announcement, page-6

Interesting way to handle a media release like that.

Never subscribe to panic selling or anything less than fundamentals in the long run.

People should note before reading my post:
a. I do have a position in BBP (just got in today at bargain prices in my opinion)
b. I subscribe to a LT Buy

I would however like to know what people think about the tank in the stock price and why this is to be expected.

I note 3 important reasons behind the drop in prices (please feel free to add more as I wish to learn of the expectations of more than 1 investor):
a. Management expectations
- I do not believe that BNB's (inclusive of satellite) management have been completely honest in market communication
b. Debt problems (higher repayments due to possible change in credit ratings - probably worth noting that the biggest risk in this model comes from refinancing; the current structure is considerably in safe levels but the biggest risk is the revision of credit ratings and increase in the previous gearing levels (loosely stated))
c. Market expectations of profit forecasts
- This stock is predominantly a favourite due to its past dividend release from accounting profits. The possible "fire-sale" of many assets are ostensibly causing investors to believe the good assets are being sold at lower levels and that this would impact profit forecasts going forward i.e. dividends will be impacted.
- All these project finance type assets are based fundamentally on the stability of cash flows to allow the servicing of debt or the importance of possible debt service reserve accounts to handle debt for several months factoring instability in cash flows.

How about the upside in the stock?
Well, I personally think that the market has factored in a much bigger revision to the Alinta assets.
If these values can be trusted, $410 million impairment is lower than expected (by the broad market).

The gearing levels have been significantly adjusted with the sale of 3 assets.
Correct me if I am wrong but 2 were at a profit and 1 was at a loss.
I am not interested in commenting on the selection of the assets-for-sale (albeit I am a little disappointed) but I do think from a fundamental perspective, I am either dead wrong or many people out there need to handle market announcements slightly better.