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Rolls Royce
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- Lemon Slice
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Rolls Royce
https://www.bloomberg.com/gadfly/articl ... used-to-be
Opinions gratefully sought on the above article. RR is currently 4% of my portfolio, I trimmed on 15 Aug 16 at £7.99 which as things have turned-out was well timed. The debatable issue is whether RR is becoming as capital-consuming as the airline industry it serves. I cannot envisage a world without RR, but the above article compounds my concerns! Latest Broker recommendations:-
Opinions really Gratefully Appreciated!
Opinions gratefully sought on the above article. RR is currently 4% of my portfolio, I trimmed on 15 Aug 16 at £7.99 which as things have turned-out was well timed. The debatable issue is whether RR is becoming as capital-consuming as the airline industry it serves. I cannot envisage a world without RR, but the above article compounds my concerns! Latest Broker recommendations:-
Opinions really Gratefully Appreciated!
Re: Rolls Royce
I began buying RR about 18 mths ago , accumulating gradually at prices below 800p. My logic was that the continued rapid growth of air travel was certain for many years(see China population travel stats), plane orders were steadily rising , the order book was sound, and long-term maintenance cash will roll in for years. I knew that the co. was not well managed but was convinced that it was (and still is) undervalued.Luckily I sold all at 820p on the july spike(the best timed trade of the year for me!)but am now accumulating again for the same reasons as above. The problem looming is the adjustment to the way they book revenue(every engine is sold at a loss which is recouped over the 20+years of maintenance)That meant that they "fiddled the books " on sales to bring forward some? maintenance revenues at the time of sale.The adjustment needed to create a fair reflection of cashflow will create some pretty frightening figures in the next year, BUT they reflect accounting requirements rather than a fundamental change to the business.If you believe as I do that RR will continue to sell a significant share of the aero engines installed over the next decade(and that is my time horizon)then RR is a buy for me. I am many zeros behind Buffett, but I trust his maxim, I am buying, slowly, when other are fearful, though I fully accept the likelihood of the sp being lower at times in the next year or two.
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Re: Rolls Royce
Rolls-Royce's shares are at a "crossroads" it either can appreciate or decline. EPS forecasts the next two years is half of 2013. The shares could move higher, but must get above £7.50/share or lower, if it breaks £6.50/share. Analysts are split on Rolls-Royce!
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Removed copyright graph. Raptor
Removed copyright graph. Raptor
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- Lemon Quarter
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- Lemon Slice
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Re: Rolls Royce
Quite ironic that almost 3 years to the day of my original post, we're almost back to square-one. The FT recently outlining the issues the company currently has, benefiting from excellent comment-posts from both employees and LKHyman (once of this parish). I've topped-up a small amount of RR today at 666p which I do feel is very cheap. Any comments on RR gratefully received........
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- Lemon Quarter
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Re: Rolls Royce
YeeWo wrote:Quite ironic that almost 3 years to the day of my original post, we're almost back to square-one. The FT recently outlining the issues the company currently has, benefiting from excellent comment-posts from both employees and LKHyman (once of this parish). I've topped-up a small amount of RR today at 666p which I do feel is very cheap. Any comments on RR gratefully received........
Interesting... On what basis do you find RR very cheap? I can't find a single attractive metric: PER=24, EV/EBITDA=18.4, PCF= 38, Yield=2.1%, negative NTAV & Net debt is about 8x forecast net profit for FY2019. One more setback and you'd be looking at a government bailout!
All the best, Si
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- Lemon Slice
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Re: Rolls Royce
On no measurable basis, in a conventional sense. Things have simply got to the point were the business is borderline un-investible, £Billions of American Investors money is tied up and change is going to Have to come. Not a scenario for widows or orphans, but may yet be turned round........simoan wrote:Interesting... On what basis do you find RR very cheap?
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- Lemon Half
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Re: Rolls Royce
ReallyVeryFoolish wrote:
A takeover stock perhaps?
Thoughts?
I'd be concerned regarding the risk of 'Government intervention', given the clear strategic importance of Rolls Royce..
That might or might not be a concern to potential investors, but it should be a prominent consideration at the very least..
Any thoughts of a 'take-over' should also recall the UK Government's 'Golden Share' in Rolls Royce, and perhaps consider that 'normal market processes' are unlikely to happen in any potential 'take-over' area when compared to other 'non-strategic interest' companies that might find themselves in similar situations..
They might do well from here, but do fully understand the risks..
Cheers,
Itsallaguess
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- Lemon Half
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Re: Rolls Royce
Sorry but even if it was "cheaper" I would not consider investing here purely based on the financials (last 10 years)....and that would be before any consideration of the effect of Covid-19. I think Simoan was being quite kind ( edit ... being quite kind at the time and that was before things got worse).
As for being "The one remaining truly world class engineering manufacturer in the UK economy of any real substance at a global level."...are you not considering BAE Systems in the mix? I could see someone like BAE being "forced" to take them over as an arm of their company but there would need to be a recognition of RR's debt level. I can't see a takeover simply because of the golden share arrangement.
As for being "The one remaining truly world class engineering manufacturer in the UK economy of any real substance at a global level."...are you not considering BAE Systems in the mix? I could see someone like BAE being "forced" to take them over as an arm of their company but there would need to be a recognition of RR's debt level. I can't see a takeover simply because of the golden share arrangement.
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- Lemon Half
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Re: Rolls Royce
ReallyVeryFoolish wrote:Bringing this thread back to life as the situation goes from very bad to appallingly bad in the aero engine business. As RR looks like it's going well <100p when the rights issue gets underway, at what point does the company look like a recovery play? Or does it collapse into renationalisation, in the sense that nobody is prepared to effectively underwrite a blank cheque except the government?
RVF
The Chinese government is that ........ ?
regards, dspp
Re: Rolls Royce
How can we know that the shares will go below 100p?
I may well take up my rights although I would admit this looks like a falling knife. Rolls is a genuine technology leader with a UK HMG golden share and I suppose I cannot conceive of them being sold abroad. It will be a long road back but the rest of the industry is facing the same abyss.
I may well take up my rights although I would admit this looks like a falling knife. Rolls is a genuine technology leader with a UK HMG golden share and I suppose I cannot conceive of them being sold abroad. It will be a long road back but the rest of the industry is facing the same abyss.
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- Lemon Half
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- Lemon Slice
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Re: Rolls Royce
On the basis the decimated SP jumped 7% yesterday and is up circa 12% today as I type, perhaps there is hope!?
I have read lots of back-of-the-envelope thoughts on RR and it's current predicament. In the current environment it is simply unknowable when large scale long haul aviation will resume. When it does resume though, RR will be a significant supplier. I have never lost sight that only circa 50% of RRs business is civil aviation : Diesel Engines, Nuclear, Defence & Turbines are the balance and will endure whatever happens.
I added yesterday morning at 116p and will be taking up my rights, I have no problem in taking a 5+ year view with my holdings.
Clearly a gamble on RR surviving which, on balance, I clearly feel it will........GLA.
I have read lots of back-of-the-envelope thoughts on RR and it's current predicament. In the current environment it is simply unknowable when large scale long haul aviation will resume. When it does resume though, RR will be a significant supplier. I have never lost sight that only circa 50% of RRs business is civil aviation : Diesel Engines, Nuclear, Defence & Turbines are the balance and will endure whatever happens.
I added yesterday morning at 116p and will be taking up my rights, I have no problem in taking a 5+ year view with my holdings.
Clearly a gamble on RR surviving which, on balance, I clearly feel it will........GLA.
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- Lemon Quarter
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Re: Rolls Royce
YeeWo wrote: I have never lost sight that only circa 50% of RRs business is civil aviation : Diesel Engines, Nuclear, Defence & Turbines are the balance and will endure whatever happens.
What about propulsion by electric motors though? If it can happen with cars, can it not chip away at some of those other areas?
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- Lemon Quarter
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Re: Rolls Royce
If it were 4% of my portfolio back then, I'd have several stiff drinks and console myself with the thought that it's a much smaller % now!
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- Lemon Slice
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Re: Rolls Royce
It's at a princely 8.1% of portfolio now, albeit when this refinancing is completed it will be trimmed!scrumpyjack wrote:If it were 4% of my portfolio back then, I'd have several stiff drinks and console myself with the thought that it's a much smaller % now!
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- Lemon Half
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Re: Rolls Royce
monabri wrote:I still reckon BAE will have an input in RR.
Discussed in the Investors Chronicle today
https://www.investorschronicle.co.uk/co ... lls-royce/
"The UK state has a ‘golden share’ in Rolls-Royce, thereby providing Whitehall with a veto over specific strategic decisions. The government would be loath to see the group fall into foreign hands, perhaps even from a national security perspective, but it might look upon any domestic approach more favourably – step forward BAE Systems (BA.). A merger proposal by the UK defence heavyweight would certainly make strategic sense given Rolls-Royce’s unique aerospace capabilities, while an enterprise value-to-sales (EV/sales) ratio of 0.2, set against a five-year average of 0.9, underlines significant indebtedness coupled with a faltering top line – arguably just the time to move in."
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