Thu, Jan 29, 2015, 11:57 PM EST - U.S. Markets closed


% | $
Quotes you view appear here for quick access.

Pep Boys - Manny, Moe & Jack Message Board

hageneriksson 500 posts  |  Last Activity: 3 hours ago Member since: Oct 13, 2009
SortNewest  |  Oldest  |  Highest Rated Expand all messages
  • So I will try to explain what happened:

    15 months ago the company issued the convertible note carrying a 5% coupon to TPG together with 12 million shares (equivalent to 6 mln ADRs) at an issuance price of $5.48.

    Clearly the investment was ill-timed by TPG as China's housing market did run into major problems almost immediately at that time. With the shares down more than 50% just 15 months later and XIN having been technically in default with some of the note covenants for some time now TPG is now looking for an exit strategy. With the shares still carrying a dividend (though I suspect it will be eliminated soon) and considering the low daily trading volume TPG at this time can not get rid of the equity stake without causing further heavy damage to the share price.

    But with the notes being in default for some time now they were able to put them back to the company. Given that they are still sitting on an deeply under water equity stake it was in both sides interest to negotiate an amicable solution to the matter. But clearly TPG pressed very hard to get at least partly compensated for the decline in the equity stake and XIN has to pay a roughly $10mln penalty in addition to the nominal amount and accrued interest. All together XIN will have to pay roughly $90 mln to TPG to leave this matter behind them.

    TPG will still remain with the equity stake at this time but frankly speaking they really have no choice here other than converting the shares to ADRs and selling them on the NYSE. The magnitude of share supply would easily cause the share price to tumble below $1 before TPG would be done with selling 6 million ADRs. If XIN will indeed eliminate the dividend in the near future TPG might still decide to exit their stake regardless of the share price implications.

    Clearly TPG has lost patience with the company (or perhaps with the Chine housing market overall) and is actively trying to reduce exposure.

  • The only way the company seems somewhat cheap here is using the overall FY2014 expected eps number of $1.99. But that will soon be history.

    Going forward into FY2015 margins will be much lower and tax payments will move up from basically zero to a whopping 30% rate. Current FY15 eps estimates still seem way too high here given the new information revealed on the conference call yesterday.

    To make things worse the Wolfson acquisition is a major failure at least for now as the business all of a sudden needs huge capital investments while their revenues and margins are falling off a cliff. And despite the troubles at Wolfson they did not renegotiate the purchase price.

    The ever decreasing margins with regards to the Apple business are an ongoing theme but clearly they don't help things here either.

    So looking to FY15 eps is currently projected to go down 25% to $1.51 but these estimates will soon have to come down significantly given the new margin reality, the Wolfson issues and the huge tax rate increase.

    Putting all this together an FY15 eps assumption of $1.30 still looks pretty optimistic here - the truth might come closer to $1.10 to 1.20.

    Using the current $19 share price you have a company with decreasing margins, increased tax rate, a poor looking acquisition and still severe customer concentration trading at a forward p/e of around 17.

    I don't know of any other company with these characteristics that trades at a p/e that high. I see downside for the shares to around $12 here just to kep their current p/e valuation going into FY15.

  • hageneriksson hageneriksson Oct 30, 2014 2:10 PM Flag

    you will of course lose even more as there is not a single catalyst for educated or institutional investors to buy the shares here.

    The huge cash position has turned into net debt due to a seemingly ill-timed and perhaps even ill-fated acquisition. No chance for dividends anytime soon.
    Ever decreasing margins.
    New 30% tax rate.
    Initial IPhone 6 ramp soon history with Apple revenues falling back to a more sustainable level going forward (as always).

    So I guess peak revenues, lower margins, higher taxes, net debt levels and a major acquisition underperforming expectations by a wide margin arent't the ingredients to make the shares a strong buy.

    The shares are expensive at these levels and actually most of the smarter guys in the market are pretty much aware of this fact as evidenced by today's price action. One of the best short ideas in the market currently.

  • Reply to

    Conf Call

    by graffpw Nov 12, 2014 12:15 PM
    hageneriksson hageneriksson Nov 12, 2014 12:37 PM Flag

    utter nonsense - the payment timing does affect the cash position at quarter end but NOT reported revenues and margins. It also doesn't explain the lowered FY14 revenue guidance and the giant miss on gross margin guidance. And of course it does not explain the push out of profit targins for another year. The company stinks, management stinks and the shares should be avoided at any cost.

  • I firmly expect the call to be a disaster once analysts discover the capex required to bring the outdated Aventine plants to produce acceptable yields.

  • Reply to

    must read and why you must buy...

    by anilkoomar Dec 8, 2014 3:04 PM
    hageneriksson hageneriksson Dec 9, 2014 9:47 AM Flag

    actually MSFT might have noticed them to come up with a much better offer or otherwise the contract will be gone. Now they came up with new terms and MSFT has time to rethink it

  • hageneriksson hageneriksson Dec 30, 2014 8:48 AM Flag

    yeah - read again and you might learn that NADL does not sell any oil at all.

  • 40,000 shares changed hands so far around $7 (!!!)

  • hageneriksson by hageneriksson Oct 30, 2014 9:13 AM Flag

    gross margins projected to move even lower next quarter while revenues will stay the same - company is going to evaluate their procedures to go after new contract signings to avoid more losses

  • Reply to

    re news

    by chcgfan1 Nov 10, 2014 8:48 AM
    hageneriksson hageneriksson Nov 10, 2014 10:16 AM Flag

    TPG could have simply eliminated the covenants but actually demanded repayment here. And when looking at this sentence in the pr "the company has available cash to fund the redemption, however it is also considering other alternatives to finance the redemption" I would become really really frightened as a shareholder. The company's previous dollar denominated bond issuances were priced at brutal junk rates and clearly they plan to do so again here. Expect 15% or even more.

  • Reply to

    Andy's Fuzzy Math

    by texas_cpa1 Nov 12, 2014 11:00 AM
    hageneriksson hageneriksson Nov 12, 2014 11:23 AM Flag

    they have always failed to live up to its own expectations and clearly things hasn't changed so far. NO institutional investor would accept this for an elevated period of time regardless of potential growth prospects.

    the guys who bought the recent capital raises will look for the exit here as today's call again was ample evidence that Andy can't be trusted. Virtually every metric was a far cry from his own promises (just a few weeks old by the way) and revenue guidance was lowered quite a bit (and still does not look achievable given the product shipment guidance). Given the weak revenue mix in Q4 losses will be much higher than in Q3. Remember Andy expected Q4 to be EBITDA neutral just a few weeks ago. New profitability target AGAIN pushed back one year.

    Needless to say more. Nobody should own the shares at least until management is replaced.

  • hageneriksson hageneriksson Dec 2, 2014 9:26 AM Flag

    Actually the company is 49% owned by South Corean conglomerate Hanwha Group which guarantees the company's debt obligations. If business conditions continue to worsen they will still have the backing of their parent company and won't need to go out of business.

    That said the company doesn't look like a great investment currently but at least they don't face LDK's fate.

  • hageneriksson by hageneriksson Dec 23, 2014 5:13 PM Flag

    Nothing new here at CAMP - management continues to overpromise and underdeliver - this time they finally had to admit that their projections for the insurance business were far from reality (actually they confirmed those expectations just a few weeks ago). This time the high end of the guidance doesn't even reach the current analyst consensus estimate. Satellite business continued its slow dying.

    On a more positive note the core wireless datacom business looks quite healthy with increased gross margins and good cash flow.

    But given management's ongoing inability to adequately forecast the business I would continue to avoid or even short the shares here as analysts at some point will lose patience with the company.

    And given current analyst estimates for next FY I doubt that the company's forecast next quarter will be anywhere near that number.

    Given the ongoing disappointing performance of some highly touted business units and the ongoing demise of the satellite business I wouldn't bet on any meaningful revenue growth next year.

    Given the weak growth trajectory the shares look pretty extended here.

  • hageneriksson by hageneriksson Dec 19, 2014 8:31 AM Flag

    Revenue recognition delayed and will be delayed further leading to a huge revenue miss. Service revenues continue to go down. Hardware revenues poor.

    With revenues still going down big time the company will have problems to stay meaningful. Sell.

  • CUBA is a simple fund which is ultimately bound to its net asset value over time. It's holdings look mostly conservative and most of them are actually not really Cuba related.

    FUGI doesn't even exist - Yahoo profile adress and phone number do not work.

    SHERF in fact is a very real $700 mln company despite acting in the heavily pressured energy and mining sector.

    The company’s Oil and Gas segment is involved in the exploration and development of oil and gas properties in Cuba, Spain, Pakistan, and the United Kingdom. Its Power segment constructs and operates electricity generating plants that provide electricity in Cuba; and owns an electricity generating plant in Madagascar. As of December 31, 2013, this segment’s power generation facilities located in Cuba had a total capacity of 356 megawatts. It operates primarily in Canada, Cuba, Madagascar, Europe, and Asia. Sherritt International Corporation was incorporated in 1995 and is headquartered in Toronto, Canada.

  • hageneriksson hageneriksson Dec 8, 2014 10:23 AM Flag

    Actually we need to know the debt load of Q-Cells to make a comparison. At the time of the acquisition out of bankruptcy Hanwha assumed roughly $300 mln in debt. But anyway we look at this from the outside - the acquisition seems heavily overpriced and done for a sole purpose - to benefit the controlling shareholder.

  • Q-Cells was bought by Hanwha out of bankruptcy in 2012 for EUR 250 mln and some two years later the company's value seems to have at least tripled by some kind of miracle. HSOL is overpaying by a large amount here to put Hanwha in full control of the combined business

  • Reply to

    HanwhaSolarOne and Hanwha Q Cells to merge

    by docscience130 Dec 8, 2014 8:00 AM
    hageneriksson hageneriksson Dec 8, 2014 10:00 AM Flag

    The shares are under most investor's radar but clearly this is a great move bei Hanwha to merge their solar subsidiaries and gain full control over the combined company without committing any new money.

  • Reply to

    Let it sink in--- Hsol almost doubled its size

    by chnook1 Dec 8, 2014 9:08 PM
    hageneriksson hageneriksson Dec 10, 2014 6:46 AM Flag

    why should it move up ? HSOL investors have been screwed big time and the shares look heavily overvalued compared to peers given the 3x overpayment for Q-Cells.

  • Reply to

    Andy bought some credibility today

    by zkeithnewman Dec 4, 2014 12:18 PM
    hageneriksson hageneriksson Dec 4, 2014 12:27 PM Flag

    actually he lost even more by recycling another old news which was already discussed on the conference call four weeks ago. Not that he had any credibility before anyway

8.80+0.19(+2.21%)Jan 29 4:03 PMEST

Trending Tickers

Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.
Core Laboratories NV
NYSEThu, Jan 29, 2015 4:00 PM EST
QUALCOMM Incorporated
NASDAQThu, Jan 29, 2015 4:00 PM EST