Precious Metals hitting all time high yet CAPD price is struggling??? |
Tamesis research -
Valuation -
Capital are working on a structural transition of their business. Drilling has already seen the improvement, and the roll-out into the US has been slower than anticipated but this is ramping up now. The update on FMG is unexpected, but we believe Capital can tender for an alternate contract, or sell the equipment. Our revenue forecast for 2024 is now on low end of guidance at $356m vs $359m before. We have had to downgrade our revenue forecast for 2025 (by 7.0%) and 2026 (by 6.8%) driven by FMG’s early termination of their mining contract at Belinga, and the delayed ramp up at MSALABS. Despite the revenue downgrade the shares are still trading on undemanding valuation multiples - EV/EBITDA for FY2024 and FY2025 of 2.7x and 2.8x, and a PE of 6.1x and 7.1x and a FCF yield of 8% and 20%. We continue to expect the company to use its strong balance sheet to deliver further growth too and remain comfortable with our PT 160p. |
I'm not hugely surprised about Belinga as iron ore is not in a great place right, and possibly never will be again. The Centamin contract was great, but as we recall Belinga was one in an extremely competitive auction. So I'm fine with this, though I suspect the drilling element will go the same way once that contract term expires. $15m was spent on additional equipment so some of that will come back and capital intensity overall will be much reduced. MSALABS is plain disappointing though.
Knock out figures on the drilling side, which is the core business. YoY a 24% increase in revenue from a flat rig count. Also very good, nay excellent, figures on the investments:
The total value of investments (listed and unlisted) was $30.9 million as at 30 September 2024, down from $47.8 million as at 30 June 2024;
Along with the proceeds from the disposal of our shareholding in Predictive Discovery, the portfolio recorded investment gains (realised and unrealised) of $15.0 million in Q3 2024. |
Shame they didnt have the foresight to include a Sept-24 net debt figure in the announcement. Granted not all companies would do this, and CAPD are one which do not, however given the significant proceeds from the Predictive sale it might well have helped the share price by communicating what should now be a materially lower net debt |
An excellent Q3, despite both early contract termination at Belinga and a slower ramp up at Nevada for MSALabs, means that CAPD only needs to achieve the same $93m revenues in Q4 as it did in Q3 to reach at least the minimum of the predicted revenue range for the year.
Which perhaps shows the resilience of the business. Both ARPOR and utilisation were terrific this quarter, and the new Perseus contract win in Tanzania has ramped up quickly.
Finally, "Capital Drilling anticipates revenue growth into the back of the year", so hopefully growth above Q3's $93.7m revenues will leave CAPD nicely around the middle of the predicted revenue range. |
Will Capd benefit anymore with CEY being taken over? |
As above, it looks more like a bowl to me but not a chartist.
Main thing which I think is important in the Q3 results is any update on the deleveraging actions |
Any Chartists out there -Cup and Handle forming? |
Reports of H2 traction in the ramp up of the labs business with Nevada Gold Mines would be a tonic |
Well Q3 earnings shouldn't look great if full year earnings forecasts are any guide. |
Good to finally see the break up from 82p area. Perhaps that earlier 94,950 trade cleared a small overhang? Q3 update should be next week. |
CAPD have just disclosed that their shareholding in Asara Resources has increased to 150m shares (from 138m).
This was primarily due to participation in Asara's placing earlier this year at A$0.009. Since then Asara's share price has doubled to A$0.019.
At the current 1.93 exchange rate CAPD's holding is worth almost exactly £1.5m.
So worth keeping an eye on now: |
Bowl shape starting to form if you look at a 6 month chart? |
Mine too
Something has changed
Pressure has worked? |
AJ Bell dividend has landed Phillis - to be fair that's some improvement on the multiple weeks it used to take. Not before time. |
Mine arrived today at IG. |
Wonder how long the divi will take to land |
Company should be buying back I believe. |
Gold has hit another all time high today. Wonder why buyers don't make the connection here and drive up the price as it should be a turbo charged way to profit from the PM bull market?? |
Ready for take off here is you look at the Precious Metals market with $ Gold (all time) and Silver (5yr) hitting highs. |
Student13, elsewhere I am hearing Mitchell Services (MSV.AX) is very cheap. Do you have an opinion? |
Gold new ATH $2545 |
Agree hpcg. Weakness in various small caps in recent days/weeks despite good trading. Assume its down to a possible ill-judged raid by Reeves in the budget |
This is harsh, mercenary and uncaring, but the sad death of David Abery should help freshen up the board. I don't think there is too much wrong and some of the recent stated strategic changes, like not attempting to grow the capital intensive earth moving side are welcome. The market is much more circumspect though. |
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