Morning Mumble: Naibu (NBU), Iron Ore & Anglo Pacific & JKX + Pawnstars

Naibu (NBU) NED's request the suspension of trading in the company's shares. If this is what I think it is, it comes as no surprise. For those more versed in such matters the rocket science of Li Ning's struggles represent the issues. China's Li Ning warns of third straight yearly loss, outlook upbeat. Having closed my shorts out the other day, was I premature. I suspect so...but it would be rude if I started complaining. CamKids isn't suspended is it?

It was hoped today there would be time to share some Housing issues that are coming in the UK. Persimmon based on values and the glut First Time Buyers really needing a review based on a number of factors including First Time Buyers, however it'll have to wait as most are now in action.

Anglo Pacific Group (APF) PLC Trading Update is with no surprise, the lack of enticing assets and the returns that are dire. With jam being implied the dividend may provide some support when DRIP (Dividend Re-Investment Plan) or SCRIP is applied. Unless something materially changes in the asset base or an acquisition of a decent size is made the dividend will start to look expensive in terms of risk. Kestrel appears to be the only saviour here....and that's "anticipated" and far from in the bag. 

APF with the usual excuses about the commodities market, if one had superior assets even in dire markets the returns are assured. The inferred big deal appears to now be never coming, with limited funds, and a question over whom in this market would support the financing for a larger deal, its not for widows or orphans. Expect APF to give up some of it's more recent gains.

Iron Ore is being bounced around in my inbox with most whom disagreed with common-sense however long ago now surprisingly having a sniff of reality. This morning I was sent this through (Cheers AV) CHARTS: Iron ore price won't withstand 2015 supply flood. With their views only 10% lower than mine (currently), albeit disagree with their views on Copper and so would the market with a near 7% drop in the last month. 

With the Chinese returning to speculation (one assumes  this time with Chinese finance instead of STAN's / Citi's :-)) Copper could have some support...but for how long with  Kaisa's missing a payment . Anyone for a Government initiative for social housing? Anyone for a high risk punt on discounted property bonds? The smaller companies appear to be impacted more so...gaining short exposure is difficult though. With little takers for iron ore futures further out, prices are likely to come under further pressure. 

JKX (JKX) Oil & Gas PLC announce Elizavetovskoye Production Update which I suspect will be on deaf ears. The Ukraine has not been forgotten not the limited upside until the issues in the region are resolved. One suspects Putin's weather doll for a severe cold snap to improve his position has taken a vacation. 

H&T Group PLC (HAT) Trading Statement is a positive, with some jitters in the market it should be seen as a positively for the Pawnbroker. With Albemarle & Bond (ABM), being the short and the competition across the sector being seen as a positive, HAT are in a position to acquire and grow from strength to strength. Net Debt down, an acknowledgement of need for a retail focus has started to reward them. There's a number of ways HAT could improve their margins, however that's for them to work out. It's a long not without risks, especially with welfare reform, something to consider for all higher cost lenders, albeit HAT do have the pledge. The downside is, with limited upside on the current SP save for a buyout (or extraordinary event) its not that appealing.

Some shipping watch showing the dire state of the industry for dry goods. Around $70m is at stake for Jinhui Shipping following protracted commercial disputes with Grand China Logistics (GCL) and Parakou Shipping. With losses racking up for Jinhui...

Atb Fraser

Morning Mumble: My "King" doom for a horse...& slow market news!

When investing rule one is the "returns" and "potential." However with King I cannot help but wonder will the world wake up one morning and think: perhaps it’s time to read a book on the way to and from work.

In looking at Zynga's not so stellar performance, 1.0 version of the "Gaming Online Entities". Well, let’s put it another way January 30, 2014 - Zynga Announces Fourth Quarter and 2013 Financial Results results are slightly different to King's recent performance on numbers only but I suspect a similar performance profile for their Farmville Offering as Candy Crush. They tried spinning out different games, but the psychology of humans is well known, simplistic app games are fun "for a while." You only have to look at your teenage children, perhaps even you partner to realise Candy won't be sweet forever. I have resisted the temptation to go on pun-overload.

The rate of decline for games is well versed...so if you were to look at Zynga, I cannot help but wonder if the outlook doesn't bode well for online/app gaming as a realistic long-term venture at 'these prices.' The investment case for short-term trend profits bodes well, albeit people argued that for Apple and Samsung earnings, but the difference being something quite massive, parties are able to see, touch and utilise their purchase, it's tangible. It’s not the intangible offering of paying for an arcade styled mental benefit or challenge that, save for the odd addict, generally disappears as a fad or trend. 

The pricing doesn't appear to be so overcooked as Zynga's, Facebook's or Twitter's however in the short-term there will no doubt be some plus as there's plenty of people to sell the story to. So I’m thinking in the short-term (4 months) there may (will) be a material appreciation for the stock but post the ability to sell the story in any great numbers and the comparisons to previous dividend payments becoming reality the price of stock will be lower post the 1st Quarter of listed results. 

This theory is based on there being parties with significant profits on these IPO's and one suspects wanting to realise some gains. Any limits/lock-ins will bode well in the short-term but post which there's going to be a real depreciation in the share price. 

Candy Crush aka King and Zynga are reliant on primary platforms and equipment to function. Facebook, being the social interaction point of millions is indemnified against these risks (including the access point for these games). Candy Crush and Zynga , without a decent roll out of games that are "not reliant" on offering 'free lives' to the original app are doomed to lower returns but currently based on higher expectations. My trading head offers some lemming style longs for brief-periods prior to the reality kicking in post earnings. Let’s see...

Back to reality and normality, the Chinese are now spooked by defaults, China banks begin retreat from risk. It will have an impact on commodity demand again as the oversupply issue "to the market appears resolved with iron ore going back to $110/t for what reason? Well its common-sense that people, banks and bond traders are waking up to the fact that with defaults being real and the perception of guarantees disappearing the market will become real. Higher financing costs for entities (Risk) that really should not have survived in their own right. Consolidation will lead to contraction as savings need to be made to create 'going concerns'. 

It appears that there's rumours of an 'very well paid CEO' departing to attempt to reduce the scandal and distractions affecting a company that's trying to raise funds to produce oil. I can't think who that person is!?! 

The markets is betting on H&T Group (HAT) to benefit from Albemarle & Bonds position. I'd a liken HAT as the DSG to Comet if ABM go fully to the wall. Declining pledge books (across the sector) which is common after a large increase in sector as people realise there is not much left to 'pawn' or sell. The margins are being squeezed on the purchase price as well, which does not bode well for the companies over the longer term, without a reduction in the footprint of stores nationally. Some may benefit with the eventual close of ABM stores that do not meet a viability threshold or are not acquired. 

It’s a mystery why parties thought ABM's demise came about unexpectedly. The odds of a return for shareholders still holding stock (WHY) is likely to be nil. HAT's 2.5% dividend based on yesterday's SP on may present some welcome relief but my concern is these entities do not leverage well for which HAT are focusing on paying down the debt. The issue remains with regulatory pressure on the higher cost lending market is likely to impact on margins further.

Very slow market news wise for directional plays, save for LMI. As one party points to closing operations permanently which would make sense. When will South African's Miners Unions learn that you can't milk the cows nonstop. They do have to graze... Lonmin PLC Update on Protected Strike Action 05th March 2014 was over 3 weeks ago with little change. As such, the cost implications are going to be significantly higher. Russian issues are predictably positive for Palladium, combined with the on-going strikes, is Palladium going to break its 800$/oz. resistance and tick up to a new range? Certainly looks that way, which should benefit Platinum!

The mockery of "analyst" consensus is being exposed again by the revision of Tin Deficits (Reuters) only a near 7 fold increase upwards. Well there's no prizes to think that the price reacted accordingly. 

Finally, Mediterranean Oil & Gas (MOG) Litigation Update suggests that the judgement will be handed down tomorrow on the case Leni Oil & Gas brought against the MOG Subsidiaries. Now based on common-sense, with MOG's announcement so soon after the LGO relinquishment for $1/£1 (whichever it was) surely meant they took legal advice. Its still very odd for the claimants have not issued any news on this? Perhaps it’s on the basis MOG are? Not long to go before the results...

All the best, Fraser