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PHOENIX - R2 Billion CASH = POTENTIAL! - Especially when you have a Hen's tooth Insurance Licence!

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Threshold5
Contributor

PHOENIX - R2 Billion CASH = POTENTIAL! - Especiall...

So - there you go. Given this years income - they should represent about R1,50 of investable value per ordinary share after seeing out the year. They should have over R2 Billion free cash to invest in insurance contracts. lovely. Dumped mine at 53c and took back a million of them at 42c. If I am feeling strong - I'll take another million.This could be an interesting proposition.

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Super Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

I think it will turn once the selling pressure is over, my feeling is with finacial year end around the corner a lot are off loading to claim the capital loss, thats why I also took a chunk now but will wait to off load my holding (old ABL) in the new financial year.

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

Could be - but sometimes you just need to take the plunge or risk being relegated to watching from the sidelines. If it drops - I will hopefully have the courage to take more.

It sounds like you have followed a similar "scaled" approach.

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Valued Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

don't gorget the R1.1billion in pref share libaility

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

I have not. To all intenets and purposes - you may as well forget about them.

They have pratically no rights. They are non-redeemable, non participating, non-cumulative. They are essentially an interest free loan.

They do not benefit from capital growth and have no impact on the capital metrics until a payout is made..

As long as no dividend is declared (in which case their scrip obligation for that year must be settled first) - they are non-players.

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Frequent Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

If Steyn CapItal management - who as I recall are forensic acocuntants have bought into their debt then that is a hello this makes for a tick in at least one of the boxes.

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Frequent Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

Steyn Capital  bought the prefs ir seems

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Valued Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

the refs are interesting coz you getting cash at serious discount, but you may never see that discout close and lots of ways to lock mess with pref holders es as they non everything .. easiest is to pay pref div then pay ords a special div with all extra cash

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

Steyn may have paid next to nothing for these - so he is prepared to wait for the dividend stream.

Quite possibly - given that he made his fortune in INSURANCE - he is going to propose something - perhaps a specific conversion to ordinary equity in return for participation in some or other venture. After all - these prefs do represent a long term "obstacle" to the dividend stream so they do have currency. BUT I speculate, of course, ... and that has often been my undoing.

Either way - this is a net positive development.

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Shi
New Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

150 per share? Their last NAV is 35c. Does anyone know how this NAV is made up? You would think that with the cash they have and Stangen, this NAV should be alot higher. What am I missing?

 

 

 

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

See above for the discussion on exluding the Prefs for this calculation.

They should also earn some R200 million next year.

(What's more - and not taken into account in the above - you could also add back a couple of hundred million of excess write-offs - they have written every possible doubtful figure down to nil)

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Frequent Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

I don't generally plan to increase capital losses - albeit very modest ones  in this case - but still. However while the air starts to thicken with the birds of prey

I am still waiting to see a margin of safety develop - and that in this case seems to turn on more info needed on these developments?

I hate this sort of lender - as they are inherently the ugly face of capitalism...

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

They are not a lender at all.

They are purely an insurance company.

To your point on lenders however - they are necessary!

There is nowhere else to borrow money and nobody holds a gun to anyone's head and forces them to borrow money.

The law, as it stands, is all in favour of the borrower - I think lenders need their heads read.

True microlenders (leg-breakers) - well - that's really a form of criminal enterprise, isn't it(?!)

The government should allow more liberal establishment of "stokvels" but they don't want to for obvious reasons.

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Frequent Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

 You are right of course -it is not presently a lender(  - it really is an aid to my understnading if I read the sens - i must do more of that )

but that said the question remains - what will they be going forward - apart from the lofty ideal of being an investment holding company - of which there sees to be

an oversupply?    

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

They have an insurance licence!

They are already writing business generating R84m profit + R114m interest income.

Apart from that - they essentialy have R1833M + part of R267m + R200m profit for the coming year - so R2,2 Billion to invest.

If they just invest this in a quality diversified portfoio of internationa property stocks - they could extract - say 12%

They don't really HAVE to do much at all.

 

So 264M + R100m on growing insurance business = R364 per year/1428B SHARES - TAX =18,4c per share income as things stand.

 

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

BTW

Thse prefs that seem to worry everyone so much...

AXL could bu them back in the market for R450m

The dividend hurdle to clear on these is around R26m per annum if they wish to oay a divi to ordinary share holders.

If they withold divs for 5 years - with a 10% internal growth rate... the NAV of these prefs drops to nearly NIL. The NAV is pegged in ZAR to boot.

They are of no consequence in determing the EV of AXL except in a distributive model and then they are worth very little - especialy considering the Rand takeout cost.

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

BTW

Thse prefs that seem to worry everyone so much...

AXL could buy them back in the market for R450m

The dividend hurdle to clear on these is around R26m per annum if they wish to oay a divi to ordinary share holders.

If they withold divs for 5 years - with a 10% internal growth rate... the NAV of these prefs drops to nearly NIL. The NAV is pegged in ZAR to boot.

They are of no consequence in determing the EV of AXL except in a distributive model and then they are worth very little - especialy considering the Rand takeout cost.

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Threshold5
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Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

Of course, if they choose not to acquire the prefs and rather to settle the coupoin rate on the face value - that could get a bit expensive at R100M+

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Highlighted
Frequent Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

Why on earth would they elect to invest in "international property stocks" ( a category which covers wide spectrum:  so as in what part of the spectrum? )  

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Threshold5
Contributor

Re: PHOENIX - R2 Billion CASH = POTENTIAL! - Espec...

No idea!

Who said they would?

 

Not me.

 

I did say: "If they just invest this in a quality diversified portfoio of international property stocks - they could extract - say 12%

They don't really HAVE to do much at all."

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