I have read various threads over the last few weeks. A lot of discussion and view is that BBI needs time to make a few major divestments, pay down debt and a smaller business will recover and the SP take off. In my view this is economics that assumes a logical market which is not where the world is at.
Pretty much all listed infrastructure businesses have had their share price halve or much more - HDF / VIR / EPX / DUE / CIF / SKI / SPN - let alone the B&B & Macquarie stables. Most all have quality assets in mostly regulated environments with predictable cashflows etc etc . You have read it all many times.
Problem is they all need debt rollovers at various times over next fewe years which was never a problem 18 months ago. Now most of the above list need buyers and all assume this will happen at or close to purchase price.
So buyers have an absolute smorgasboard of "quality assets" and a worldwide canvass to choose from - and here's their position - the longer they wait the lower the price as debt rollover dates of the sellers get closer. For the next conceivable year or two - this is an absolute certainty. They need do nothing but sit on their hands whilst quality assets get offered up at greater and greater discounts and P/Es. Whilst I not stating that looking at historical P/es paid and future cashflows isn't normally relevant, it just doesn't fit the world situation we are in.
So holders of the listed units - in my opinion, asset sales or not, the road ahead for a sustained turnaround is very moot. Assets will be sold for way less than book value and way less than they are worth. But those with money have the listed infrastructure funds by the proverbials. Get used to it.
BBI (as with most shares than go sub 10c and 10% of par) is now a plaything of the day traders for current volume.
I do not personally see how it will recover as asset sales will be at a deep discount and all the proceeds will pay the banks. With likely dilution from conversions hanging around, either make your money from daytrading a bit here and there or move on. Long term 10 bagger unlikely.
But just a further opinion of one person.
Good luck
BBI Price at posting:
3.4¢ Sentiment: Sell Disclosure: Not Held
