Capital Share Discussion Threads

[rivaldo] 23/10/2020 09:37

Thanks Shanklin.

I'm already overweight here, but it's soooo tempting to buy more at these levels :o))

[shanklin] 21/10/2020 07:11

CEY Q3 Report includes

"During September, Centamin submitted applications for several new exploration licences in Egypt and we look forward to continuing to work with our partners at EMRA and the Ministry of Petroleum to further develop Egypt's gold industry."

Potentially more work for CAPD

[shanklin] 16/10/2020 12:40

...and not have an incessant seller with loads of stock

[hpcg] 16/10/2020 11:55

Top end, beat, and above expectations are what drive multiple expansion. If there is one thing to learn from US companies it is forecast conservatively and always beat.

[gleach23] 15/10/2020 14:22

Although it probably contributes to the delay in exhausting our seller?

Thanks for the posts btw.

[rivaldo] 15/10/2020 13:50

Agreed ds2. I go along with your figures - but I would rather Berenberg and others forecast reasonably cautiously, such that CAPD will announce they're trading at the top end of forecasts and may well beat them.

[dangersimpson2] 15/10/2020 12:34

Not seen the Berenberg note, but from the summary Q4 looks a bit light to me.

- the company did $100.4m revenue in Q1-Q3, so $136m revenue would be $35.6m vs $35.5m for Q3, so effectively flat.

- Assuming the 3.5xEBITDA quoted is the FY20E then that would be $25.4m EBITDA forecast for FY20 based on a 65p share price and current securities portfolio valaution. The company did $15.4m EBITDA in H1 and by my estimates at least $7m in Q3. Which would mean Berenberg are forcasting only $2m EBITDA for Q4.

However, from the Q3 trading statement we know that existing long term contracts are performing as expected, and there are at least 6 additional rigs being deployed to new explo projects during Q4.

I think revenue of c$39m and EBITDA of at least $8m is achievable for Q4 assuming the 6 additional rigs are able to be deployed on time. This is long way above the c$35m revenue and $2m EBITDA that Berenberg appear to have in for Q4.

I guess we'll see which one of us is right in time.

[rivaldo] 15/10/2020 12:05

Here's some detail on Berenberg's increased 97p target price:



"Berenberg raises Capital target price after strong quarter

Analysts bumped up the full-year revenue forecast to US$136mln from US$133mln

Capital Limited (LON:CAPD) got its target price raised to 9,7p from 95p by Berenberg after the third quarter figures beat analysts’ expectations.

The bank, which retains a ‘buy’ rating on the Africa-focused mining services company, said quarterly revenues of US$35.3mln beat its US$33.5mln forecast.

Analysts bumped up the full-year revenue forecast to US$136mln from US$133mln.

Capital noted that it remains in advanced discussions in the contract mining business and that it continues to gradually build fleet in preparation for its entry into this market.

“We would hope that Capital is in a position to announce a contract mining win in the fourth quarter, and… there is significant revenue, underlying earnings (EBITDA), free cash flow and valuation upside in this fledgling business,” Berenberg commented.

“We continue to believe the shares (trading at 3.5x EBITDA) are mispriced, particularly given compelling cyclical fundamentals in the drilling business and clear upside in the contract mining business.”

[death by donut] 13/10/2020 20:32

Berenberg 97p from 95p

[hpcg] 13/10/2020 15:16

Shanklin - In what way have investors bought in too early? Today's price is above mid-July and a short period a year ago. Then one has to go back to 2017, which definitely was too early.

[shanklin] 13/10/2020 12:59

Well we should know quite a lot more from the Q4 TS in mid January.

[dangersimpson2] 13/10/2020 12:11

Tamesis mainly just regurgitated the RNS! I doubt they will do any real work on their model for FY21 until FY20 results in March.

[qs99] 13/10/2020 11:57

800k blimey....shame some billy big Bs can't just hoover the lot up, given the broker "extremely undervalued" quote AND yield opportunity etc. DYOR

[gleach23] 13/10/2020 11:55

Ever the optimist (so feel free to totally disregard this!) but I think Burton will be cleared shortly. After today's further positive update, there will surely be institutional demand at this level to take up what's left of the overhang, plus director interest.

Since he's below 3% I guess it's a matter of looking out for those clearing trades now, as we won't have any further Holdings RNS for him (unless there is one to confirm he's out).

@ 63-65 it looks to me as though over 800k are available to buy. It's so ridiculously high for CAPD that I'm wondering if it might be a precursor to a large trade to be processed. Here's hoping.

[rivaldo] 13/10/2020 10:47

Tamesis retain their 102p price target and their $138.3m revenues forecast near the top end of estimates. They conclude as follows:

"Positive outlook.

Capital notes that the tendering market for drilling has increased materially during Q3 2020.This has been in both the number and size of tenders in the market.With Capital continuing to expand its fleet (four RC rigs are due for arrival in Q4 2020) we believe the business will be in a better position to actively engage and secure larger tendersin this current strong mining services tender market. Capital also notes that opportunities within its mining services business are progressing well with advanced discussions on a number of potential deals.Given the typical size of mining service contracts, any such contract win would likely be material to the Company’s revenue and earnings outlook.

Conclusion:

Despite the global uncertainty around COVID-19 this most recent trading update shows a lot of things are going right for the company.Management continue to lay down a strong track record in revenue and EBITDA growth. The shares are actually down 2% YTD despite this performance and also despite a large increase in the gold price. As such they continue to look extremely undervalued; trading on a 2020E EV/EBITDA and P/E of 2.8x and 5.8x respectively.For those investors who feel they might have missed the boat a little on the surge in the gold miners, this is a perfect and relatively safe way to gain leverage to the gold price as well as a well-executed organic expansion strategy."

[dangersimpson2] 13/10/2020 10:23

Q3 slightly better than I expected on utililistaion, but more importantly more visibility on Q4.

With 60 rigs in use in Q3 we add 2 explo contracts from existing rigs plus the new 4 RC rigs which gives a fleet of 102 rigs and 66 utilised so about 65% utilisation. This means CAPD are likely to be bumping along at the top of the revenue guidance range.

Good to see Sukari unaffected, as expected.

I have upgraded my 2021/22 forecasts in light of this:

Tendering market for drilling has increased materially during the quarter, both in the numbers and size of tenders in the market

Opportunities within the mining services business are progressing well with advanced discussions on a number of opportunities


FY20 FY21 FY22Rig Utilisation % 60 67 72Rig ARPOR $k 171 180 190Mining Services Revenue $m 17.7 30.0 50.0 Total Revenue $m 139.8 177.6 217.4 EPS (p) 6.3 11.5 16.6P/E 10.4 5.7 3.9EBITDA $m 32.9 43.0 55.0EV/EBITDA 2.7 2.1 1.6



Using Tamesis's 5x FY21 EBITDA target this would be £1.36/share.

None of this matters in the short term though while we have a seller who is happy to sell in volume at less than half that value.

[deanowls] 13/10/2020 10:08

Company should step in and buy a few.

[qs99] 13/10/2020 09:28

I get top slicing, but in a rising market to offload the lot is nuts IMO.....

he had 2.99% left at last RNS, let's hope that update allows brokers to do their job and find a buyer to clear him ooot sharpish!!

[rivaldo] 13/10/2020 09:25

The outlook for CAPD has never looked brighter, yet once again the share price is presumably being held back by Craig Burton's selling.

One day he'll run out of stock. In the meantime this price is surely a huge bargain, imo anyway.

[shanklin] 13/10/2020 09:23

In retrospect many of us bought here far too early. Somewhat unfortunate that we have such a determined seller who wants to exit at any cost. Must be very strong personal reasons for his approach as otherwise it seems completely irrational to me.

[adamb1978] 13/10/2020 08:22

Re-assuring update, particularly given my little top-up yesterday. Still happy with my 2 year expectation of something in the 120p-130p range for this

[gleach23] 13/10/2020 08:20

Still evidence of the overhang at the moment. It seems to me that there are over 650k shares currently available to buy (more then twice the amount I've seen before) and not much that one can sell.

Looking out for a very large trade one day (hopefully very soon) to indicate the exit of Burton.

[qs99] 13/10/2020 08:12

Spot on Shanklin, that one is key to the recent sell off IMO...

[shanklin] 13/10/2020 07:55

And of course the comments re no impact at CEY.

[gleach23] 13/10/2020 07:47

Welcome shanklin - it made me realise the incessant selling I referred to has really been since April last year rather than 2016.

Refreshing to see the Q3 update out promptly with no Covid-19 delays. It would appear positive momentum continues apace.

Great to see the increased utilisation and I particularly liked the comments on the tendering market which has "has increased materially during the quarter, both in the numbers and size of tenders in the market" and that CAPD "Continued to gradually build mining fleet to better position the business to actively engage in the mining services tender market".