Aviva Share Discussion Threads

[dunebor] 27/11/2020 07:46

Because they're looking to build up cash to make an acquisition in their core markets, should a suitable opportunity present itself?

[karv1] 26/11/2020 23:43

If all these asset sales are basically in one way or another in the bag and it is only a matter of time before we find out ie months or so, and taking into account the current profit covered the old dividend rate and taking into account the 1.2 billion they already took, and the billions in surplus. If we suppose to get a lot of this money back in special and buybacks over the next few years, why not start now and retain the old dividend rate it would only cost a few hundred extra millions which are currently covered anyway.
If the argument is with our slimmed-down 3 core business the 31p dividend would not be covered, my answer would be why the heck are we doing it then, if it is to benefit me the shareholder.
It is all about power and control and who has it.

[cyberian] 26/11/2020 23:13

HMG has already indicated recently that they are minded to reduce "considerably" the current Solvency 2 requirement to free up more capital to invest in dare I say "dear old UK". They sense that the key names in the sector are responsibly managed and will manage/retain sufficient reserves/liquidity adequately. I believe that our CEO is striking the right forward strategy and has clear goals to grow the business in a more defined and balanced manner....let's cut her some slack, please. The strong financials of AV. are key to her judgement and influence with a supportive board which she may well strengthen if that becomes necessary.

[karv1] 26/11/2020 22:18

I doubt anyone can answer that, I am guessing it depends on if they get 8.4x like Italy or 18.4x like Singapore this will make so much difference especially on the larger unit ie the french operation, as wba1 said there are complications that can make all the differences in France.

[muscletrade] 26/11/2020 21:51

@1rob, thanks for the clarification. Seems this is where alternative view is happening.

In the conference call it was "almost" acknowledged (after an analyst question) that the reduced debt target could be covered by the disposals already made ie, Italy, Singapore and Indonesia.

Ergo the proceeds from France, Poland the rest of Italy and various joint ventures would/should be cash available to return to shareholders. They also have existing surplus cash as I referred to previously.

It all turns on what the remaining disposals will be worth but it should be considerably more than £2.9B (or 23% of current market cap.)
And I also note that lex is not doing his own sums but citing the citi analyst and earlier today i made the same rebuttal when citi view came up.

Maybe one of the industry experts on here can give their view on what the remaining businesses up for sale are worth

DYOR of course.

[salver2] 26/11/2020 20:41

I don’tget that about 20 odd percent of market cap will be returned in normal dividends

[1robbob] 26/11/2020 20:37

Lex sites analyst at citi
....disposals to raise circa £6.6m circa half to be needed to reduce solvency 11 debt level to 30%

Its s long article hopefuly I have precied it readonably!!

[cjac39] 26/11/2020 20:37

The buyback divi debate is somewhat moribund with aviva. Jason Windsor who
I know personally is a seasoned inv banker and as this is his first large plc cfo job and btw he’s also a seasoned M&a guy will understand the nuances better than me.

The key qn for me remains what happens next. They look like they can exit a decent amount of now non core at 1x own funds vs a mkt price of c.75 own funds across the group so accretive.

Divi looks sustainable as well.

Not sure I understand all the comments about risk weighted assets and capital all being wrong. These companies are better reserved than most.

[muscletrade] 26/11/2020 20:15

@1robbob, thanks for the info Rob, although I am at a loss to understand that Lex only expects 23% return.Where does this figure come from? is it plucked out of the air or does he explain.The value of Euro biz is 6 to 7 billion which currently makes up 47% of todays market cap. In addition Aviva already hold 1.7b excess capital. So why only return less than 3Billion.
Maybe they heard something in the conference call that I didn't, but in any event it does'nt seem to make sense, why sell the biz at all if the surplus cash is going to just sit there.
Yes they could reduce the debt even further but then you end up with an inefficient balance sheet blah blah the money would be far better off in shareholders possesion

[whatsup32] 26/11/2020 20:04

Thanks rob,

[1robbob] 26/11/2020 19:59

More on Lex comment:
circa 23% of current market cap should become available for return to shareholders by end 2023. Having met debt reduction and solvency targets

[huncher] 26/11/2020 19:58

And pigs might fly

[muscletrade] 26/11/2020 19:38

@Huncher.Agreed

I would not mind though if Berkshire Hathaway made an offer of 650p on Monday.

[1robbob] 26/11/2020 19:31

Lex...conclusion

Ms Blanc’s plan to rekindle the interests of markets has merits. Confidence in the stock remains low from previous resets that failed. A dividend yield of 6.4 per cent is in line with peers but only at the discounted valuation. Aviva offers deep value and income, but with little assurance for growth.

[huncher] 26/11/2020 19:20

Mus, I sincerely hope you are right that we have a strategic plan where the ROI is greater than buy backs (the easy way out for poor management without a clue). Past history is not encouraging but we have new blood and it is fair to give them a chance.

[muscletrade] 26/11/2020 19:16

Let's not forget, the euro assets appear to be worth between £6 and £7billion, thats roughly worth 178p per share, when todays share price is 325P. Regardless of how they return that cash, some of it or all of it, if you bought today it is equivalent to buying Aviva light (core)for 147p per share...when its true worth is 400 to 500p. If they keep all the cash then
547 to 647 per share(but thats not going to happen) unless someone makes an offer before they can return the cash, as others on here have suggested quite a few times.

Whichever way you look at it, it seems to be a straightforward BUY

[scobak] 26/11/2020 18:55

The way forward without share buybacks has got to be share consolidations.
Fewer shares reflecting smaller business without huge outflows of cash.
Anyone have any thoughts?

[whatsup32] 26/11/2020 18:53

hxxps://news.sky.com/story/avivas-army-of-sids-would-be-wrong-to-oppose-dividend-reset-12142966

[muscletrade] 26/11/2020 18:51

Oh no, not back to the never ending buyback v special divvis argument again. Lets be pleased that the new CEO has a coherent plan and is moving forward with implementation at pace. Results/update that Aviva is excellent price right now regardless of selling European assets. If they DO sell them then we should get to realise some of that value sooner.
Good luck everyone

[whatsup32] 26/11/2020 18:45

hxxps://www.hl.co.uk/shares/share-research/202011/aviva-dividend-reset

[huncher] 26/11/2020 17:38

Theoretically share buy backs should benefit everybody, but that was in the past, primarily nowadays they are used to ensure that bonuses are met. In this case at least we are not using borrowed money which in many cases are just hollowing out the Company (look US).

[1robbob] 26/11/2020 17:36

What would work would be a Tender Offer to ALL shareholders at a premium to the share price but a discount to the NAV

[spud] 26/11/2020 17:19

And RDSB, IMB? Both spent billions and ended up cancelling their programs with share valuations down over 60%. I could list more but what would be the point. spud

[yf23_1] 26/11/2020 17:11

NEXT have successfully done buybacks over the years keeping their ROCE very high which leads to a quality rating and improved EPS, thus giving holders a nice ecapital gain on the shareprice.

[1robbob] 26/11/2020 17:09

But spud
When future investors research the dividend history
It will look as if Tulloch cut the dividend in 2019 and AB restored it in 2020, with a 35%+ increase !!!