R.e.a Share Discussion Threads

[bad robot] 27/10/2021 20:37

Cawky cawky has sniffed something here. I remember his posts on White Nile.
This is a bit like Ferrexpo at 30p.


BR
IN BR WE TRUST
RED MERCURY CREW.

[nobull] 27/10/2021 18:49

Wigwammer, thanks for that info. I don't have any spare money until I've got probate, and I can't deal in anything until then, so GMS has to be off my radar. I see they had a placing (and open offer?) at 3p and that it has an even higher risk rating than that of REA, at "highly speculative". Yes, it's interesting, but I'll have to pass on that. It is also an inherently more risky business model because its product(or service?) (self-propelled, self-elevating platforms?) is aimed at other businesses, whereas REA is arguably a more defensive stock with it being mainly a food producer, I wonder? Yes, I see GMS has very interesting eps forecasts.

Dandigirl, thank you for Evil's view. Very interesting.

[dandigirl] 27/10/2021 17:38

I wish!

From Evil Knievel:

"""It is striking as to how REA (RE.) ordinaries keep pushing up. Yesterday 1.9m (out of c. 44m all told in issue) were crossed. The price is now 93p. And the palm oil price keeps going into new high ground. RE. looks to be heading a lot higher. Cowardy custards should just buy the prefs (RE.B) – still at a discount to 100p and still with 18p of arrears to come""".

I'm still a Cowardy Custard.

[wigwammer] 27/10/2021 11:11

Sounds like a decent read, nobull. If interested in similar stories, perhaps have a look at GMS. Big debt pile with a viable route out. ATB :)

[nobull] 27/10/2021 09:15

"I wonder who has been buying large amounts of stock?"

Dandigirl changed her mind? :)

"Like imminent death, burdensome debt tends to concentrate the mind. The whole capital structure was designed to force production and managerial efficiencies in order to generate the cash flow needed to pay down debt. And, because the equity base was slender [just like REA’s is], it grew rapidly in value as the debt declined."

A quote from Joel Stern's book, The EVA Challenge, from a discussion about LBOs where the normal debt to equity ratio was 4:1.

A consequence of this is that other CPO producers, not making any charge for their equity capital, have overstated their profits: you need to deduct a charge for the equity capital, the size of which depends on the riskiness of the business, from reported profits to calculate the economic value added (what economists call economic profit) according to JS. Yes, our debt to equity ratio is sky high, but maybe we are not so bad after all. We will see.

[wigwammer] 27/10/2021 09:03

It may simply be the house broker taking the position for liquidity purposes, and clearing the overhang. Of course, they would only be willing to do this at such scale if they felt the risk/reward was favourable.

[cousinit] 27/10/2021 09:00

Whoever it is, seems they did a good job of keeping the seller holding on while higher CPO prices and newsflow on the coal loans repaired the balance sheet a bit...

[ntv] 27/10/2021 06:34

I wonder who has been buying large amounts of stock?

[nobull] 26/10/2021 10:07

A trade of 1.9m shares (over 3%?) has just gone through.

Date Time Trade Prc Volume Buy/Sell Bid Ask Value
26-Oct-21 08:57:33 81.00 1,900,000 Sell* 78.50 84.00 2m O
26-Oct-21 08:57:24 81.00 1,939,320 Sell* 78.50 84.00 2m O

[ntv] 23/10/2021 12:22

Thanks for that nobull, that is what i had read but couldn't find it to post

[wigwammer] 23/10/2021 09:33

Delayed report of a 286k (£228k) share trade @ 80p, probably what flipped the share up yesterday. Possible PMDR purchase? :)

[nobull] 22/10/2021 21:40

"Looking further ahead, local civil works for government projects in East Kalimantan are likely to require large quantities of crushed stone"

I believe the Indonesian government is relocating Jakarta to a new place near Balikpapan. Of course all the politically connected Indonesians buy up the land at agricultural-use prices or wasteland prices, get the planning permission, and stick the tube stations to disgorge huge footfall near their bits of land (so any shops that get built have to pay huge rents for the privilege of the high passing footfall), build the city and then charge the earth to all the foreign embassies that have to relocate. The politically connected get to strip out huge economic rents (profits from privilege rather than from risk taking). I expect this is what happened with the move from Rangoon to Nappidaw, and also with the move from Almaty to Astana.

The generals in Burma must have cleaned up. Ditto the Nazerbayev family in Kazakhstan.

Yes, as long as we get $17 a tonne for that andesite and as long as mining starts this month, there should be no impairments on the stone interests, and there should be plenty of demand for it:

[ntv] 22/10/2021 19:12

They must be getting close to coal recovery as we are the final Q of the yearI also read somewhere about the stone being used for major construction projects soon but I can't find the reference to it now
Even just receiving interest payment would really help the balance sheet

[cwa1] 22/10/2021 17:22

Healthy volume today

[nobull] 22/10/2021 14:06

NTV, hi
I haven't got any figures for revenue from coal. I assumed in the last revised forecast eps I posted here or on the pref share thread that the coal deposits would be sold off, and that the loans to these mines, including the loan interest previously written off, would be fully recovered. I think the coal mines are in the books at around $31.8m and that about $6m in provisions for anticipated non recovery of interest on the loans might be written back, giving us $37.8m if they were sold today, I wonder?

I think you have to look back to around 2011 when the coal mines last made a contribution, and I don't think it was a lot then - a few million dollars a year, but then coal was about half the price it is now.

Below from Note 14 in the latest interims:



Edit: Stone interests? Sorry I didn't answer your question properly. No idea. I wouldn't have thought it was very much at all, and in any case, most of the production will be for our own use, I wonder? No, I didn't include anything at all for revenue from stone production.

[ntv] 22/10/2021 11:22

Another big chunk Nokia pension fund gone through

[ntv] 21/10/2021 17:29

What figures have you got nobull?
I am interested in what the stone interests will generate in 2H

[nobull] 20/10/2021 08:17

These ought to go to £1 in no time with CPO prices like this. JMV. I bet there will be an article appearing soon on the wonders of REA in a national newspaper too, by you know who, by which time most readers will already have missed out on quite a bit!

[wigwammer] 18/10/2021 08:17

Looks like a breakout. Given where palm oil prices are and how depressed the shares have been vs long term history, it may have a lot further to go. ATB

[nobull] 16/10/2021 09:42

"I agree but still consider the ords as risky for our appetite."

Yes, there could be a backlog of replanting expenditure that needs to be dealt with, on top of the need to get net debt down, and they may have undisclosed plans for extension planting that stop the debt being paid down, to say nothing of the Indonesian government's policy of taxing the hell out of plantation companies: the government might introduce a new export tax band to stop us having any CPO price upside above $1,300. So plenty to be concerned about, for people who like to worry about these things.

"Check me but for an outlay of about £40k he has lifted the market cap by about £6m?"

I think it's probably the change in prospective cash flows that has driven the price up, and that Mr Robinow's purchase merely drew attention to the matter, but what do I know? We should be entering a period of falling net debt and lower interest bills, leading to rising eps and that in turn leading to more debt repayments, a virtuous circle of events?

I might even start to believe my own revised eps forecast I posted a while back, now that Mr Robinow has loaded up! LOL!

Of course, with a company that has such massive combined leverage, the tiniest error in forecast sales revenue can make one's eps forecast a load of old cobblers very quickly, and of course our CEO can ramp up the arrears payments, which will make my forecast even more wrong (I assumed a 1p repayment for FY2021. We'll see next May. ATB.

[ntv] 15/10/2021 17:27

Didn't see yesterdays RNS til after the market closed
Started buying first thing but then someone pinched the lot
I am hoping for a retrace:-))

[dandigirl] 15/10/2021 17:01

I agree but still consider the ords as risky for our appetite.

Check me but for an outlay of about £40k he has lifted the market cap by about £6m?

I do think that the outlook for REA will be transformed after sale of the coal/cement assets and settling the RE.B arrears. Especially as the CPO is at all time highs.

Wouldn't it then be a pure CPO play? and tidied up ready for sale to the likes of Evans? Or to private capital? That would then more than likely facilitate repaying the Prefs. which so skew RE's capital structure.

As I write, I am wondering if we should take bit of a punt here?

Are we too late though?

[nobull] 15/10/2021 16:19

Dandigirl, it's a very different risk rating, so it doesn't mean a lot. Mr Robinow has simply outsmarted everyone: first he bought the prefs; they were the first to rise; next the warrants, for they were the ones that benefited most from the ords recovering: I am sure he has doubled his money on the warrants in the last 24 hours! I believe he is a senior wrangler, so we shouldn't be surprised. Coal is still good and CPO prices look set to deliver even good profits next year. I won't be surprised if REA turns out to be a stunner what with all that operating leverage. ATB.

P.S. No, I never foresaw cpo breaking above $1,300, which is probably the real reason for the ords going up, albeit helped with that RNS!