Mediterranean
Oil & Gas Litigation Update to the market in comparison to the Leni Oil
& Gas Silence is very odd especially as one party has been so 'forthright' about the issue. Now
I’m not inferring that MOG have been successful in the defence of the LGO
Claims based on whom has RNS'd first, that would be stupid (Ian :-)). Personally I thought at the time the matter stank to high heaven and
was far from right but there is not long to wait for the
verdict/decision/judgement whatever phrase you prefer. There are always two
sides to a story in respect of the legal cases, so any decision will be very
interesting to read as will the transcripts (which can be ordered for those
wishing for some Eastenders like excitement). Perhaps Ian will not fail in his
curiosity to order a set and comment on them, or just sit back and drink
mojitos in Cameroon instead!
The unusual silence by LGO does however give an indication
for the sceptical among us, lets see who will be proven correct. I’ll
remind a certain individual of his commentary on the matter “LGO appeared to
have never paid on time, were allegedly in default of the monies owed and as
such had no entitlement to any further information until such time as they had
ponied up the dollars.” Not long to wait
to find out Rich!
However, Morrison's
Final Results is the shocker of the day, for us shorters, its certainly
going to be a day to consider a change in positions. MRW exceptional losses are a surprise, but the property update is higher than envisaged by most
analysts, with a proposed £1b disposals which is ahead of the 350-500
consensus, albeit the timeframe is 3 years the like for like declines does not bode well.
Personally, if there ever was to be an offer for Morrisons,
there could not be a worst time as it would appear the LIDL/Aldi
competitiveness is eroding their sales faster than the others. I envisage the
declines settling over the next 6 months as competition heats up and the online
offering is perhaps too late, albeit may delay some of the ROT. This could be a
very good time for Sainsbury’s to become the victor and go shopping for
Morrison, it would put it on a par with Tesco and perhaps even improve the
outlook. Afterall, it’s not likely to be a Monopolies issues with Morrisons and
Sainsburys sales, turnover etc…
Whilst typing this I have been closing positions
in MRW, which has had a healthy return since Christmas, 214 (*a little early)
but I’m not after getting 100% out of everything its not healthy to over manage or over play positions. A few parties have significant plays there to £2 but I clearly do not have their conviction.
All the best Fraser.
Fraser
ReplyDeleteYes- MOG v LGO- impossible to call as it will not doubt come down to the agreements they had in place re that asset- even a comma in the wrong place could be pivotal- it did seem that LGO had been "played like a kipper" but they contributed to their own downfall by the look of it. Good luck to all involved, esp those betting on the outcome.
Re MRW- they did hit my £2.10 target but the results were so poor and the outlook so bleak that I added to TSCO instead, taking advantage of their associated fall to around the £3 mark. MRW haven't really started to sort their problems out whilst TSCO are more aware of their issues and more able to get to grips with them. The UK supermarkets talk a good game on bring down prices but they are highly profitable and on much better margins than most food retailers around the globe, so I take the MRW talk of price cutting with a pinch of salt- they want to be be seen as low cost rather than actually be low cost. The press will no doubt report the aim of competing with ALDI and LIDL and this will be free publicity for MRW, but I cant see them doing much in reality. They have bigger issues to deal with and they need good margins and profit from the core business to roll these changes out.
Cheers. The Leggie
Leggie with margins being squeezed, I feel TSCO is due a significant re-rating (downwards) as a result. Their margin's cannot be maintained as the shopper becomes more informed (whether ill-informed or not) is immaterial at present as shoppers are relying more on media to demonstrate their "prowess and pricing." This price war, although good for the shopper wont' be good for Tesco. Tesco missed a trick when Asda started offering the 10% cheaper guaranteed...had they responded quickly they'd have maintained margins. Psychologically, with "people's most expensive items" being compared and contrasted more often this impacts on price, quality or service or all three. So parties wanting the cheapest of everything, don't moan when its crap, no wonder China ended up with all the shoppers monies.
ReplyDeleteThere's some ratio somewhere about what price wars have on each stock. Asda, whether people like that snotty green logo or not is making inroads, as are Aldi and Lidl. Something that shoppers in the UK should value. For myself, personally I'd rather use an independent shop for meat, groceries and the like. Not just because I can afford it, but some things are worth paying for and that's a family firm giving excellent service at "ok" prices. (It’s for the reader to define what they think is ok).
More importantly, what is happening in retail is clearly evolving, independent shops are growing, both fashion and grocery types. This is because of the "wholesale" devaluation by the shoppers that has eroded the quality. A quick view down most high streets shows there's not enough choice and the quality is dire.
The Grocery years are over, with low margin, low profits heading our way. Wal-marts etc...will do well on economies of scale, but investor I fear have had the best of the bunch and I would be very surprised, save for consolidation, if any meet the returns of yester-year. One thing I hated about the UK was a loyalty card for this, for that, your wallet if you bothered was bursting at the seams.
For that reason, I’m taking a wide birth of supermarkets for a long-term hold.
Atb Fraser
Fraser
ReplyDeleteFair comment re avoiding UK supermkts in the long term- their margins are likely to contract to US/European norms, given that is where the competition is coming from via Asda, Lidl, Aldi but I do feel TSCO have the right people in place at the top now after their cull last summer and they do have targets that are achievable. They are more of a utility now as the days of major growth are over and I would back them v SBRY over the next few years. I don't think there will ever be a proper price war in this sector, just lots of misleading talk from the participants, whilst the gravy train slows but continues onwards. The dividends are increasing, even from MRW.
Cheers. The Leggie
From where I'm sat, Im looking at a one way street at the moment for the supermarkets.
ReplyDeleteGiven Morrison s will now also be aggressive (£1bn) in their price cuts, the supermarkets , all of them are in for a rough ride.
Just take a look at the IPO`s forthcoming,
Pound land (I know its not a supermarket) and also B&M to follow, these are the discounters like Aldi and Lidl who are doing well and have been doing well, its up to the big super markets to now follow and the price war will pressure prices downwards.
(I know how much my shopping habits have changed since being on holiday in the summer and a supermarket visit with F was an eye opener and a half !)
The only problem with the pound land IPO and the B&M one is the over subscription (pound land being what 15x offering )