Debt ratio – ATRX http://atrx.net/ Mon, 26 Sep 2022 21:39:29 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://atrx.net/wp-content/uploads/2021/10/icon-3-120x120.png Debt ratio – ATRX http://atrx.net/ 32 32 Yields on UK 5-year bonds now point to more risk than Greek and Italian debt https://atrx.net/yields-on-uk-5-year-bonds-now-point-to-more-risk-than-greek-and-italian-debt/ Mon, 26 Sep 2022 19:21:03 +0000 https://atrx.net/yields-on-uk-5-year-bonds-now-point-to-more-risk-than-greek-and-italian-debt/ Five-year gilt yields soared more than 51 basis points on Monday to 4.579% amid fallout from the UK government’s tax plan. Yields on Greek and Italian five-year bonds were 3.978% and 4.079% respectively. This indicates that the markets see more risk in the medium-term debt of the United Kingdom than in that of the most […]]]>
  • Five-year gilt yields soared more than 51 basis points on Monday to 4.579% amid fallout from the UK government’s tax plan.
  • Yields on Greek and Italian five-year bonds were 3.978% and 4.079% respectively.
  • This indicates that the markets see more risk in the medium-term debt of the United Kingdom than in that of the most indebted members of the euro zone.

Medium-term borrowing costs in the UK jumped on Monday as investors fret over a plan to cut taxes in Britain.

The yield on five-year bonds jumped more than 51 basis points on Monday to 4.579%, topping rates like Greece and Italy. Yields on Greek and Italian five-year bonds were 3.978% and 4.079% respectively.

This indicates that markets see more risk in UK gilts over the medium term than in equivalent bonds from the most indebted countries in the euro zone.

In July, Greece had a debt-to-GDP ratio of 189.3% and Italy’s of 152.6%, which is the top two in the monetary union. That of the United Kingdom was 99.6% in July.

Britain’s debt, along with the pound, fell after Britain’s new chancellor detailed a series of potential tax cuts and hinted more were on the way. Investors feared the cuts would not only increase public debt but also fuel inflation, prompting the Bank of England to raise interest rates more aggressively and potentially drag the UK economy into a deep recession.

For now, yields on 10-year debt in the UK are still below those of Greece and Italy, although the spread has started to narrow.

But the surge in the yield of five-year gilts beyond Greek and Italian bonds of the same maturity is also notable, as the two southern European countries have been among the flashpoints of the eurozone debt crisis. ten years ago.

At the time, yields on the so-called PIIGS – Portugal, Italy, Ireland, Greece and Spain – surged as markets doubted their ability to service their high debt amid weak economic growth.

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2 top energy stocks to buy right now https://atrx.net/2-top-energy-stocks-to-buy-right-now/ Sat, 24 Sep 2022 09:30:00 +0000 https://atrx.net/2-top-energy-stocks-to-buy-right-now/ Long-term investors need to think about both the good times and the bad when selecting investments. This is especially true when it comes to highly volatile areas like energy. The impact of the pandemic on the industry has been very telling and helps explain why you’re likely to want to stick with giants like ExxonMobil […]]]>

Long-term investors need to think about both the good times and the bad when selecting investments. This is especially true when it comes to highly volatile areas like energy. The impact of the pandemic on the industry has been very telling and helps explain why you’re likely to want to stick with giants like ExxonMobil (XOM -5.32%) and Chevron (CLC -6.53%) today.

The short story

Since March 15, 2020, around the low of the last major oil shock, Cosmos Energy (KOS -13.38%)a small oil producer specializing in offshore drilling, saw its stock soar about 440%. Crescent Point Energy (GIC -10.24%)a small onshore producer in North America, saw its inventory rise even more, growing by more than 600%!

It’s hard to watch gains like these and not be drawn to these energetic stocks. There has to be something positive, although in this case the incredible rebound is tied to massive stock price declines (more on that below). Essentially, investors got over their fear, at the start of the pandemic, that smaller players like Kosmos and Crescent Point could be forced into bankruptcy due to falling demand and oil prices.

Image source: Getty Images.

Exxon and Chevron only rose about 140% and 85%, respectively, over the same period. These small energy stocks revolve around the giants of industry. This is actually not an unusual thing to see, even outside of pandemic-level market disruptions, as junior oil and gas companies tend to be much more sensitive to changes in energy prices. And this time around, oil has rallied considerably from a painful and incredibly rapid price drop in the early days of the coronavirus pandemic, when people at home led to a rapid and steep decline in demand. of petroleum.

Today, with oil prices still on the rise, it is more important to watch what happens when oil prices fall. For example, Brent Crude and West Texas Intermediate Crude, two key industry benchmarks, have trended lower over the past few months. Crescent Point and Kosmos Energy each fell 11% and around 1%, respectively. Exxon and Chevron, with much broader businesses, are up 8% and 5%, respectively.

That said, your market view wouldn’t be complete without looking back at the dramatic drop in energy prices in 2020. During this shocking period, Crescent Point and Kosmos fell roughly 80% each between Jan. 2020 and March. 15, 2020. It’s less than three months, although it was a time of great uncertainty and, as noted, there were very real concerns that smaller players in the industry might not survive. Few people could have endured such a blow without losing sleep. Exxon and Chevron didn’t weather this downturn, losing 45% and 30% respectively, but those are much easier numbers to digest than 80%.

CLC Chart

CLC given by Y-Charts

How do they do?

There’s no particular secret to the greater stability Exxon and Chevron are displaying, but it’s worth remembering the basics when small oil and natural gas drillers catch the eye of investors due to gains huge.

For starters, Exxon and Chevron are integrated energy companies. This means that they produce energy, transport it and transform it. They are exposed to the entire value chain, which helps to smooth financial performance over time, as parts of their business (e.g. refining) may actually benefit from lower oil prices. energy. Small power producers usually only focus on upstream activities (drilling) so their performance and bottom line is totally dependent on energy prices.

On top of that, Exxon and Chevron have incredibly strong balance sheets. Exxon’s leverage ratio is 0.26 times, while Chevron’s is an almost shocking 0.17 times. This gives them the financial means to take on debt during tough times so they can continue to spend on needed capital investments and support their generous dividends. Both are dividend aristocrats, despite the highly volatile nature of oil prices. To be fair, Crescent Point’s debt-to-equity ratio is a modest 0.23x, but its upstream focus gets all the attention when it comes to investor perceptions. Kosmos’ debt ratio is 3.4 times much higher.

The safest game

Chevron and Exxon are not perfect. For example, they will tend to lag during big oil and gas rallies, as we have seen recently. And they’re not moving as fast as some of their peers when it comes to investing in clean energy, which is a long-term issue to consider. However, if you want direct exposure to oil and natural gas today, when energy commodities have already seen a massive price increase, you should probably consider downside protection. In this scenario, Chevron and Exxon have historically held up better than smaller producers like Crescent Point and Kosmos Energy.

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Loans make AP’s debt sustainability suspect: CAG https://atrx.net/loans-make-aps-debt-sustainability-suspect-cag/ Thu, 22 Sep 2022 09:37:00 +0000 https://atrx.net/loans-make-aps-debt-sustainability-suspect-cag/ Amaravati: The debt sustainability of the Andhra Pradesh government is suspect as a predominant part of the borrowed funds is used for interest payments, thus reducing the scope of productive expenditure, the Comptroller and Auditor General of India has said. The state borrowed mainly for the restructuring of past debts rather than for the creation […]]]>

Amaravati: The debt sustainability of the Andhra Pradesh government is suspect as a predominant part of the borrowed funds is used for interest payments, thus reducing the scope of productive expenditure, the Comptroller and Auditor General of India has said.

The state borrowed mainly for the restructuring of past debts rather than for the creation of infrastructure, the CAG pointed out in its state finance audit report for the year ended March 31, 2021.

In 2020-21, 77.12% of borrowed money was used for repayment of previous debt and only 8.91% for capital expenditure (asset creation) against 71.71% and 7, respectively. 76% the previous year.

“Borrowed funds should ideally be used to finance capital creation and development activities. Using borrowed funds to meet current consumption and to pay interest on outstanding debt is unsustainable,” he observed.

The CAG’s critical comments came just days after Chief Minister YS Jagan Mohan Reddy told the Legislative Assembly that state finances were rosy with the state’s gross domestic product growing rate the higher by 11.43%.

“Along with borrowing (in the open market), the state government has created corporations, public sector enterprises and special purpose vehicles to raise funds as off-budget borrowing in the market, outside the scope of the Fiscal Responsibility and Budget Management Act to implement government policies/works. This further increases the state government’s interest burden, pushing the debt-to-GDP ratio to 44.04%,” the CAG noted.

The auditor also pointed out that the state relies heavily on off-budget borrowing for direct benefit transfers (freebie schemes).

“Further borrowing to restructure previous debt and increased use of debt to fill the revenue gap lead to debt unsustainability,” he said.

The state government resorted to such off-budget borrowing amounting to Rs 86,259.82 crore at the end of March 2021.

The overall state liability including off-budget borrowing as of March 31, 2021 has soared to Rs 4,34,506 crore.

“Creating such liabilities, without publishing them in the budget, raises questions of both transparency and intergenerational equity,” the auditor noted.

The state government, in its response to the CAG, claimed that the increase in debt in 2020-21 was mainly due to lower own-source state revenue and increased spending to manage the pandemic. of COVID-19.

State tax revenue jumped 5.50% in 2020-21 from the previous year with an increase in transfers from the Indian government.

The CAG said the PA is expected to repay 45.74% (Rs 1,23,640 crore) of its debt over the next seven years.

“The state government needs to formulate a well-thought-out debt strategy and mobilize additional revenue resources to address this debt burden. Unless there is a definite plan to deal with the debts, the resources available for development will only diminish further,” the CAG warned.

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Research: Rating Action: Moody’s assigns a Ba1 rating to senior unsecured notes offered by EQT https://atrx.net/research-rating-action-moodys-assigns-a-ba1-rating-to-senior-unsecured-notes-offered-by-eqt/ Tue, 20 Sep 2022 17:32:31 +0000 https://atrx.net/research-rating-action-moodys-assigns-a-ba1-rating-to-senior-unsecured-notes-offered-by-eqt/ No related data. © 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved. THE CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES CONSTITUTE THEIR CURRENT OPINIONS ON THE RELATIVE FUTURE CREDIT RISK OF THE ENTITIES, CREDIT COMMITMENTS, INDEBTEDNESS OR SECURITIES ASSOCIATED WITH INDEBTEDNESS, […]]]>


No related data.

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Knowles Co. (NYSE:KN) Brief Interest Update https://atrx.net/knowles-co-nysekn-brief-interest-update/ Sun, 18 Sep 2022 17:33:25 +0000 https://atrx.net/knowles-co-nysekn-brief-interest-update/ Knowles Co. (NYSE: KN- Get a rating) saw a significant drop in short-term interest rates in August. As of August 31, there was short interest totaling 2,270,000 shares, down 13.7% from the total of 2,630,000 shares as of August 15. Based on an average trading volume of 880,300 shares, the day-to-cover ratio is currently 2.6 […]]]>

Knowles Co. (NYSE: KN- Get a rating) saw a significant drop in short-term interest rates in August. As of August 31, there was short interest totaling 2,270,000 shares, down 13.7% from the total of 2,630,000 shares as of August 15. Based on an average trading volume of 880,300 shares, the day-to-cover ratio is currently 2.6 days. Approximately 2.5% of the company’s shares are sold short.

Knowles shares down 0.6%

Shares of KN traded down $0.08 during Friday’s midday session, hitting $13.30. The company’s shares had a trading volume of 2,245,243 shares, against an average volume of 896,954. The company’s 50-day moving average is $16.55 and its 200-day moving average is 18 $.36. Knowles has a 52-week low of $12.98 and a 52-week high of $23.81. The company has a market capitalization of $1.22 billion, a price-earnings ratio of -11.27 and a beta of 1.42. The company has a current ratio of 2.54, a quick ratio of 1.27 and a debt ratio of 0.06.

Knowles (NYSE:KN- Get a rating) last released its quarterly earnings data on Tuesday, August 2. The communications equipment provider reported earnings per share of $0.25 for the quarter, beating analysts’ consensus estimate of $0.24 by $0.01. The company posted revenue of $188.00 million for the quarter, versus analyst estimates of $200.00 million. Knowles had a negative net margin of 12.20% and a positive return on equity of 9.12%. On average, equity research analysts expect Knowles to post 0.97 EPS for the current fiscal year.

Analyst upgrades and downgrades

Several research analysts have commented on KN’s actions. Roth Capital downgraded Knowles from a “buy” rating to a “neutral” rating and reduced its target price for the stock from $20.00 to $17.00 in a Wednesday, August 3, report. StockNews.com downgraded Knowles from a “buy” rating to a “hold” rating in a Thursday, August 4 research note. Four analysts gave the stock a hold rating and one gave the stock a buy rating. According to data from MarketBeat.com, the stock currently has a consensus rating of “Hold” and an average target price of $20.63.

Institutional investors weigh in on Knowles

Several hedge funds and other institutional investors have recently bought and sold shares of KN. Teacher Retirement System of Texas increased its stake in Knowles by 21.6% in the fourth quarter. Teacher Retirement System of Texas now owns 17,987 shares of the communications equipment provider worth $420,000 after acquiring 3,197 additional shares in the last quarter. Qube Research & Technologies Ltd increased its stake in Knowles shares by 103.8% during the 4th quarter. Qube Research & Technologies Ltd now owns 61,815 shares of the communications equipment supplier worth $1,443,000 after buying an additional 31,477 shares during the period. Charles Schwab Investment Management Inc. increased its stake in Knowles shares by 2.5% during the 4th quarter. Charles Schwab Investment Management Inc. now owns 915,478 shares of the communications equipment provider worth $21,377,000 after purchasing an additional 22,000 shares during the period. Renaissance Technologies LLC increased its stake in Knowles shares by 49.4% during the 4th quarter. Renaissance Technologies LLC now owns 899,300 shares of the communications equipment provider worth $20,999,000 after purchasing an additional 297,226 shares during the period. Finally, MQS Management LLC acquired a new position in shares of Knowles during the 4th quarter at a value of $207,000. 99.14% of the shares are currently held by institutional investors and hedge funds.

About Knowles

(Get a rating)

Knowles Corporation offers micro-acoustic microphones and balanced armature loudspeakers, audio solutions, high performance capacitors and radio frequency products for the consumer electronics, medical technology, defense, vehicle markets. electricity, industry and communications. It operates in two segments, Audio and Precision Devices (PD).

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Vonovia: How Interest Rates Affect the Dividend Payout Ratio https://atrx.net/vonovia-how-interest-rates-affect-the-dividend-payout-ratio/ Fri, 16 Sep 2022 22:04:00 +0000 https://atrx.net/vonovia-how-interest-rates-affect-the-dividend-payout-ratio/ AlbertPego Several Seeking Alpha articles have already discussed how low the current market price is compared to the book value of Vonovia (OTCPK:VNNVF), so just a quick recap. (All figures are in euros, with B for billions and M for millions. Data I use come from the materials of the public company, mainly the Presentation […]]]>

AlbertPego

Several Seeking Alpha articles have already discussed how low the current market price is compared to the book value of Vonovia (OTCPK:VNNVF), so just a quick recap. (All figures are in euros, with B for billions and M for millions. Data I use come from the materials of the public company, mainly the Presentation 2Q2022 and the Report 2Q2022.)

  • Vonovia carries their properties to 100B on their books. Most of them have current market values ​​around 30% higher.
  • Net debt is 43.5 billion, so net tangible assets (EPRA NTA) are around 50 billion (or ~63 per share).
  • The current market capitalization is less than 20 billion, therefore less than 40% of NTA.

It really looks attractive. However, the gross rental yield of the buildings at book value is only 3.5% and at market value around 2.8%. That’s shockingly low, but consistent with the zero interest rate policies of the past decade (Vonovia’s average interest rate on its debt is just 1.2%). There are two other major factors at play:

  • Very high current construction costs. For example, the average of Vonovia. the book value per square meter (m2) in Berlin is around 3200, but the market values ​​of older properties are around 5000 and those of newly built apartments are over 7000. Construction costs alone (not including developer’s margins) are greater than 3500 eur/m2. The market value of older properties is being driven up by higher prices for new properties.
  • Low rents. There are different regulatory frameworks for rent control (eg the Mietspiegel described in more detail in the Q2 presentation), but basically no landlord can raise rents at will, most rents are below market, and it will take more than 5 years for the vast majority of rents to catch up with current inflation. On the other hand, I think it’s safe to assume that rents will increase by at least 2% per year on average. With high inflation, it could be much more, because CEOs of German rental companies claim.

Let’s look at some other financial data. The issue here is that Vonovia has been a serial acquirer for the past decade, so the financials change a lot, including a major change since the acquisition of Deutsche Wohnen in 2021. So I’ll take the numbers from 1H2022 and multiply them by 2 to obtain an annual execution rate.

FFO calculation

(source: the author, based on Q2 financial data)

Reported EBITDA does not include income net of fair value gains on properties, so it reasonably reflects recurring cash flows. (Vonovia is also a large real estate developer, but 80% of EBITDA comes from the rental segment.) The calculation of interest expense is quite complicated due to interest rate derivatives and other elements (see p. 17 in the Q2 presentation). Expensed maintenance is included in EBITDA, but capitalized maintenance is not, so instead of FFO, I prefer to look at AFFO (FFO minus capitalized maintenance). The dividend policy is 70% of FFO; currently, dividends represent approximately 72% of AFFOs.

Over the next 8 years, about 4 billion debts will come due each year. Since the debt structure is quite complex with all the interest rate hedging etc., I cannot determine the actual interest rates on refinanced bonds in any given year. Therefore, I assume that all outstanding bonds have an interest rate of 1.2%. The following table shows the annual increase in interest expense relative to the new interest rate at which the bond is refinanced.

increase in interest expense

(source: author’s calculations)

We can see that the current dividend would only be sustainable up to an interest rate of 3-4%. My very rough estimate of the risk premium for Vonovia bonds is around 2%, and since German 10-year government bonds are already at 1.7%, it is obvious that something needs to be done. Management plans to sell properties worth 13 billion. With a loan to value ratio of 45%, we can expect the result to be around $7 billion in debt reduction and around $7 billion in equity proceeds. Let’s see what happens if all of this is used to pay off the debt due in 2023 and 2024.

payout rate after repayment of debt

(source: author’s calculations)

Thus, the implementation of this plan results in the sustainability of the dividend for rates ranging up to 5-6%. If the 7 billion of share proceeds were instead used to buy back shares, this would buy around 1/3 of the company (at 25 eur/share), reducing the dividends paid by a third, or 400 million, which can be used to pay higher interest. This would lead to a sustainable dividend for rates up to 5-6%. This suggests there is indeed room for buybacks at current interest rates – they have a similar impact on cash flow (or dividend sustainability) as debt repayments. (Selling apartments at 1.3x NAV and buying back shares at 0.4x NAV is also very likely to generate significant gains.)

However, the 6% interest rate on Vonovia bonds is only something like a 4% risk-free rate. Although it is reasonable to assume that higher rates will only be accompanied by higher inflation, which will result in higher rents overtimeI’m glad management is exploring other options to reduce debt: they want to create joint ventures that would allow them to withdraw money from their assets tax-free.

Other risks

Energy costs are rising across Europe and this could be a problem for some tenants. But it’s a problem for everyone, not just apartment renters. The strict regulations imposed on apartment rentals indicate that governments are very concerned about affordable housing, so I can’t imagine they wouldn’t do anything about the exorbitant prices of heating and electricity.

While some people might switch to shared accommodation to save on costs, apartments are in short supply in most cities, so Vonovia or its competitors won’t be much affected.

An unpleasant risk to keep in mind is a possible takeover. Vonovia is big, so it’s less likely than some of its smaller competitors. But I find the following scenario quite plausible: you buy shares for 25 eur/share, then the price temporarily drops to, say, 10% while the overall market only drops 20%, then a large alternative manager offers an offer of “above the market” 15 eur/share and privatizes Vonovia (for less than 15 B). Look what happened to STORE (STOR).

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these actions.

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Buy Golden Ocean and Star Bulk at their current prices https://atrx.net/buy-golden-ocean-and-star-bulk-at-their-current-prices/ Wed, 14 Sep 2022 22:41:00 +0000 https://atrx.net/buy-golden-ocean-and-star-bulk-at-their-current-prices/ Miro Nenchev Over the past few months, the market situation for bulk carrier businesses was not as strong as in the first quarter of 2022. Driven by lockdowns in China, rising interest rates in the United States and the European countries, and the war in Ukraine, the demand for bulk carriers has decreased. However, the […]]]>

Miro Nenchev

Over the past few months, the market situation for bulk carrier businesses was not as strong as in the first quarter of 2022. Driven by lockdowns in China, rising interest rates in the United States and the European countries, and the war in Ukraine, the demand for bulk carriers has decreased. However, the golden ocean (NASDAQ:NASDAQ: GOGL) the stock price has rebounded in recent days. Also, Star Bulk Carriers (NASDAQ:NASDAQ: SBLK) the stock price is up more than 10% in the past five days. In terms of market outlook, I expect a stronger market condition for GOGl and SBLK in the coming months. Additionally, my analysis shows that both companies are well positioned to make significant profits in the second half of 2022.

Q2 2022 Highlights

In its 2Q 2022 financial result, GOGL reported total operating revenue of $317 million, compared to total operating revenue of $276 million in Q2 2021, up 15%, driven by increased time charter revenue. The company’s total operating expenses decreased from $181 million in Q2 2021 to $170 million in Q2 2022, due to a significant decline in charter expenses. Golden Ocean reported 2Q 2022 net income of $164 million, or $0.81 per diluted share, compared to 2Q 2021 net income of $105 million, or $0.52 per diluted share. In the second quarter of 2022, GOGL’s cash and cash equivalents grew 53% quarter-on-quarter to $164 million. The company reported 2Q 2022 EBITDA and Adjusted EBITDA of $208 million and $192 million, respectively, compared to 2Q 2021 EBITDA and Adjusted EBITDA of $144 million and $130 million, respectively. The company’s total fleet rental days increased from 8,633 in Q2 2021 to 8,486 in Q2 2022. For Q2 2022, Golden Ocean reported TCE per day of $29,431, compared to TCE in 1st quarter 2022 per day. of $24,920. “Golden Ocean posted another strong result in the second quarter of 2022 despite trade disruptions and economic headwinds,” commented the CEO. “Despite recent weakness in freight rates caused by reduced port congestion and the contraction of the Chinese economy due, in part, to the zero COVID policy, our market outlook remains optimistic,” he continued. .

In its Q2 2022 financial results, Star Bulk reported travel revenue of $417 million, compared to travel revenue of $311 million in Q2 2021, as its TCE per day increased 33% year-on-year and 11% quarter-on-quarter to $30,451 in 2nd quarter 2022. The company’s net income increased from $124 million, or $1.22 per diluted share in the 2nd quarter of 2021 to $200 million, or $1.95 per diluted share, in the second quarter of 2022. In the second quarter of 2022, the company’s EBITDA and Adjusted EBITDA increased 40% and 42% year-on-year to $251 million and $258 million, respectively. “With a limited supply of vessels, upcoming environmental regulations limiting vessel orders and speeds, our competitive operating costs and our scrubber-equipped fleet, we remain optimistic about our company’s revenue prospects despite a challenging environment. seemingly uncertain macroeconomics,” the CEO said. commented.

Market outlook

During the week ending September 11, 2022, global iron ore shipments decreases by 17.5%. From August 29, 2022 to September 4, 2022, 2636 million tons of iron ore arrived at Chinese ports. That number was down 41% a week later. In addition, the volume of iron ore shipments to China increased from 1,895 million tons in the week ending September 4 to 1,652 million tons in the week ending September 11. However, I expect the volume of iron ore shipments to Chinese ports to increase. According to the MMI Iron Ore Daily Index report, released on September 13, 2022, the upward trend of total iron ore inventories in Chinese ports has come to a halt (see Figure 1). In addition, China’s total iron ore import volume increased by about 5 million tons in August 2022 (see Figure 2).

Figure 1 – Total iron ore stocks in Chinese ports

Figure 1 - Total iron ore stocks in Chinese ports

IMM

Figure 2 – Total volumes of iron ore imports into China

Figure 2 - Total volumes of iron ore imports into China

IMM

Additionally, China’s production of rebar and hot-rolled coil has increased in recent weeks (see Figure 3). Additionally, Chinese consumption of rebar and hot-rolled coil in September 2022 is approaching their September 2021 levels. Baltic Dry Index shows that after a significant drop from over 3000 in May 2022 to under 1000 at the end of August 2022, the index has rebounded by more than 40% in the past two weeks (see Figure 4). Thus, after experiencing a period of weakness in recent months, the bulk carrier market situation is improving.

Figure 3 – Steel consumption and production in China

Figure 3 - Steel consumption and production in China

IMM

Figure 4 – The Baltic Drought Index

Figure 4 - The Baltic Drought Index

tradingeconomics.com

Performance

In this section, I provide a careful analysis through the prism of the financial measures of Golden Ocean and Star Bulk. According to GOGL’s debt terms, a decrease in net debt aligned with an improvement in EBITDA led to a decline in the company’s net debt to EBITDA ratio of 6.61 in Q2 2022, compared to its previous level. from 9.47 in Q1 2022. In addition, following its lower net debt and higher operating cash flow, it is not surprising to see its leverage ratio decrease across its entire net debt on its operating cash flow to stand at 7.6 at the end of the second quarter of 2022 against 10.34 in the last quarter. Thus, Golden Ocean Group illustrates financial stability from the perspective of leverage ratios. Meanwhile, to provide a picture of the liquidity condition, their current and cash ratios have slowly improved and stood at 1.54 and 0.71 in the second quarter of 2022, respectively. (see Figure 5).

Figure 5 – GOGL leverage and liquidity ratios

Figure 5 - GOGL leverage and liquidity ratios

Author (based on SA data)

On the other hand, according to Star Bulk’s debt and liquidity conditions, it is observable that its lower net debt, higher EBITDA and operating cash flow compared to GOGL led to better ratios. of indebtedness. In the second quarter of 2022, SBLK’s Net Debt to EBITDA and Net Debt to CFO were 4.08 and 4.3, respectively.

Following SBLK’s strong cash and capital performance, it is no surprise to see increases in its liquidity ratios. The company’s current ratio of 2.07 in Q2 2022 was 84% ​​higher than its result of 1.12 at the end of Q2 2021. Despite a slight decrease in the cash ratio compared to the first quarter of 2022, the ratio cash is doubled. of 1.27 compared to its amount of 0.63 in the same period last year. In short, Star Bulk’s healthy liquidity position is observable from its liquidity ratios (see Figure 6).

Figure 6 – SBLK leverage and liquidity ratios

Figure 2 - SBLK leverage and liquidity ratios

Author (based on SA data)

Additionally, we can analyze Golden Ocean’s hedging ability at all levels of its interest coverage and liquidity coverage ratios and compare them with Star Bulk. GOGL’s Q2 2022 ICR indicates that 31 times the company can pay its interest expense on its debt with its operating profit. Golden Ocean’s interest coverage ratio improved three times from its amount in the same period last year. Similarly, as a conservative measure to compare the company’s cash balance to its annual interest expense, GOGL’s cash coverage ratio in Q2 2022 was 34.89, showing a stunning increase from compared to its level of 16.47 in Q2 2022. a well-generated free cash flow eliminates concerns about its ability to cover its obligations in the event of a slow recovery from the COVID-19 pandemic. From the perspective of Golden Ocean’s profitability, it is worth mentioning that return on assets and net profit margin improved in the second quarter of 2022 compared to the same period last year. Its ROA and net profit margin were 0.05 and 0.52, respectively, in the last quarter. All said and done, Golden Ocean’s profitability ratios indicate that the business is doing well in generating revenue and cash flow (see Figure 7).

Figure 7 – GOGL profitability and coverage ratios

Figure 7 - GOGL profitability and coverage ratios

Author (based on SA data)

In the case of Star Bulk’s profitability and coverage ratios, SBLK’s net profit margin declined 12 basis points since the start of 2022 and stood at 48% in the second quarter of 2022, although improved slightly from 40% in the same period in 2021. Despite a decrease since the start of 2022, SBLK’s ROA amount remained virtually unchanged. The ROA ratio in Q2 2022 shows that 5% of the company’s net profit is linked to its total assets. Additionally, as a measure to calculate its ability to pay debt interest expense with its operating profit, Star Bulk’s ICR was 17.5 in Q2 2022, which was lower than Golden Ocean’s. . Additionally, comparing SBLK’s cash balance to its annual interest expense shows that the company has the potential to cover its interest approximately 32 times (see Figure 8).

Figure 8 – SBLK profitability and coverage ratios

Figure 8 - SBLK profitability and coverage ratios

Author (based on SA data)

Conclusion

Although the lockdown of China, as the world’s second largest economy, may severely affect the steel supply and shipping industry, we know that this situation is most likely temporary and a better future may await the future. shipping companies. So, in my opinion, it is worth analyzing and comparing dry bulk companies from different aspects to give the best shot. In this regard, I have analyzed Golden Ocean’s debt, liquidity, profitability and coverage ratios and compared them to those of its peer, Star Bulk. Both companies are in a healthy position overall, so I think they’re a buy.

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Mondelez International Stock: Buy The Snack Giant (NASDAQ:MDLZ) https://atrx.net/mondelez-international-stock-buy-the-snack-giant-nasdaqmdlz/ Tue, 13 Sep 2022 09:16:00 +0000 https://atrx.net/mondelez-international-stock-buy-the-snack-giant-nasdaqmdlz/ Daniel Bendjy Slowly but surely, we are succeeding. This is true for stock investing because of mean reversion. For example, the latest group of new tech stocks were trading at bubble valuations and fell as the Federal Reserve began to tighten. On the on the other hand, some companies continually generate wealth for investors by […]]]>

Daniel Bendjy

Slowly but surely, we are succeeding. This is true for stock investing because of mean reversion. For example, the latest group of new tech stocks were trading at bubble valuations and fell as the Federal Reserve began to tighten. On the on the other hand, some companies continually generate wealth for investors by slowly and steadily returning cash in the form of dividends and stock buybacks. One company that comes to mind is Mondelez International (NASDAQ:NASDAQ:MDLZ). There’s a lot to love with market leadership, rising revenue and earnings, and solid dividend growth. The stock is a Dividend Challenger and trading at a reasonable valuation. I view Mondelez as a long-term purchase.

Mondelez Overview

Mondelez was formed in 2012 after Kraft Foods split into two companies, Mondelez International and Kraft Foods Group. 3G Capital eventually acquired the Kraft Foods Group and later merged it with Heinz to form Kraft Heinz Company (KHC).

Subsequently, Mondelez underwent a reorganization. First, the company placed its coffee business in a joint venture with Douwe Egberts, eventually becoming JDE Peet’s (JDEP) (OTCPK: JDEPF), listed on the Amsterdam Stock Exchange. Additionally, the company owned shares of Keurig Green Mountain, which eventually became the property of Keurig Dr. Pepper (KDP) after the merger with Dr. Pepper Snapple Group. As a result, Mondelez still holds partial ownership of coffee stocksof which ~22.7% from JDE Peet’s and ~5.3% from Keurig Dr. Pepper.

Mondelez owns brands from the original Nabisco, Cadbury and LU Biscuits, making it one of the largest snack food companies in the world. They hold the world’s number one position in cookies and number two in chocolate and gum. Mondelez’s global brands are Nabisco, Oreo, Milka, Philadelphia, belVita, Cadbury, Toblerone, Trident, Tang and Halls. Other must-have brands are Ritz, Tate’s, Lacta, LU, What Thins, Swedish Fish, Triscuit and Chips Ahoy. Many brands are #1 in their market segment or geography.

Total revenue was $28,720 million in 2021 and $29,878 million in the last twelve months.

Trademark Chart

Mondelez Investor Relations

Growth and restructuring strategy for Mondelez

Mondelez expects to grow organic revenue by approximately 3-5% per year. The company generally follows the playbook of most packaged food companies by introducing product expansions, expanding distribution and marketing.

However, Mondelez is an acquisition company that adds growth through add-on acquisitions. The company has acquired eight companies since 2018, adding more than $2 billion in revenue. The strategy is apparently to buy promising brands as a platform where the company is underrepresented in a segment, a price or geographically. Subsequently, the company extends the new brand. The eight brands acquired are Tate’s Bake Shop, Perfect Snacks, Give & Go, Hu, Grenade, Gourmet Foods, Chipita and Ricolino.

In this sense, Mondelez announced the acquisition from Clif Bar for $2.9 billion, which ranks first in protein and energy bars. The new brand will add approximately $800 million in sales.

Table of brands acquired

Mondelez Investor Relations

In addition to revenue growth, Mondelez is increasing its margins through cost reduction. As a result, the company has reduced its emissions, food waste and water consumption compared to 2018. It has also reduced its packaging waste, moving to 100% recyclable packaging by 2025.

Mondelez exits non-strategic assets after strategic review. Instead, the company will focus on cookies and chocolate. Therefore, it will divest the developed gum market and the global theater business, representing approximately $920 million in revenue. The change in focus includes the sale of the Halls, Stimorol, Hollywood, Dentyne and Trident brands. Additionally, the company is selling its interests in JDE Peet’s and Keurig Dr. Pepper. He plans to use the proceeds to add to the snack portfolio.

Trademark Assignment Chart

Investor Mondelez Reports

Competitive advantages

Mondelez has several competitive advantages. First, the company is by far the market leader in cookies, with around 17% global market share in the $104 billion market category. Campbell (CPB) is number 2 but with only around 3 to 4% market share. In fact, Mondelez has a larger market share and faster growth than many of its top competitors combined. Besides Campbell’s, other competitors include Kellogg (K), Pladis, Ferrero, PepsiCo (PEP), Britannia, Parle, Barilla and Nestle (OTCPK:NSRGY). This scale and size allows Mondelez to spread distribution and manufacturing spend across more brands and greater volume.

Next, the company is a solid No. 2 in the global chocolate market with around 12% global market share in the $112 billion category. Private company Mars is No. 1, but Mondelez is growing faster and gaining market share. Only Hershey (HSY) is growing faster. Besides Mars and Hershey, other competitors include Ferrero, Nestlé, Lindt, Storck, Pladis, Lotte and Uniconf.

Additionally, Mondelez has some very recognizable brand names. Consumers are familiar with brands like Oreo, Cadbury and belVita. The combination of excellent brand recognition, dominant market share and high sales volumes gives the company an advantage for product placement at retailers.

Finally, Mondelez has an excellent and disciplined capital allocation focused on core business reinvestment, integrated M&A, dividends and share buybacks, and balance sheet.

Risks for Mondelez

Mondelez faces inflation and input cost risks despite its strength and market leadership. Most inputs are products like sugar, flour, cocoa, wheat and dairy products and prices fluctuate. The business is also subject to risks related to energy costs, labor and freight. Therefore, higher prices can negatively affect margins. Additionally, as a US company with global operations, a strong dollar will lead to headwinds on exchange rates.

Dividend analysis

Mondelez pays an annual forward dividend of $1.54, resulting in a dividend yield of 2.40%, above the 5-year average of 2.14%. The dividend yield is also higher than the average yield of the S&P 500 index. Additionally, the company has increased the dividend for nine years, with the streak dating back to 2014, making the stock a Dividend Challenger.

The dividend yield and double-digit growth make the stock attractive to many investors.

Mondelez last increased the quarterly dividend in July 2022 to $0.385 from $0.35 per share. The dividend growth rate has been 13.06% CAGR over the past five years. Additionally, the reasonable payout ratio of around 46% combined with the rising earnings per share means that the dividend will likely be increased in the future.

Chart

Portfolio overview

Mondelez has excellent dividend security in the context of earnings, free cash flow (FCF) and balance sheet.

Consensus estimates for fiscal 2022 for Mondelez are $2.91 per share and the dividend is $1.54 per share. These figures produce a forward payout ratio of approximately 48%. Our target payout ratio is 65% indicating the dividend is safe with a decent buffer and room for growth.

Mondelez had approximately $4,316 million in free cash flow (FCF) over the past 12 months. The dividend required about $1,907 million, giving a dividend/FCF ratio of about 44%. This value is excellent and below our 70% threshold, suggesting little risk for the FCF-based dividend.

The balance sheet has acceptable liquidity, leverage and interest coverage.

At the end of the second quarter of fiscal 2022, Mondelez had $605 million in short-term debt, $746 million in current long-term debt, and $17,861 million in long-term debt. Total and net debt has been remarkably constant over the past few years. Total debt was offset by $1,924 million in cash and cash equivalents and $126 million in short-term investments. As a result, the leverage ratio is around 2.6X and interest coverage is around 14.2X, both solid for a consumer staples company. Cisco has a lower to medium investment grade credit rating of BBB/Baa1 from S&P Global and Moody’s. Debt is nothing to worry about from a dividend security perspective.

Evaluation

The Mondelez share price has done relatively well in 2022. The total return since the beginning of the year is around (-7.0%) and the 1-year return is around 1.2 %, much better than the S&P 500 index and the Nasdaq. Additionally, the stock is trading at a price-earnings ratio of around 21.1X, slightly below its range over the past five and ten years.

Consensus analysts’ earnings estimates for 2022 are now $2.91 per share. Therefore, we will use 21X as a reasonable value for the payout multiple. This number is lower than the average of the last decade. However, we factor in headwinds from global inflation and recession fears.

Our fair value estimate is $61.11. The current stock price is around $61.33, suggesting that the stock is correctly valued based on estimated earnings.

Applying a sensitivity calculation using price/earnings (P/E) ratios between 20X and 22X, we obtain a fair value range of $58.20 to $64.02. Thus, the current stock price is approximately 96% to approximately 105% of the fair value estimate.

Current valuation estimate based on P/E ratio

P/E ratio

20

21

22

Estimated value

$58.20

$61.11

$64.02

% of estimated value at current stock price

105%

100%

96%

Source: dividendpower.org Calculations

How does this result compare to other valuation models? A multiple EV/EBITDA analysis from Finbox yields a fair value estimate of $71.81 per share. The model assumes a forward multiple of 17.5X. Portfolio overview weighted fair value model combining the P/E ratio and the dividend yield yields a fair value of $68.39 per share. We don’t use the Gordon’s growth model due to the high dividend growth rate.

The average of the three models is around $67.10, which suggests that Mondelez is undervalued at the current price.

Final Thoughts

Mondelez is a stock that should be on the radar of any dividend growth investor. The company consolidates its position in the biscuit and chocolate sector through acquisitions. The company has a wide moat and develops the top and bottom lines. A growing dividend and share buybacks reward shareholders. A moderate payout ratio supports the projected dividend yield of 2.4%. The stock is undervalued at the current price. I view Mondelez as a long-term purchase.

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Public debt repayments rise in July – Manila Bulletin https://atrx.net/public-debt-repayments-rise-in-july-manila-bulletin/ Sun, 11 Sep 2022 09:00:00 +0000 https://atrx.net/public-debt-repayments-rise-in-july-manila-bulletin/ Debt payments by the national government rose in July due to higher amortization, according to data from the Office of the Treasury. National government debt service reached 156.2 billion pesos in July this year, jumping 158 percent from the 60.54 billion pesos paid in the same month last year. Debt service refers to interest and […]]]>

Debt payments by the national government rose in July due to higher amortization, according to data from the Office of the Treasury.

National government debt service reached 156.2 billion pesos in July this year, jumping 158 percent from the 60.54 billion pesos paid in the same month last year.

Debt service refers to interest and principal payments. The debt service burden excludes actual outflows such as rescheduling or refinancing of existing debt and conversion of debt to equity.

Principal payment accelerated to 104.11 billion pesos from 1.51 billion pesos in July last year.

During the month, principal payments consist of domestic payments amounting to 103.46 billion pesos, compared to zero the previous year.

Offshore debt payments, meanwhile, reached 647 million pesos in July, a 57% increase from 1.51 billion pesos.

Interest payments, on the other hand, fell 12% to 52.1 billion pesos in July, from 59.02 billion pesos in 2021.

Of the total, domestic and foreign interest payments reached 32.42 billion pesos and 19.67 billion pesos respectively.

From January to July, debt payments amounted to 305.25 billion pesos, down 46% from 566.68 billion pesos a year ago.

Of this amount, interest and principal payments reached 309.3 billion pesos and 305.25 billion pesos, respectively.

Earlier, the Treasury office reported that government debt hit a new high at 12.89 trillion pesos, approaching the 13 trillion peso mark at the end of July 2022, up 11% from 11 .61 trillion pesos in the same period last year. .

Since the end of December 2021, public debt has widened by 9.9% or 1,160 billion pesos

The total debt stock at the end of July 2022 was mainly composed of domestic borrowings at 68.5%, while the remaining 31.5% was external borrowings.

But despite the rise, the finance ministry had assured that the government could still gradually reduce its debt ratio to 52% by the end of the Marcos administration.

For 2022, the debt-to-gross domestic product (GDP) ratio is expected to fall to 61.8% before falling to 61.3% next year.

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There are no plans to seek debt relief, says finance minister https://atrx.net/there-are-no-plans-to-seek-debt-relief-says-finance-minister/ Wed, 07 Sep 2022 08:26:28 +0000 https://atrx.net/there-are-no-plans-to-seek-debt-relief-says-finance-minister/ Finance Minister Ibrahim Ameer said he had no intention of seeking debt relief. Minister Ameer briefed parliament on the state of the country’s debt during Wednesday’s parliamentary session in response to a question from Kulhudhuffushi North MP Yasir Abdul Latheef. Yasir asked if the government is trying to find ways to ease debt repayment by […]]]>

Finance Minister Ibrahim Ameer said he had no intention of seeking debt relief.

Minister Ameer briefed parliament on the state of the country’s debt during Wednesday’s parliamentary session in response to a question from Kulhudhuffushi North MP Yasir Abdul Latheef.

Yasir asked if the government is trying to find ways to ease debt repayment by negotiating with countries that have provided loans to the Maldives.

In his response, the Finance Minister said that although the Maldives borrows from other countries, the country has never faced a default situation. Minister Ameer’s response suggests that such a situation is unlikely to occur in the future.

“Therefore, we do not anticipate a situation where we will default in the future. For this reason, we have no intention of negotiating with lenders to find ways to ease debt repayment terms,” Ameer said.

Although Minister Ameer expressed confidence that the Maldives would not default on its loans, international financial institutions have noted that the Maldives’ debt ratio is very high. Financial institutions are also calling for action to address the debt problem facing the Maldives.

The country’s total debt now exceeds MVR 100 billion. The country’s external debt stood at MVR 31.5 billion at the end of last year.

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