Wogen Share Discussion Threads

[slapdash] 28/11/2005 19:43

My concerns on this one:

May be on a lowly P/E but you have to remember this is a trading business and so the quality of its earnings is low. I.e. the EPS could easily crash 50% next year. Also interesting to remember that the EPS has increased significantly this year (just before floating) which is always a little dubious in my view. Is that increase which puts it in a low P/E sustainable??

But I have to admit I have yet to do extensive research on this one.

Results are way into next year I believe.

Slap

[arthurly] 28/11/2005 15:16

Reason why these may appear very cheap :

much of £21m profit for the year may be what might be called from 'holding gains'

Many years ago the accountancy institutes proposed a system of accounting for inflation called current cost accounting. Could be useful here.

Haven't seen a balance sheet for this but say if £20m of stocks at start of year and £30m at end - with prices up 50% so same volume at end :

- we could say £11m profit from trade + £10m holding gains. The holding gains are unlikely to be repeated and could have holding losses in future.

Could anyone post stock figures for this company and has anyone done research on price increases in the various minerals in the last year ?

[mad4it] 21/11/2005 16:51

Sorry! I've gotta disagree! Extremely overbought now. I doubt it'll go much higher before a healthy retracement occurs.

...of course, I would say that as I'm waiting to buy in! ;)

[fromtheblue] 21/11/2005 16:35

A late flourish of buys and no sells points to a continuing rise in the share price Topped up once again today as still seems too good to be true.

[tonyx] 21/11/2005 12:25

Nice rise here!

[tole] 20/11/2005 15:28

Yep sounds quite probable doesnt it - and anyway I have a few shirts I picked up here in early Nov that I am prepared to lose :)

[cockneyrebel] 20/11/2005 15:17

Yep, Bridgewell couldn't have another flop and floated it on a recommened cheap multiple to get it away I reckon.

CR

[tole] 20/11/2005 14:52

High risk business model - but what isnt these days really...
Article from the Times back in early Nov best sums it up...think a few summed it up correctly as being floated cheaply during Oct to get it away...

WOGEN, which made its debut on the lightly regulated AIM market yesterday, presses all the fashionable investor buttons. The company trades exotic metals such as molybdenum, titanium and indium - the stuff used in high-resolution television screens. For investors who believe in the resources "super-cycle" (the theory that raw material prices are in for a 15-year bull ride), it looks well-placed. For those who buy into the China story, it stands out, having been there since 1976.

This is a high-risk business. Wogen takes physical delivery of minerals, not always with an end-using customer signed up. Adverse price movements and defaulting counterparties can smash profits. Even so, it has managed to stay in the black for 29 of its 33 years. At the 122p placing price, it trades on two to three times net assets, just four times this year's earnings, and yields 6 per cent.

The founder has partly sold out. The sponsor is Bridgewell Securities, whose last stock market debutante was Wham Energy, which has just flopped. Buy, but only if you're prepared to lose your shirt.

[graham_brown1] 20/11/2005 14:44

Wish I had seen this one sooner!
Not much dilution to come either with around 200k Options for Directors, not too many on nearly 45m shares in issue.
Imminent £3.3m Dividend, Growth, what's the catch?

[cockneyrebel] 20/11/2005 11:28

Fair enough, but I think with most stocks if you don't look forward somewhat then by the time you buy even more iis priced in. In 4 months ALT's March to 2006 will be completed and Investors will be looking at the year 2007 PE imo, especially if there has been a trading statement at year end. They have gone from losing 1.3p in H2 to and eps of 1.2p in H1, a 2.5p improvement half over half. I think the momentum is there enough to look at the year ahead and see they are potentially very cheap -, you don't believe it enough to back it with your cash - that's the market and psychology.

Perhaps in a similar way the 'too good to be true' psychology is in play at part with WGN. Maybe it' that and the fact they had to float cheap together with many not having heard of it - I hadn't heard of them till they put out that trading statement a week or so ago.

That's the market I guess.

CR

[wjccghcc] 20/11/2005 10:14

CR, your PE of 10 for ALT is year end Mar 2007, i.e. 18 months away. I usually take earnings forecasts that far out with a big pinch of salt, particularly when the company has a record of missing forecasts like ALT. Likewise I wouldn't put much faith in forecasting WGN results more than 6 months ahead. Having said that, WGN's PE of 3.5 historic prices in most risks whereas ALT's of 17 doesn't IMHO.

[aleman] 19/11/2005 19:49

Reading about that rogue government copper trader in China. It is claimed he and possibly others in his department took positions on the view that government action would cool the economy to the point that prices would fall. It has blown up because there has been little sign of cooling and copper has continued to rise. This bodes well for WGN. Also recent stronger growth figures for the larger European economies suggest world demand will not soften.
Added to the above reasons for a low p/e would be the political risk with exposure to China and Russia.

[cockneyrebel] 19/11/2005 15:57

It's philanthropy then! Fabulous :-)

CR

[tonyx] 19/11/2005 15:18

And so is this...

Wogen (WGN:AIM), a London-based international trader in speciality metals
and minerals, has started trading after raising £20 million from institutions.

The company trades items such as chromium, cobalt, indium, titanium,
tungsten and vanadium – none of which are traded on exchanges.
It has its
headquarters in London and offices in China, Russia, Japan and Spain.
Growing global demand for hi-tech consumer and industrial goods is
expected to drive revenues. Wogen has a major operation in China, both in
sourcing and distributing speciality metals and minerals.

Its average return on equity over the past 20 years has been about 18% and
for 2004, it reported £133 million sales and post-tax profits of £7 million.
Trading this year has been particularly strong.
Wogen has announced turnover of £157 million and post-tax profits of £14.6 million for the nine months to June 2005.
Management also intends to pay a dividend of £3.3 million – representing a 6% yield for 2006.
Allan Kerr, CEO, has 32 years'experience in the metals trading industry,
while David Munro, non-executive director, was formerly CEO of RMC
(RMC) and prior to that a president at mining group BHP Billiton (BLT).

[cockneyrebel] 19/11/2005 15:16

Spooky, go and point that out about a PE of 10 on the ALT thread please. I'm holding those, they posted results ahead of forecast so the 4p eps next year looks like being upgraded plus savings from the move to AIM - 5p eps next year? 80%+ earnings growth, PE 9? PEG 0.09 and a yield coming!

The secret is to buy all these stocks that have moderate to high earnings growth forecast that are on a low PE - invariably the PEG's are below 0.5 just like Wogen, Punters watch, wait and miss stocks like this to their regret imo.

There might be something we can't see right now but I suspect floating while the market was tanking is the reason for the low valuation at the float.

Imagine: you put together a floatation, it costs you £400K or more I guess, it takes a lot of planning and timing. You thing you're floating just as the market is on a high and the market trips you up - metal prices start to fall, share prices start to fall and your share price relies on both - who is going to underwrite that at a decent price?

So do you pull the float, perhaps wait several years if this is the market top they have just seen or go with it or pull the float?

I've looked through Proquotes RNS and I can't find many other floats in October, just one, a drug co, Abcam but stand to be corrected. I'm pretty convinced the market in October meant most floats were delayed or pulled, Wogen went ahead but I bet they had to float on a very conservative rating.

With a name like Wogen they might have given us a Blankety Blank cheque here possibly. Suppose they floated cheaply due to thinking the market was on a longer term decline, they float Oct 31 just as the market makes a bottoms after the AIM index has fallen 10% in 6 weeks. Might have been classically poor timing for the company but brilliant timing for the private investor imo.

CR

[tonyx] 19/11/2005 15:15

Not sure if posted before-this is from SHARES mag..

Non-execs buy into Wogen
The executive directors of international metals traderWogen (WGN:AIM) are major shareholders. Deputy chairman Colin Williams holds 29.96% of
the equity, while the four other executive directors have 27.16%, as well as usefuloptions.
Two of the non-execs decided to become major shareholders as part of the
company's float. Chairman Richard Nelson invested £500,000, while David Munro
invested £200,000.
Munro was briefly the chief exec of RMC (RMC), where he invested almost £200,000 buying shares at 581p. Within months, RMC received a bid at
855p. Shareholders in Wogen will hope that he is as successful on his occasion.
Meanwhile they will be consoled by the 6% yield on the placing price.

[pezza2] 19/11/2005 14:15

I just want to congratulate you guy's for some excellent posts - I haven't looked at this stock yet but I will now do some research and see what I make of it.

The reason I have decided to look atit is because some of the excellent posts on this stock.

I might be back to post my own !!

[spooky] 19/11/2005 13:59

I think we are making this a little more complicated than it actually is.Wogen is a metal trader,it has more to it than that but lets just say it is a metal trader,how should it be rated ? Well how do you rate a hedge fund or any business which has earnings volatility,the market provides a number of examples and i do not see many of them trading with PE'S below 10,in fact there are no larger businesses with potentially significant earnings volatility that are trading below 10.So on an earnings basis i believe the company to be undervalued on current earnings expectations.What are current earnings expectations,in reality this isn't any more confusing than looking at an oil company or a gold miner.People are fairly comfortable with their projections for all the major oil companies but what do they look like if the oil price falls to $5,they would obviously be different.The point is that you are happy holding the oil company because of your views on the oil price and how the company will perform.Returning to Wogen, if you believe that commodities markets will be active,that there will be price volatility and that emerging markets will be significant players in this,Wogen will benefit.The time to be long is when you feel that markets favour what they do and the time to sell is when you do not.The rating will change over time as the company produces results which people can analyse,i believe this rerating will occur faster than most people expect,the first published results in 6 or 7 weeks will play a significant part in this.

When buying a gold miner you are guided by the gold price,current and future, buying Wogen is the same decision,does the current market allow the company to generate profits and will it in the future,at the moment it most definitely does and i also like the future outlook ,so i am long.If Wogen had been listed for the last two or three years and if they were about to produce 40p in EPS,I believe the shares would be trading above £4.00,three times the current share price.

If i am wrong on the outlook then i will be wrong on the future share price,but please don't ignore the fact that this company is very well placed in it's markets and being wrong may mean that the company significantly outperforms my expectations not underperforms.

[liarspoker] 19/11/2005 13:04

So according to spookys information the market may think the appropriate P/E for a company like this is just over 10 - let's say 10 for easy calculations. Profits seems to be doubling but lets say that this year they'll 'only' grow by 75%. Assume that this is in direct proportion with EPS ( all variables held equal ) that still gives gives a PEG of .15 AFTER a rerating with current EPS growth ?!?! Current P/E of 3 - 4 ?

In the above example if EPS were to double PEG would be .1 - ridiculously cheap if it's right.

My question is - are we missing something ?

Edit: Can anyone find previous EPS figures ?

Just roughly from say 130p if EPS increased by 75% and a small rerating occured we could well be looking at 280p+ quite eaily imo.

[cockneyrebel] 19/11/2005 12:33

Float was at a time when many may have perceived mets/mins might have beed at a peak and the S&P had just had it's worst October since the 87 Crash - I'm amazed they got the float away at the end of October but my bet is that it was done at a much lower level than originally anticipated.

Reckon these could be a major steal here myself.

CR

[nurdin] 19/11/2005 10:01

The stock looks amazingly cheap but worries me why the WGN management accepted such a low valuation when they floated.Here is a company likely to turnover over £165m,show an operating profit of circa £22m,pay a healthy dividend of 6% and trades in a market that seems to be booming from all the evidence.So why accept a valuation at just 3x this years earnings? Baffling...would welcome any feedback specially from those who might have seen the admission document...

Will dig deeper on Monday..

[martinwj] 18/11/2005 13:38

but it is lol

[martinwj] 18/11/2005 13:34

that cant be right surely?

[spooky] 18/11/2005 13:32

I don't want to get anyone worried but you do realise this is now trading on an historic PE of 4 :-o)

[martinwj] 18/11/2005 13:17

this is rising with every small buy...just like ssp