Biffa Share Discussion Threads

[pmorrell] 27/6/2007 13:55

I am fairly certain this is being walked down under the cover of a weak market. Hold your breath, don't look down and watch this space

[awe430save132] 27/6/2007 12:22

Does anybody think this will end the day blue any time soon?

[mitzis] 27/6/2007 10:16

Reading the company reports may be some time analysing the forecasts.

[mitzis] 26/6/2007 16:00

260p will do fine.

[awe430save132] 26/6/2007 15:22

If that 2.78 support doesn`t hold i think were heading to 2.60!Bought last week at 2.95 and it hasn`t stopped going down ever since. Oh well one day Rodders!

[johne1] 26/6/2007 12:48

Obvioulsy, some folk are not interested in receiving the dividend and would rather sell shares at low prices. Invesco have have reduced - so what?

[bookbroker] 26/6/2007 12:11

This stock has fallen too far, it is in a market of consolidation and few participants, that will ultimately speak for PRICING-POWER! Want to make money out of garbage, then buy the sites, why shouldn't we have to pay more for our rubbish to be disposed off.

[jezboy1] 26/6/2007 10:13

LOL - ultra.

278 still support, of course until tomorrow when we all get paid. :-)

Well aware that the directors buys are unlikely to indicate a bid in the near
future, but they are a positive indication nonetheless.

have a nice day.

[ul7raviolet] 26/6/2007 09:26

see all of you down at £2.50 area.

[jeffian] 26/6/2007 09:18

Only if it's an agreed bid. If it's hostile, or the approach comes out of the blue without prior discussion with the board, then they're not 'insiders' and they can do what they like.

[watwungyi] 25/6/2007 23:38

good point, awe.

[awe430save132] 25/6/2007 19:46

I maybe stand corrected but i think a bid is out the question for at least eight weeks due to the directors buying due to insider knowledge and all that!

[jezboy1] 25/6/2007 14:13

I agree with your bid assessment watwungyi - but then of course I have seen
over-valued buyouts in a number of examples in recent times, it seems what is key for that sort of situation is more than one interested party.

support still holding despite the general market malaise.

[watwungyi] 24/6/2007 18:49

Hello fellow investors,
If someone is interested to bid this, that's good. I don't really know if anyone would bid. But if anyone is prepared to do so, I think they may have to pay at least around 30% premium of current market cap. Or Biff shouldn't agree to open their book less than that value. I tried to work out the reproduction cost of this business(which is not the same as stated NAV) and I came up with slightly less than #600M, which is what I think its true NAV. Veolia paid Cleanaway #585M for NAV of around #200M. That means goodwill for Cleanaway is twice as much as its NAV. And if Biff is to be bid, the price should be around #1200M. And current market cap is around #960M(please check). So it could fetch roughly 30% of current marekt cap. That's what I think.

GL,

[ideal420] 24/6/2007 16:53

watwungyi, interesting post. My own 2p, still think biffa is a target for simple reasons, ability to process waste in line with legislation (both uk and eu). I think the points been made before, anyone can spend 60k on a truck and collect waste, not everyone can spend 5m on processing system or landfill site.
Veolia and Suez have already proven their interest in uk based waste.

I must confess to not having a position in biffa, yet, share price is a little excitable at the moment.

Also, just a question on the Debenham's example. I was under the impression that the vast majority of its sites were leasehold....oh wait, maybe that was Woolworths I was thinking of.

[marvelman] 24/6/2007 16:46

Yes, even those Johne :-))

[johne1] 24/6/2007 16:24

Synergies?

[marvelman] 24/6/2007 14:15

Watwungyi

You did a fair bit of research to post that, fair play to you amd thanks also for your thoughts.One point though for my two pence worth...companies dont just buy others to asset strip.There are huge economies of scale to be had from buying or merging with similar or complimentary business's.If Severn Trent had not demerged I wonder how much additional profit it would be making now for example...more than Biffa are making on its own I would wager.Regards.

[johne1] 24/6/2007 12:42

Thanks for your views watwungyi - always appreciated. I thought you were going to tell us that you had gone short, after reading your first few words.

What is your take on the recent placing?

I hope you are having a good weekend.

[watwungyi] 24/6/2007 12:26

For those expecting a takeover of Biffa, the bad news is it's not going to happen. First who's gonna pay over a billion pound for a free cash flow (after maintainence capex) of around 40M though cash flow from its landfill division and resource recovery should increase it. Second, what private equities are looking for is what you may call hidden assets which usually center around the property portfolio of the business. Hudson General in USA, Debenham, and likely takeover of Sainsbury or less likely of Morrissons are good examples. Asset inflation bring the prices of the real estate of these companies to a new higher value, which predators can sell, releasing cash and re-lease it back, with increase in debt while paying handsome dividends from proceeds of the released cash. Although present carry values of Biff's real estates could be worth more than what are stated in balance sheet, the sad thing is unlike department stores and retailers, its real estate, mainly landfill sites, have no multiuse. It's used only to dump the rubbish.
Thirdly, Biff is not qualifed for taper relief CGT, which is one of the criteria for private equity take over. When the prey is aim-listed or farmland or small risky business, private investors can buy, overhaul, and sell them back and the proceeds attract low CGT. That is why private equites target a smaller segment of big companies, AA, Birds Eye are good examples.
Last week Morgan Stanley sales confirmed that take over is unlikely for this share.
But..
Should we just part company with a business simply because private equites are not interested? Of course not. Biff definitely has got a good management. I absolutely agree with selective price increase, rather than across the board correction. And despite admitting sales would be lower end of expectation, it still deliver slightly better result than what they originally announced. Collection division business should deliver higher earnings in a not too distant future due to govt's legislation which favour big integrated companies like Biff.
Second, it has some sort of barrier of entry in landfill division. Govt is not keen on new landfill sites. But in the medium term land fill will still be a key component in waste management and Biff can have some pricing power over its coustomers which include hundreds, if not thousands, of waste collectors who do not possess landfill sites. And landfill business is much more consolidated than collection. So I expect future is bright for this company. Current cash flow may not be too attractive for full-blooded value investors 'on purely valuation ground', especially bond yield are not likely to come down below 5%level, the cash flow should be improved. And more waste at landfill means more power generated which would bring slightly extra cash.
When equities are going through turbulent time, this is one of safe business to shelter the coming Tsuanmi. Prices might fall further who knows? But that would only make it more attractive to buy more.

[tom89] 22/6/2007 16:38

Does that mean Barclays did not need to make a disclosure?

[bookbroker] 22/6/2007 16:34

They placed them on behalf of an investor with a holding under the disclosable threshold.

[tom89] 22/6/2007 16:20

If Morgan Stanley placed 22.8M shares @ 282-285p range how come there was no anouncement? Where did these shares come from?
Barclays purchased 7.2M on 21st June and that took their holding from 4% to >5%.
Sorry to all to be so er.. basic but as you see the only thing that is clear to me is that I do not understand.

[jezboy1] 22/6/2007 09:53

no way it's make 260, unless the whole market has as wobbly....


278 - is support I reckon. Have a nice day :-)

[mitzis] 22/6/2007 09:27

That is what I was thinking carterk but if they fall any further they must be a give way in any future take over scenario.
At 260p if they fall that low they are a bargain long term.