So the value analyst was right. His comment on 14th May did hint something- “a major reduction in broker expectations, slipped out without informing the market properly”. My comment was not on the target price but on the overall expectations. Canaccord's update today does show that they have downgraded their expectations aggressively.
- Target price reduced from 369p to 96p
- Net Interest Margin reduced from 5.5% to 1.5%
The concern is how that information got leaked before the actual note was published. Two questions come to my mind
- Which of the short fund holders are Canaccord clients?
- What information was shared/leaked by Canaccord analyst to those clients?
I hope Canaccord's Compliance will look into this.
Two glaring points from Canaccord's update-
"Our 96p target is based on £104m for Tungsten Network (acquisition price), £31m for
Tungsten Early Payment (DCF at 20% discount rate), -£53m for central costs (10x 16E),
£12.8m net cash, £16.5m from equity funding and £25m net assets in Tungsten Bank"
If you add all of the above and divide by 125,405,397 shares - value comes at 108.68p. It reminds me of Dark Destroyer's unmatched mathematical skills. It seems like 96p was released to oblige somebody.
Second one about funding cost increased to 3.1% for large suppliers and 7.2% for SME suppliers to bring the net interest margin down. Tungsten management should clarify on this. It's hard to believe that cost of funding from Insight is that expensive. If that's the case, they should retain the bank and issue bond or reinstate deposits to get cheaper funding .
Disclaimer
All
content provided on this blog is for informational purposes only. The
owner of this blog makes no representations as to the accuracy or
completeness of any information on this site or found by following
any link on this site. The
owner will not be liable for any errors or omissions in this
information nor for the availability of this information. The owner
will not be liable for any losses, injuries, or damages from the
display or use of this information
the p
No comments:
Post a Comment