Morning Mumble: A valium edition - a recap, from China to the oil price requirements on government expenditure - flying pigs poignantly timed for Macau's disappearing Billions...but it's ok it's only 3-4% of the Macau Junket liquidity ++ KGF being Screwfixed!

Good Morning, 

One would be wise to make sure they have coffee or Valium!? Some missives from the past couple of days. 

Not only is there a rise in Chinese inventories, retail price increases, wholesale/factory gate prices are falling - to stay competitive China have resorted to energy price manipulation. All of which are eating into the earnings of global producers – aluminium a prime example. Following in unfortunate timing with, FT: Asia trades cautiously following Chinese data.

The overhauling of the SEO’s (State Owned Enterprises) is insufficient on its own. China, with any form of sensibility will have to adjust the wastage and excesses. The implications throughout the economy are not positive, if SEO’s suddenly garner economic prudence. The agendas of the Government will be harder to be played out, including, but not limited to, employment numbers, wages but also benefits.

The indicators suggest all is not as well in China, in addition to flying pig prices - notably the pork industry isn't as leveraged. China's food inflation won’t assist the economy out of this glut either, but they can hope. Similar to Russia but not as dramatic, China is suffering from a reducing wage cost, the impact on how people service there mortgage will perhaps be another story.

Finished goods prices (wholesale) have come under pressure from lowering demand but aided mostly by reducing commodity prices that are limiting the chances of growth. If UBS and Goldman Sachs forecasts’ of a worst case $28.50 and $20 a barrel respectively, come to fruition it’s not looking great either. If one was so inclined, this belated about turn by UBS and GS, may be an indicator the market is about to improve, with drilling count and well reductions.

See: AFR's: BHP Billiton price target cut on oil forecast revision and Bloomberg: How Low Can Oil Go? Goldman Says $20 a Barrel Is a Possibility. Essentially the outlook for certain countries isn't great, nor for debt of the oilers or the credit ratings.

Bloomberg’s Brazil's Junk Status is just the start of the risk realisation in international bond markets. Where, in the race for returns, monies have been lent on the basis of being a lower risk than the realities of the situation present. What are the implications for the following debt? More so who will own Petrobras? 

Country	Oil Price to balance fiscal budgets 2015
Algeria	Needed $130/bbl, revised to $98/bbl
Angola	$100/bbl++
Brazil’s just another story entirely, Petrobras’s debt woes won’t disappear overnight!	$115/bbl estimated just to service debt. Junk!
Ecuador	$80/bbl
Iran Allegedly	$130 by consensus but more than probable at $84/bbl based on increased exports.
Iraq	$95/bbl
Kuwait	$55/bbl
Libya	$140/bbl
Nigeria	$120/bbl
Qatar	$55/bbl
Saudi Arabia	$62/bbl (*based on revisions and financing)
Rest of UAE	$70/bbl
Venezuela	$120/bbl

Bloomberg's: Best & Worse Analysis.

For those readers that are keen on Pork Ribblets, Semi-Meaty. The UK suffered a lowering in pork prices and demand during August. Spain and Portugal, despite significant increases (double digit EMC estimates 10-12%) in exports, has seen only modest 2-4% increase in prices, despite a surge in demand. 

The global pork prices, even allowing for US woes of Porcine Epidemic Diarrhoea Virus, or PEDv, have not seen the supply issues being cited in the Chinese press nor so in China. One can only wonder who or what is leading the media to believe there is a supply shortage of pork in China? A flying pig perhaps? 

With the current news flow including companies attempting to rationalise their balance sheets and spending, similarities are yet again being drawn towards Japan. Japan suffered a prolonged period of disinflation occurred after periods of strong growth. Ticking another box in the theory that Chinese companies' having no alternative but to invest globally (EMC: Japan August 2015) and / or pay down debt. Some appear exempt on sensible ratios of debt. With Japan printing, is it a case of sell GEM (Global Emerging Markets) and buy Japan?

Corporate entities have a rather large issue in China. The need to focus on their borrowings, part acknowledged by China's reduction in interest rates. If Chinese corporations continue without some form of prudence and debt reduction, the deflation and slowing of demand will create a real risk the number of defaults rising. It could be just the foundations and consolidation that China needs. China's premier will not be resting on his laurels with regard to a stimulus, but perhaps more prudent to take ones time.

The wholesale deflation has made it very difficult for the corporations to service debt, maintain earnings and justify the higher levels of employment. Banks, are sensibly risk assessing new applications despite the actions of the PBOC (People’s Bank of China), shrinking liquidity further. 

China is being forced to become efficient (or attempt to), this will have implications for employment levels and taxation receipts. The PBOC has realised this, with planned infrastructure and PPP/PFI spending, there are little alternatives.

It’s prudent to have a quick recap of the Chinese growth story and their economy this year. To prop the economy up, the PBOC has reduced interest rates five times (soon to be six). Injected capital directly into the banking system to attempt increase lending and part replace the capital outflows. 

China have reduced the Reserve Rate Ratios (RRR) 5 times to a now 18% and attempted to prop up the stockmarket financially, followed by policy. Better yet, China devalued their currency and tightened up on e-payments and capital outflows including commodity financing deals. Glencore would be wise to consider the latter.

Most of the actions by the Chinese government have had limited impact, China has no alternative but to acceleration spending on infrastructure projects. China has already been discreetly bringing forward infrastructure projects, examples being the development of waste management systems for Beijing.

Tax incentives are being given for investments and capital expenditure, both for individuals and corporations, on top of development grants for those wishing to become entrepreneurs. We have not forgotten the dire state of local government and their dwindling revenues and central government seizing $150B, where the confetti of debt has been issued and underwritten by central government. 

It appears Macau have caught another cold, thanks to a group with a light-fingered approach to gambling. Not only is Macau in the glut of a property depression, in part aided by Li's anti-corruption policies and clampdown on excesses, but more so, the wider economy both with property and business revenue declines. 

Not to worry, gross revenues in Macau may have dropped by 38% in June (worst for five years), but their property has so far only dropped 15%. Junket’s losing near $250M appear not to be of significance to some analysts, it’s only 3 percent to 4 percent of junket volumes.  Ironically, due to the declines it’s actually nearer 8% but what’s a few % of an entire market in decline?

One has to wonder how well the listed Macau Property (MPO) is and what of their Net Asset Valuations in light of the property situation in Macau. With some dramatic discounts being touted on high end property of 25%, but the average is 15% decline as a minimum. We'll know more in due course with a visit planned very soon by the travelling duo!

Of course, with a share buyback in full swing at MPO you'd have thought the SP would be appreciating/holding. With a NAV near 50% above the current SP, one cannot think what the buyers are waiting for!

Staying with a theme, Cloudbuy's (CBUY) NOMAD Westhouse has quit with immediate effect. Disappointedly (for the management) it won't have helped them with their half yearly report also out at the same time. 

Why did Westhouse quit, more so, if anyone was long on this stock post the EFH (Here EFH 1 and Here EFH 2 about turn) debacle covered very well elsewhere, then they need to have words with themselves. Time would not be wasted in looking at how EFH traded this stock, perhaps those whom earn monies exposing such things will be inclined? 

Kingfisher’s interim results are out, beating expectations (EMC) and also a beat on the implications of the BDO. However, the drop in profit is not to be ignored. One has to consider the sensibility of the ScrewFix expansion - 200 stores. The press/city would be wise to wake up to the discounting and margin erosions, more so ScrewFix is not just a “tradesman’s entrance.” Margins yet again under pressure.

KGF are not confident of a French performance (remaining cautious on trading in Castorama and Brico Dépôt France). In essence what the UK gave, France took away. It would be wise to monitor the industrial output of France, renamed “the indicator for Catorama and Brico Dépôt.” KGF, in hindsight for them, may be thankful in being unable to complete on Mr Bricolage.  How prudent of KGF to sell their controlling stake in China.  

To save time, we’ll say goodbye to Haik Chemical now, this company has been the eternal dog of performance. We could blame the likes of Hi-Tech Spring, whom consistent with higher inventories and lower demand have been forced to be more competitive.   

Apologies for the search function not working properly in the top left hand corner, there is nothing that can be done about this. Utilising Google's site search, may be wise. 

Atb Fraser

(Travelling today so limited). 

PM Bolt-On: Sinclair Williams (SNCL), compost! & Kingfisher (KGF)

Good Afternoon,

Continuing on from EMC: Composting Sinclair Williams (SNCL) Share Certs; as quoted here by one irate reader that isn't happy (in quotes). 

"Sinclair Williams (SNCL) continue their historic trend of disappointment with the CEO falling on his sword today. As asked last year about SNCL, my flippant comment that I hope you aren't composting your share certs created upset. Perhaps now they'll have a group hug! Over to SNCL to sum up trading above their "poor start to the season."

William Sinclair has had a difficult season so far. While some progress has been made in the ramp up of production, we are not as well developed as we had expected to be at this stage. We have also seen a slow start to the season with sales to retail and professional customers below last year. There has been margin pressure in both professional and retail sectors. Consequently the Board expects that the result for the year on an underlying basis will be materially worse than last year.

Allowing for debt, SNCL will have to pass the cap around soon, the read across to B&Q (Kingfisher/KGF) might not be as favourable if one measures compost against KGF sales. It would be very unwise to bet against KGF with the current buyback in progress. [*] With a few savvy investors spotting the money for old rope long. SNCL benefited with the hope value in the recessionary grow your own that failed to materialise. With the younger generations avoiding any form of home horticulture and DIY, the future isn't so rosy, quite how they’ll turn around this business remains to be seen. Price perception of compost and gardening materialise is amazingly difficult with older generations being the driver rather than the youth of today."

In May SNCL announced a funding shortfall that came with a good indication of the results coming out today. The unaudited interim results won't assist those negotiating an equity investment in the company or for that matter a sale. More so, should there have been a trading update? 

Strangely without knee-jerking immediately to buy, there's some potential for SNCL. If the "turnaround" crew (Directors) see potential value, most shareholders would have their hand bitten off circa, 20 pence but there's potentially more even allowing for liabilities (Debt near £24M). To start such an enterprise and get a consistent quality it would now be more expensive than buying SNCL for £7.5M and assuming all liabilities.

Just to cheer Mr Irate and his composting chums whom are fearing the worst , its wise to consider the possibility of there being greater upside from here, but from a highly speculative / risky viewpoint. 

For those thinking of spreadbetting or CFD'ing SNCL, its virtually impossible now save for those any current positions. The market capitalisation has gone from £30m to £1.5m ish. Equity longs only need apply, but not for widows nor orphans, as there's a significant risk of a capital raising of around £6M or total wipe out. One could be accused of losing my marbles but...! 

*Since March, there's been a significant change in the support and sentiment of Kingfisher (KGF), breaking 354 pence, despite KGF being in the market (share buyback) for near 40% of volume the price is now at a key support stage, watch the volumes! 

With FX woes in France and margins being key. 2nd Quarter trading update due in near three weeks, 23rd of July (perhaps 24th) without checking. Can there be an improvement in trading?!? Last years was not great, blamed in part to a tough comparative "strong Q2 in 2013. Summer is key, one hopes they don't blame the weather but with headwinds needed from Q2. France, Poland and Britain? LFLs. 

Atb Fraser

Morning Mumble: Disclaimer, Scotgold Resources (SQZ), Anglo Asian Mining (AAZ)

Good Morning,

The past few days have been rather silent, for a number of reasons. It’s best if readers see the disclaimer, which is already covered by Google's "disclaimer about content." In the event parties disagree with the disclaimer either of EMC or Google then they should close the webpage and not return.

SGZ came out with a resource upgrade on their Cononish Gold Project (in Scotland not as some think Ireland or Cornwall). SGZ have increased their resources by revising their Mine Development Plan, en par to a Prefeasibility Study. One got all excited about the announcement and share price to look for the borrow to short, sadly there's zip! Even retailer spread bet firms couldn't/wouldn't! Although it was intraday greed! Purely on a belief of an unjustifiable appreciation in the SP, normality has since returned.

Anglo Asian Mining final results, continuing on from the director loan from EMC 22nd May 2015 Director Loan AAZ's going concern is a tricky statement. Its common-sense the AAZ's forecasted cash position and ability to repay debt have a number of assumptions. 

•  Achieving the forecast production of its gold production operations, principally its heap and agitation leaching; [Also an assumption about grades and recovery should be considered].

•  its gold price assumption; and [it’s difficult to validate that gold price assumptions as the all in associated costs per ounce appears absent].

• the small scale flotation plant being commissioned on time and achieving its planned performance. [Crucial].

Bold is EMC not AAZ!

With some sensible rearrangements in the debt repayment to the Bank of Azerbaijan (IBA) it is a going concern. With cash at the end of the year at less than the price of a semi in London, it’s no wonder the director loan was organised, and in hindsight, one could have argued a higher % should have been charged.

One doesn't envy AAZ if their grades drop below 3g/t as costs will increase and thus impact on cash flow. Personally, AAZ require circa $10M in capital to improve the balance sheet, and in an ideal world $20M would be welcome. The leveraged play at the current levels means they can survive as long as IBA are willing participants. 

EMC estimated of cash costs were a little conservative at near $945/oz AAZ have come in at $971/oz. Simply put, it’s not without its risks, if one assumes they can continue with grades above 3g/t, keep cash flow positive, floatation plant on time, budget and working properly, improving recoveries, oh and the gold price remaining stable. Please remember, every Chinese person and their dog is favouring equities (no doubt leveraged) over gold and increased supply in the gold market. It doesn't sound that great, especially with net debt of $52.4 million.

Kingfisher (KGF) came out with Q1 trading statement. No change in sentiment here, one just needs the buyback to end and the realities of poor trading and conditions in France (the acquisition or lack of may have been very fortunate to KGF). 

Screwfix are still cannibalising revenue from B&Q, one wonders whether KGF would be better shrinking B&Q stores and farming space out to other providers whom don't duplicate the offering. Perhaps something for supermarkets to consider or...car sales or similar? Gyms? This would maintain Screwfix in growth and costs seem to be easier to control and traction in the market making it the shining star. 

KGF are quick to point out about margin improvements, although on the comparative period this would not be hard! UK gross margins up 90 basis points reflecting weak comparatives (-210 basis points Q1 2014/15) due to more promotionally-led showroom sales last year. 

One has to wonder whether KGF's costs focus is something they shouldn't be echoing to the market, more so maintaining efficiencies. Costs benefited from on-going productivity initiatives offset by phasing of marketing costs. Could Kingfisher benefit by cancelling their over 50's discount scheme that appears not to be abused by anyone whom can grab a granny/granddad. It does not promote loyalty, it just promotes abuse of the system! 

Its somewhat hilarious commentators and the press are suggesting the handyman is driving sales with a belief all these workmen are disappearing off to Screwfix. Having been in a Screwfix recently, its surprising the lack of trade, although Screwfix are enticing trade with free tea and coffee when picking up goods. 

Simply, the punters have realised the catalogue model is easier, you don't have to walk round a huge great bloody warehouse to then ask where such and such valve is. For heavy materials or plants there's a difference, simply put, for tools and "Screwfix's" key market, you're better off getting someone else to get locate and organise your order for no charge. 

Screwfix simply meets the three C's of Convenience, Consolidation and Conservation of time, in terms of marketing. As always, ones very foolish to bet against share buybacks. Today was merely aiding closing the longs as the market laps up the premium applied to the buyback that in reality shouldn't purchase any stock above 325 pence. 

Iofina (IOF) popped their final results out yesterday. There's a big difference between positive EBITDA and operating profits. Global iodine prices have continued to be under pressure, we'll ignore SQM (Sociedad Quimica y Minera S.A) issues as such, on the basis they have a very different balance sheet and muppets seem to think it’s relevant. So save for comparing margins or performance within sector the EBITDA figure (or lack of) is like a chocolate teapot for a developing company.

Iofina hope by 06th June they should be in a position to update fully on the Atlantis Water Depot Project. With a high probability of being granted the permit, it would be rude not to have some binary money on the possibility for high risk exposure, although IOF's downside may deter some speculators! 

We'll leave Iofina to summarise their accounts, record revenue, record loss...hmmm

Atb Fraser

Morning Mumble: Kingfisher (KGF), GKP (Part 2) and....SLP + CMCL via ANTO

Good Morning, 

Kingfisher's "ONE" is now to a point of being unworkable. Any expansion for B&Q is capped, with Screwfix LFL sales increases hindering the 'one kingfisher' B&Q's turn around. Simply put, KGF cannot continue without closing stores and expanding the Argos DIY model we know as Screwfix. 

With FX issues, and European woes the market will, for a perverse reason, like the store closures and yet another grand plan. Blah blah, customer needs etc...If one gets the product offering correct, avoids competing against its own margins, and expands the model, it is simple. The market will embrace the cash return and go in denial of a growth impaired model, incapable of identifying an acquisition and resorting to a cash returns.

EMC's KGF analysis wasn't far off the pace from earlier this month. What is worth considering is whether Kingfisher's operations devalue Screwfix or vice versa. Would open competition via a separate listing be more beneficial? Margins, all under pressure, many thanks Screwfix, forcing B&Q into higher promotional activity. 

GKP raised US$40,693,235 / £27,488,000 via the placement of 85,900,000 shares at 32 pence with Simon Murray leaving.  With a caveat of significant gossip and a lot of it being BS, it’s been suggested this morning that Mr Murray is leaving due to a potential conflict of interest. Surely this would have been disclosed?!?! With one company disposing of property assets and being alleged to be on the hunt for petroleum 'opportunities', time will tell whether it’s anything to do with GKP. 

News on Sylvania Platinum (SLP), with  "future" management options, another  broker change, and a Grasvally update. The chrome license is historic, notoriously difficult to work with but apparently this overcome with 'small and shallow pit type operations. One day the market might be informed who owned the Grasvally license prior to SLP? 

The broker at the time of the ' Grasvally deal' didn't seem to want to answer this question. Despite the managements' assertions of all is well, the lack of share price movement is starting to test the patience of those long-term investors, even those willing to trade the stock! Perhaps holders should watch the SLP space. 

With AIM also becoming tired with Chinese companies leaving the investors disappointed, Aquatic Foods Group (AFG) revisits the positives in a statement in the hope of over-coming a disinterest in their stock. Simply put, one doesn't envy the position of the broker of any Chinese related entity in the current environment.

Limited time for Caledonia Mining (CMCL), the results do not read positively and investors will hug the potential expansion. With a shrewd analyst picking up the complexity of assessing any shareholder returns (at the moment), it would be wise to not buy in to the potential. Unusually the EMC doesn't have a long or short view, but there are whiffs of potential. (Apologies for the art weaknesses). Simply put CMCL's taxation and returns should have been better, especially allowing for FX benefits. 

The no news award goes to Antofagasta (ANTO), what is not said is more telling for the Copper producer! Going out of favour with the market in terms of growth and "potential" ANTO's management are under pressure. 

Atb Fraser

Relating to an earlier question, T5 Oil & Gas Strategy.

PM Bolt On: Kingfisher (KGF) read across from HOME (Homebase specifically), + Hippo's sweets.

Good Evening,

A long day, and limited time for any thoughts tomorrow as its Cheltenham Gold Cup and tardiness is not allowed. We have Indiana (Ian) heading back to honour us with his company for the weekend +2 days, as he never replies to text at least he can read here that Hippo's sweetie is stuck the vent of his car.

Some thoughts on the train home, with Kingfisher’s (KGF) preliminary results due on the 31st of this month, with Homebase's performance not instilling much in the way of confidence for KGF. 

France, as a country, has struggled to achieve anywhere near the 2% EuroZone target and is now in deflation.  The outlook for retail including DIY and building projects isn't positive as a result of the deflationary pressures. 

Psychologically, we as the consumers (surprisingly the same in France) delay purchases (especially significant purchases) for longer when in a deflationary environment, in the hope goods or services will become cheaper. Last November, Kingfisher's French Castorama and Brico Dépôt sales declined adding to an overall 11.8% fall in profits to £225m. The cause was clearly weak consumer confidence in France (and Europe) and adverse currency moves, which have continued through to January 2015. 

More recently, France had a 0.4% decline in annualised prices in January (released March 2015). This previously occurred after the financial crisis in 2009/2010 where the French economy slipped into deflation (notably margin pressure from consumers), so the read across for the economy does not bode well in the short-term. 

Kingfisher's bottom line will be under-pressure not only by the currency strength of the pound (in reporting terms) but France's weakness in addition to the retail outlook in Germany, Poland, Portugal, Romania and Russia (Ruble watch out) along with their margins. Fools bet against buybacks of considerable size, however Kingfisher are likely to cap their price in the coming weeks. Save for some short-term momentum in the SP by the closing of the B&Q China deal for £140M.

The market should rightly be cautious about KGF performance, excluding the UK & Ireland revenue being marginally better (circa 2%). Kingfisher is logically up on the share buyback and special dividend. One will be very surprised if anything within KGF operations has been outstanding above and beyond the known. Screwfix will most likely be the shining star and still cannibalising the margins over at B&Q. 

With the buyback continuing for some time and being in the market for circa  5-8% of the stock most days, its not rocket science to know which way the stock was going. The news on the 31st March should change sentiment, save for speculation of the PE boys liking KGF cashflow and business model its hard to justify a target price of 270 excluding B&Q China special dividend of 6 pence. One wouldn't rule out The Home Depot lining up Kingfisher, but speculation is short lived in the absence of news. 

Whilst reviewing KGF, there was a fatal flaw in KGF operations, that not only did the man from Halfords (Matt Davies) identify in his strategy at Halfords, but changed the entire direction of the company. Having mused the possibilities of KGF, it was wise to close the last of the KGF longs today. (The prize for identifying the flaw is a pair of socks).

Atb Fraser

Dairy date of interest: PLUS500 (PLUS) Ex-dividend and special dividend date. 

Morning Mumble: China's rebalancing, ISAT, VED, Lex bemusement, SXX, GENL and SNCL read across to KGF? + BofE

Good Morning,

For some reason or other certain entities prefer to call EMC commentary as negative rather than realistic on Chinese growth. We'll ignore how numbers are reported and 'massaged' within the Chinese GDP focal-points. China's premier Li Keqiang (FT) has reiterated a more relaxed approach to growth with the terminology of 'around 7%.' 

China and those better versed in the politics and industry know full well there's significant wastage, which is symbolically represented by the housing slump in China. With industries reliant on stimulus for growth, when in reality, after such a sustained period of growth consolidation would be wiser. 

The emphasis is on the 'around' terminology. China are logically accepting a slowdown/cooling in specific sectors and resetting expectations. Investors would be wise to consider this a cautionary note of things to come. The contradictions are already there, with such measures as increasing financial liquidity of mortgages but cunningly increasing the down-payment requirements for home purchases. 

Li (EMC not the direct line to the premier) has concerns for how resilient Shanghai and Beijing house prices and rental yields are, as they are already showing a larger housing price decline than expected. This is solely in part due to the exponential demands on house price to wage ratios, the latter being 50% above any other city in China, at circa 15 and 22% respectively. Raising questions about growth in the cities when balanced against affordability and wages which are slowing. China has surpassed western economies with an emphasis on home-ownership, with the lovely term fangnu meaning 'house slave'. In essence working just to keep the house.

With oil in decline, and commodities significantly lower, China will feel the benefits in the short-term, but deflation is a significant risk in China. Along with excess capacity, wage-stagnation and limited FDI. It's wise to ignore the recent jump in China inflows of FDI, on the basis of the lunar cycle being near one month earlier for the Chinese New Year. With China very much in the throes of Japan's 1980's models. Its becoming more evident that China are wary of excessive stimulation save for a populous of discontent that may force the Government to 'keep their comrades happy.' Those Chinese mega-bulls might be wise to revisit their expectations. 

Inmarsat plc (ISAT) updating the market that they're out of fashion with Government spending, down a whopping 20+%. ISAT will benefit from a trend in flight tracking and the Global Xpress system (specifically from London.) With a fairly decent run since October it would be sensible to take profits. Results likely to suggest a few downgrades to circa 850 pence. 

Vedanta have given some Cairn India guidance. We will save the debate on what proactive means, as Cairn recently updated us with Q3FY15 and "in light of the current oil price environment, Cairn is taking a proactive approach to capital allocation and shareholder returns." With an element of sarcasm, its positive that VED acknowledge they have "a" shareholder. I'm sure Anil Agarwal knows there's a few others on the register. 

Its with bemusement that the LEX column couldn't have been further off the market with their coverage of Glencore. One is resisting the urge to educate them some more, as Roger Bade rightly points out, "net income before extraordinary items might have fallen only 7% to US$4.3bn last year, but net income was only $2.44bn, after the significant items." LEX need educating about bottom and top line (Glencore: Trading Place) and what to allow for in deductions. It’s easy to spot crap, GLEN's results were crap and with some hope of a recovery in oil trading, GLEN might get some respite. 

Sirius Minerals (SXX) holders need to learn to avoid becoming the eternal short on their own stock. Holders simply won't learn nor will the management if they continue to utilise this type of funding in future. Near 40% of the fall (aided by impatience and an idiotic understanding of the planning process) is as a result of warrants and the flipping of said stock. 

Genel (GENL) full year results, suffice to say GENL expect significant growth in the future. Perhaps aided with an all share purchase? Despite exploration costs being just shy of $500M, depreciation being $141M, GENL remain bullish for the future with revenues even at $50/bbl being positive for the bottom line. As such, GENL can potential leverage or alternatively, take on leveraged assets. Is it enough to stop the rot in the SP? In the short-term yes.

Sinclair Williams (SNCL) continue their historic trend of disappointment with the CEO falling on his sword today. As asked last year about SNCL, my flippant comment that I hope you aren't composting your share certs created upset. Perhaps now they'll have a group hug! Over to SNCL to sum up trading above their "poor start to the season." 

William Sinclair has had a difficult season so far. While some progress has been made in the ramp up of production, we are not as well developed as we had expected to be at this stage. We have also seen a slow start to the season with sales to retail and professional customers below last year. There has been margin pressure in both professional and retail sectors. Consequently the Board expects that the result for the year on an underlying basis will be materially worse than last year.

Allowing for debt, SNCL will have to pass the cap around soon, the read across to B&Q (Kingfisher/KGF) might not be as favourable if one measures compost against KGF sales. It would be very unwise to bet against KGF with the current buyback in progress. With a few savvy investors spotting the money for old rope long. SNCL benefited with the hope value in the recessionary grow your own that failed to materialise. With the younger generations avoiding any form of home horticulture and DIY, the future isn't so rosy, quite how they’ll turn around this business remains to be seen. Price perception of compost and gardening materialise is amazingly difficult with older generations being the driver rather than the youth of today. 

Daily Mail + Cyprus Mortgages. Talk about reactive reporting, wasn't yours truly reporting on this in FTML a few months ago pre-CHF debacle? What the article does not say is the lengths the Cypriot banks will go to seek recovery of their money. With UK holders with property in the UK potential having to sell / lose their homes to repay their potential obligations. For those with potential obligations over there, they'd be wise to contact Christofi Law, who are conducting a class action.

We have the excitement of the Bank of England rate decision today, which I'm sure will thrill people with no change!

Atb Fraser

N.B Avoiding Oxus commentary at the moment on the basis a) trading, b) potential misinformation is in the public domain about the size of any award and c) holders should have made considerable monies already. 

Morning Mumble: A contribution from Leggie, International Arbitration (Bolivia)

Morning, whilst completing my blog and eating croissants, Leggie has come up with a company that is worth a closer look at. Both Leggie and myself have a position in this company already and does not constitute a buy recommendation. As per the normal common-sense rules, not do any posts for that matter. This has to be put in place to avoid idiots running of and claiming they were unaware.

My post is to follow in due course...re: Barclays, the turn around with a big shift in focus, plus AntoFa'ghastly (ANTO) who's results leave a lot to be desired. Rio's dire coal sale. Also continuing the theme of the cannibalisation of B&Q, we have Travis Perkins results, Travis Perkins PLC : Interim Results which in essence is akin the to LIDL/ALDO price perception to Sainsbury's or Tesco, and perhaps even Asda. Save for the ToolStation Loan notes debt was significantly reduced and net interest cover increasing significantly to 20 times+, this company is clearly proactive. I'll cover more in due course. 

Leggie's devling has produced his own view [Start]:

The main issue being that the best play re Bolivian nationalisations I have located happens to be a stock that isn't traded much at all, so its down to tranches and patience. Still, most other things line up for me, so let me know if you find anything Ive missed.

The company in question is/was Soam Silver (soam standing for South American), which was a fully owned sub of TriMetals Mining (TSX. TMI). Soam discovered a silver/indium deposit in Bolivia (named Malka Khota) and spent $16m over 4 years on the project, with a PEA in 3/11 showing a NPV of $704m at 5% discount, with an IRR of 37.7% based in silver at $18/oz and capex of $411m. The cash costs were v low ($3/oz) and there was a mixture of metals, with silver over 70%. The 181 page PEA is on the website, and a NPV of $1.5bn was quoted at silver at $25/oz as a headline, but the figure above is obviously nearer the case today.

http://www.soamsilver.com/malku-khota.asp

So far so good, they were busy working on their PFS when, hey ho, guess what, a media announcement is made on 10/7/12 that the project was to be nationalised, following swiftly on 1/8/12 by a supreme decree which confirmed the above. Five attempts to negotiate were ignored by the government between 8/12 and 2/13, and despite a meeting in 4/13 (v brief apparently) Soam Silver announced on 30/4/13 that it was going to take the case to UNCITRAL for recourse. The position re arb is held here and confirms that the position now is that a statement of claim will be submitted by 24/9/14 and that the court has set a date for hearing on merits as being in either 4/16 or 5/16. The court seems quite intent on getting procedural matters settled between now and then, but no doubt the Bolivian side will argue over every point in the meantime, looking at the interplay to date. More info re the arb case is here-

http://www.soamsilver.com/arbitration-update.asp

Tri Metals Mining have several assets they are developing but the good news for me (at least) is that they have split the company and have a secondary listing (TSX- TMI.B) which is purely interested in the arb case and which will get 85% of the net proceeds. This is positive for me as it simplifies the investment case.

They have also got an unnamed international party to third party fund the arb - Calunius or even Burford Capital, who knows but still a positive as they will have assessed before putting their money down, and hopefully the % take is reasonable and equitable. Given the RUR case, Im hoping its not Burford, but no clues Ive been able to locate in this respect.

The market cap of the secondary listing (TSX- TMI.B) is circa C$18m, which is around £10m and v close to the OXS mkt cap strangely enough. Volume is v low here and there is v little interest at present, with 2 years to go, its an ideal time for me before the claim goes in in 2 months (over $700m v v likely) which may stir some interest. Im long via a small inv but planning on a couple more invs over the next month.

Any comments are welcome. Good luck to all. Im not expecting a $700m payout, but given the mkt cap and the asset, I feel the risk/reward balance is right for me presently. [End]

Cheers for that Leggie, my comments will be in the reply

Will be back later Atb Fraser

Morning Mumble: Stimulus (you'll need it to read it) & Commodities and the China/UK Financing Switch.

China appears to be vehement about its expansion plans at the risk of other sectors. So, it was around this time last year China introduced a Mini-Stimulus, unsurprisingly it was..."Housing for the Poor & Railways" (why don't they just be damned and open work houses & Almshouses). Now that appears to have done absolutely zip, so guess what they're doing this year? Nope, throw common-sense to the wind, they're not going to let the economy cement its foundations instead roll the risks up and continue to focus on Housing for the Poor & Railways, only 6,500 Kilometres of track...up near 1K on last year. 

One's assuming they can lay track on track? As they surely must be running out of the plausible Railway Expansion zones. Demand will, I'm categorical about this, not meet demand if this type of stimulus continues without consolidation across all sectors. One simply cannot expand and not ignore the fractured foundations of the two tier financing, with defaults here there and everywhere. 

So a thought for the China bulls. A shocking level of companies in China have sold assets to China to fund not expansion but debt repayment. What will they sell next to fund such a necessity of repaying their obligations? One assumes they can't sell the obligation? This has been common-across all the stressed Sectors save for the Solar Industry and belatedly construction. It, put simply, is a train wreck waiting to happen (sorry couldn't resist), one that will be ignored by the "old stimulus" packages they merely reword to keep the "Analysts happy." 

Do not think for a minute its a prediction of the end of the world, more a stark reality that "common-sense" is approaching. All the papers are reporting on the "stimulus" to meet Growth Targets. If one has a lobotomy you could be excused, but there's no news here folks it's a rehash of wording for what was planned in 2013, it was happening 'whatever'. You'll get the idea, as China attracts finance with the promise of riches via the Railways, one would do well to minimise their risks there...It reminds me of the American Railways, but I'll save that for another day and no doubt when I feel Wild Wild West...

In the market, I've missed something, it was disappointing, I had actually considered it thoroughly but forgot to continue the thought process through to the overall impact of the supply China and Australia. I'm more annoyed with myself for keeping my note book in such bad order. The "gap" in the Supply and Demand of commodities is the High Grade Ores, which have had a better than expected performance. This is the norm, but more importantly, is a necessity for the Mills and Producers in China whom have to reduce their pollution. So you have China pushing High Quality through the rood, and 'standard and inferior' only being propped up...this is mirrored the same for Nickel, whom since the obvious happened, has had a nice 19-21% run.

The question is, when will China adopt a realistic attitude to its economy about financing, expansion and maintaining the basic principles of Supply & Demand? From the Amateur, me (smiles), I've been watching the consolidation in China take charge and the bits that are being ignored. So everything that's in the crap now, that has defaulted and/or is, will post 2016 gain again. Solar, Coal and the stronger real estate companies (less leverage) will do well, including Carbon Emission Trading (the lovely intangible). Those expanding, based on the same principles, will (de)falter in due course as their coke fuelled frenzy of bonds dries up. This won't (oops best hedge my bets), isn't likely to be all at once, but will slowly unwind as China "over the next 5-6 years up to 2020 forces the economy to become financially independent. "

China will be akin to your 13/14 year old daughter/son spending all their allowance and then having an advance on next years as well. They're in essence betting on your income being maintained. So the 'buzz' will be no doubt called Environment Enhancement or Environmental Protection (or any such spin) post this five year plan, the Thirteenth Guideline (2016–2020) (Five year plan) will likely be consolidation. One simply cannot continue even without common-sense at the same rate. 

Albeit, as a trader I should be thankful for China additional QE stimulus on the markets. So in essence we've had a bucketload of them. PPI Claims, (I still want to know why they randomly text people are they that stupid), We've had Governmental QE, not only with rescue 'strategic elements of industry' (banks etc...) but we've also had them being able to sell a few assets at bargain basement prices, (many thanks once again).

For the UK, the consolidation in the sector is likely to have a higher impact on the banks than one realises. Bank lending, whether the Government says otherwise is most likely to deteriorate as companies such as Renovo (used to be a Pharma but acquire Ultimate Finance Group their Preliminary Results) and GLIF Plc (Link to Results) come in to their own (Psst I'm long on Both, the former more recently Inspired Capital INSC). For myself, with my cash element I have elected to start funding as well, as the returns are around 7%...much better than the last minute crap you get with ISA's.

This 'secondary' lending, albeit with conditions and pricing, is likely to force the banks to become conventional and dull. Its one reason I don't see Barclays and Barclays Investment Bank staying together. Parties will and have argued that separated they'd be weaker or one poorer, however a divestment were BARC holders get one share in each is likely to be the way forward. Barclays Retail can then ignore any issues with the IB section and just shrug in a very sort of French manner about any other misselling scandals that come to the fore.

Back to the market now, with Dunelm Mill coming in nicely with Interim Management Statement which should provide some support to the stellar performance in its shareprice over 6 years. For Rachel, selling her house and investing (shoving was her word) into Dunelm mill when she went to work in Hong Kong has proved a very savvy move (Congrats).

It looks like Kingfisher is betting on the French/European recovery now with Kingfisher entering into exclusive negotiations to acquire Mr Bricolage. One will be hoping their foray into Europe will be better than Marks & Spencer. Having not really looked at the ownership structure for some time, it would appear it's a very good expansion, with sites in France, Belgium, Argentina, Bulgaria, Madagascar, Spain, and Uruguay it 'could' be a very shrewd deal. 

So on the back of BLT (BHP Billiton's) announcement of their 4 or 5 pillars (depending how many fingers you have) Anglo American (AAL) are now inclined to wave bye bye to their Angloplats operation. Not that this has not been suggested every year since 2008, it's now very plausible. The same as BLT will no doubt do, give the shareholders 1 share in Anglo Platinum for every share they have in AAL. So for the next 12 months, IPO's will be lower, instead crap will be spun out for more people to own the crap. Would you be a holder of a stock that is being held to ransom by the workers? 

Sadly out of time to cover AMI (African Minerals Full Year Results) announcement, polyhalite (SXX implications of Verde Potash), Copper (Central Asia Metals plc Q1 2014 Production Update inline and positive), Uranium support and improvement (improving outlook), Fluorspar (take outs) and Iron Ore (default on deliveries). If life was easy, I would just paid for a narrative...sadly I cannot pay myself to write!