AML - Stock Market Listing
Discussion
Well the call was pretty consistent with prior calls except Stroll seemed more relaxed and defensive. Maybe now he feels he has money coming in so it’s one less hurdle for the story has been telling to be viable or credible. However, I still don’t see the numbers going his way.
Essentially it’s still “ We are going to build significantly better cars and charge significantly more for them”. I wouldn’t be surprised if they relegate the low end Vantage to token status. Sort of like the Cayman/Boxster is over at Porsche. Just an entry level aspiration drug to try to get people hooked on the more expensive, more profitable product. Certainly doesn’t look like it’s going to be the volume leader. It’s a drag on every metric.
Lambo has sold the most cars it ever has the first half of this year. They are running about 2 to 1 vs Aston and did even better than that for the second quarter. Not to mention a substantially higher ASP. I’m guessing the only lesson Aston learned from this is to not sell cheap cars.
One thing nobody brought up on the conference call was the elephant in the room of a CEO succession plan. What’s the half life of a CEO under Stroll? 9-12 months? Not to mention this one had two feet out the door before they propped him up for a showpiece. Wasn’t there a movie about this?
It’ll be really interesting what the sport/GT redesign brings. If I were a betting man, I would say the Vantage V8 goes to a Vantage S with 600 hp and with a commensurate increase in price. Also think there will be a move back to haptic buttons and overall less buttons for a “ no plastic buttons” look. Whatever they do, my guess is it will be too little too late. Maybe the updates even turn out to be a Green Ferrari on the inside, LOL. I’m actually starting to feel sorry for LS. His timing isn’t looking good.
Essentially it’s still “ We are going to build significantly better cars and charge significantly more for them”. I wouldn’t be surprised if they relegate the low end Vantage to token status. Sort of like the Cayman/Boxster is over at Porsche. Just an entry level aspiration drug to try to get people hooked on the more expensive, more profitable product. Certainly doesn’t look like it’s going to be the volume leader. It’s a drag on every metric.
Lambo has sold the most cars it ever has the first half of this year. They are running about 2 to 1 vs Aston and did even better than that for the second quarter. Not to mention a substantially higher ASP. I’m guessing the only lesson Aston learned from this is to not sell cheap cars.
One thing nobody brought up on the conference call was the elephant in the room of a CEO succession plan. What’s the half life of a CEO under Stroll? 9-12 months? Not to mention this one had two feet out the door before they propped him up for a showpiece. Wasn’t there a movie about this?
It’ll be really interesting what the sport/GT redesign brings. If I were a betting man, I would say the Vantage V8 goes to a Vantage S with 600 hp and with a commensurate increase in price. Also think there will be a move back to haptic buttons and overall less buttons for a “ no plastic buttons” look. Whatever they do, my guess is it will be too little too late. Maybe the updates even turn out to be a Green Ferrari on the inside, LOL. I’m actually starting to feel sorry for LS. His timing isn’t looking good.
Edited by GreasyHands on Monday 8th August 05:31
You feel sorry for someone who blatantly lies to shareholders and embarrassingly patronises analysts?
Someone who funds his private company through a public one, raises hundreds of millions on the back of the brand name, when cash is super-tight, but at the same time raiding the workers' pensions?
Someone who invests very little of his own cash in the business but overrules and micromanages, taking on the worst kind of debt in Europe, crippling the company, then has to go begging to dirty Saudi cash to prop it up and avoid insolvency?
Someone who funds his private company through a public one, raises hundreds of millions on the back of the brand name, when cash is super-tight, but at the same time raiding the workers' pensions?
Someone who invests very little of his own cash in the business but overrules and micromanages, taking on the worst kind of debt in Europe, crippling the company, then has to go begging to dirty Saudi cash to prop it up and avoid insolvency?
Edited by Peavey123 on Monday 8th August 07:20
Edited by Peavey123 on Monday 8th August 07:29
When reading your post GH, a few extra words immediately came into my mind.
GreasyHands said:
Well the call was pretty consistent with prior calls, except Stroll seemed more relaxed and defensive having almost lost his voice.
Maybe now he feels he has money coming in to his private Formula One team, thanks to using the Aston Martin name, so it’s one less hurdle for the fantasy story he has been telling to be viable or credible.
However, I still don’t see the numbers going his way.
Maybe now he feels he has money coming in to his private Formula One team, thanks to using the Aston Martin name, so it’s one less hurdle for the fantasy story he has been telling to be viable or credible.
However, I still don’t see the numbers going his way.
Certainly agree with your last sentence (above).
Using half the equity capital raised to reduce debt by just (around) 25%, which will still leave that debt at an unmanageable level (and having huge interest costs). The repayment dates are of course getting closer. Then the remainder to fund the ongoing overspending, for yet another temporary period (the 109 year trend).
Saying [during the Q&A], "We did not require the money [capital raise] to reach our target of 10,000 cars ..."
Unbelievable in more ways than one. Does he think no one can understand the [2022 H1] financial accounts ?
At the time of the Stock Market flotation, CEO Andy Palmer's dream, was for Aston Martin to become a constituent of the premier FTSE 100 Index. The initial market value was initially not too far away from being eligible, at £4.3 billion.
Now the Company is a FTSE 250 Index exit candidate.
The next FTSE quarterly review will be 31st August 2022.
The proposed capital raise will help avoid relegation, but I don't think that takes place until September.
I listened to the Q&A for which the link was kindly provided. Laurence Stroll comes across as quite credible, actually sympathetic, if we did not also know that he is extracting £21m a year from AML to put into his Formula 1 team, with little appreciable benefit to AML, that suppliers, employees and shareholders are being ruthlessly exploited in an effort to keep the show on the road, that the debt (which admittedly predated his accession as EC) has been rolled over and increased, and that the Valkyrie project has turned into a disastrous mess.
I expect that the Geely offer was much as he described, an offer to take the company over at a value which reflects the debt and all the other toxic stuff lurking in the boardroom cocktail cabinet.
My issue with Andy Palmer was that he personally extracted £64m via the IPO from a company which was even then loaded with debt and gasping for capital. I had hoped when Stroll got involved that he was going to put the company on a sensible financial footing. If for example the AM name is sufficient to attract massive sponsorship income into a racing team, would it not have reflected more credit on Stroll if he had channelled some of that back into AML? Also, if they cannot deliver a hypercar over a period of six years, instead falling out with all of the demonstrably capable partners with whom they started, Adrian Newey, Red Bull, Nebula specifically (again, thanks SSO for that very informative piece) how can they possibly deliver a new range of cars of the standard which they are claiming? So it would appear that he is, like Palmer, simply taking as much for himself as he can, before the music stops.
More than anything else, what I find astonishing is the extent to which analysts and city investors appear to have bought into (or put their clients' money into) the hype surrounding a company which most on here were saying before the IPO, was beyond risky. They may ask penetrating questions, but what are they doing there at all? Anyone with any understanding knew that this company, set up as it was, was not a credible investment. Is this type of flagrant destruction of capital normal in the stock markets?
What is the hoped for outcome? A new range of cars will sell 10,000 per year and lift the entire enterprise out of the manure? Is that even possible? If it is possible, it will need a CEO who is not only capable and credible, but who will place the interests of the company before his own. Does such a person exist these days?
I expect that the Geely offer was much as he described, an offer to take the company over at a value which reflects the debt and all the other toxic stuff lurking in the boardroom cocktail cabinet.
My issue with Andy Palmer was that he personally extracted £64m via the IPO from a company which was even then loaded with debt and gasping for capital. I had hoped when Stroll got involved that he was going to put the company on a sensible financial footing. If for example the AM name is sufficient to attract massive sponsorship income into a racing team, would it not have reflected more credit on Stroll if he had channelled some of that back into AML? Also, if they cannot deliver a hypercar over a period of six years, instead falling out with all of the demonstrably capable partners with whom they started, Adrian Newey, Red Bull, Nebula specifically (again, thanks SSO for that very informative piece) how can they possibly deliver a new range of cars of the standard which they are claiming? So it would appear that he is, like Palmer, simply taking as much for himself as he can, before the music stops.
More than anything else, what I find astonishing is the extent to which analysts and city investors appear to have bought into (or put their clients' money into) the hype surrounding a company which most on here were saying before the IPO, was beyond risky. They may ask penetrating questions, but what are they doing there at all? Anyone with any understanding knew that this company, set up as it was, was not a credible investment. Is this type of flagrant destruction of capital normal in the stock markets?
What is the hoped for outcome? A new range of cars will sell 10,000 per year and lift the entire enterprise out of the manure? Is that even possible? If it is possible, it will need a CEO who is not only capable and credible, but who will place the interests of the company before his own. Does such a person exist these days?
GreasyHands said:
...
One thing nobody brought up on the conference call was the elephant in the room of a CEO succession plan. What’s the half life of a CEO under Stroll? 9-12 months? Not to mention this one had two feet out the door before they propped him up for a showpiece. Wasn’t there a movie about this?
...
Weekend at Larry's?One thing nobody brought up on the conference call was the elephant in the room of a CEO succession plan. What’s the half life of a CEO under Stroll? 9-12 months? Not to mention this one had two feet out the door before they propped him up for a showpiece. Wasn’t there a movie about this?
...
Forget how many years ago I said this but small companies should be quicker
It's always taken ages for any of the cars to get built, if they do - always 3 or 4 years late taken decisions (DBX) and even slower producing if at all (Rapide E). Need a streamlined management and speed things up
All I can see is everyone frightened of doing everything and now everything being held up or changed by Stroll.
The old deposits thing will be killed by inflation as will completing all the cars without massive losses (even more?).
Not sure what's going to survive longer - Lance Strolls F1 career or AML - maybe their linked
It's always taken ages for any of the cars to get built, if they do - always 3 or 4 years late taken decisions (DBX) and even slower producing if at all (Rapide E). Need a streamlined management and speed things up
All I can see is everyone frightened of doing everything and now everything being held up or changed by Stroll.
The old deposits thing will be killed by inflation as will completing all the cars without massive losses (even more?).
Not sure what's going to survive longer - Lance Strolls F1 career or AML - maybe their linked
RL17 said:
Forget how many years ago I said this but small companies should be quicker
It's always taken ages for any of the cars to get built, if they do - always 3 or 4 years late taken decisions (DBX) and even slower producing if at all (Rapide E). Need a streamlined management and speed things up
One might say - all the disadvantages of a small company, and all the disadvantages of a large one.It's always taken ages for any of the cars to get built, if they do - always 3 or 4 years late taken decisions (DBX) and even slower producing if at all (Rapide E). Need a streamlined management and speed things up
cardigankid said:
More than anything else, what I find astonishing is the extent to which analysts and city investors appear to have bought into (or put their clients' money into) the hype surrounding a company which most on here were saying before the IPO, was beyond risky. They may ask penetrating questions, but what are they doing there at all? Anyone with any understanding knew that this company, set up as it was, was not a credible investment. Is this type of flagrant destruction of capital normal in the stock markets?
An interesting question and after years of having an involvement, I have reached some conclusions.
An important part of City income are fees, for transactions and advice/services.
Whether an investor turns out to be successful following a share purchase, is not a money earner for the City, but if an investor does make a share purchase or sale, then that is an earner for the City.
Seem to remember that the total costs to AML for their IPO was somewhere around £125 million. If your City job depended on it, would you tell them not to proceed with the IPO idea, especially after the CEO had toured City institutions (including your rivals) and described all the exciting opportunities ahead ?
There is an image that City professionals are experts, so they must know what they are doing and will give me advice which is in my best interest. Really? There are plenty of examples where illogical actions have been taken, often involving herd mentality, where no one wants to stand out as not conforming. Sometimes mass panic selling (clients money) during stock market crashes is one example.
There is an interesting news story at present, which illustrates client advice can be upended by simple logic.
The myth that when share prices suffer during an economic crisis, bonds and gilts will offer protection.
There is some truth in that, but with one glaring exception, which is occurring now.
https://www.cityam.com/staggering-298bn-wiped-off-...
Perhaps rather boring, but important to how the pricing of bonds and gilts works. Over time, prices generally move in an inverse direction to interest rates. If a gilt cost £100 and pays interest of say 2%, you would not want to still pay £100 if general interest rates then moved up to 4%. A 2% return ceases to be good value, so you would expect to pay less than £100. Interest rates move up, gilt prices move down. Simple logic, but perhaps forgotten during 15 years of exceptionally and historically low interest rates
The watchwords seem to be, buyer beware and keep a look out for ulterior motives.
Interestingly there have been some examples where clients who bought investment funds, would have done better by buying shares in the actual fund provider company. That sums it up.
Jon39 said:
There is an image that City professionals are experts, so they must know what they are doing and will give me advice which is in my best interest.
To be fair to the institutions who managed and underwrote the AML float, they did exactly what AML and the existing shareholders asked them to do. While I have a huge deal of sympathy for the general employees of AM who were encouraged to invest their own money, no new shareholder was forced to invest.
Jon39 said:
There is an interesting news story at present, which illustrates client advice can be upended by simple logic.
The myth that when share prices suffer during an economic crisis, bonds and gilts will offer protection.
There is some truth in that, but with one glaring exception, which is occurring now.
The last 20 years have seen an unprecedented period of low interest rates and low inflation. Negative short term interest rates were first introduced by the Swiss in 2014 and other major Central banks followed suit. In such an environment the price of government bonds went sky high. Unless one believed that interest rates would continue the path towards zero/negative rates the bond markets were too high. In fact government bond prices peaked two years ago and have been declining ever since. The 60/40 ratio of equities/bonds is not recommended by my fund manager, it is more like 80/20 or 95/5 depending on a balanced or growth orientation. I believe this is one reason why the stock markets have been so resilient in the face of pandemic and inflation. Bonds are not defensive investments at the moment.The myth that when share prices suffer during an economic crisis, bonds and gilts will offer protection.
There is some truth in that, but with one glaring exception, which is occurring now.
What worries me is that I expect that over three quarters of people working in the investment business today have never experienced inflation in their entire working lives.
pschlute said:
To be fair to the institutions who managed and underwrote the AML float, they did exactly what AML and the existing shareholders asked them to do. While I have a huge deal of sympathy for the general employees of AM who were encouraged to invest their own money, no new shareholder was forced to invest.
True, but it makes me wonder, also how many of the shares were truly 'bought', that is, were not acquired at a hefty discount so they could easily be offloaded later at a profit, or acquired in return for a fee or underwriting payment, which comes to the same thing. Given the very understandable pressures which Jon described, would it be unfair to ask, rhetorically, how many shares were stuffed, as a convenient means of disposal, into a variety of funds controlled by managers who were party to this IPO? No new shareholder was forced to invest, certainly, but in the kind of environment described, they may have been given an entirely false impression of the share's market value. More fool them, of course, but still a little fraudulent. pschlute said:
The last 20 years have seen an unprecedented period of low interest rates and low inflation.
I would suggest that is neither a bad nor an unnatural thing, unless one is making a living by arbitrage on fluctuating values. (Of course in this case it was funded by cheap manufacturing and encouraged excessive public sector spending. But those are evils which need to be tackled separately.) It is a good environment for those looking to make a living in the 'real world' as opposed to the financial markets. Is that a naive position?pschlute said:
What worries me is that I expect that over three quarters of people working in the investment business today have never experienced inflation in their entire working lives.
Inflation was a great thing for share values, as I recall, it's the common man who suffers. After the old 'canny' generation of savers who got cleaned out in the 1960's, it created the great UK residential market and the culture of buying on credit. pschlute said:
Other points ...
and
What worries me is that I expect that over three quarters of people working in the investment business today have never experienced inflation in their entire working lives.
and
What worries me is that I expect that over three quarters of people working in the investment business today have never experienced inflation in their entire working lives.
Thank you for your comments. We share exactly the same opinions, probably because as you indicate, having past experience certainly helps.
( A bit off topic, but with OP privilege, discussion here might now be fairly subdued, until the new product reveals at Pebble Beach. )
I feel sorry for savers who leave everything to fee earning 'experts', because the most they can expect is probably average, but learning the subject is not of interest to many people.
I run a long-term equity portfolio, but did profit once from gilts many years ago, when it was very clear that inflation and therefore interest rates, were about to reduce considerably. The gilt prices increased by 40% over an eighteen month period, but since then, I have not spotted similar circumstances, so have never held gilts or bonds since. This year to date has been surprisingly good for me. It has been due entirely to good luck though, that the oils, banks and tobacco sectors have all moved strongly upwards during the same period. Timing of course, tends to be very unpredictable.
cardigankid said:
No new shareholder was forced to invest, certainly, but in the kind of environment described, they may have been given an entirely false impression of the share's market value. More fool them, of course, but still a little fraudulent.
I remember in the 1980s, IPO pricing tended to be fairly sensible in relation to the fundamental business prospects. There seemed to be a desire for a good start to market trading, with at least a modest price uplift. Not so many retail IPOs these days, but they do tend to involve hype and high valuations.
We were probably more aware of the AML hype, because we had been following the Company quite closely. Some probably believed AML were diversifying into USA property development! We only knew about the enormous increase in the number of new model announcements prior to the IPO, because we previously knew what was usual. Again probably easy to be excited by lots of new products to boost revenue, when not knowing what we knew.
pschlute said:
cardigankid said:
The last 20 years have seen an unprecedented period of low interest rates and low inflation.
I would suggest that is neither a bad nor an unnatural thing, unless one is making a living by arbitrage on fluctuating values. (Of course in this case it was funded by cheap manufacturing and encouraged excessive public sector spending. But those are evils which need to be tackled separately.) It is a good environment for those looking to make a living in the 'real world' as opposed to the financial markets. Is that a naive position?I think pschlute was just referring to the gilt and bond markets. It has now caught out fund managers, many whom have no practical experience of previous economic circumstances.
Very cheap debt does of course encourage borrowing, which may be OK, but also encourages excessive borrowing, which can lead to disaster when more normal interest rate levels return.
Edited by Jon39 on Tuesday 9th August 13:22
Inflation in the UK is 13%, and interest rates are 1.75%.
That's a negative interest rate of 11.25%.
It should be at a bare minumum of 3% now, watch all the wage inceases and power price increases feed inflation.
High debt companies will not be rewarded for their terrrible decisions, quite rightly.
Worse of all, the Fed/BoE/ECB can't come to the rescue this time.
That's a negative interest rate of 11.25%.
It should be at a bare minumum of 3% now, watch all the wage inceases and power price increases feed inflation.
High debt companies will not be rewarded for their terrrible decisions, quite rightly.
Worse of all, the Fed/BoE/ECB can't come to the rescue this time.
GreasyHands said:
Essentially it’s still “ We are going to build significantly better cars and charge significantly more for them”. I wouldn’t be surprised if they relegate the low end Vantage to token status. Sort of like the Cayman/Boxster is over at Porsche. Just an entry level aspiration drug to try to get people hooked on the more expensive, more profitable product. Certainly doesn’t look like it’s going to be the volume leader. It’s a drag on every metric.
Powered by an off the shelf Mercedes engine found in G wagons and other SUV’s. Ya, it’s going to work out well.Edited by GreasyHands on Monday 8th August 05:31
Hmm which to purchase, Lamborghini or Aston with 4.0 AMG crap sounding engine.
Edited by AstonV on Tuesday 9th August 17:11
GreasyHands said:
Lambo has sold the most cars it ever has the first half of this year. They are running about 2 to 1 vs Aston and did even better than that for the second quarter. Not to mention a substantially higher ASP. I’m guessing the only lesson Aston learned from this is to not sell cheap cars.
Wasn't that an Andy Palmer-ism. Raise the price of your cars they will come! Edited by GreasyHands on Monday 8th August 05:31
How about making the f*****g cars people want?
It’s funny, lambo normally turns me cold, but in the flesh their suv is more appealing than the dbx to me.
MY interpretation on all the SUV brands are:-
Lambo - look at me - fast, young
Bentley - made it, living in comfort
Rolls, same as above but more comfort
Audi/BMW/RR etc all In the same bucket of so familiar on the roads it must be the PCP monthly payments that are favourable.
Where does this leave AM? Its not the most comfortable so doesn't appeal to the bentley/rolls bunch, it doesn’t as a brand appeal to the flash generation who would have a lambo, It cant tow 3.5 tons so is not what you’d choose to use for towing. Who is the target market I ask myself.
charlotte (she/her) [ffs] has gone and got married to her long term partner and they have managed to get pregnant through a donor and they have therefore gone for a Subaru ……
MY interpretation on all the SUV brands are:-
Lambo - look at me - fast, young
Bentley - made it, living in comfort
Rolls, same as above but more comfort
Audi/BMW/RR etc all In the same bucket of so familiar on the roads it must be the PCP monthly payments that are favourable.
Where does this leave AM? Its not the most comfortable so doesn't appeal to the bentley/rolls bunch, it doesn’t as a brand appeal to the flash generation who would have a lambo, It cant tow 3.5 tons so is not what you’d choose to use for towing. Who is the target market I ask myself.
charlotte (she/her) [ffs] has gone and got married to her long term partner and they have managed to get pregnant through a donor and they have therefore gone for a Subaru ……
GreasyHands said:
Lambo has sold the most cars it ever has the first half of this year. They are running about 2 to 1 vs Aston and did even better than that for the second quarter. Not to mention a substantially higher ASP. I’m guessing the only lesson Aston learned from this is to not sell cheap cars.
The decision appears to be quite a conundrum.
Aston Martin introduces a new lower priced model, the DB7. = All time record sales.
Then Aston Martin introduces another new lower priced model, the 2005 Vantage. = Another all time sales record is set.
There must be quite a fine balance, between offering an expensive product (with presumably a modest profit margin) that many buyers can afford, or offering a much more expensive product (with a higher profit margin) that fewer buyers can afford.
The first basic though, is to offer a product that is very desirable, to as many potential buyers as possible.
All very easy to say, but after that, everything becomes difficult.
EDIT - After typing, I have now read your post, oilit.
How silly of me. I had forgotten that the world now is all about SUVs.
Edited by Jon39 on Tuesday 9th August 19:30
Jon, you need your lower cost models to be in demand…as well as your higher end models. Affordability is not the issue - its being the last kid in the line at the school football team choosing process ….
All the manufacturers i mentioned above dont seem to have a problem getting cash out of peoples pockets.
All the manufacturers i mentioned above dont seem to have a problem getting cash out of peoples pockets.
Gassing Station | Aston Martin | Top of Page | What's New | My Stuff