Capital Share Discussion Threads

[johnrxx99] 14/7/2022 10:02

The LABS are supporting CAPD. IMO, amend the policy of "buying" new contracts by investing in the client, sell the current investments and focus on the business - digging holes and analysis of what's in the holes.

KISS principle needed here.

[yasx] 14/7/2022 10:02

Gilotron,

Regular updates are not provided by the Co. but the figures that appear on here are based on record keeping by one or two contributors to this thread.

As another reader has pointed out, the investment portfolio has basically been clouding the profile of the Co, and now appears as a drag on the price when it never did benefit when things were rosy. I do recall some on here were suggesting that Boyton was, or should be, a brilliant fund manager given the gains but in reality there was no skill in his stock selection, most of which were given as part of contracts, and the gains were simply as a result of sector buoyancy. Now that sentiment has been punctured, that portfolio has imploded.

[gilotron] 14/7/2022 09:45

How are movements in their investment portfolio announced or is this something we all have to calculate somehow?

Mining services companies seem to carry low pe's but it feels like CAPD is more of a growth company at this current stage

[shanklin] 14/7/2022 08:42

Based on that notes, the MSALABS margin is circa 40%.

[chillpill] 14/7/2022 08:15

Completely oversold. Tamesis have re-iterated 160p price target this morning.

[shanklin] 14/7/2022 07:47

I remember that operating margin in MSALABS is higher than the rest of the business. Can anybody recall what it is please? Otherwise I will start looking

[qs99] 14/7/2022 07:14

Nice update this am...ahead of trading update

[gleach23] 13/7/2022 11:56

Ah...thanks shanklin, I'd missed that

[shanklin] 13/7/2022 11:09

"Capital will be announcing its trading update for the six months to 30 June on 19 July, which will include a conference call and question and answer session."

[gleach23] 13/7/2022 11:07

H1 trading update before then - could be as soon as tomorrow

[podgyted] 13/7/2022 00:08

Leo Lithium down 14% today - Predictive down another 3% - Firefox still suspended for refinancing but presumably a big fall there when unsuspended.

Could really over-shadow the operational result in a few weeks time.

[hpcg] 07/7/2022 08:02

A helpful exploration update from Centamin. Plenty of life in Sukari and nearby. They have a solar plant coming on line this quarter which will help their costs.

[podgyted] 07/7/2022 00:07

Yup.

Whenever there is a conversation with an II/City professional they absolutely hate CAPD's investment portfolio - you sometimes wonder if the share price would be 50% higher if they didn't have it (and I mean with nothing to replace the NAV).

IMO the market hammers CAPD when the MV of it's investment portfolio goes down and ignores when it goes up, so the current events are worrying. I'm also worried that CAPD will turn out to be part of the refinancing for Firefox which will be another market disaster.

Perhaps I worry too much.

[yasx] 06/7/2022 15:17

DS,

I agree it is illogical not to attribute anything to these investments when they were rising but to fsctor them when they are on the decline - but, that is what often happens. Had they sold a fair chunk of them the cash would most certainly be recognised now. Having a plethora of nascent juniors was always bound to be heavily discounted since it is often difficult to sell them except when sentiment is extremely positive and because almost invariably most retreat and end up as failed investments.

But, at least the order book is strong at CAPD as noted recently by the Co. Hope that is reflected in the price at some point.

[dangersimpson2] 06/7/2022 15:09

They were selling down FFX, but if they had sold more they would have missed out on the Leo Lithium stake. Their LLL stake is worth more than the FFX stake was when they started selling down so don't think we can be too critical here.

The PDI stake they clearly are getting lots of explo/infill drilling contracts out of, and probably hope that by holding they will get long-term production contracts in the future.

The market never marked these stakes to market on the way up due to their strategic nature so logically they shouldn't on the way down. This isn't exactly a logical market though!

[yasx] 06/7/2022 15:02

Quite why they never offloaded more of these investments at a time when sentiment was extremely strong baffles me - it was inevitable that this would happen sooner or later as I oft repeated on here. Had they done that, they would now have cash at their disposal to use if required.

[dangersimpson2] 06/7/2022 14:53

Yes, FireFinch have struggled with cost increases and the ECOWAS sanctions. Sanctions were lifted this week so we can expect some return to normality in the medium term.

This has placed pressure on Firefinch's working capital, hence they have sold all the Leo Lithium that isn't subject to lock up. FFX will remain suspended until they can raise fresh capital from the market - not easy in the current markets so expect a big discount.

In terms of direct impact on CAPD - Exploration has been put on hold at Morila so that will be a small negative impact on CAPD in the short term. Although developing a new mine plan may well drive some incremental infill drilling work.

The other impact is, of course, the valuation of their stake in FFX. Before suspension, it was worth just over $2m and we can assume it will be worth quite a bit less going forward - at least until they sort these issues out. The interesting thing will be if CAPD helps bail them out. If they do, I'd expect them to demand extended drilling contracts or something similar in return as well as getting a potential low price on any fresh capital injected.

Overall probably about $2m short-term impact for CAPD out of a forward EBITDA of around $80m. The medium-term impact could be a few $m more, but with the potential to be a net positive if/when there is a recovery. So not really material compared to the current daily moves that are simply market noise.

[podgyted] 06/7/2022 14:17

Missed these 2 so it does look like Firefinch has (hopefully) a temporary problem.

[podgyted] 06/7/2022 14:02

Firefinch seems to be struggling or am I misreading this?

[dangersimpson2] 04/7/2022 11:02

Moving up on lots of small buys. Suggests the forced seller may have been cleared.

[rivaldo] 01/7/2022 13:58

Berenberg have today raised their target price slightly to 156p (from 154p) and say Buy:

[rimau1] 30/6/2022 15:10

Good day to top up sundance! Imagine the rise if markets were not imploding?

[sundance 13] 30/6/2022 12:55

Bad day for good news unfortunately, at least it's up!!

[hpcg] 30/6/2022 11:14

Adam - for me it's the duration of the contract at that size that is more consequential than any incremental improvement. Fekola is new territory and offers the possibility of further growth.

yasX - it is a 98% down day in London, based on the current state of the FTSE100 so the response is excellent. As you have said before this doesn't get a high rating, so I am not expecting much when the market is under pressure. There are plenty of small cap investors that won't touch mining services in Africa; they'd rather cluster in quality compounders like asset managers, Best Of The Best, Games Workshop and the like. To be fair I'm going to buy GHE once markets turn, and I'd like to buy GAW at a reasonable price, but right now there are much better sterling cash returns coming out of CAPD. A low price plus surplus cash generation is fertile ground for an effectively run buy back program, so I hope we see that.