Capital Share Discussion Threads

[cascudi] 29/7/2013 15:20

looking the finance statement in terms of current asset and current liabilities
at lest the share price should be 24p imo so 40% more than the current share price
ROCE 15.3%
RONA 15.4%
quick ratio 2.5

[koolio] 05/7/2013 07:40

Not convinced about the Egypt situation being good for CEY or CAPD. I am not holding either company myself at the moment but I continue to watch. GLA.

[thorpematt] 05/7/2013 00:04

Capital Drilling Ltd (LON: CAPD)'s stock had its "buy" rating reiterated by investment analysts at Canaccord Genuity in a note issued to investors on Wednesday, Analyst Ratings Network reports. They currently have a GBX 35 ($0.53) target price on the stock. Canaccord Genuity's target price would suggest a potential upside of 94.44% from the stock's previous close.

Other equities research analysts have also recently issued reports about the stock. Analysts at Liberum Capital reiterated a "buy" rating on shares of Capital Drilling Ltd in a research note to investors on Wednesday. They now have a GBX 30 ($0.46) price target on the stock.

Shares of Capital Drilling Ltd (LON: CAPD) traded up 3.83% during mid-day trading on Wednesday, hitting GBX 18.30. Capital Drilling Ltd has a 52 week low of GBX 44.00 and a 52 week high of GBX 95.25. The stock's 50-day moving average is currently GBX 54.94. The company's market cap is £24.6 million.

[thorpematt] 04/7/2013 23:57

Gold miner Centamin saw shares jump by nearly a fifth on Thursday after the President of Egypt, where its flagship Sukari mine is located, was ousted by the military. Centamin has been involved in a legal dispute with Egypt's administrative court since the government came into power, regarding the validity of its Sukari licence.

Analysts at Investec said today that while the political chaos in the country is "unsettling", it may not be necessarily bad for Centamin which had only encountered tenure issues since Mohamed Mursi was elected. "Providing protests and disruptions do not result in fuel or explosives issues for the mine, CEY could continue as normal throughout this uncertainty," they said.


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I need some up to date calcs here but:-

EV is i think £37m

NAV I think is well above that - so I think a margin of safety exists here. In other words free money.

Clearly we would need to be carfeful in any fancy asumptions for future income but applying a non-growth figure and projecting a "guess" based on comparing back to an average historicly (5years) we would have to believe that significant positive cash generation is perfectly achievable once the cyclical lows are behind us.

In other words a future return on equity (magnified by some of that free money) could be quite lucrative.

BUT here's the thing: Given that no dividend is present, the cash produced by operations is of course re-invested in the business. I'm fine with that but what it has to do is to increase the book value with some tangible increase in assets.

Here are the figures for the last 5 years :-


Net Tangible Asset Value Per Share

p

18.60

13.94

28.59

37.10

42.62


Given that CAPD is trading at less than 20p / share,we again have quite a way to fall in order for that margin of safety to dissapear.

[technofiend] 04/7/2013 16:13

What is good or bad for CEY tends to be good for CAPD.

[gleach23] 04/7/2013 15:28

buys piling in here this afternoon so took the opportunity to top up

bounced strongly off prior resistance in past couple of days too

[hedgehog 100] 24/6/2013 21:29

Thanks Tjdeakin.

Good luck to both CAPD and SHFT.

Both look undervalued, and as quality, profitable companies with good assets are I believe being unfairly treated by the market.

The global economy is still growing, and sentiment in the markets can turn quickly.

With signs of capitulation, I would anticipate at least a good bounce for mining services companies over the summer.


P.S. For info. on the EuroChem claim situation, please see my SHFT AGM report:

Hedgehog 100 15 Jun'13 - 20:34 - 44 of 44

[tjdeakin] 24/6/2013 19:10

Thanks for you reasoned reply. You make some fair points and my apologies for mixing up the currencies. I was using advfn's figures for the debt which seem to contradict the rns that states a net cash position for the previous year - can you explain the discrepancy there?? Also there is an issue with EuroChem claiming 495m. Has that been resolved?

As to broker targets I tend to take them with a pinch of salt. For instance are the Capd f/cs assuming Centamin lose their licence at Sukari? I tend to think that's unlikely and even if that happened wouldn't the Egyptian govt be likely to employ Capd anyway?

Overall and with Shft's exposure to South Africa I prefer the risk profile here but with such turmoil in the world economy who knows? Lets just hope for the best of luck with both our investments!

[hedgehog 100] 24/6/2013 17:55

tjdeakin 23 Jun'13 - 16:23 - 573 of 573 0 0
"Perhaps Jonny from the Wren kitchens ad can help us.....
Jonny, which shares are better value... the SHFT shares with the 80m net debt and profits substantially lower at just 3m last year or the CAPD shares with the 23m net debt, a modern drilling fleet and profits only slightly lower at 18m..........??? :D"


Tjdeakin,

I didn't want to start an argument, and I agree that CAPD's quality assets should help to underpin its share price to some extent; they may also make it an attractive takeover target.

However: "Comment is free, but facts are sacred".

At its year end, SHFT's net debt was actually little more than a fortieth of the figure you have given:

29/04/2013 07:01 UKREG Shaft Sinkers Holdings Plc Final Results
"Net debt of GBP2.1 million"


You're also quoting SHFT's pre-tax profits in pounds and CAPD's in dollars.

CAPD's profits certainly held up much better than SHFT's last year, when SHFT was hit by an extraordinary combination of circumstances, but we're now midway through the current year, so it's the expected profits for 2013 and 2014 that are really now more important.

And the pre-tax profit forecasts (in pounds) are:
2013: CAPD £5.43m., SHFT £6.0M.
2014: CAPD £4.61M., SHFT £8.4M.

[tjdeakin] 23/6/2013 16:23

Perhaps Jonny from the Wren kitchens ad can help us.....

Jonny, which shares are better value... the SHFT shares with the 80m net debt and profits substantially lower at just 3m last year or the CAPD shares with the 23m net debt, a modern drilling fleet and profits only slightly lower at 18m..........??? :D

[hedgehog 100] 22/6/2013 21:53

TechnoFiend,

At present: CAPD 18.75p, cap. £25.24M.; SHFT 30.25p., cap. £14.37M.

CAPD: 134,592,800 in issue, so 10p equates to a market cap. of £13.46M.
SHFT: 47,500,000 shares in issue, so 10p equates to a market cap. of just £4.75M.


The current CAPD and SHFT forecasts from Digital Look:

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield
CAPD:
31-Dec-13 82.81 5.43 3.37p 5.6 n/a -50% n/a 0.0%
31-Dec-14 73.27 4.61 2.74p 6.8 n/a -19% n/a 0.0%
SHFT :
31-Dec-13 193.00 6.00 8.40p 3.6 0.0 +72% 2.80p 8.9%
31-Dec-14 187.00 8.40 11.80p 2.6 0.1 +40% 3.90p 12.4%

Note the opposite 2013-2014 trend in forecasts by the respective companies, the lack of CAPD dividends, and the fact that SHFT's forward P/E for next year is just 38% of CAPD's, despite the fact that SHFT's should be much higher than CAPD's.


Not all mining services companies are the same, and SHFT are safer CAPD. They perform very different types of work (the clue is in the names, i.e. Capital Drilling, Shaft Sinkers), and for the following reasons CAPD are far more exposed to a market downturn:

- CAPD are exposed to exploration.
- CAPD's contracts tend to be short-term.
- CAPD faces more competition from local competitors.
- Many mines do their own drilling.
- CAPD is far more exposed to gold, and we seem to be entering the early stages of a gold bear market.

In contrast, SHFT's prospectus says this:
"The long-term nature of the Group's projects provides considerable visibility over the Group's future revenues and a degree of resilience to short-term movements in commodity prices."

This difference was made clear by their respective IMS's on the same day just over a month ago. CAPD issued a profit warning, whereas SHFT gave a positive trading update. See the following extract from SHFT's IMS:

17/05/2013 07:00 UKREG Shaft Sinkers Holdings Plc Interim Management Statement
"Based on current assumptions, results from trading for the 2013 financial year are expected to be in line with market expectations and the Board remains confident in the Group's prospects.This year's results should benefit from the higher margin Hindustan Zinc Limited and Kibali Goldmine contracts."



With regard to potential operational difficulties with SHFT's projects, this extract from SHFT's prospectus is helpful:

"4.3 Contracting philosophy
4.3.1 Background
The tendering process for contracts varies between clients but will normally involve at least a two-stage process with binding tenders and contracts awarded on the basis of the second tender. A typical shaft sinking contract specifies the depth and diameter of the shaft, the surface infrastructure required, the expected duration of the project, facilities and services provided as well as shaft infrastructure and funding arrangements. The Group's shaft sinking contracts are typically for the full duration of the project.
The nature of the Group's work is inherently unpredictable, depending on ground conditions and other factors beyond the control either of the Group or the client. Where the Group is not confident of such factors, it seeks to ensure that its contracts contain escalation clauses as well as adjustments for unforeseen or abnormal ground conditions or features so as to pass on any unexpected costs to the client. In addition, both sides typically recognise their mutual inter-dependence and the likelihood that discussions may be required at some stage during a project to resolve any issues which arise."

[technofiend] 13/6/2013 08:10

CEY's court case is June 20th I believe.

CAPD and SHFT are both dirt cheap right now.

[technofiend] 18/5/2013 20:03

I've got a feeling Centamin-related bad news is going to send this share to sub 10p.

In which case I shall be filling my boots.

[pugugly] 18/5/2013 17:26

Major Clanger:> Thanks - Both Liberum Capital Limited and Canaccord House Brokers - So possibly "rose tinted glasses"

[major clanger] 17/5/2013 21:04

TP cuts here:

[affc21] 17/5/2013 19:47

From my notes (from late last year) I have 20 rigs at Centamin and 3 rigs at Anglogold Ashanti.
Although the latest CAPD presentation (as mentioned above) states 24 rigs in Egypt, so obviously my notes are not quite up to date.


The company will clarify the rig breakdown in Egypt...

CAPD Investor Relations:

[pugugly] 17/5/2013 18:07

Valhamos:> Lets agree to disagree. All should become clear within the next 6 months or so.

[valhamos] 17/5/2013 13:43

Pugugly

"Hence if the court case goes against CEY and they have to stop drilling somw 24 rigs may have to stop working in Egypt which is some 40% of current rig utilisation as per today's IMS."

I still think your assumptions are unwarranted and that you are mixing up rig utilsation with rig location, in fact comparing apples with oranges. You are assuming 100% rig utilisation for rigs in Egypt. Why? I could just as easily say that there are 25 rigs in Zambia which must be 100% utilised "which is some 40% of rig utilsation". If I did the same for Tanzania and Chile, I would have proved, using your methods, that every other area (which includes Egypt) must only account for 20% of rig utilsation.

[pugugly] 17/5/2013 12:59

Valhamos:. Sorry seem to havee been confusing you and possilby myself.

In my orignial post I thought I had seen "Revenue" but in my 2nd post 561 I was calculating on Rig Utilisation and came to the conclusion that the 40% figure I though I had seen did not relate to revenue but, to the %age of rig utilisation.

Hence if the court case goes against CEY and they have to stop drilling somw 24 rigs may have to stop working in Egypt which is some 40% of current rig utilisation as per today's IMS. (That is assuming that all 24 rigs in Egypt are currently being utilised by CEY).

[valhamos] 17/5/2013 12:34

Pugugly

"Possibly all CEY as no split given" But you are ignoring Anglogold as you acknowledge a sentence later.

If Egypt and Tanzania together accounted for 40% of revenues in October, then there would have to have been a collapse in revenues outside of Egypt for Eqypt on its own to be 40%. The statement today does not say that is the case, in fact there has been a general increase in ARPOR in Q1.

[pugugly] 17/5/2013 11:50

Valhamos:. Thanks = Just been back to check the last presentation.



Looks like 24 rigs out of a fleet of 92 locaated in Egypt - Possibly all CEY as no split given and we know CEY is major client - So worst case some scenario 25% of total rig fleet utilisation at risk. Or as from todays notice fleet utilsation was "Rig utilisation of 66%," 66% of 92 I make 61 rigs in use - So say CEY current use account for all the 24 in Egypt (I cannot locate a figure for AngloGold in Egypt) then it is possible that the figure of 40% I was working on may have related to the %age of rigs currently in use.

Does this seem about right ??

Drewz:> Agreed re well run and competent company. Which is why I am interested and watching.