ValuePadawan

https://imgur.com/gallery/8QmIp Dear mother of God. They believe its raining gold and they didn't just bring out the bathtub but all the pots and pans and the kitchen sink. Does anyone have any inkling how they will raise the capital for this order? They surely are going to have issues generating the cash for these ships internally right? What do you guys/gals think, tap the equity markets or can they get quite creative with their portfolio financing program?

I would be very surprised if Bing renegotiated those deals. If he did I'm sure he would take more than his pound of flesh and would be positive for the return on each vessel.

Graftech sold the large electrodes for electric arc furnaces to make steel. They used to sell them on the spot market before 2015 or so. There was a bust in the electrode price and a bunch of electrode producing capacity went offline permanently, then some time later electrode prices rocketed. While the prices were sky high, Brookfield bought Graftech out of BK and instead of selling on the spot market signed a lot of 3-5 year take or pay contracts at very good prices and because of the contracts they were able to finance the purchase of Graftech using predominantly debt. I'm assuming the similarity he sees is that ATCO is signing a lot of long term contracts at high prices and therefore due to the visibility of the cash flows they can more safely finance these assets or even use a bit more debt than would be prudent for a ship chartering in the spot market. Do I have that all correct walkie518?

CDLX in size, now my largest position,

https://www.newswire.ca/news-releases/atlas-corp-announces-exchange-offer-for-seaspan-s-7-125-notes-due-2027-889848141.html Crafting the capital structure a bit more.

https://semiwiki.com/semiconductor-services/297904-spie-2021-applied-materials-dram-scaling/ Good overview of the possibilities and problems with scaling DRAM chips in the next few years.

Lol RIP proves me right for having some hubris https://www.telecomlead.com/telecom-chips/korea-approves-sk-hynixs-106-bn-semiconductor-project-99388 Seems like an awful lot of supply coming online. Will be interesting to hear what Micron says about this on their earnings call.

Yes I don't dispute that. But will MU earn more or less than what it currently earns? IF earnings stay constant at $6 mid-cycle, then I am happy to sell at 15x P/E. Only reason to hold on (for me) would be growth in earnings, which I have no confidence in. of course P/E could go to 25 and you could do very well in the stock, or underlying EPS might be higher. I don't have answers, but happy to share my confusion below about incremental returns on capital. For growing EPS you need one of the following 1. Book value is constant and ROE keeps rising. unlikely. 2. Book grows at 15%, so depreciation grows at 15%, for constant ROE, EBITDA should grow at 15%. Now I don't know what 15% book means in terms of bit growth, but if I assume 15% bit growth, then you get 15% EBITDA growth by keeping ASP constant a constant margin (unlikely that ASPs don't drop). Or you could get 15% EBITDA growth by constantly increasing EBITDA Margin (also unlikely). Maybe I just don't understand the industry in enough detail. But to believe this is a compounder with bits growing at 15%, you need to know how much Capex is required above depreciation and how much of cost decreases need to be passed on to customers. I don't think this is purely a boardroom decision. Yes the industry is better than before, but I am not sure it is that much better, since the oligopoly only lasts if the players maintain their lead on nodes. A lot of MU's increased earnings have come from catching up with Samsung, so it can be done. As long as the only companies making DRAM are Samsung, SK Hynix and Micron I have no doubt they will in time behave rationally. This has become a Cournot Oligopoly (https://en.wikipedia.org/wiki/Cournot_competition) They will act rationally and ROIC will continue to be high. If CXMT is able to produce cutting edge DRAM all bets are off but if the ecosystem of companies stays at it's current equilibrium they are the toll gates on the information superhighway and they can use that market power to increase returns through-cycle. I fully expect them to be able to increase ASPs over the next decade as long as they keep up on node development with SK and Samsung. Node development and CXMT progress are what I'm staying laser focused on as I see those as the most important building blocks holding up my thesis. Data is becoming ever more important in the global economy and with the DRAM company positions stable, their leverage will increase and EPS will follow that. Software is eating the world and chips are it's teeth.

Looks like you're agreeing that probability of them getting their hands on an EUV tool is not zero. What do you think the probability range for that is? ASML is currently making somewhere between 30-40 EUV tools per year and each one has a price tag of around $120m USD it is not like the Chinese can just buy one with a shell company and smuggle it into China. Still lets assume they did fool ASML and got their hands on an EUV tool. The tool is shipped from Veldhoven, Netherlands in pieces then rebuilt onsite by ASML experts and this isn't exactly Lego. It takes 6 cargo planes to ship the whole thing. The building that houses the EUV tool has to be specially built with a special foundation because the machine is so heavy. Then when it arrives ASML experts have to put together and calibrate the EUV tool. How good does their calibration have to be? Well the room that the tool is in has to have constant humidity and stay at 21C so that the tolerances in some pieces of the machine don't become to tight or too loose due to thermal expansion or contraction of the metal. Imagine the Chinese are able to do all that on their own. Then they have to correctly operate the EUV tool and achieve high yields on their wafers. Intel which has been working with ASML for decades to create the EUV technology had a lot of issues trying to produce their 7nm chips. If Intel with the capital, talent and pedigree had issues with making the EUV process work I can't imagine the Chinese could anytime soon and that is with ASML's collaboration. Fine let's assume the Chinese get it all working and then the EUV needs a replacement part or the laser has an issue. With the restrictions on ASML set by the US it's not like they can ship that part and help the Chinese troubleshoot. As long as the US keeps sanctions on Chinese chip companies for cutting edge tech and processes I give the chance CXMT gets and can use an EUV tool maybe 1%. Very low. I would say effectively 0 but I'm not creative enough to think of what can happen in the future. If the US allows ASML to sell EUV's to the middle kingdom all bets are off though.

It is gonna be awful tough for the Chinese DRAM national champion Changxin Memory Technologies (CXMT) to catch up to where Micron and SK Hynix are going without being able to get their hands on an EUV tool. Now hopefully Micron doesn't pull an intel and mess up EUV adoption and end up behind the Korean memory makers. On cost improvements the transition to the 1 alpha node alone will cause a 40% decrease in cost due to producing more chips per wafer as chip size decreases. Imagine China was 1 node behind 1 alpha (which they are not) that means Micron could sell a 1 alpha chip 20% cheaper than a CXMT chip's breakeven cost and still make money. It's like a race where every step you fall behind the frontrunner you gain ten pounds. With DRAM, continued scaling is only going to get more and more difficult and without earning any profit Changxin could very well become a money pit. As scaling and shrinkage gets more difficult and demand continues to increase the only way to keep supply up with demand is by building more fabs which means increasing supply is now a boardroom decision instead of a survival necessity as it has in the past. If I've made any mistakes please show me where my blindspots are y'all.

https://www.nytimes.com/2021/03/06/business/global-shipping.html "Peter Baum’s company in New York, Baum-Essex, uses factories in China and Southeast Asia to make umbrellas for Costco, cotton bags for Walmart and ceramics for Bed Bath & Beyond. Six months ago, he was paying about $2,500 to ship a 40-foot container to California. “We just paid $67,000,” he said. “This is the highest freight rate that I have seen in 45 years in the business.” In early September, he waited 90 days to secure space on a ship for a container of wicker chairs and tables."

Following Irish banks - have a significant position in BOI which has done very well since the March/April lows.........PT of 6 euro there in base case......picked up share @ 1.50 euro Your correct on your analysis as I've looked at AIB too.......couple of thoughts - - mortgage book of Irish banks have extremely low LTV's....written very prudently over the past 10 years since GFC with loan to income rules from central bank of c.x3.5 times........default risk and COVID uptick in NPL's likely to low........BOI in better shape with historical NPL - digitization project at BOI is a number of years in progress........with significant costs associated with it fading into rear view mirror........with flow through cost savings beginning to show up.........BOI likely working towards AIB's cost to income ratio soon - celtic tiger / property crash ECB credit models which require significant equity capital to be held against mortgage loans at AIB/BOI should begin to roll off soon (if no significant NPL from COVID) enhancing profitability / ROE.....and another opportunity to return capital to shareholders - ulster bank exit from market returns duopoly to AIB/BOI - Irish government is attempting to significantly increase housing supply in coming years to c34,000 p/a units...introducing lots of help to buy/shared equity schemes..........potential big increase in mortgage market lending available (now minus 20% market share owner Ulster Bank)........pre-COVID construction only managed to deliver c.22,000 - AIB & BOI + smaller players have entered into JV to develop instant payment app.......attempting to cut off FinTech's like venmo, revolut, N26 etc. - finally if interest rates surprise to upside there's untold optionality here AIB vs. BOI - prefer BOI given lack of government majority ownership........outside possibility of Sinn Fein being in power at some point scares me in 75% AIB ownership scenario......lots of cost optimization already done at AIB........BOI has lots more cost savings to deliver to markets.......BOI has UK market diversification which could surprise to the upside (was a drag during Brexit debacle)........BOI CEO is an ambitious outsider (former HSBC exec & UK born) looking to build a reputation for her next role and therefore likely as a result to make more robust decisions than AIB CEO who is an AIB lifer and a local. Government at some point is going to try and unload shares........that overhang will keep I think AIB depressed vs. BOI. Thanks for taking the time to give me more detail on BOI I appreciate it. Your concern that the Government might sell their stake and depress prices doesn't worry me as when that happens I expect AIB to be quite profitable and AIB's CFO just the other day stated that "if we get into '22 and let's say, equity valuations are where they are currently, I'd be mad not to look at a buyback as opposed to a cash dividend." So I'd be happy in that eventuality actually.

Not sure anyone is still following Irish banks but although 2020 was a dog's breakfast AIB came into the crisis fat with capital and the ECL charge of 1.4B euros just leaned out the capital ratios to a CETi ratio of 15.6% from 17.3%, nothing even nearly worrisome. Also they reaffirmed 8% ROTE target for 2023. Assuming even if their loan book shrinks and their equity decreases from 14B to 13B by then (unlikely with the Ulster acquisition ensuring inorganic growth) an 8% ROE means pre-tax net income of around 1 billion and net income of 900 million or so. The market cap is 5B so 900m in earnings if continued would be an 18% yield on the current price. Am I making mistakes in my analysis more knowledgable forum members can see? Please feel free to tear apart my thesis. Cheers.

If artists do that and own their content they will still have to negotiate with streaming platforms and it will be like ants trying to negotiate with elephants. Right now they in effect collectively bargain through 3 artist unions that we call labels: UMG, WMG and Sony. Sure the labels take a large percentage of the economic pie but if artists break up the labels they will be poorer for it as their leverage will be atomized and the streaming platforms will gobble them up one by one. It's not in artists interests to break up the labels.

Hopefully it is raining gold for them because they are bringing out the bathtub not the teaspoon.Wow I like the initiative but as others have mentioned I'm curious to see what the return parameters are like.