I think this announcement speaks volumes about the 2 different business models. One that is capital hungry and one that is capital light.
If CHL had $20m in THL shares - would they offload them? Wouldn't need to. But when you look at THLs numbers, I dont blame them for liquidating.
- THL as of 31 Dec 23 had approx 500 vehicles (net) that they were building to increase fleet. - Their capex to grow their fleet for the 24FY is expected to be $170m. - They already increased their net debt position since 30 June by $118m. Ouch.
Very briefly on their Cashflow and Balance Sheet. - At 31 Dec 23 they had $50m cash on hand (versus $77m at 30 June) - Their operating cashflow was negative $79m in H1. - They do have undrawn debt facilities of $240m
I dont blame THL for wanting to boost working capital. They cant wait for CHL to deliver returns when they have a pressing need now to invest in their own fleet (and obtain a return now).
Things may have gotten a little too skinny if they didnt.
It will be interesting however to see what the 'Change in Substantial Holdings' announcements will show over the coming weeks from CHL.
CHL Price at posting:
$1.95 Sentiment: Hold Disclosure: Held
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