Morning Mumble: Why I'm long Dixons Carphone (DC.) in the short-term & Oxus Plc (OXS), Gregg's & FML.

Phones4U Trading Update has entered administration as speculated by the weekend papers. Dixons is likely to benefit the same as Curry's did when Comet departed, albeit with margins in Europe in decline and I suspect the same for the UK there's some negotiating to be had by the carriers now Phones4U has become the casualty. What quite happens with Phones4U is yet decided as there's a lot to unwind and they do have contracts in place in the short term. 

Comet benefited by being the main high street retailer, Dixons Carphone is likely to benefit around 10-15% in turnover and but lower in profits as a result of today's news. With a potential rerating to around 460 pence. The key point is the margins and Europe, what will DC. do post iphone 6 and 4G fever? The gimmicks are coming slower and the advances the same, nevermind the length of contracts increasing. So for the Christmas cheer, I'm long!

Now correct me if I'm wrong but if the primary function and operating business in Oxus's business is the Arbitration case (UNCITRAL arbitration proceedings), why is the cash burn so high? The half yearly outlines nothing unexpected. The company was contacted awhile back about an alternative to the Equity Finance Facility (read as short), however the company did not respond for their own reasons. Not exactly exploring alternatives...or giving the impression of doing so more importantly. One will await the news from Oxus on the award, specifically the size of the award. 

Gold is on a cusp in terms of physical ETF margins and support, if buyers are not found one would have assumed with the weak data out of China causing an Asian markets low, buyers would want to hedge. Now where's that bull analyst gone, South Korean Won Drops to Five-Week Low on China Factory Output By Jiyeun Lee (BBerg). It was nice to catch up with Li from China this weekend and be told about the Chinese focus on productivity and cost savings. One assumes that with the decline in factory output targets that wastage is now becoming more evident. Time for the Chinese bulls to review their investment cases now, with all sectors contradicting their beliefs, commodities, service, factory output, banking lending up (including fast track applications) so are bad debts...we'll ignore the issues with coal producers, iron ore producers and the steel.

For the followers of Greggs, it would appear they've embraced the image and offered healthier choices (Balanced Choice options as Greggs prefers to call it) and improved their service and appearance which has benefited the bottom line. I've never liked Greggs personally, but the company has all the things an investor likes. Their Interim Management Statement (IMS) shows the signs of some luck in addition to a quality strategy that is simplistic in roll out. So with the cheeriness you should expect I am now reviewing Greggs looking to go short on the stock. Today's results were so materially ahead of expectations I'm calling them a fluke. Gregg's locations (Location Location Location) and a credit to the management, but the unexpected change in trend means there were factors outside of Gregg's control, namely the sun shining (my view).

For some thought for holders of Greggs, from the IMS; "Whilst we face tougher comparatives in the final quarter the combination of strong sales performance, lower costs and our outlook for the remainder of the year means that we now anticipate full year profits to be materially ahead of our previous expectation." Some food for thought (sorry couldn't resist), but one would be wise to watch the weather!

Now looking in my emails from near 3 years ago, its interesting to see Frontier Mining (FML) shares have hit my target price. FML inform us, that they can cover their costs but the debts are another issue. FML needs the sale of Naimanjal (Circa $30m) to appear to its lenders they're making headway. This is making any agreement on borrowings harder the longer it is delayed and the essential monies need to improve operating performance won't appear. Naimanjal was announced in March and yet to complete with Regulatory Approval to proceed with sale of Naimanjal end of July (29th); not too long a time frame but concerning if you have the grim-reaper at the door (debt).

Yerlan Aliyev, Chairman and Chief Executive of the Company, said: "While all of the operating cash flow is being used to finance ongoing operations, during the first half of 2014 Company continued conversations with financing institutions and counterparties in order to negotiate extensions of debt repayment obligations. The sale of Naimanjal is viewed as a source of financing to pay down part of the loans and provide finance for the purchase of new equipment required to improve production levels; however, the transaction has yet to be completed and so we were not able to use the sale proceeds to prepare for the 2014 production season. 

In the event of no sale pre-christmas the company needs cash or a strategic partner which is likely to be announced post the sale of Naimanjal...time will tell but FML might be turning into a high risk binary punt on success. Not for the sober folk!

Looks like yet another company is waking up to the dire state of the Iron Ore and Steel industry, with Arrium, Elders offer investors a fair go. I specifically found a chirpier article to avoid a Samaritans switch board overload!

Atb Fraser