Capital Share Discussion Threads

[adamb1978] 18/10/2023 18:46

"If they can't be bothered, they should not present the forecast."

Completely. Showing flat gross profit to 2026 when turnover is ramping is daft.

If these aren't company guided forecasts, then if I were CAPD I'd be shouting at Tamesis and getting them to pull the note and/or ending any relationship with them. Having these forecasts out there are doing the company a complete dis-service

[mtioc] 18/10/2023 17:38

I don't think the analyst or the company have focused on FY25 and FY26. From FY22 to FY26:

- Sales increase by c. $90m or 32%
- GP is flat
- Admin costs go up by $2.7m in Yr1 and are flat after that (really?)
- EBITDA goes up by $2m or 2.3%
- EBIT (for me the most important) declines by $14m or 25% (and the EBIT margin from 19% to 11%)

The EV/EBITx increases from 3.7 to 5. That could be right for a business with declining profitability and shrinking margins.

However, I don't believe the company or Tamesis have up-dated the outer years (25 and 26). If they can't be bothered, they should not present the forecast.

[wrighna1] 18/10/2023 13:14

Thanks Adam for your input.Perhaps it's a conservative / basic forecast as you say. But it put me off buying some more when I saw it , as the top line story looks very different to the bottom line trend !Will keep an eye on it for now.

[adamb1978] 18/10/2023 12:59

Agreed hpcg. Its been a consistent refrain by some of us on here - a buyback would be a good use of capital and they should be moving some resources to it asap.

[adamb1978] 18/10/2023 12:47

Hi Wrightna1

You make a good point and I dont know. The Services revenue stream is lower margin than the Drilling and Mining lines, but it shouldnt have such anywhere near as big an impact given the relative sizes.

Tamesis say that gross margins go from:

2022: 46.2%
2023: 43.5%
2024: 38.8%
2025: 35.5%
2026: 35.2%

Or put another way, Tamesis say that revenue increases by $93m over 2022-6 but gross profit only incraeses by $900k. They forecast decreasing net income too.

Tamesis' numbers look rudimentally put together though as admin costs are modelled flat at 47.1m over 2023-6, which also looks odd.

Anyone know? I've emailed the company.

Adam

[hpcg] 18/10/2023 10:14

Vast sections of the London small cap market look cheap, and by the continuous stream of takeovers that is also the view of actors with money. The only way to counteract money flows is for companies to provide their own flows, which means buy backs.

[fozzie] 18/10/2023 09:52

We are back where we were two years ago, this is just the most frustrating share. Its always looked very cheap, will we ever reach any kind of sensible valuation.

[wrighna1] 18/10/2023 09:46

Does anyone know why the gross margin % in tamesis estimates for fy24 falls back meaning 10m less adjusted EBITDA in Fy24 vs Fy23? New to this company

[rivaldo] 18/10/2023 09:28

Tamesis have retained their 160p target price and forecast of 18.5c EPS this year, giving rise to a P/E of just 5.1.

This despite Q3 being slightly behind forecasts due primarily to the Perseus Mail drilling project hiatus and Q3 weather seasonality. Tamesis expect a strong Q4 due to the ramp up of the drilling contracts at Ivindo and Reko Diq.

With Mining Sevices and MSALabs now comprising over 30% of revenues CAPD are "no longer just a drilling business".

In summary (extracts):

"Capital are clearly on track for another record year (4th consecutive year of revenue growth), and are well placed to continue with an active tendering pipeline, growing geographic footprint (having recently entered into America with their Nevada Gold mining contract – see note) and first-in class services."

"Capital’s holding in Allied Gold was worth ~$10 million as at 30th September 2023, at Allied Gold’s share price of C$4.74. The company’s investment portfolio stands at $47.8m valuation vs $42,1m as at 30 June 2023."

"The shares are trading on EV/EBITDA multiples of 2.2x and 2.4x 2023 and 2024 respectively, PE ratios of 5.1x and 7.0x and a dividend yield of 4.1%."

[adamb1978] 18/10/2023 08:21

Still looks cheap I agree. Nothing massively new in there that will get the price moving unfortunately. The Nevada contract is useful though if material given it moves a bit more of the geographic exposure away from Africa.

As said before, the focus at some point needs to move to cash generation and buying back shares (or paying fatter dividends). Whilst investing for growth is great, they're not getting credit for it so a tweak to the capital allocation decisions before long would be beneficial for shareholders

[rivaldo] 18/10/2023 07:45

Q3 results look positive, with revenue guidance maintained despite the usual African hiccup such as in Sudan.

Drilling continues to thrive with new contract wins etc and revenues up 9% on last year, supported by mining revenues up 39% and MSA Labs up 36% year on year, with both these also up nicely quarter on quarter too.

The investments are now worth almost $48m, up in the quarter from $42m after the Allied Gold IPO and backing up around 26% of the m/cap in themselves.

At the current valuation and low single-digit P/E CAPD still looks extremely cheap. And of course the gold price is now rising back up again for obvious reasons.

[otemple3] 14/10/2023 00:51

Thanks Darlocst, will listen in the morning ?

[adamb1978] 13/10/2023 12:53

Q3 was on the 18th Oct last year, so assume we'll get one next week?

[darlocst] 13/10/2023 07:20

The comment was made in the webcast by the CEO yesterday - the recording has not been uploaded to Centamin's website yet but should be available here at some point:

[otemple3] 12/10/2023 19:52

Thanks DarlocostThat's always been their plan so no change - can you point me in the direction of the comment as I can't see it in the RNS or slides but may be being blind

[darlocst] 12/10/2023 16:14

Confirmation today in the Centamin RNS & investor presentation this afternoon that the Capital Sukari waste stripping contract will finish in mid-2024. Centamin have $34m cost against remaining waste stripping in 2024.

Centamin CEO thanked Capital for delivery of contract and said they remain a trusted partner at both Sukari and for the wider Centamin group going forward.

[podgyted] 12/10/2023 14:22

Rudd and Boyton sold £5m in June 2023. To be fair, they still own close to 18% between them.

[adamb1978] 12/10/2023 12:46

No-one is selling are they? Last director dealing was a c.100k purchase

[yasx] 12/10/2023 12:40

Why are those running the Co. selling the shares if the prospects are so good?

[rivaldo] 09/10/2023 07:23

From Citywire today:



"Allianz manager Knight drills down into Capital prospects

Capital Ltd (CAPD), previously known as Capital Drilling, is an example of a small-cap stock being hit disproportionately hard by negative news, says Allianz Global Investors’ Richard Knight.

The Citywire Elite Companies A-rated mining services company has a focus on the gold mining industry in Africa and is a top 10 holding in Knight’s Allianz UK Listed Opportunities fund where it makes up 2.4% of the £197m portfolio.

‘The shares have performed poorly following a trading update in July, though the update was only slightly soft on revenues and led to very minor downgrades in profit expectations for the year, though management guidance was maintained,’ Knight said.

He added that the ‘more salient news’ was the ongoing longer-term contract wins in mining services in new metals and in new geographies that ‘significantly de-risk the business operations’. This, along with growth in materials testing means it ‘warrants a much higher valuation than the group average’."

[podgyted] 05/10/2023 17:44

Given the amount of capital they tie-up in investments it would be nice if they gave a list of their top 10 holdings.

If they want the city to take them seriously then being deliberately opaque about the size of their Allied Gold holding (for example) is really not going to help - seems to have fallen from 5.50 to 4.50 since 13/9/23 on staggeringly low volume if Yahoo Finance is correct.

[volsung] 25/9/2023 08:30

Sold. At least I’ll get the divi

[benjonesinvestments] 21/9/2023 15:14

Hi Adam,

Thanks for asking Capital to split down their capex requirements - important given the new mining contract and now new drilling contract in the US. It looks like the additional $20m capex in 2024 can be covered by operating cashflow, ie no need to further increase debt. Although it does of course delay any FCF for shareholders until at least 2025.