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Orbital 3Q20 results plus RCEP trade thoughts -3

09:05 16-Nov-20


Orbital Energy Group has released its third quarter results:
The loss per share was 11 cents if you count discontinued operations, but the company has $4.1M in unrestricted cash versus a $9.9M operating loss, indicating that it will have to raise capital soon.  OEG is down 16% pre-market, to 74 cents.  The backlog is up to $52M, but I don't see an investment case here pre-dilution and while the pandemic lasts.  The conference call is beginning, but I am unlikely to write further.

As mentioned, Oribital may eventually benefit from a new administration in Washington, but the legacy of populist western politicians was cemented yesterday, when the world's largest trade bloc was formed.  I'm including Modi in the populist category; RCEP covers almost 30% of the world's population and GDP.  If India stops holding out, those figures will jump to a third, and almost half, respectively.  India does well to follow Europe in environmental regulation, to the unquantified benefit of Westport.  However, I do not think it can continue to be even worse in alienating Western tech businesses, as its economics are very different.  If it does, India risks sinking further into eventual irrelevance.  Anyone still holding EBIX should pay attention to this as well as immigration policy following the conclusion of the Senate runoffs in Georgia.

In any case, I think RCEP signals that it's too late to mend fences with China and avert a fundamentally divided world.  My conversations with contacts around the world indicates that regionalism remains a major political force, and that businesses are prepared for a no deal Brexit as a result.  Either way, if the West finishes dithering and acknowledges that the pandemic has catalyzed permanent changes to its economies, there is still plenty of time to reverse the brain drain and improve matters.  That would be of further benefit to BGCP, which I think is also rising to the reset to more granular options strikes.  On the other hand, LUMN reverting to monthly options is probably a temporary reason for the stock languishing.  Note that this has nothing to do with management and is determined purely by the exchanges.  I expect this to correct by year end, well before M&A gives a truer approximation of value.