am
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Post by am on Sept 22, 2015 9:17:43 GMT
Rated A+, up from C for their last two loans, but reducing turnover according to last annual results, and long term liabilities creeping up. Questions not being answered. Cost of servicing loan comparable to last year's profits.
They say they want to recruit new salestaff, so perhaps turnover is now on the up, but if they want me to lend they ought to tell me so - I'm not willing to lend solely on the basis of a risk rating from FC. (I suppose the bigger fool theory of investment might apply.)
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Post by Deleted on Sept 22, 2015 10:10:25 GMT
I'm slowly cashing out of FC at the moment, but just for fun I stopped by this one to see if it passed my ultra-cautious parameters.
Fail.
Electronic subcon sort of business (so only makes serious money on the upturn), always ends up with excesss stock and no-where to sell it on the down-turn. These types of businesses are affectively front ends between the big OEMs and large users. They are easy to set up and costly to close. The 7 year cycle washes out loads.
Borrowings close to twice profit but then look at the payment terms/results, if you don't pay you suppliers you have hidden borrowings, and if you don't pay your suppliers why should you pay your lenders?
I've run businesses like this and they are tough, driven by contacts but go look at the electronics disti market at the moment, PFarnell and RS both in trouble and the big OEMs are not a happy bunch. If we are slipping into a down-turn then avoid like the plague, if we are just bumbling along after the highs of 2014 then think what would be the assets you could sell off, old electronic assembly machines and old stock?
Still they have 100% and must be happy.
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TitoPuente
Member of DD Central
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Post by TitoPuente on Sept 22, 2015 10:43:39 GMT
It's 100% filled. That can hardly be considered struggling.
It is officially an A+ so any active investor that achieves any rate 8.3% or higher will in theory be able to offload after the first few payments, even before the first one.
The reason why it went from C to A+ is obscure and inconsistent, but that's FC.
On the positive side, it has a rather long history of repayments.
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arbster
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Post by arbster on Sept 22, 2015 11:12:12 GMT
It's 100% filled. That can hardly be considered struggling. It is officially an A+ so any active investor that achieves any rate 8.3% or higher will in theory be able to offload after the first few payments, even before the first one. The reason why it went from C to A+ is obscure and inconsistent, but that's FC. On the positive side, it has a rather long history of repayments. I know you said "in theory", but given that it's almost certainly going to close well above 8.3%, and the majority of the higher-priced parts are being bought by the usual suspects, it's likely that (if the borrower accepts the rate) the SM will be full of excess parts at 10%+ for a very long time.
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am
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Post by am on Sept 22, 2015 11:35:10 GMT
I was looking at the secondary market for property loans that I missed the first time round, and I noticed that similar loans are currently going (at hefty premia) for about 9.5%, including one just about 1 month old.
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