Capital Share Discussion Threads

[chillpill] 18/10/2022 07:40

As we have come to expect all looks good.

[rivaldo] 13/10/2022 07:45

Looks like Friday or Monday then :o))

EDITED - prior version was rubbish!

2ND EDIT - a post elsewhere states it'll be Tuesday.

[rivaldo] 12/10/2022 15:23

CAPD tweeted this yesterday re rather encouraging September industry drilling data. Hopefully bodes well for the Q3 update which may land tomorrow:

[phillis] 10/10/2022 10:42

A J Bell finally credited divis this am

[rivaldo] 04/10/2022 12:35

The Q3 trading update has been on 13th October for each of the last two years, so not long to go.

Q3 is generally seasonally slower, but given this from the interims less than two months ago the year on year comparison should be pretty decent:

"the tender pipeline remains buoyant across drilling, mining and laboratories and as a result of this strong demand, we are raising our revenue guidance for 2022 to $280-290 million".

[hpcg] 03/10/2022 16:19

With the price of gold in dollars recovering this will go up. It's really stupid, given that gold is close to all time highs in most currencies. Of course if gold goes up faster than the dollar goes down then we are cooking. As important an easing of the dollar will improve sentiment and sentiment is the most important driver for risk assets. If the Fed shows any signs of slowing rate hikes, especially if it looks like real rates will remain negative, then there could be an abrupt reappraisal of prices in precious metal related equities.

[yasx] 03/10/2022 12:58

"I reckon listed and unlisted are worth about $44m at the moment, and I take a 10% discount to reflect illiquidity, giving a $40m valuation."

There is not a chance they could dispose of these investments at that price - a 10pc reduction is grossly optimistic.

The sentiment towards smallcap mining tiddlers has changed markedly - most of these will continue to fall and dramatically so. Since CAPD have no intention of selling them, the valuation is pretty meaningless other than to point out that a 50pc reduction is probably generous right now.

As for this trading at a higher premium relative to peers, I do not think that is justified given the geopolitical risk - CAPD operate in a (relatively) risky part of the world.

[chillpill] 02/10/2022 20:02

I agree it’s a good place to be at the moment.

[rivaldo] 30/9/2022 13:51

Mark Simpson (ds2) has just sent out the latest Small Caps Live weekly market round-up. Hope he doesn't mind me linking to his updated valuation of CAPD as follows:



"Capital Limited (CAPD.L)

We don’t normally comment on stocks without specific major news. However, with Capital there has been a number of small changes that have potentially added up to a big change in valuation. These are a new contract with B2Gold, a placing at Firefinch, but perhaps most importantly, a weakness in the pound. This still provides a tail wind even though the current spot rate has bounced strongly back to 1.12 on Friday.

On discord, Mark has tried to make sense of this with an updated valuation model. As usual, he calculates a mid-case valuation but also presents a low and high case for those who are particularly pessimistic or optimistic on how Capital should be valued versus its listed peers:

First up is the investment portfolio. Lots of moving parts, but I have updated holdings where we know about them and also marked Firefinch to the AUD6c placing price vs 20c suspension price. I reckon listed and unlisted are worth about $44m at the moment, and I take a 10% discount to reflect illiquidity, giving a $40m valuation.

MSALABS I value on a revenue multiple. The growth rate will be slowing from the 100% pa historical rate, plus market valuations have come in for growth stocks. So I reduce my revenue multiple to 4x. However, the TTM revenue is now around $21m making a $64m valuation for CAPD's c77% stake.

For Capital Mining & Capital Drilling, I used EBITDA multiples of 3.7 & 4.1, respectively, which is the competitor mean from the 22H1 results presentation. Splitting the admin costs pro-rata between the businesses and ignoring MSALABS (which is conservative since at least some of the admin costs will be due to this growing business), I get around $16m EBITDA for mining & $70m for drilling based on my estimates.

This gives a $59m valuation for mining and $288m for drilling.

Year-end debt will be higher due to purchasing the 10 rigs from Perenti. I am estimating this at $42m net debt since the guidance was for this to come down a bit from the $36m at H1, prior to this deal.

All of these are in USD, and with the current GBP weakness, this mid-case valuation works out to be about £1.93/share for a 128% upside to fair value.

My downside valuation, implying that the various parts should trade at a discount to industry averages, gives a fair value of £1.24/share for a 46% upside.

If you believe that the business should trade at a premium to peers, (an argument that I have some sympathy for, given their pursuit of long-term contracts rather than high spot rates), then I get an upside valuation of £2.76/share for a 226% upside.

I've always thought that Capital was a good place to be invested because of the quality of management and where we are in the cycle, but that the returns would be good but not stellar. They would just be a lot more certain than other places to put your money, and this justified a reasonable holding. Of course, returns in a spreadsheet are not the same as an actual share price, and the areas of operation make the company higher on the risk spectrum than average. However, I am increasingly seeing that this could be a multi-bagger with a fair wind, not just a solid but unexceptional return."

[soundbuy] 29/9/2022 14:40

somebody lightening....1,300,000 @86p

[kaizenkid] 29/9/2022 08:58

More gold found at CAPD largest holding PDI: hxxps://www.investi.com.au/api/announcements/pdi/56c30186-591.pdf

[johnrxx99] 27/9/2022 15:58

I'm sure this has been answered before but is CAPD paid in US$ or local currencies?

[phillis] 26/9/2022 16:33

Agree Yas
Not our business

[yasx] 26/9/2022 16:29

Putting more money in is the wrong thing to do - they ought to be reducing as I previously suggested, not scaling up. This is not an investment fund. The value of the investments went up only because the sentiment for dud speculative plays was favourable, not because Boyton knew what he was doing. - many of them will likely end up worthless.

[chillpill] 26/9/2022 09:21

I imagine CAPD will put money in to avoid dilution of their holding.

Anyway am very relieved to be owning lots of $ based assets right now.

[podgyted] 23/9/2022 16:20

Hopefully.

Firefinch shares were suspended at AUD 0.20. Issuing 1.5bn shares at AUD 0.06 - so there'll be a large loss on Capital's Firefinch shares I presume.

[kaizenkid] 21/9/2022 15:24

Firefinch have raised capital to develop the Morilla gold mine. Should mean they end up spending about $70m on the mine - hopefully CAPD will capture some of that spend.

[gleach23] 18/9/2022 13:40

Yes - it'll be interesting to see how the share price opens on Tuesday.

[phillis] 18/9/2022 08:42

V strong demand at the close

[gleach23] 16/9/2022 14:56

Looks like bots on mini steroids buying today. So far there have been just over 100 trades and half of them have been purchases of around 1k shares.

[kaizenkid] 15/9/2022 08:58

Leo Lithium having a good run - one of CAPDs larger holdings - maybe Jcapital were right...hxxps://www.jcapitalresearch.com/uploads/2/0/0/3/20032477/2022_03_23_ffx.pdf

[kaizenkid] 14/9/2022 09:03

CAPD Tweet: "Our Sukari team smashed records last month, mining exceeded previous daily production record by 325BCMs & monthly production record by 35,343BCMs, blast hole drilling team beat monthly record by 10,292m, & the entire fleet achieved a record month of 12,519m, all delivered safely"

[johnrxx99] 12/9/2022 08:35

IMO this is meaningful from Major Drilling:-

"A slowdown in junior mining financing is being offset by a desire from senior customers to continue to grow their reserves, both in precious and base metals. With metal prices remaining at levels well above what is needed to support exploration, we are already in discussions with several senior customers for their calendar 2023 programs, with many looking to book their rigs early.”

So the seniors should be the marketing target and they should be able to compete with their larger rival having secured such recent contract wins.

[rivaldo] 09/9/2022 09:40

Thx to Kaizenkid elsewhere for this commentary from Canaccord on the recent new contract award:

"Today’s announcement demonstrates that the business continues to grow under the
strong market conditions, despite global macro headwinds, which has seen the share
price fall sharply over the last month. We see the stock trading on a 2023E EV/EBITDA
of ~2.1x and a (pre-debt) 2023E FCF yield of ~22%, and we believe the stock is
significantly mispriced. Maintain BUY rating and 140p target price."

I note that Leo Lithium is up to new highs after an overnight rise. I've updated the thread header post - I calculate CAPD's holding in Leo Lithium is worth almost £4m.