Capital Share Discussion Threads

[chillpill] 18/8/2022 07:18

Chrysos who manufacture the machines can only make around 16 per year so CAPD have a dominant position for this new product.

Assay testing companies usually trade on a p/e in the teens. To reflect the value of this business it could be spun out in 2/3 years time

[catsick] 18/8/2022 07:11

These mslabs machines are much in demand as time and cost savings are significant, I can't see the ebitda margin being less than 50% to start with, so building a business from zero to 80m in revenue in 5 years is probably worth more than the current valuation of the company... Great company, well run , well undervalued

[se81] 18/8/2022 06:46

Well as a CAPD observer, I'm fairly impressed- is there anyway to get an idea of the profitability of MSALABS? What do those estimated $80m pa revenues in 2025 translate to in terms of bottom line- presumably this is much higher margin than the rest of group?

[johnrxx99] 18/8/2022 06:40

I suspect the market will say investments have reduced post tax profits by 47.3%. I hope I'm wrong. Otherwise as expected.

[rivaldo] 18/8/2022 06:20

Terrific results - and great to see the $10m revenue upgrade to $280m-$290m.

The adjusted EPS for H1 (excluding the investment portfolio movement) is 10.53c, up from 6.7c - that's 8.7p EPS in H1 alone, so CAPD are on track for say 18p-20p EPS this year.

Which is a P/E of around 5...backed up by the $47.3m investment portfolio and other high tangible assets.

The interim divi is up 8% to 1.3c.

The rapid rise of non-drilling income to 28% of revenues, plus the long-term nature of much of CAPD's production contract/drilling work, is quickly reducing any vulnerability to cyclicality.

Tamesis's 160p target may or may not be increased again, but it certainly looks a reasonable - and achievable - target imho.

[chillpill] 18/8/2022 06:10

As expected great set of results with a small revenue upgrade.

Quite often the stock sells down in first hours after update as traders take their profits. Hopefully any dip will be temporary.

[rivaldo] 17/8/2022 08:22

Cheers Tole.

You can register for the H1 results presentation webcast at 9.00 am tomorrow morning here:

[tole] 16/8/2022 19:39

From 12th Aughttps://masterinvestor.co.uk/equities/small-cap-catch-up-featuring-rps-code-carr-and-others/On Thursday 18 August Capital Limited (LON:CAPD) – should be declaring its Interim resultsFrom its late June low of 75p the group's shares have been on a steady climb back up again, now at 95.6p ahead of the figures.The high of 108p peaked in early April may appear to be a market target but I am now wary of more shares being unloaded onto the market as the price moves.Tamesis Partners have a current year revenue estimate for the mining services group of $274.9m, which would be a record figure. In mid-July they had a price objective on the shares at 160p each.

[rivaldo] 16/8/2022 08:24

Nice 200,000 share buy at 95p just reported, before the H1 results due on Thursday.

[rivaldo] 11/8/2022 07:18

R&M UK Micro Cap Investment Trust's July factsheet is just out.

CAPD is the Trust's largest holding now at 5.6% of the portfolio, and R&M have just bought more after a "strong update":

[rivaldo] 09/8/2022 07:11

:o)) I know, it's incredible isn't it....and yet these City boys get paid £m's for their "efforts".....

Anyway.....CAPD's H1 results are out in just 9 days on 18th August. We already know they'll be excellent, so given the "strongest demand environment since the company's inception" hopefully the next stage of this upward trend over the last couple of years will hockey stick upwards again.

[hpcg] 08/8/2022 14:39

I wouldn't waste your time Rivaldo, as we know this isn't a buy because it is too difficult for London focused fund managers to value. Not that they have any money, spent it buying high quality growth IPOs like Made.com or The Hut Group.

[rivaldo] 08/8/2022 13:31

Excellent Q2 results just out today from Geodrill. The outlook says it all:



"Outlook:

Exploration companies, intermediate and senior mining companies generating cash continues to drive demand for drilling;

Drilling activity levels in core geographic regions are increasing in 2022;

Extremely active bidding market, with particularly strong demand in exploration drilling in all geographic locations."

[rivaldo] 03/8/2022 09:12

"High-grade" drilling results this morning from Shanta's West Kenya project, where CAPD are the contractor. And MSALabs are carrying out the lab analysis.

Plus lots more drilling to be carried out over the rest of 2022:



"The latest phase of drilling at West Kenya has continued to deliver consistently high-grade results that are indicative of the vast potential West Kenya offers in the Shanta Gold growth story.

The 2022 drilling campaign is two-part, focused on upgrading existing resources to the Indicated category and resource expansion across our numerous targets. I am pleased to report that today's results highlight our progress with the former, and will be quantified with a year-end resource upgrade targeting hundreds of thousands of new ounces to the Indicated category.

We expect to have a further update in the next few months with our priority being to expand the resource base at targets including Kimingini and Ramula, where drilling is active and delivering highly encouraging results."

[rivaldo] 02/8/2022 12:49

I note that Canaccord are forecasting at 93p a P/E of just 5.4 for next year.

Which provides encouraging back-up to Tamesis's similar forecast as above.

They also see a 2.69c dividend this year rising to 2.76c next year.

[rivaldo] 01/8/2022 11:31

Excellent - and that's as usual with initiations probably a relatively conservative opening target which can easily be upgraded later.

Good coverage on Sharecast:



"Canaccord Genuity initiates coverage on Capital Limited

Analysts at Canaccord Genuity initiated coverage on Africa-focussed full-scope mining services company Capital Limited on Monday with a 'buy' rating and a 140.0p target price.

Canaccord Genuity said it believes Capital shares were "significantly mispriced" based on the group's "strong" growth outlook and pointed to four key reasons why investors should own the stock.

Firstly, Canaccord said Capital was "a dominant player", generating premium margins, while it also noted that the group was operating in a growing market, it had a "positive outlook" for key segments, and also pointed to the company's balance sheet strength.

"Capital operates the largest drilling fleet in Africa, with approximately 116 rigs, and operates at higher margins than peers. Mining services activity is picking up significantly and is set to rise further as commodity prices incentivise exploration activity. Further, the company is using its established position to diversify into segments with positive outlooks, including contract mining and laboratory services which accounted for roughly 22% of group revenue in FY21," said Canaccord.

The Canadian bank also noted that Capital's management had positioned the company for "significant growth" and, importantly, it now expects that most growth spending can be funded from internal cash flows.

"We see Capital as a well-run, growth-focused company operating in a fragmented market which acts as a degree of protection over the company's margins. The company is trading at an EV/EBITDA of ~2.2x for FY23E and ~1.6x for FY24E, compared to a historical industry average of ~3-4x over the last few years," said the analysts."

[kaizenkid] 01/8/2022 09:35

Canaccord initiate today - 140p target price

[rivaldo] 01/8/2022 07:37

Excellent increase in their gold resource at Bankan just announced by PDI:



I note they now have 9 drill rigs on site (CAPD's Q1 update stated their contract with PDI had expanded from 2 to 5 rigs).

And PDI state:

"Bankan is one of the most significant gold discoveries ever made in West Africa and may possibly become the region’s next tier-one gold mine."

"Over the following months and supported by our healthy A$57 million cash balance, we will continue to drill the current deposit to convert the Resource category from Inferred to Indicated, undertake further resource drilling at Bankan Creek and develop our regional targets with the goal of finding more NE Bankan-style deposits along our 35km-long structural corridor."

[rivaldo] 29/7/2022 13:57

As posted previously, Tamesis Partners' forecast implies 20.45p EPS for next year given their stated P/E of only 4.4 at 90.2p.

A P/E of 8.4 - as per the current year at present - would give a share price of 172p.

CAPD are a different company from years ago. One could argue that with:

- the excellent dividend yield
- the tangible asset value (rigs etc)
- the value of the investment portfolio, i.e some $47m at present
- the security of the long-term mining contracts which have reduced vulnerability to the cyclicality of exploration mining since earlier times
- the potentially huge value of the new Labs business, which again is a value-enhancing addition from earlier times

CAPD deserve a reasonably higher multiple than 8 or so.

There are any number of further catalysts as stated earlier. I also forgot to mention the potential IPO of Allied Gold, which was mooted last year and may well be resurrected, especially if the gold price remains around its current levels or falls back to say $1,400-$1,500, which would still be a decent level historically.

[gilotron] 29/7/2022 11:49

I'd be interested to know where you lot have put the rest of your money if that's not too controversial. I have a lot in solg myself

[deanowls] 29/7/2022 11:40

Tbf that should be a disclaimer for all shares. Stick it in a tracker for safe keeping.

Ps. First tranche I bought at 18p, it’s not done bad tbf, sometime gets stuck at a point then really motors.

Good management, good contracts, Carrie’s risk but that’s the upside and downside. There are worse places to have your money in my opinion.

[yasx] 29/7/2022 11:27

There's no reason imo why the share price shouldn't re-rate again by anywhere between an additional 50%-100% given the extremely cheap fundamentals.

-----------------------------

To suggest there is no reason to think it won't re-rate by up to 100pc is stretching it. Firstly, it never managed to re-rate by 100pc from a much lower baseline even when the broader economic outlook was much better. Moreover, during that time, given the boom in speculative investments, the stakes it holds in various Co's went up markedly. Despite all that, the reaction has been subdued.

Now macro conditions have started to deteriorate, demand for services can change fairly sharply. That may not occur, but to exclude it as a risk is unreasonable. Just look at the performance of the shares during two periods of broader economic/market weakness and see how they fared - in the 2007/8 downturn, this lost 85pc of its value in a few months. More recently, during the Covid period in early 2020, the shares lost over 50pc in a matter of weeks.

For now there is good visibility in terms of demand for services - but, that can change when market dynamics are fragile at best.

[rivaldo] 29/7/2022 10:17

More work for MSALabs from Goliath Resources in Canada:

[rivaldo] 28/7/2022 21:44

Good to see another rise today to the closing 91.8p mid-price after several large trades went through and a total of 3.72m shares traded.

The H1 results are out soon, on 18th August. We know they'll be good (at least prior to the short-term investment portfolio movements). The outlook will be equally bullish.

Then there's every chance of further mining service contract wins, plus the stellar growth of the Labs business and the likelihood of more drilling contracts.

The share price has gained 50% in the two years since I started this thread. There's no reason imo why the share price shouldn't re-rate again by anywhere between an additional 50%-100% given the extremely cheap fundamentals.

[adamb1978] 28/7/2022 13:52

Agreed yasx - I'm not desperate for yield but inserting a meaningful and rapidly increasing dividend when they can would also bring another type of investor into CAPD