Capital Share Discussion Threads

[mr doughnut1] 15/12/2020 17:20

For anyone whose interested there is an interview with JB on the Captial website.

[shanklin] 15/12/2020 15:08

Incredibly low target price given the vale of CAPD’s share holdings and prospects, but better than we are currently.

[rivaldo] 15/12/2020 14:48

Mark Watson-Williams on Master Investor updated a few days ago, with a 100p target price:

"Capital (LON:CAPD) – time to get back into this mining services group

Today I am suggesting that investors who like to play the mining sector should have a good look at Capital.

It is now very much a growing mining services group having evolved from its base of supplying and operating drilling rigs, particularly in Africa.

This week the group has just announced a mega $60m-a-year contract, set for the next four years. It is with Centamin and covers an earth-moving contract as part of its client’s open pit revamp at their Sukari Mine in Egypt, one of the largest gold mines in Africa.

This is the second load and haul contract for the group and is a significant deal for Capital which could well presage other such contract wins in due course.

But to help finance the group’s development balance sheet it is looking to raise £22m by way of a placing of 38.5m new shares at 58p each.

The new contract, described as transformative, starts next month and cements further the good working relationship that it already had with Centamin.

Capital is currently active in several earthmoving tender processes with new and existing customers as it continues to evolve into a full-service mining contractor.

Brokers Peel Hunt rate the shares as a ‘buy’ with a price objective of 90p. Their analyst estimates that the current year to the end of this month will see revenues rise from $115m to $136m, with adjusted pre-tax profits almost doubling to $27.8m, worth 9c per share in earnings.

For the next two years the brokers go for sales of $165m then $175m for 2021 and 2022 respectively, with profits of $19m then $21m and earnings of 9.7c then 10.8c per share.

Obviously, the shares, now 63.5p, could well slip back to around the placing price level, which gives investors a very good opportunity to jump aboard before others realise just how the group is expanding."

(Profile 03.08.20 @ 77.5p set a Target Price of 100p)"

[someuwin] 14/12/2020 08:29

Buying in here. Always good to get in just after a placing.

[yasrub] 11/12/2020 16:16

Looking hopeful on seller, small tick up

[rivaldo] 11/12/2020 12:10

Another 384,000 traded so far today, including a 250k sell at 60.12p. Craig Burton must surely be out or very nearly out by now.

[earwacks] 10/12/2020 16:46

yeas. Sure there are risks. War . Meteor strike . Collapse of gold price another disaster at CEY, which incidentally had no effect on CAPD's work last time. In all likelihood a buyer will have been found for anymore of Burtons's shares if he still has any. i.e off book. Last year they held a placing for his shares which seems strange way of doing it. So all the proceeds went to Bulmer. Very often the companies will find someone to trade an unusually substantial shareholding so as not to effect the open market price. There is always a certain amount of time to bed in the extra placing shares. The immediate effect after all is to devalue the company however promising the reason for the placing, plus you've now relieved a lot of investor dosh in one swoop. If its a takeover and there is immediate revenue enhancement the recovery will be immediate. Not sure what the latest deal is exactly but usually they have a financial stake in any gold they mine, which in itself presents another risk.

[masurenguy] 10/12/2020 15:40

Good points ds2 !

[deanowls] 10/12/2020 13:50

You start then yas.

[yasx] 10/12/2020 13:36

CAPD certainly looks undervalued on most metrics - a view buttressed by most of the contributions on here. However, as with all shares, there are risks - it would be more useful for this board to encapsulate/consider some of those rather than everyone merely gilding the lily.

[dangersimpson2] 10/12/2020 13:16

It would seem strange if it was placing related - surely no-one buys £100k+ worth of a small cap stock in a placing at 58p and then flips them at sub-60p?

If the placing was at a big discount it could understand it but not for a 2-3% gain.

We know from both the increase in the size of the placing and the fact that some investors were scaled back very significantly in their allocation, that people are unlikely to have received an overallocation and hence want to sell down immediately.

I guess it could be an investor who wanted 1m shares, say, and only got allocated 200k - might they decide it is not worth the bother for the smaller size and sell down? Maybe, but if they wanted large size anyway it will because they see significant long-term value, so why sell out now?

Logically it seems then, that this is just the usual seller(s). Why on earth they didn't get Tamesis or Berenberg to place them for them at 58p when we know there was great demand at that level is a mystery.

The good news is that the overhang will clear at some point. And in the meantime investors who didn't get access to the placing, or the size they wanted in the placing, have a good opportunity to retain their percentage of the enlarged shareholder capital at a level that is only just above the recent oversubscribed placing.

[gleach23] 10/12/2020 12:44

I'm not sure founder member Craig Burton will be an issue now?

As has been pointed out several times he was down to his last 4m back in September, some high volume days since will have whittled that substatially lower and we had a 100m volume day just recently.

I'm certainly no expert but my feeling is that we are waiting for the mechanics of the placing shares to unwind before a move north to better reflect the outlook.

Does anyone with a better handle on this have a more informed view?

[yasrub] 10/12/2020 11:58

Okay - thank you

[earwacks] 10/12/2020 11:41

Not really. Just a founder member wants out. Going to be faced with a substantial Tax bill. But then Bob Dylan has just sold his entire catalogue of songs. A very smart move as record and streaming companies are now stealing from their artists on an unprecedented scale.

[yasrub] 10/12/2020 10:35

Being a relatively new holding, is there a short explanation to the history of the larger seller or is it complicated?

[paleje] 04/12/2020 14:19

IC has an article today on Centamin, I've pasted their conclusion below, but guess who they also rate 'buy' well don't guess you can see it:)

....... Though higher spending and lower production obviously dent the near-term earnings outlook, there are also bright spots. The company will cut costs and has committed to training up locals at Sukari to cut the dependence on expat workers, which will be positive for its government and community relations. It is still debt free and has good options for growth at Sukari and in West Africa. Buy at 123p. We also have a buy rating on Capital, at 61p.

[shanklin] 04/12/2020 10:50

I guess we don’t know whether it was oversubscribed at the increased placing size. If you want to sell in size, given the current volumes, I suspect it would be easy to get 58p

[qs99] 04/12/2020 10:42

if the placing was truly over subscribed then any overhang from a selling insti should be able to be hoovered up surely.....

[adamb1978] 04/12/2020 10:38

I added a few more yesterday too, averaging down a little. The new deal is accretive and the placing gives confidence taht there aren't unknowns which haven't yet been announced. Feels far too cheap

[valhamos] 04/12/2020 10:01

I added yesterday to mitigate the dilution with the placing. In fact I would have preferred the deal to have been part financed by locking in some profits on the investments resulting in a reduced placing. Although undoubtedly a transformative deal I would be interested to find out about the margins on the load and haul waste stripping contract.

[yasrub] 04/12/2020 08:37

I have added this morning the underlying business is doing very well with plenty to shoot at, was not overly impressed with the placing price - but it is done and hopefully move upwards from here.

[masurenguy] 04/12/2020 08:08

Welcome aboard Martin - there still appears to be plenty of upside here ! :0)

[hastings] 04/12/2020 06:24

New entry for me yesterday after watching for some time. Share price looks all wrong, particularly after the news from earlier in the week.

[adamb1978] 03/12/2020 09:51

Yes, share price feel very underpinned esp with NAV of around 60p (based on the interim figure and adjusted for the placing).

The deal yesterday should pay back the placing in just over 12 months so should further support it. Assuming $60m incremental revenue per year @ 40% gross margin = $24m benefit. £30m raised in the placing for capex and general corp purposes - call that $30m for capex with the delta remaining on balance sheet and its a 15 month payback, with revenues beyond that being gravy.

Does anyone know why you can't raise lease finance for these assets? Just because of political risk of where they're located?
Thanks

Adam

[sphere25] 03/12/2020 09:28

I guess it depends on how the pre-placing holders have reacted to the news. We know there was at least one big seller in the market. If the majority have been supportive then we just need to clear that known seller. If not, then we're going to be farting about around the placing price even longer and possibly even abit lower if there is real dismay at management's actions here as those holders liquidate.

I'm going to add on weakness because there is too much fundamental backing and good news here for this to not go higher (regardless of the short term gyrations) imo. It's just a waiting game now.

All imo
DYOR