Aurrigo Share Discussion Threads

[davebowler] 18/12/2009 17:26

Yes I agree- whilst I am disappointed to not get the rights opportunity I'm not sure I could afford it now as I bought so many at 11p ,when the price was well below the cash on the balance sheet, that the outlay at 40p would be almost four times as much.

[envirovision] 18/12/2009 11:33

Not sure what you were expecting regarding NAV to be disappointed prehaps you could ellaborate?

16 April 2007 NAV 95.9p SHAREPRICE 93P
28 September NAV 2007 96.8p SHAREPRICE 94P
31 March 2008 NAV 109.6p SHAREPRICE 90P
23 June 2008 NAV 114p SHAREPRICE 85P
11 December 2008 NAV 116.9p SHAREPRICE 11P
30 June 2009 NAV 106.5p SHAREPRICE 25P
30 SEPTEMBER 2009 NAV 108.6p SHAREPRICE 37P

IT APPEARS THOUGH SUPERSTROY HAS STABLISED AND ALL STORES WILL BE PROFITABLE IN 2009, THEY ARE STILL UNABLE TO WRITE THE VALUE BACK UP COMPARED TO 31ST MARCH (DONT FORGET 6MILL WAS WIPED OFF THEN MEANING AN UPLIFT OVER 40% NOW THATS NOT GOING TO HAPPEN IN THE 6 MONTHS IS IT!!!!). KREDITMART IS HARDLY GOING TO SHOW IMPROVEMENT YET EITHER!

THE SHARE PLACING ALBIET A PREMIUM TO CURRENT MARKET PRICE MEANS:

NAV INCREASES TO 93.85MILL BUT NAV PER SHARE REDUCES TO 84P BUT PRESUMABLY GETS PUSHED BACK UP A BIT WITH THE 43.5% INCREASE IN STAKE TO OSG NAV.

HOWEVER THEY GET MOST OF OSG OSG WHO ARE THE largest records management company in Russia, Ukraine and Kazakhstan with GROWTH AT 21% EBITDA PER YEAR.

I guess from our point of view its disapointing to not be given the opportunity to subscribe but then at a premium to market price i doubt you would have, and with 3.6MILL currently left in cash. Given superstroys loans cost 14.5% guess they couldn't afford to service on balance sheet debt assuming they could get it.

On the other hand, they are hinting at some rather large juicy returns to shareholders in the form of special dividends in a few years.

[engelo] 18/12/2009 10:08

Would welcome some comment on the September NAV and placing plans please?

For me, NAV is disappointing.

What are the share price implications of a placing at 40p?

Presumably the content of the RNSs were well known to the market, as there has been absolutely zero reaction.

[davebowler] 03/12/2009 15:34

Well spotted Darcon -here's hoping.

[darcon] 03/12/2009 09:04

Kingfisher (owner of Castorama), one of Superstroy's competitors in the Russian market, posted its latest Q3 trading update today. Kingfisher reported sales in Russia up 10.5% in a slow market and have opened one store since their previous results.

Castorama now have 9 stores, 81,000 sq.m. of selling space and 1,750 full-time employees. So Castorama now appear to be close to double the size of the Superstroy large format stores.

Hopefully, Aurora will have similar positives to report about Superstroy's sales in Aurora's forthcoming NAV update on their investments which I think is due in mid-December.

Source: Kingfisher Q3 trading update:

[envirovision] 30/11/2009 13:09

Only reason for mark down appears to be to take out a few holders and create a bit of volume in an otherwise quite market here. Can only see nothing but positive things for aurora going forward and would not be surprised to see the share price double in the next 12 months

[das3] 27/11/2009 16:58

Darcon: very eloquently put, and seems right on the nail to me. Optimistic about improvement in the NAV from March to Sept, but difficult to predict what discount the market will apply to it!

[darcon] 27/11/2009 15:53

The share price rose on the back of Standard Life increasing its stake. That created momentum in the stock which attracted additional punters and led to a narrower spread. Once Standard Life stopped buying, momentum ran out on the buy-side and that has given MMs the reason to start dropping the price to try to generate new trading. If you look at trade volumes the price has gone down on much lower trade volumes than average (on some days it has been notched down on no trades).

Looking at the chart there is a kink at the 30pence level so I guess there is risk it could drop to that level in small increments before we hear the updated NAV figure in December.

I don't think it is necessarily an ominous sign. More a case of this being an illiquid stock most of the time and after a brief period of relative liquidity (as a result of Standard Life doing a stake-build) it has now reverted to previous form. MMs make their money from trading so naturally they start dropping the price to try and generate activity.

Some punters get nervous and sell, the spread widens, no news is heard and that holds back new buyers...

[das3] 27/11/2009 10:39

This is looking extremely grim, leading up to the Dec NAV publication.

Any theories anyone?

[darcon] 17/11/2009 20:57

Latest Aurora Advisors report for November is out:



All continuing to look very positive. They have made some interesting commentary about the services sector (which is where AURR are primarily invested) being likely to outperform natural resources growth on a mid to long-term horizon. And also about the excellent exit prospects for Russian PE investors (like AURR) who can sell to strategics who will want to enter higher growth markets as their home markets stagnate.


I see the marketmakers have been dropping the bid over the past few days in response to a few buy orders (or are some trades going through PLUS which I am not seeing?)

[sherlock holmes] 11/11/2009 13:49

just topped up another 20k.....good luck all

[envirovision] 10/11/2009 20:10

Remember just a few short months ago when the russian government was using its foreign reserves to defend the rouble by selling usds and buying roubles. They were also buying shares in her best commodity companies with state runs so as to protect the country's riches.

At the time the world was pouring scorn on russia commenting that in usd terms her reserves were falling fast etc. At the time i suggested this was an excellent policy of russia to defend herself from commodity speculators and raiders.

How quickly things change. It seems buying roubles on the lows was the trade of the year. Now the russian government is trying to suppress its currency so fast has she risen..

By Peter Garnham
Financial Times, London
Tuesday, November 10, 2009



Russia's central bank warned investors on Tuesday that rouble appreciation was not a one-way bet as it sought to stem an advance in the currency sparked by rising oil prices and a falling dollar.

The central bank, which bought $700 million and sold the rouble on Tuesday, said lower interest rates would ease upward pressure on the currency alongside a large rouble liquidity injection from the budget in November and December.

The central bank, which closely manages the value of the rouble against a basket of 55 per cent dollars and 45 per cent euros, shifted its intervention level to push its currency up 2 kopecks to 35.19, its strongest level since December 2008.

This took the currency's gains since the start of September to 8.5 per cent as strong demand for Russia's oil and a weak dollar have supported the rouble.

The situation stands in stark contrast to the central bank's position a year ago when falling oil prices and worries over Russia's banking system in the wake of the financial crisis forced the central bank to dig into its foreign exchange reserves to halt a slide in the currency. The rouble has now recovered more than half the losses it incurred in the wake of the financial crisis.

However, Sergei Shvetsov, head of the Russian central bank's open market operations, warned that the rouble would not always move in one direction.

"I'm sure the level of [rouble] volatility will remain the same as with other [currency] pairs and I would not take a risk to predict that the rouble will continue to strengthen," he said.

Mr Shvetsov added that upward pressure on the rouble was rising as a result of carry trades, in which investors borrow in low-yielding currencies to invest in currencies with higher interest rates.

"Therefore rate cuts would reduce pressure on the rouble," he added.

The Russian central bank has reduced interest rates by 350 basis points since April to 9.5 per cent, but they remain much higher than those seen in the world's leading economies, thus encouraging carry trade investors.

Mr Shvetsov said the Russian budget would inject hundreds of billion of roubles into the economy in the remaining two months of the year. Institutions financed through the budget were expected to rush to spend their allocation to avoid seeing their share reduce next year.'

[envirovision] 10/11/2009 13:05

39.35p strait to market, was hoping for better than that considering 1v4 but took them all the same.

[envirovision] 10/11/2009 13:02

Great info Darcon, ok lets see what the market wants for a further 10,000 of these?

[darcon] 09/11/2009 17:56

Following website does a good summary of the discount to NAV:

[davebowler] 05/11/2009 19:03

Very useful stuff Darcon. New buyers will benefit tremendously by reading the research you/we all generate.

[darcon] 02/11/2009 07:15

Is Kreditmart missing out on a potential market? I found the following recent press release from an outfit called Lowell Finance:



Lowell Finance are claiming to be the first mortgage broker on the Russian market offering assistance in getting mortgage for foreign real estate.

Their website is at:

[darcon] 01/11/2009 21:16

The pick-up in revenues with Flexinvest bodes well for the business of Kreditmart, which as at March 2009 was reported as distributing over 600 loan products through seven loan shops in six cities across Russia. Kreditmart is not just a distributor for Flexinvest products (according to Kreditmart's website it distributes products of 20 different banks) and it is where the bulk of the value lies in Aurora's investment in the credit/mortgage/investments/insurance financial retail brokerage market.

There was a heavy write-down as at March 2009 for the NAVs of Flexinvest and Kreditmart. If business is now rebounding with Kreditmart as well as Flexinvest, then I guess we may see the NAVs for each of these two investee companies returning to what they were before the write-downs (probably not this year, but perhaps during the course of 2010 once the businesses, the economy and the lending market are proven to have recovered).

Darcon

[darcon] 01/11/2009 20:48

Quarterly profit and loss accounts of Flexinvest Bank in Russian, can be found on the Russian Central Bank (www.cbr.ru) website. They are in Russian. Below is a summary of the information I found:

1 April 2007 - quarterly P&L
- 17,594,000 revenues
- 13,681,000 costs
- 3,913,000 profit

1 July 2007 - quarterly P&L
- 36,034,000 revenues
- 26,286,000 costs
- 9,748,000 profit

1 October 2007 - quarterly P&L
- 57,363,000 revenues
- 42,988,000 costs
- 14,365,000 profit

1 January 2008 - quarterly P&L
- 78,559,000 revenue
- 59,210,000 costs
- 19,349,000 profit

1 April 2008 - quarterly P&L
- 35,363,000 revenue
- 19,983,000 costs
- 15,380,000 profit

1 July 2008 - quarterly P&L
- 49,147,000 revenues
- 31,049,000 costs
- 18,098,000 profit

1 Oct 2008 - quarterly P&L
- 58,074,000 revenues
- 42,022,000 costs
- 16,052,000 profit

1 Jan 2009 - quarterly P&L
- 68,134,000 revenues
- 53,095,000 costs
- 15,039,000 profit

1 Apr 2009 - quarterly P&L
- 9,687,000 revenues
- 11,812,000 costs
- (2,125,000) loss

1 Jul 2009 - quarterly P&L
- 31,021,000 revenues
- 23,733,000 cost
- 7,288,000 profit

1 October 2009 - quarterly P&L
- 45,649,000 revenues
- 41,074,000 costs
- 4,575,000 profit

What this data seems to show is that Flexinvest Bank has continued to be small in its operations, but generally profitable (at the level of the Russian company before taking into account the admin costs of the foreign holding structure, which Aurora shareholders need to consider). Revenues from Flexinvest's operations hit a peak in the last quarter of 2007 and then fell off (perhaps a result of previous owner's being incentivised to hit an earn-out target? They then began climbing again in 2008 to reach a peak in the last quarter of 2008 following which they collapsed in the first quarter of this year (the only quarter to produce a loss). However, since the first quarter they have been climbing again and may match last year's revenues. But revenue growth is now being achieved at higher cost resulting in lower profits. It will be interesting to see what P&L will be posted on the CBR site on 1 January 2010.

[darcon] 01/11/2009 18:45

Interesting report about Russian retail banking which I found on the website of Russian Standard Bank (a leading non-state-affiliated player on the Russian retail banking scene):



It was written by analysts at Troika Dialog, a leading Russian broker and investment bank, and is dated 11 April 2007 (around the time when Aurora started-up Kreditmart). Notwithstanding the financial crisis that has occurred in the meantime much of the general analysis about the positive fundamentals underlying the Russian retail banking sector and there still being plenty of opportunity for new entrants still hold true.

Darcon

[battlebus] 17/10/2009 09:17

Something holding back these shares with only 2-3p rise on what was a great buying day. Seller in the background?