Share Name Share Symbol Market Type Share ISIN Share Description
Bateman Engineering N.V. LSE:BATE London Ordinary Share NL0000039147 ORD EUR0.01
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 7.50p 0.00p 0.00p - - - 0 06:30:09
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Industrial Engineering - - - - 3.28

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simon gordon: This article in the Investors Chronicle 'hits the nail on the head' as to one of the reasons why I'm moving from Investing to Trading: Equities As Bets Created: 10 July 2008 Written by: Chris Dillow What is an equity? This isn't an abstruse philosophical question. It might help us understand better the market's current troubles. The standard answer is that a share price is the discounted present value of all future cashflows the shareholder can expect. However, this view - the dividend discount model - doesn't get us far. It gives us a single equation with not one or two but three unknowns. The model implies that the dividend yield on a share should be equal to the risk-free discount rate, plus a risk premium to compensate for the riskiness of future cashflows, minus expected annual growth in cashflows from now to infinity. The trouble is, we cannot directly observe either the risk-free rate, or the risk premium, or expected cashflow growth. You'd think the risk-free rate would be easy. It should be just the index-linked gilt yield. But here's the problem. This yield has fallen by two percentage points since early 1998. Other things equal, this should have cut the dividend yield on the All-Share by two percentage points, with growth stocks benefiting more than value stocks because they offer more cashflows in the distant future and so get a bigger kick from a fall in discount rates. But neither of these things have happened. The All-Share's yield is almost two percentage points higher than it was in early 1998, and value stocks - despite their recent slump - have actually outperformed growth ones. Now, we can reconcile these facts with the dividend discount model. Maybe shares are being priced off of a 'shadow' risk-free rate which has risen in the past 10 years. Or maybe the risk premium has risen four percentage points. Or expected growth fallen by four percentage points. Or some combination of the three. However, none of these possibilities is directly observable. What's more, when the market falls, it's often impossible to tell whether it's done so because expected cashflow growth has fallen, or because the risk premium has risen. But the distinction matters enormously. The latter implies that expected returns have risen, meaning there's a good chance of the market rising. The former doesn't. Sure, it's a useful rule of thumb that big moves in shares - up or down - are usually more due to changes in expected returns. But rules of thumb aren't hard knowledge. So, there's a lot wrong with the standard view. Luckily, though, there's an alternative. Don't think of shares as the discounted present value of future cashflows at all. Think of them instead as state-contingent securities that pay off different amounts in different states of the world. The simplest state-contingent security is a bet. Financial services provider Paddy Power is offering seven-to-four on John McCain becoming the next US president. If you hold £1 of this asset, you get £2.75 in states of the world in which McCain becomes president, and nothing in other states. You can think of the All-Share in a similar way, except - we hope - that zero pay-offs are less likely. For example, imagine two states. In one, the All-Share yields 5 per cent, as it often did until the early 1990s. This implies an index value of around 2300. Think of this as a world in which economic volatility keeps shares cheaper than we have been used to in recent years. In the other state, the index yields 3 per cent - giving a level of just under 3900. This could be what we would get if the 'nice' decade returns. You can now imagine the index's current value as signalling that we have a 70 per cent chance of entering state one, and a 30 per cent chance of entering state two. That is: (0.7 x 2300) + (0.3 x 3900) = 2780, which is roughly where we are as I write. Now, imagine that the probability of entering state one - our bad state - were to rise by just one percentage point. Then, the price of the All-Share would become: (0.71 x 2300) + (0.29 x 3900) = 2764. This is a drop of 0.7 per cent. In other words, tiny, reasonable changes in the probability we attach to differing but plausible states of the world can produce quite large moves in the index. Regarding the market as a state-contingent security, therefore, shows that volatility is normal and rational. Indeed, David Meenagh of Cardiff Business School has shown that market volatility since 1963 is quite easily explained if we think of prices as reflecting varying probabilities of different states of the world. This contrasts to the dividend discount model which - as Yale University's Robert Shiller famously pointed out in 1981 - implies that volatility should be only around one-tenth what we actually see, and that only irrational investors can generate such high volatility. Now, my example is over-simplified. In practice, there are countless different possible states: catastrophe, slump, recession, slowdown, normal growth, boom, exhilaration and Kurzweilian singularity, and all degrees in between. Recognizing this renders otherwise bizarre behaviour explicable. Why does volatility rise in recession? Because investors begin to attach small and varying probabilities to catastrophe and slump. Why did we have a tech boom and bust earlier this decade? Because the probability of exhilarating growth rose and then fell. Of course, it's not just the index that we should regard as a state-contingent security. We should regard sub-sets of the market, and individual shares, in the same way. Value stocks pay off badly in recession states but well in boom states. High-beta stocks pay off well in states in which investors have high appetite for risk, and badly in other states. Commodity stocks have a good pay-off in states where Bretton Woods II holds and the global economy grows nicely, but low pay-offs in other states. And surely it makes more sense to regard Bradford & Bingley's price as depending upon the probability of its re-re-re-financing going well than it does upon a forecast for its earnings in 2011. What this means is that most investors should change the way they think about shares. Stop thinking of them as having a 'fair value' of x, depending upon your forecast for earnings and assumptions about discount rates. This is just plucking numbers out of the sky. Instead, ask the questions: in what states of the world would this pay off, and by how much? What reason do I have to think good states more likely than the market believes? Am I more or less worried than the market by the probability of bad states? You might object that this method doesn't give us precise valuations, because we can't define possible states of the world, still less attach probabilities to them. This is true. But such imprecision is an unavoidable consequence of the fact that the future is inherently unknowable. To hide from this fact, and pretend that future cashflows and discount rates can be predicted and shares precisely valued, is mere pseudo-science which gives us a false comfort that there's such a thing as 'value'. But maybe it's false comfort you want.
alun rm: There is no doubt that the award goes against common sense. The old team really did not handle the newsflow well and as a result the story surrounding the stock has been tainted. Sentiment is so important in share price management and it only take a quick glance at the chart to see that this share price has been badly managed. Having said that, there is now a new CFO and a new CEO. The firm has a good balance sheet and they operate in a booming industry. So the $64,000 question is, can they create some positive sentiment around the stock and get the share price moving? Only time will tell.
alun rm: Simon, Volume isn't huge after the presentations, but it may take a day or two for the fundies to get into buying mode. Time will tell, but looking at the big picture, I really like the way Bateman has restructured their management in response to execution problems. If the share price is depressed because of problems with project execution, at least they have formed a strategy to solve it. Here is one view from inside the industry: Gounden bids Bateman farewell Allan Seccombe Posted: Thu, 26 Jun 2008 [] -- SIVI Gounden has resigned as Bateman Engineering's chief executive and will be replaced by Eddie Du Rand, the group's deputy CEO, the company said on Thursday. Gounden resigned to pursue "other interests", the company said, adding he would remain at his post until 25 July to ensure a transfer of responsibilities to Du Rand. Du Rand's appointment has to be approved by an extraordinary shareholders' meeting on 25 July. The management changes at the very top of the company follows a spate of senior management appointments in the first quarter of 2008 to make sure large projects were successfully executed. This was after the Hindustan Zinc project in India had run over its budget and time targets. The managing director in India was been replaced by Thys Greeff. One of the key appointments was that of Du Rand to the deputy CEO role to "ensure a coordinated and consistent approach to project execution and risk mitigation across the Group." Bateman said in March it was moving away from lump sum turnkey projects towards reimbursable and hybrid projects to mitigate risk in a high demand inflation contracting environment. The AIM-traded company, which provides services to mining and metals industries, had an order book worth $461m at the end of the first half of its financial year. Full-year results are due in September and the company said: "The Board is pleased to confirm that it expects that its results for the full financial year ended 30 June 2008 will be in accordance with management's expectations."
affc21: Another Mining Services company "MDM Engineering" (probably known by a few posters on here), on the rise again this morning - apparently tipped by SCSW this weekend after previously being tipped by And before anyone asks, no I'm not invested in MDM :( But, well done those that are. I suppose my point is if/once the BATE management credibility issue is behind us with either a Trading Update(July?)/Final Results(September?),there is then the likely-hood of these also being tipped with a hopefully corresponding rise in the share price. After all BATE/MDM are in the same booming Mining Services sector, so I'd have thought they should at least be extremely busy with contracted project work. BATE Management also stated in the Half Year Results for the six months ended 31 December 2007 (released on 13 March 2008): they are confident of meeting full year end targets, with all losses from the Hindustan Zinc project accounted for in the First Half Results. Below is copied from the Half Year Results: Outlook The first half of the 2008 year has been challenging in terms of managing project execution risks. Various steps including the appointment of Eddie Du Rand as Deputy Chief Executive Officer and the replacement of the Bateman India Managing Director are intended to ensure a sharper focus on project execution and its associated risk. Noting that the appropriate provisions were made in the half year results for the loss making Indian project, I am confident of a significant improvement in results for the second half of the current year. I am therefore of the view, based on an assessment of the second half of the year, that our results will meet management expectations. Dr Sivi Gounden Chief Executive Officer 12 March 2007 ----and---- Chief Financial Officer's Report Overview The Hindustan Zinc project in India is behind schedule and is over budget, resulting in an expected material project loss to completion, fully recognised in the first half. The project is being monitored closely to ensure that no further losses are incurred. Please DYOR From the 1H result's BATE earned EPS of 21.6c, which should make the full year target of EPS 53c achievable with as hoped for no more project cost over runs to report(i.e. with EPS of 31.4c from the 2H).
simon gordon: 15 February 2008: "Bateman expands Laos capability with another gold project" Bateman Engineering Pty Ltd (Bateman) will be the lead consultant for the Pan Australian Resources Ban Houayxai gold-silver project in Laos. The pre-feasibility study is already underway and will continue through to the third quarter 2008, with the feasibility due for completion mid 2009. Bateman has been contracted by the Pan Australian Resources operating company Phu Bia Mining in Laos to complete the pre-feasibility and feasibility studies for the project. The Ban Houayxai gold-silver deposit (pronounced Ban Hoy-Sai) is located in the south west corner of the Phu Bia Contract Area in Laos approximately 120 kilometres north of the capital Vientiane. Australia and South East Asia Managing Director, Peter Strimaitis, said that working with Pan Australian Resources provides an exciting opportunity to support one of the most dynamic growth-oriented mining companies in the South East Asian region. "We are excited to be involved with Pan Australian Resources as they develop their outstanding portfolio of projects and we look forward to building on the relationship and supporting Pan Australian Resources well into the future." he said. ----- Background info. on Metplant acquisition: Acquisition of dynamic Perth-based engineering firm Metplant Engineering Services caps a year of vigorous growth for Bateman Australia and South East Asia (Bateman). Bateman re-launched in Australia at the beginning of this year as an autonomous business unit of global giant Bateman Engineering NV (BENV), an international process engineering and project execution company. BENV's share price has tripled since listing on the Alternative Investment Market of the London Stock Exchange in October 2005. Bateman Australia and South East Asia's first acquisition makes perfect strategic sense, according to Managing Director Peter Strimaitis. More may follow. "We looked at good-fit companies in late January, approached Metplant in February and signed off on the deal in July," he said. "Bateman now owns 100 percent of shares in Metplant and it will continue to trade as a fully-owned subsidiary." Mr Strimaitis said Metplant met all the criteria demanded by the parent company's Acquisitions Policy. "It's a healthy, well-run business with no significant issues requiring immediate structural or management change. It's process-engineering-based, so we're culturally similar. And our interests and skills are complementary – there's no overlap," he said. "Metplant's wide experience of comminution and concentrator design meshes with our leading edges expertise in hydromet design. This means that together we can handle everything associated with any scale and complexity of minerals processing plant – from comminution to end product." Metplant's recent track record in nickel and gold (both within Australia and internationally, with current projects in Vietnam and Egypt) would bolster Bateman's position in these commodities, he said. "Bateman globally has operated in more than 60 countries, but so far these haven't included Egypt and, more importantly, Vietnam. Metplant's current activities there represent a fantastic strategic opportunity for Bateman to gain ground-level entry to those markets." The Metplant acquisition would also expand Bateman's activities in emergent areas such as magnetite iron ore, Mr Strimaitis said. Full integration is scheduled to be complete within 12 months. An Integration Manager has been appointed and an Integrated Organisational Chart has been developed. Each party will continue current projects as planned before the acquisition, and execution of new projects will draw on the two parties' combined resources. In the meantime, it will be business as usual for Metplant clients, according to Metplant founder and managing director David Phipps. "We've built some very valuable client relationships and those will continue, with the same principals and staff offering the same depth and quality of expertise and service," Mr Phipps said. "Those relationships have helped us grow. And combining our resources with Bateman's widens the opportunities for all concerned – individually and collectively." Physical arrangements will see Metplant retaining its relatively new offices in Belmont, Perth, while Bateman staff move from outgrown premises in suburban Mt Pleasant to new quarters in West Perth. This will give Bateman a suburban and an inner city presence in Perth while accommodating a significant increase in staff. Including Metplant, Bateman now has over 150 personnel based in Western Australia, with this number constantly expanding. In Brisbane, Bateman retains offices at Milton and will take up additional space at Milton to accommodate continued expansion, with 100 personnel now based in Queensland. Key Metplant staff will continue working for Bateman, with incentives including expanded career paths, a diverse client base and a globally-known brand name. Mr Strimaitis said Bateman Australia and South East Asia, like its parent company, was a high-end processing company with diverse interests and a good record for attracting and keeping staff. "We're involved in leading-edge projects world-wide, we have a number of world-firsts under our belts and we have close relationships with research groups," he said. "Our projects are innovation-driven, we're right into new technology and we offer interesting work – and that's probably why we've been successful in an under-supplied recruitment market. "The amount and variety of work on our books fully supports our recent growth in staff numbers. Having Metplant on board will expand and strengthen that position."
simon gordon: Four peers: Ausenco - *Recently made two acqusitions in oil and port engineering. Share price has been rocketing. ------ MDM - *Due to float on AIM next week. Looks like they lack technological firepower and scale. ----- TWP - *Recently bought an architectural practice. Share price doing well. ----- Outotec - *Purely focused on mining techonolgy. Share price is strong.
simon gordon: TWP a peer of BATE's has released bunker-busting results. In December '07 both had a similar valuation - BATE's share price has since halved. If Hindustan had not been poorly managed and the CFO departing had not spooked the markets then I surmise that the share price would be c.£3.50. All being well, I expect that once the market is confident that these two factors have abated the share could move back to c.10x '09 = c.£3.50. ----- MiningMx - 5/5/08: TWP foresees more growth in 2008 TWP Holdings, one of Africa's largest mining services companies, posted a 230% increase in annual net profit, ahead of internal forecasts, and expects the strong demand for its services that drove last year's performance to continue in the coming year. TWP offers services from shaft sinking and infrastructure, to hydro- and pyrometallurgical expertise and environmental assessments. It employs more than 1,100 people, making it the largest such company in Africa. "The performance, which exceeded the forecast published in the group`s pre-listing statement ("PLS"), was as a result of strong demand for the group's services in all fields of operation," the company said in a statement. TWP listed on the JSE in November last year. Its shares gained nearly one percent during Monday's session at R23.70. TWP's cash position has improved remarkably over the year, climbing to R91m at the end of February 2009 from R2m at the end of the previous year. The increase came about from the raising of funds in the listing and improved work flow. "Announcements regarding new work, acquisitions and opportunities being pursued can be expected throughout the forthcoming year," the company said. As at the end of November, the company had work on its books with a capital value of R55bn. "Growth is underpinned by strong demand for the group's services globally and in Africa and Australia in particular. The order book is extremely robust and new commissions are being secured on a regular basis," it said. TWP has used its JSE listing to develop a share incentive scheme to retain and attract skilled workers in a global environment, it added.
simon gordon: The World's Billionaires #583 Benny Steinmetz: The Benny Steinmetz Group: Katanga Mining: ----- Mega Cap Miner: Mid Cap Miner: Small Cap Miner: Micro Cap Miner: *BATE is now between Small and Micro. ------ Article on TWP who are based in South Africa - 12/07: TWP tops rival's market cap AHEAD OF A POTENTIAL ten to 15 new mining listings next year in Johannesburg, it's perhaps gratifying for the JSE's new business team that there's proof it's better to list locally, sometimes at least. Engineering and consulting firm, TWP Holdings, listed on the JSE on November 27 and has since seen its share price up by more than a third. The firm is now worth about R2.25bn which is slightly more than Bateman Engineering which listed on London's AIM but has a lower rating. It's market capitalisation is about R2.13bn. TWP's basic proposition is to capitalise on the project spend, principally African and Australian capital intensive projects. It's a direct play on the health of the commodity market and metal prices. Says one Johannesburg analyst: "There's literally scores of people wanting to put cash into African projects. This mining market is going to carry on for another 10 years." In truth, the comparison between Bateman and TWP is not completely fair because although both occupy the mining project space, they have quite different approaches. Bateman has a heftier revenue line because it undertakes large, turnkey projects; TWP will take on process engineering without the burden of the whole project. As a result, TWP has slightly thicker margins than Bateman. Says Nigel Townshend, CEO of TWP Holdings: "Our margin after tax in the first six months of our financial year is about 15%." Bateman's margin is often in single digits. Townshend raises the prospect of a dual listing, however, probably in Australia rather than AIM. In the meantime, the company is trying to grow quick enough to take on the extra work. "We're turning work down at the moment," says Townshend. "But we're hiring about 40 to 60 people per month to cope with the volume." Acquiring skills in the current mining market has been identified as one of the key challenges for metal supply growth, but Townshend says the challenge is do-able. "It's a challenge but we're at the top of the food chain as we only employ high-end technical professionals," he says. ----- High Grade - 7/07: Bateman design has people at the centre Peter Strimaitis ... recruitment success a testament to different business model. THE "RIGHT" acquisition has given Bateman Engineering's drive to grow its business in Australia and South East Asia - and its intellectual capacity in one of the world's major mining centres - a significant boost, according to the company's regional chief. While seemingly modest in size, Bateman's $US16 million purchase of 20-year-old Western Australia-based Metplant Engineering Services – concluded last week – had important ramifications for the company's plan to make Australia its global "centre of excellence" for front-end nickel, gold, leaching and possibly uranium and coal engineering work and research, said Peter Strimaitis, Bateman's managing director Australia and South East Asia. "Metplant had greater appeal than other companies," he told HighGrade, adding Bateman had examined several other firms in the sector that had recently been acquired. "Its core business model of being a process engineering focused company that executes process plant projects in the minerals industry closely aligns with Bateman's strengths. This alignment means that culturally the companies are alike and, as is well known, the success of an acquisition often is directly related to the cultural fit of the two organisations. "Metplant also has a strong client base with clients that Bateman has either worked with in the past or aspires to work with in the future and Metplant's current project list complements Bateman's in this region. Technically, Metplant's track record and expertise in the areas of nickel and gold processing are complementary to Bateman's strengths in hydrometallurgy." Bateman said Metplant posted a $US1.1 million operating profit on $US7.4 million of fiscal 2005-06 revenues, while the acquisition price was 5.75-times Metplant's forecast operating profit of $US2.8 million for the 12 months to June 30, 2007. The company would add 90 people to Bateman's Australian workforce, which had trebled in only the past six months to about 150 (not including the acquisition), said Strimaitis. The region would be a "significant contributor this financial year" to Bateman's overall results, he said. At the end of March this year the group had $US562 million of work in hand. London Stock Exchange-listed Bateman, which still derives most of it revenue from its South African engineering business, had a market capitalisation of $US560 million at the end of last week. Strimaitis leads a new management team recruited to "relaunch" Bateman in Australia at the start of 2007. "Australia is not only one of the centres of world mining with many clients based in Australia executing projects globally, it is also a centre for engineering design and innovation in the mining industry," he said. "The [Bateman] Australian and South East Asian business unit will therefore be more than just a strong earnings contributor to the group, but will also house a number of technical centres of excellence for the group. The centres will provide know-how and front-end design to projects throughout Bateman, irrespective of where the project may be located." Strimaitis said the company's Perth leaching centre of excellence provided leading-edge technical solutions for copper and other base metal projects. "Through the Metplant acquisition, a nickel and gold processing centre of excellence will also be formed in Australia [in Perth]," he said, adding the centre would be established "well within the next 12 months". "The plan is to develop other centres of excellence based in Australia over time in commodities such as coal and uranium." Strimaitis confirmed Bateman was assessing potential acquisitions in these and other commodity fields, and was targeting both privately owned and public companies. The company last month raised $US39.5 million from a placement of four million shares (about 10% of its issued capital) and a senior international executive told HighGrade at the end of June the company was "progressing with a number of other acquisitions and we are hopeful that one or two would be consummated in the second calendar half of 2007". Strimaitis said the company's recruitment success in Australia, in the face of fierce competition for engineering talent not only from mining and engineering companies but also the financial services sector, could be attributed to the company's high-end technical focus and commitment to building the centres of excellence. "Bateman's not a man-hours-game kind of company," he said. "I would suggest Perth is the toughest recruitment market going at the moment. But a lot of the engineering work being done is not that exciting or intellectually challenging. Iron ore, for example, is a fantastic business but in terms of the smarts for engineering, once you've ticked the box on a project the next one is going to be very similar, and the next one, and so on. "Bateman does high-end process engineering so a lot of the projects it tackles, even on the process engineering side, are the complex projects – polymetallic deposits, looking at cutting-edge solutions, and making step changes to the economics of a project. "We provide something that's differentiated in the marketplace and it's also a pretty good recruitment attraction because, in the end, most engineers like to have their grey matter stimulated. "The centres of excellence are not about having thousands of people based in Australia, but having high-value people based in Australia. We can tap into high-value, innovative individuals, have relationships with high-value, innovative technology partners, and then be able to offer clients who might be based in Australia or elsewhere, but doing projects around the world, technology-driven solutions. "The two main areas where we will have centres of excellence are South Africa and Australia." *Refining its edge BATEMAN Engineering last week secured exclusive rights to two copper-leaching technologies it claims have potential to enhance its ability to win major copper processing projects globally. The rights to Galvanox technology, awarded by the University of British Columbia (UBC), enable Bateman to market the technology in about 20 countries. Australian miner Oxiana has also granted Bateman sole rights to sub-license the leach process used at the award-winning Sepon copper project in Laos to other potential users in about 15 high priority target countries. "These technologies enhance Bateman Engineering's already extensive source of in-house know how on leach processes for the recovery of copper and cobalt from diverse ore and concentrate types," the company said. "This expertise has recently been focused into a Copper Leach Centre of Excellence, established at Bateman Engineering's Perth, Australia office, to facilitate its commercial exploitation, worldwide, for the various process technologies." Galvanox technology is described as a novel atmospheric leaching process which offers several potential advantages over existing copper-leach processes for primary copper sulphides. As it is selective for the primary sulphide mineral chalcopyrite over pyrite, it is applicable to low-grade or bulk concentrates. Copper recoveries of 98% and higher have been achieved in testwork under controlled conditions, over periods of 4-24 hours. Typically, about 90% of the concentrate is processed through the atmospheric leach tanks, with the remaining 10% leached in a small pressure oxidation autoclave to provide heat and sulphuric acid make-up for the primary atmospheric leach. In order to assist UBC to commercialise the Galvanox technology, Bateman has funded construction of a small leaching pilot plant in Vancouver, Canada, and commissioned pilot-plant studies on concentrate supplied by potential end-users of the technology. Bateman said results of the tests confirmed earlier laboratory-scale work and were used to prepare preliminary cost estimates for process plants using Galvanox technology, with the initial conclusions "proving very positive relative to published information on alternative copper sulphide leach technologies". "A number of prospective customers wishing to investigate the applicability of the process to their prospects have initiated discussions with UBC and Bateman Engineering, and several new test programs are underway," Bateman said. The company said it had supported development of the Sepon leach process for several years and implemented the first phase of the Sepon project in a joint venture early in 2005. The Sepon process could be used to treat copper-bearing ore primarily containing secondary sulphide minerals such as chalcocite and, as with the Galvanox process for chalcopyrite, it offered high copper recoveries and low reagent consumptions, it said. In the process, the ore is milled and then leached in agitated tanks operating at atmospheric pressure at about 80C. Oxidation of the copper sulphide minerals occurs via action of the sulphuric acid and ferric ions in the leach solution. Leach residue is then treated by froth flotation to recover un-reacted copper sulphides and pyrite to concentrate, which is processed in a small pressure oxidation autoclave. This leaches refractory copper minerals, but its primary function is to generate ferric sulphate, sulphuric acid and steam, all of which are recycled to the atmospheric leach steps.
simon gordon: FEAR: ~Why is the share price falling: is something going wrong in the background? ~"Rising prices build confidence, falling prices spread fear." ~Hindustan: will it get worse? ~Hindustan: has it corroded trust in management? Why didn't they flag it up? ~Is there a project currently going wrong that has not been flagged? ~CFO: is he jumping a sinking ship? ~New CFO: does he have the network to put together project finance? ~Credit Crunch. ~Is this a high risk cyclical business? ~Is the cycle about to turn down? ~Rolling power cuts in South Africa: will this hit productivity? ~Are the three acquisitions good value? Has management got sufficient depth to integrate and grow them? Metplant and Intertech are just guys in an office. Could these dudes walk and set up across the road? Millions down the drain! ~CEO looks to be retiring. Will Mr Du Rand gel with existing culture? Will senior managers clash and depart to tasty offers from hungry competitors? ~Board seem to be changing sales strategy. Do they know what they are doing? ~Order book not growing at the pace of past few years - is business seizing up? ~WTFDIK about mining. ~Are some Fundies trying to dump positions? Will the share hit a quid? How low can it go? ~Is the general market in a Bear rally that could reverse violently? ~BATE engineer complex projects in frontier countries. Margins are slim and the chances of problems occuring are high. Profit can evaporate rapidly on a project. ~Management has a problem in delivering some projects on time and on budget: Moma Sands, RBCT, Hindustan, etc. ~Contract goes wrong and BATE are sued. ~Due to project risk the share will continue to be lowly rated. ~If new black empowerment legislation is introduced it could hit profits. ~Political instability in many countries BATE operate. ----- GREED: ~Hindustan: management state they will not make any more provisions closing out the contract. ~CFO: left to become CEO of Metal-Tech plc. ~New CFO: has intimate knowledge of complex mining projects, the BATE culture and over the years should have built a network. ~Mining Cycle: still looks good for a significant number of years. Strong demand due to global infrastructure spend. Russia plans to spend a trillion in the coming years solely on upgrading basic infrastructure. Africa, Brazil, China, India, Middle East, et al. Mining sector flush with capital is exploring like never before. Demand exceeds supply on a diminishing product = pricing power. Uranium demand is going to get stronger and stronger. ~South African power cuts: have been temporarily resolved in the last couple of days. BATE saw this coming with Power & Energy division. ~Mr Du Rand: has an excellent C.V. The Board look to be grooming him very professionally for the CEO spot. ~Sales strategy: as the market changes, you change, or you get left behind. ~Acquisition track record: Atoll has performed excellently. ~Order book: decision to go for bottom line rather than top line. If this means higher profits then this is all that counts. Dresdner forecasts that for 2009 the top and bottom line will grow. ~Credit crunch: risk of systemic banking collapse has passed. Capital will be tight for businesses that lack pricing power and that are consumer facing. ~2008 p/e = 6.66x. ~2009 p/e = c.4.7x. ~Balance sheet is solid: expecting $80m cash balance 06/08. ~£3.00 share price = forward p/e 7.96x. ~£4.00 share price = forward p/e 10.61x. ~£5.00 share price = forward p/e 13.26x. ~If Metplant, Intertech and Delkor fire then there could be upside potential to forecasts. A couple of juicy orders for 2010 could put a rocket under forecasts. ~Focusing on technology offers a competitive advantage and widens the moat around the business. ~Barriers to entry: technology, talent pool, skills shortage, ~Indian and Chinese strategy is a highly intelligent move. ~If price stays low then Global Minerals could pick BATE up on the cheap. ~The cheapness of the stock should attract GARP investors. ~When the stock overhang is cleared the share could bounce to three quid pretty quickly; it is so oversold. ~Jonathan Ben-Cnaan: could have left because he was passed over for the CEO spot. ~Earnings yield - e/p ratio @ £1.77: '08 = 15%. '09 = c.21%. ~J. Ben-Cnaan's departure is a positive as he was aloof at managing the newsflow and he was not greatly liked in the City.
simon gordon: affc21, Another for the header - Corporate Intranet: ----- Analysing the share price management I think BATE's big mistake was not issuing a Trading Update in January. BATE do not regularly issue Trading Updates. If they had the market would have been appropriately aware that Hindustan was a problem. By waiting until the Interims they have probably enabled a ghost to linger on the share price. Great if you are buyer, awful if you are a holder. Catalysts for stabilising the share: ~Release an RNS stating that BATE 'notes the recent weakness in its share price and confirms that the Board is not aware of any reason for this.' ~As soon as Hindustan closed do an RNS. ~Trading Update in early July. ~Directors purchasing stock. ~Contract awards. I hope the share price falls to £1.50 as I will buy it as it drops. Painful and bloody but when the overhang is cleared a bounce to three quid would give a forward p/e c.8x.
Bateman Engineering share price data is direct from the London Stock Exchange
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