Bateman Engineering Share Discussion Threads

[affc21] 01/5/2008 23:56

Done as requested Simon.

Yes, large volume day today with a bit of blue.

[simon gordon] 01/5/2008 13:28

Plenty of big buys today - could this be the bottom when the seller is cleared out?

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affc21,

Here are some more links for the header:









The Metplant link is no longer live.

Thank you.

[simon gordon] 30/4/2008 17:09

Analysing BATE with Philip Fisher:

1. Excellent market potential for its products.
*Africa, Americas, Asia, Australia, China, India, Russian Federation.

2. Management commitment to the development of new products.
*Bateman Engineered Technologies division. Delkor adds new line.

3. Superior research and development relative to the company's size.
*?

4. Strong sales organization.
*Recent sales have been strong. Demand is very high. CEO is a non-exec at Lonmin.

5. Acceptable profit margins.
*Target 6% after tax.

6. Commitment to the maintenance or improvement of margins.
*Yes, taking only high margin contracts.

7. Excellent labor relations.
*Looks sound.

8. Excellent morale among managers.
*Management team installed in 2003 and apart from Hindustan have done a great job.

9. Management depth.
*New Indian MD is from BATE S. Africa. New Deputy CEO and project managers. New CFO came from internal talent pool.

10. Tight cost and accounting controls.
*Balance sheet is solid.

11. Competitive advantages in quality and/or cost.
*Hub and spoke strategy of sourcing from India and China.

12. Long-range approach to profits.
*Hybrid tendering, putting bottom line ahead of top line.

13. Ability to grow with minimal equity financing.
*Raised £20m when share price £5.00.

14. Respect for the shareholders.
*My dialogue with BATE has so far been open and frank.

15. Management integrity.
*Looks fine.

[simon gordon] 30/4/2008 08:21

Hi GHF,

My understanding is that the problems at the Hindustan project only became known to management close to the Interims - thus the market was not pricing in this problem prior to the Interims.

I think that the share price has come off with most Small Caps and then when the CFO departed the price cratered - c.£3.00 to c.£2.00.

Since the Interims it looks like the price is being walked down to offload a fairly chunky position.

The risk with BATE is a contract going wrong - management state they are now going to de-risk by taking on smaller, higher margin, contracts.

Even with the Hindustan setback the earnings are going to grow from 31.6c to 53c.

Timeline:

~May - management probably coming over to do a roadshow.
~July - trading update.
~September - finals.

[glasshalfull] 29/4/2008 22:46

Thanks Simon.

Still to research in-depth and will get back to the thread next week.

Looks good value but I'm suspicious re. the pressure on the share price and, as before, wonder if further bad news has leaked out.

Regards,
GHF

[simon gordon] 29/4/2008 17:52

Prime-Tass interviews head of Bateman Engineering Russia B.V. Yury Gavrilov - 3/10/07:

[simon gordon] 29/4/2008 17:40

Hi GHF,

Sent.

What is your view on BATE?

[glasshalfull] 29/4/2008 17:27

simon - would be obliged if you could forward on a copy to myself please.

Many thanks,
GHF

[nickcduk] 29/4/2008 12:30

Cheers Simon.

[affc21] 29/4/2008 11:51

Thank you, will have a read later today when I have more time (work getting in the way).

[simon gordon] 29/4/2008 11:31

If you leave your email address.

[affc21] 29/4/2008 11:12

simon gordon - you would'nt by any chance have a copy of the Dresdner note by any chance (would appreciate a copy), and if not I hope you dont mind me asking where you get the Dresdner EPS figures from.

Thanks

[simon gordon] 29/4/2008 10:27

EPS by Dresdner - 13/3/08:

ACTUAL
06/06 - 27.35c
06/07 - 31.63c

FORECAST - prior to Delkor acquisition
06/08 - 53c
06/09 - 66.61c
06/10 - 76.51c

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I expect EPS for '09 and '10 to be higher with the Delkor earnings added:

06/09 - 75.5c
06/10 - 86.5c

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Forward P/E - 06/09 - 75.5c (37.7p):

£2.00 - 5.3x
£1.90 - 5x
£1.80 - 4.8x
£1.70 - 4.5x
£1.60 - 4.2x
£1.50 - 4x

[simon gordon] 26/4/2008 12:15

Bit of background:

Benny Steinmetz maneuvering to buy a local investment firm

Diamond and mining magnate Benny Steinmetz is ramping up his involvement in Israel's capital market. Possibly urged by Israeli banker David Granot, who knows the local market inside-out and who joined his business group a year ago, the cryptic Israeli businessman is in early negotiations to buy a local brokerage or alternatively another company involved in the local capital market.

Steinmetz, who is known abroad by virtue of his engineering empire, Bateman, evidently prefers not to start his capital market involvement from scratch, but to build on an existing platform. He hadn't built Bateman, either: Steinmetz acquired the controlling interest in Bateman, which handles heavy engineering projects such as mining, quarrying and power production, in early 2002. After he bought the company, Steinmetz delisted it from the Johannesburg Stock Exchange, re-registered it in the Netherlands, tossed out its management and put in new people and changed its spheres of activity to a large degree.

Granot left his job as chief executive of the First International Bank of Israel (Bank Beinleumi) a year ago and joined Steinmetz's business group, which operates almost entirely outside Israel.

In recent years Steinmetz has been operating in the world equity markets through Capital Markets, his London-based investments arm - it is controlled by BSG (Benny Steinmetz Group). The group also operates in Russia's markets through a local brokerage that it owns.

Steinmetz had been mentioned in the past as a candidate to buy Bank Leumi. He may be loath to talk to the press, but his associates clarified that he didn't want to buy a bank. Three years ago, however, Steinmetz had to break his habitual reticence when raising money in London for his companies Bateman Engineering BV, Bateman Litwin and Nikanor. Because of the offering process, Steinmetz had to shed light on at least some aspects of his business.

Capital market sources believe that Steinmetz is personally worth about $3 billion. Bateman Engineering is worth nearly 100 million pounds on London's AIM market. Last week it announced that Pieter Du Plessis was named chief financial officer, replacing Jonathan Ben-Cnaan, who is leaving in March. The CEO is Sivi Gounden.

Bateman Litwin, an engineering, contracting, chemical technologies and project management company, is worth something over 220 million pounds. Nikanor, which engages mainly in mining operations, including in Africa, is worth about 850 million pounds.

In July 2007, perhaps charmed by the ease at which companies were raising money from Israel's institutional investors, Steinmetz decided to raise a billion shekels for BSG, for starters.

Steinmetz also owns another Israeli company, Scorpio Real Estate, which was founded in 1998 and invests in East European property. Scorpio went public on the Tel Aviv Stock Exchange a year ago.

[affc21] 25/4/2008 12:34

simon gordon,

Yes, now I can see where you have got your 2009 EPS figures from.



Thanks for your explanation.

[simon gordon] 25/4/2008 07:52

If you add the new Delkor earnings = £2m PAT:

06/09 - EPS forecast by Dresdner = 33.3p.

33.3p x 43.7m shares = £14.5m PAT

£14.5m + £2m = £16.5m PAT divided 43.7m shares = 37.7p

£2.08 divided 37.7p = 5.51x.

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FT - 13/3/08:

PEOPLE: Building bridges

Bateman Engineering's efforts to put a floor under its sliding shares after its chief financial officer quit last week for rival Metal-Tech saw it lift its former chief commercial officer Pieter Du Plessis to CFO designate.

The exit of Jonathan Ben-Cnaan , who joined Bateman as CFO in 2002, to become chief of Israel-based Metal-Tech prompted the shares to fall about a third in value. Bateman's stock closed yesterday at 225p, against 315p before the news.

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Once the market is reassured that Hindustan was a one-off and that the new CFO is in control then I expect the share to bounce.

[affc21] 24/4/2008 20:22

Hi simon gordon, done as requested.

[simon gordon] 24/4/2008 19:27

Hi affc21,

Could you add this link to the header:



It is a good source for mining stories and BATE get covered.

Thank you

[simon gordon] 24/4/2008 10:20

Miningmx.com - 14/9/07:

Mineral expansion rollout unchecked

THE PROSPECT of a slowdown in the world economy is an obvious threat to the mining industry, which has been growing its output capacity at a fair clip. But London-listed Bateman Engineering, a business with strong South African origins, believes there'll be no slowdown in project implementation.

Said Bateman CEO Sivi Gounden: "Is there demand in the market? Yes, we believe there is." He estimates the world's top five mining firms will proceed with budgeted capital projects worth $69bn between now and 2011. That's why he's confident growth in Bateman's order book – which at $507m in the financial year to end-June was double the previous year's – will continue.

However, one problem is inflation demand, which attacks the margin aggressively. That's a common feature of mining developments worldwide. Gold Fields complained recently of increases in steel and energy; while Nikanor, a company developing a brownfields mine in the Congo, suffered a $320m project overshoot, 26% higher than expected.

To compound matters, Bateman has a wafer thin margin; therefore, cost containment is everything. It's also experiencing the impact of higher costs in the mining industry that could change how well mining firms respond to metals supply deficits. Its operating margin slipped to 3.9% in its 2007 financial year from 4.2% previously.

Gounden's hoped-for response is what Bateman terms a "hub and spoke" strategy. In essence, that sees capital equipment and intellectual capital sourced from an India hub, where demand inflation is not as significant as elsewhere.

The spokes of the company's business units, which include metals recovery to turnkey project management, duly fit into the hub. It's an intriguing notion. "There really are massive savings on capital cost items while there's also a reduction in lead times," said Gounden. Around 200 people now work for Bateman in India, where detailed engineering work is completed.

The company is also seeking acquisitions and believes new uranium projects present a new growth opportunity, notwithstanding a cooling in the price of uranium oxide lately, suggesting that market is toppish.

The other key systemic problem for the mining industry, which Bateman reflects, is finding skills. "We have less turnover than is perhaps the norm," said Gounden, of Bateman's staff complement.

Like Impala Platinum, which recently reported on a wobble in retaining its front-line mine managers, Bateman is throwing money at the problem. "We need to look at our basic salaries – senior personnel can also get excited about stock options."