Capital Share Discussion Threads

[rivaldo] 22/3/2022 08:13

New highs now - and buying coming in at 99p this morning.

[rivaldo] 21/3/2022 09:46

I came across this (not posted here before) from Aton Resources from two weeks ago re their appointment of CAPD as drilling contractors at Hamama West in Egypt:



Extract:

"Highlights:

Aton has contracted Capital Drilling to undertake a c. 5,000m infill RC drilling programme at the Hamama West development project, which is scheduled to start within the next 4-6 weeks, pending transfer of the drill rig from the Sukari gold mine to Hamama.
The drilling programme has been designed to upgrade the inferred mineral resource estimate at Hamama West, as Aton advances the project towards its development as an open pit starter mining operation and heap leach processing facility.
Sterilisation drilling will also be undertaken for the planned mine infrastructure facilities, as well as at the West Garida prospect 3km east of Hamama West prospect, which has returned assays of up to 99.6 g/t Au from surface sampling."

[gleach23] 18/3/2022 16:49

Nice close to end the week. When I first saw it I thought it would probably be a UT for 100 shares @ 95p, but no...112k :)

[johnrxx99] 18/3/2022 09:09

Totally agree but the downside is that in a market route the small guys are hit to pay for the calls on the big guys.

In these markets, comparisons tend to be academic imo.

[mrnumpty] 18/3/2022 06:42

Last Sunday’s Telegraph tipped Fresnillo as a “ buy “ @ £ 7.30 . The £ 5.6 bn company generates 46% of its revenues from gold , 41% from silver and the rest from zinc and lead . The author of the Telegraph points out challenges for Fresnillo “ for at least part of the coming year “ , but he states that , with a p/e of 16.6 , it is cheap compared to “ the world’s largest gold miners , Newmont and Barrick , both listed in America , each with a respective p/e of 27 and 22 times forecast earnings “ . However , in comparison to these behemoths of the gold mining world , CAPD is surely at far lower valuations , as its current p/e is about 6 . Furthermore , according to Hargreaves Lansdown , Fresnillo achieved EPS growth of 30% , whereas the same metric for CAPD was 143% EPS growth . An argument in favour of huge companies like Fresnillo is that they are more robust and yet Fresnillo’s net cash of £ 52 million seems puny to me in comparison to its market cap of £ 5.6 billion . It seems to me that the old saying that “ elephants can’t run “ applies to huge companies like Fresnillo . I much prefer to be a more nimble and cheaper company like CAPD .

[mrnumpty] 17/3/2022 23:08

Upbeat outlook for gold . In the Business section of today’s Telegraph , Tom Stevenson , who is a regular business columnist , discusses the outlook for the world economy . My suspicions last year that governments , having printed vast amounts of money during the pandemic , were far too complacent about inflation by being far too laid-back about interest rates , are confirmed by Mr Stevenson . It’s perhaps no great revelation to claim that governments are far too “ behind the curve “ , being far too slow in raising interest rates . So , Mr Stevenson fears that it’s back yak the stagflation of the 1970’s . The conclusion of his piece is of interest to all of us interested in commodities in general : “ Many oil and gas companies will break even at $ 70 crude . Even after the recent retreat , oil is priced at about $ 100 a barrel [ it jumped back up today ]. At that level , energy producers are awash with cash , and they tend to hand a high proportion back to investors in the form of dividends and share buybacks . And finally , don’t think that gold’s recent rally towards its all-time high of $ 2070 an ounce is the end of it . Goldman Sachs thinks the precious metal is heading towards $ 2500 . If we really are revisiting the 1970’s , that might be conservative “ . Sorry about going off-piste by also writing about oil , but I think that inflation will benefit all commodities , including food ( I’m also invested in the Barings Agriculture fund ) . Good luck all .

[owenski] 17/3/2022 10:58

FY Results webcast now on YT -

[rivaldo] 17/3/2022 07:33

Excellent posts above about the potential MASLABS spin-off, thanks. Must admit to not yet having listed to the presentation, which I will do asap.

CAPD are mentioned today as being the drilling contractors in a very positive RNS from Altus Strategies about Diba & Lakanfla - "further encouraging drilling intersections" etc:

[dangersimpson2] 16/3/2022 17:10

When I did a follow-up on CAPD at Mello Monday in November, I focussed on two possible ways of valuing MSALABS.

The first was a listed growth company multiple of 8xTTM P/S which came out at $68m. Since then listed growth company multiples have contracted, but the TTM Sales is now $16m and the forecast growth more rapid. Capital also own about 2% more of MSALABS. If we went for a 6x Sales multiple to reflect current market conditions this would be a $74m valuation for CAPD's stake in the business.

The second methodology was taking the future potential of the business and discounting it back to the present. I got a $66m valuation by taking $50m revenue in 2024, 25% EBIT margins, 10xEBIT multiple and a 12% discount rate. This is why I was particularly interested in what they thought about the $50m, since it now looked a little light given the recent MSALABS performance.

Taking the now $80m potential, say 4 years out, 30% EBITDA margins then you get about $24m EBITDA. According to the appendix to the Capital results presentation, competitor ALS is on 11.4x 2023E EBITDA. Applying the same multiple gives about $270m for MSALABS in 2025 or about $175m today if we discount it back 4 years at 12%. 12% may be a bit light for the area of operation so that would be $132m if you want a 20% discount factor. So that is potentially a material increase in upside valuation that was announced in today's call.

All of this requires a lot of future extrapolation and we should be wary about paying up for an uncertain future today. However, one thing is still clear to me: by applying a single-digit multiple to the EBITDA of the whole of CAPD, all the brokers currently materially undervalue the potential of MSALABS in their notes. That discrepancy has become even more severe following recent results, and now potentially stands at well over a $100m valuation gap.

[adamb1978] 16/3/2022 16:40

Yes, the MSALABS spin-out was very interesting. You usually get something from these calls so worth dialling in when possible. Very cheap IMO

[otemple3] 16/3/2022 12:15

I wasn't sure about dialing in having watched last week's presentation, but am very glad I did as lots of good info in there, much more detail than before. Agree Kaizenkid, MSLABS was very interesting particularly the inference that it could be spun out when up to scale. On 2024 numbers of $80m revenue with 30% ebit margins, you don't need to apply an outrageous PER to cover the current mrk cap of the whole business......

[kaizenkid] 16/3/2022 11:46

The CAPD presentation was very good as always. I thought it was interesting that they were willing to float the idea that MSA could be a $80m+ business and open to comparing it to ASL - 30% ebit margin business. Clearly the business prospects are better than they thought a year ago.

[rivaldo] 16/3/2022 07:32

CORA have announced today that their initial 2022 drilling programme has commenced at Sanankoro, with a 7,500m drill programme underway and "strong expansion potential".

CAPD are the drilling contractors:

[rivaldo] 15/3/2022 09:37

Analyst comment from Berenberg - note how conservative their forecasts are, with "clear upside" to those forecasts.

I suspect that Berenberg will again increase their forecasts and target price after the Q1 trading update in a month's time :



"Capital Limited remains "a conviction buy" after strong results

"With what we think is clear upside to our estimates given extremely strong trading conditions, we remain conviction buyers," Berenberg said.

Results from Capital Limited (LSE:CAPD) topped Berenberg’s forecasts, thanks to lower costs and tax.

The broker said the mining services company issued a strong set of results for 2021 while guidance for the current year was ahead of expectations.

Management has forecast that revenues this year would be in the range of US$270mln – US$280mln, which means even the bottom of the range figure is higher than Berenberg’s forecast of US$261mln.

The broker was also a little cautious on its predicted rise in the growth of the drilling rig fleet, which is set to increase by 11 this year, compared to Berenberg’s forecast of an increase by five; with the increase in rigs comes a bigger than expected guidance range for capital expenditure.

“Management commentary continues to suggest a buoyant market environment, with continued strength in demand driving the company’s fleet expansion, and robust tendering activity across all business units. The company notes that, following the rise in commodity prices, it is observing an increase in projects moving forward to development and therefore expects the pipeline of new mining contracts to expand in the coming years. Management continues to enjoy strong demand in the laboratory services business,” Berenberg noted.

The broker increased its target price to 138p a share from 134p previously."

[sundance 13] 15/3/2022 09:13

That 88.4 bid price is annoying, share showing as up today but bid unmoved??

[rivaldo] 14/3/2022 08:48

Good news from Arrow Minerals, where I believe CAPD are the drilling contractor following their equity investment. Lots of drilling work to come:

[mrnumpty] 12/3/2022 15:32

Adam . Thanks

[adamb1978] 12/3/2022 14:11

Mr Numpty

Personally I largely ignore macro events when I invest. Reason is that firstly you need to be able to predict it correctly, secondly you then need to predict how it will impact share prices, and then thirdly you need to determine whether that likely impact has already been factored in. Far too much guesswork for me!

Results this week from CAPD were excellent. Scratching my head about why it remains so crazily cheap. Now trading around NAV, which is astonishing. Hopefully they continue with the buyback whilst the price is where it is

Adam

[mrnumpty] 12/3/2022 09:12

Comments from others on the following would be much welcomed by me . As is stated in today’s Telegraph , the impact on the world economy from Putin’s obscene invasion will be as severe as the trebling of oil by the Saudis after the defeat by Israel of the combined armies of Egypt , Syria and Jordan when those three attacked in 1973 , known as the Yom Kippur War . I certainly remember how Britain’s economy slumped ( petrol rationing vouchers were introduced but not enacted ) . So , it seems to me that the best place to be invested now is commodities ( food , hydrocarbons , metals ) . Obviously CAPD is ideal as it is exposed to various producers in several countries . Does anyone have any thoughts about what this global crisis might mean for actual producers of precious metals like platinum , palladium and rhodium . Two companies producing these which I know of are Sylvania Platinum and Tharisa . However , set against the positive outlook for commodities is my conviction that this worsening crisis , through commodity price inflation , will eventually cause demand destruction .

[tole] 11/3/2022 16:52

https://masterinvestor.co.uk/equities/small-cap-summary-featuring-capd-sgc-and-boot/Capital Limited (LON:CAPD) – just praying for an early 'hat trick'A great set of results for the year to end December, saw the mining services group report a 68% increase in 2021 revenues to $226.8m ($135.0m) and a 226.6% gain in adjusted net profits at $36.6m ($11.2m), helping to generate basic earnings 141.7% higher at 19.2c (7.9c) per share.The group could see even further plusses this year. Tamesis Partners are going for $274.6m revenues, and $38.6m profits, with earnings of 20.6c per share.Peel Hunt, rating the shares as a 'buy, go for $268.1m sales, $39.1m profits and 15.1c of earnings. Their aim is for 139p a share.While Berenberg, also rated as a 'buy', see $272m of sales, $30.0m of profits, with 15c per share earnings and a 3c dividend. Their hope is for 138p a share in price.But you just know that its revenues and profits will do better than those estimates.The shares have yet to give me a Target Price 'hat trick' but I do feel that it is very close indeed to scoring.The group's shares at around 91.10p are destined to break the 100p level very soon.Hold tight.

[mrnumpty] 11/3/2022 16:03

Rivaldo . Great news and thanks for your hard work here and on LSE .

[rivaldo] 11/3/2022 15:29

Terrific summary in post 2054, cheers Mark. Looking forward to your 235p target coming to pass :o))

[fozzie] 11/3/2022 14:27

Great write up as ever, thank you 👏

[shanklin] 11/3/2022 14:19

Yes, an excellent write-up, thank you Mark (ds2)