Author Topic: RR - Rolls-Royce  (Read 69914 times)

KCLarkin

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Re: RR - Rolls-Royce
« Reply #20 on: July 31, 2015, 09:23:04 AM »
I am in with a 3% position. This is one company desperately in need of Ubben.


KCLarkin

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Re: RR - Rolls-Royce
« Reply #21 on: July 31, 2015, 11:39:23 AM »

sampr01

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Re: RR - Rolls-Royce
« Reply #22 on: August 03, 2015, 11:11:26 PM »
What is the difference between RYCEF and RYCEY?

rogermunibond

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Re: RR - Rolls-Royce
« Reply #23 on: August 04, 2015, 12:45:10 PM »
RYCEY is the ADR; and RYCEF is the OTC traded London shares

sampr01

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Re: RR - Rolls-Royce
« Reply #24 on: August 04, 2015, 01:19:54 PM »
Why ADR is 5 times expensive than OTC traded shares. Thanks

Schwab711

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Re: RR - Rolls-Royce
« Reply #25 on: August 04, 2015, 01:30:51 PM »
http://www.nasdaqtrader.com/content/technicalsupport/specifications/dataproducts/nasdaqfifthcharactersuffixlist.pdf

The 5th symbol in a ticker always has a defined meaning. The F mean it's priced in a foreign currency (not USD) and you will have some currency risk.

rb

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Re: RR - Rolls-Royce
« Reply #26 on: August 04, 2015, 01:48:26 PM »
Interesting writeup on seeking alpha
http://seekingalpha.com/article/3311125-rolls-royce-recent-dip-is-an-opportunity-long-term-outlook-remains-intact

It is really hard to understand the profitability here.
http://www.rolls-royce.com/news/press-releases/yr-2015/pr-29-07-2015-rr-signs-580m-totalcare-engine-support-agreement-with-vietname-airlines.aspx

340M Pounds for 14 engines. That's 24 M per engine. Assuming a 20% profit margin, it will be 4.8 M per engine profit. How long is this total care contract? 10 years? 20 years? That can change the valuation drastically. Does anyone know?

Assuming it is 10 years contract. Each year it will make 0.48 Million pounds per engine. There are 1500 engines sold. So that's 740 Million pounds per year profit. Giving it a 10 PE, and we get 7.4 Bn valuation. Today's market cap is 13 bn.

Is my assumption reasonable? Of course they have other lines of businesses, but not that profitable. It puzzle me as to why the author claims it is way undervalued.

I asked the article's author about totalcare revenue recognition today, he wrote:
"The company does not provide much detail on how revenue is recognized from TotalCare agreements. Given that, it is hard to give you an answer."

On the subject of pricing, he goes more into it in his previous article:
http://seekingalpha.com/article/3266845-rolls-royce-the-goose-has-laid-the-golden-engine

If it is hard to give the answer, then why can he comfortably claim RR is undervalued? Isn't totalCare contracts the major reason to invest in this annuity like business?

Typical total care contracts are about 15 years.

The life of an engine is 20-30 years. During that time the aftermarket revenue is about 3 times the price of the engine with a fat margin.

sampr01

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Re: RR - Rolls-Royce
« Reply #27 on: August 04, 2015, 01:55:33 PM »
Please can you help me out with why there is huge price difference between two

RYCEY: $64
RYCEF:$12.70

Which one is beneficial to hold. Thanks

cubsfan

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Re: RR - Rolls-Royce
« Reply #28 on: August 04, 2015, 02:00:37 PM »
Please can you help me out with why there is huge price difference between two

RYCEY: $64
RYCEF:$12.70

Which one is beneficial to hold. Thanks

The ADR RYCEY gives you 5 shares of RYCEF.
RYCEY is fairly liquid as well - I own RYCEY.

rb

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Re: RR - Rolls-Royce
« Reply #29 on: August 04, 2015, 02:02:05 PM »
Why don't you just buy RR in London?