the current woes and how long they will last.

The chart shows that today the share price has dropped below the 50% fib. The two dashed blue lines are opening gaps from a year ago and yes the market does remember them. The purple line is the level the share price was at immediately prior to Covid.

I am not suggesting that the share price will return to the pre Covid level but I do think that there is a fair probability that it will drop to the 61.8% fib. If you think that fib levels are a waste of time look carefully at the price action when the share price reaches them.

AHT DAILY

[roguetraderuk] 14/6/2022 10:18

still trading a little abv avg historical pe

[crookes243] 14/6/2022 10:10

Wow down over 5%,looks like market not impressed with strategy despite impressive numbers.
Good opportunity for Perfido to continue pound cost averaging strategy

[trt] 14/6/2022 09:47

Could see this drop below £35 quite easily now.