The concept of a convertible bond loan is not very familiar to me either, but here’s what Wikipedia says:
“A convertible bond loan is an interest-bearing or interest-free loan that a limited company can take from an investor. The terms of the loan state whether the investor has the right, at the end of the loan period, to convert all or part of the loan amount into the company’s shares according to a predetermined conversion ratio. This is therefore an arrangement somewhat resembling an option.”
So, as I understand it, if the option right is exercised, the ownership share of current owners will be diluted. Yesterday, the stock price dropped by 5%, so it seems this was taken into account in advance. The stock exchange release states that if the entire option is exercised, it corresponds to 17.83% of the current shares, which doesn’t sound too good…
Since the COVID situation is still quite bad and summer is only a couple of months away, and only about 15% of people are vaccinated, it’s hard to see how this could turn into a very good travel summer. But let’s hope for the best!
At the end of Q2, the utilization rate was already over 50%, of course with summer vacations ongoing which helps. But the situation does look a bit better already.
For your information, I’m following the ex-#1750 robot (now 1250 or 1500) in the Nokia thread, and the same entity (XTX Markets) is also running its own game with the same #1750 share bundle in this stock.
For example, today, the share of those 1750 bundles is 7.5% of the turnover, with XTXE (XTX Markets.com) as the counterparty in all those 1750 transactions.
Today like this
Update on Robot #1750 so far today in Helsinki Stock Exchange @ 13:24
19 out of 1061 transactions was 1750pcs events ~ 1.79% of all transactions
(19x1750) out of 0.47m changed total shares ~ Minimum of 7.11% of total shares exchanged
(19x1750) out of 0.45m changed total shares, without morning auction ~ Minimum of 7.32% of total shares exchanged
This between 10:00 and 13:24 today, with avg price of 32.75
And let’s say that XTXE accounts for about 31% of the trades made today (either on the seller or buyer side).
The latest Q2 interim report was released today. The travel business seems to have recovered well. EPS = 2.44 SEK, if it stays at the same level throughout the year, then PE ~ 4. The share price reaction is quite lukewarm despite the good result
Scandic caught my eye from the short lists, and with almost 10% of the company shorted, I decided to come here to the knowledge sources to ask what’s the deal, as I couldn’t find information otherwise.
So, can anyone tell me what’s expected here? Apparently, the results haven’t been a catastrophe, the share price hasn’t recovered to pre-COVID levels, etc., but why such a large portion shorted?
Is anyone following this more closely? I’m particularly interested because if we could get a nice short squeeze at some point, it would be nice to be along for the ride when those shorts close of course, the market generally isn’t very favorable for such things right now…
It’s in my own portfolio, but to be honest, I’m not up to date with all the developments and the company’s operations
But I did notice on September 7th that Deutsche Bank had lowered its target price in a sector review, and since then, the stock price has been trading at lower levels. It’s true that the travel business will also suffer from higher energy prices, as there are properties to maintain.
The debt per share at Scandic seems to be around SEK 10.2. Based on the Q3 results, the amount of debt is roughly equal to Scandic’s one-year earnings in a normal operating environment, which in my opinion is a fairly reasonable amount of debt.
Yeah, well, I guess I should read those papers a bit more carefully. It seems almost all the debt is lease liabilities. So, if the sales side just works out, I guess it’ll be fine.
Debt has been reduced aggressively; with no dividends, debt reduction continues at a steady clip until shareholders start receiving returns in the form of share buybacks or dividends. All performance metrics look increasingly better compared to, for instance, pre-COVID times—it will be interesting to see how this develops over the coming years.
The share price reaction is certainly interesting, to say the least.
I took a quick look at the figures, and it seems revenue has already returned to pre-pandemic levels. I also found the CEO’s comment interesting regarding the fact that debt levels are apparently already below pre-pandemic levels. Of course, there are a couple of quite significant loss-making years behind us, but the development looks promising!
I was wondering about the same thing myself and tried to dig it out of the figures, but I didn’t quite get it. Maybe the share price drop baked in some upcoming recessions or something. Someone wiser could figure it out.
edit: a story from last autumn regarding Scandic’s share price and ownership structure. A similar share price reaction after the Q3 results.
So, could the price reaction be related to that convertible bond? If and when the holders decide to convert the debt into shares, the share count will be diluted by about 20%.
of course, the market generally isn’t very favorable for such things right now…