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Share Name Share Symbol Market Type Share ISIN Share Description
Capital Limited LSE:CAPD London Ordinary Share BMG022411000 COMM SHS USD0.0001 (DI)
  Price Change % Change Share Price Shares Traded Last Trade
  -2.50 -2.37% 103.00 196,405 16:35:19
Bid Price Offer Price High Price Low Price Open Price
103.00 104.50 105.00 105.00 105.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 167.71 60.64 27.35 3.5 196
Last Trade Time Trade Type Trade Size Trade Price Currency
17:07:58 O 5,000 103.00 GBX

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Date Time Title Posts
26/1/202309:56CAPITAL DRILLING : global minerals industry services provider2,518
21/5/202008:16Capital Drilling -For Mineral & Mining Exploration1,593
14/11/201308:29*** Capital Drilling ***40

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Capital (CAPD) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
17:07:58103.005,0005,150.00O
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15:40:29104.2025,00026,050.00O
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Capital (CAPD) Top Chat Posts

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Posted at 24/1/2023 09:56 by rivaldo
Great analysis of the trading update from Mark Simpson's Small Caps Live - here's the conclusion:

Https://smallcapslife.substack.com/p/small-caps-live-weekly-summary-8fd

"The company is starting to be more than a drilling company, with MSALABS showing continued growth:

• MSALABS now has four units commissioned across Africa and Canada, with three further units due to begin operations in Q1 2023, including Barrick's Kibali Gold Mine;

• Trials with major mining companies are continuing with PhotonAssay in high demand globally. The expanded relationship with Chrysos will see MSALABS deploy 21 units by 2025, giving the company a strong competitive position in the coming years;

The guidance for revenue for the year just gone from MSALABS is around $30m, which from four newly commissioned Chrysos units and their existing fire assay business makes their 2025 estimate of $80m revenue from 21 Chrysos units look very conservative. Of course, the first units will go where they get maximum utilisation. But still, it is easy to see a route to $100m+ revenue here. With 25-30% EBITDA margin, their 75% stake in this business could represent a significant part of the current market cap.

Anyway, in summary have yet another beat, pretty significant on a quarterly basis, confirmation of further imminent progress at MSLABS and an upbeat outlook statement.

Despite this, the initial share price increase in response to this positive statement was met with selling. Partly this reflects that the share price had been strong in the run up to this trading statement and investors were “buying the rumour and selling the fact.”

It goes to show that the company’s shares are still pretty illiquid. It seems a few smaller investors may have been overweight and would be sellers at any price on the day. If this is the case, then it is easy to see why the share would be volatile.

However, those sellers may come to regret it, since this remains one of the cheapest shares on the market with excellent short and medium-term business momentum."

Posted at 24/1/2023 07:40 by johnrxx99
Posted on 24th January 2023 | By Bruce Packard
Capital Ltd FY Dec Trading Update

This African gold mining support services company, that was Mark Simpson’s pick for this year, announced a Q4/FY Dec Trading Update. I also own the shares. FY revenue was up +28% to $290m, which was the top end of the increased guidance range ($280-$290m v $270-$280m guided in H1). Pleasingly Q4 revenue v Q4 last year was up +19% to $79m. There’s no mention of PBT in the RNS, but there wasn’t in last year’s FY trading update either.

Outlook: The drilling business (72% of revenue) has a strong outlook for 2023 according to management. Their MSALABs (28% of revenue) also is seeing strong demand. This is an assay business, which tests for the quality and proportions of precious metals in ore. The price of gold has risen +16% to around $1,900 an ounce, so this bodes well for gold miners like Barrick and B2Gold, who are large customers of CAPD. Revenue and CAPEX guidance will be announced on 16th March when they report FY results.

Valuation: The shares are trading on 7x 2023F and 2024F PER. Return on Capital Employed is an impressive 22%, for a company on a such low PER rating. One concern is that CAPEX of $42m FY Dec 2020 and $46m FY Dec 2021 has been higher from net cash generated from operations, hence net cash from investing has outpaced cash generated in the last two years. Below is a long-term chart showing CAPEX v depreciation.

Hence the disconnect between RoCE and CashRoCI -7.7% and rising net debt ($36m at H1). I think that this is a timing difference, however, it is worth keeping an eye on and probably explains the low valuation as investors (rightly) prefer to focus on cash versus accounting profits.

Investments: Also worth noting that CAPD management often take equity stakes in their gold mining customers, which gives an adjusted net cash (ie including investments marked to market of $11m at H1). As of the end of December, the value of their investments (listed and unlisted) has fallen to $39m v $60m at the end of Dec 2021), partly because they were a net seller and partly because gold mining shares have fallen in value.

Opinion: Mining rigs in Africa and the current poor cash generation may be beyond some readers’ risk appetite, so please do your own thinking. However, I like it and CAPD strikes me as an interesting way of having some exposure to the gold price, without buying a gold mining company. Sharepad has the price of gold in US dollars, but below is a log chart showing the price of gold in GBP per ounce is up almost 8x in the last 20 years. I’d imagine that was a similar level to the 1970s when capital controls were in place.

Posted on 24th January 2023 | By Bruce Packard @ Sharescope

Posted at 19/1/2023 07:18 by rivaldo
Excellent - revenues are slightly ahead of even the very top of guidance.

The $290.3m is also way ahead of Tamesis' forecast of $283.8m. And Q4 revenues of $79.1m revenues bode very well going forward.

Both drilling and non-drillng look in great shape. Non-drilling is increasing fast and is now 28% of total revenues, with Chrysos' prospects looking explosive.

The investment portfolio took a hit as already known - but is worth $38.7m against a cost of $12.5m in 2019 - still a terrific return (and presumably after some profits have already been taken since CAPD were a net seller in 2022).

With "multiple long-term contracts" renewed and won in the year, and Sukari performing very well, CAPD's revenues are not only increasing but also secure going forward and less and less influenced by cyclicality in exploration drilling.

CAPD look in great shape imho.

Posted at 18/1/2023 08:10 by adamb1978
I guess the trading update will be tomorrow. 14th and 18th in the last two years and TUs tend to be less common on a Friday

Will be looking out for:

- 2023 guidance, which as always will be conservative
- net debt will have likely spiked as a result of the capex splurge for the growth investment, though that spend looks ideally timed with the gold price where it is. Should still be well below 1x EBITDA
- further increases in the dividend, just because there's a cohort of investors who want that and keeping those investors happy helps the share price

Posted at 06/1/2023 11:00 by rivaldo
Thx davebowler, but that link doesn't work for some reason, so.....

Https://www.investorschronicle.co.uk/ideas/2023/01/05/capital-limited-in-name-only/

"INVESTMENT IDEAS

Capital Limited in name only

The drilling services company is under the radar, growing well and inexplicably cheap

January 5, 2023

Name aside, it’s not hard to guess why investors might look past Capital Limited (CAPD). As an on-site services provider largely catering to Africa’s gold producers, the FTSE Small Cap index member appears to be in a cyclical sector in a high-risk geography. Its assets are rust-prone heavy drilling rigs, rather than
precious metals. And while its clients seek treasure and exposure to limitless spot markets, Capital hunts for modest margins on multi-year drilling or earth-moving contracts.

But there’s a lot more to the business than first appearances – a point you might think investors had grasped, more than a decade on from the company’s London initial public offering and seven years into a 330 per cent share price rally.

Indeed, by any measure, Capital has talked and walked like a well-managed growth company for some time, and little suggests that its trajectory is about to stop.

How then, does one account for the cheapness of its shares? Despite a lack of debt, they trade in line with book value. And despite rising sales and an expanding operating margin, they trade at less than six times forward earnings, a 40 per cent discount to peers and the stock’s own five-year average of nine. Capital’s price-to-earnings growth (PEG) ratio of less than one also suggests the past year’s share price appreciation has been overly cautious. Not that long-term investors will
have minded; had they reinvested their steadily growing dividends back into the stock, annual returns would have averaged 25 per cent since late 2017.

The answer, we would venture, is that the market has mispriced Capital’s risk premium. Let’s start with the basic mechanics of the business. Capital provides a wide range of services across the mining cycle, from the exploration phase to a mine’s development and eventual production stages. These include the leasing of equipment, geological sampling, fleet management, and drilling and earth-moving
work. Since 2019, it has offered on-site laboratory services, which allow its clients to outsource geochemical analysis and assay work to an independent, licensed contractor.

These services are provided through contracts comprising a mix of management, volume-based and per-sample fees, and are typically signed for between two and five years. But Capital’s close working relationships with its mining customers mean the group always has a clear idea of long-term spending plans, and repeat awards are
common. Contracts also contain provisions that help to shield Capital from the effects of cost inflation.

One historic issue with mining services business is the limited demand visibility. This matters a great deal to services businesses’ own capital-intensive investment decisions: time the cycle wrong, and profits and cash flows can quickly sour. However, Capital is addressing this in two ways.

First, since 2019, a rich source of new contracts has come from the company’s own portfolio investments. By taking equity stakes in miners, primarily at the exploration and development stage, Capital has gained a strong idea of its pipeline and the likely timing of tendering activity, which the company says is always
carried out at arm’s length.

The return on this investment strategy has been excellent. Since Capital began taking stakes in 2018, annual recurring revenues from portfolio firms has jumped from zero to $48mn (£40mn), while the value of its listed and unlisted portfolio
has swelled to $47.3mn, from a cumulative cash outlay of $11.5mn. Granted, these stakes are highly speculative and prone to skew the group’s reported income statement, but the dual benefits of these investments are plain to see.

Second, the group recently appointed resources and logistics veteran Peter Stokes as chief executive. He is based out of Perth, which will not only puts the company close to the capital spending decisions of important prospective future clients, but frees up co-founder and executive chairman Jamie Boyton to look for more contract opportunities around the world.

Currently, the clear majority of mine-site sales are made in Africa, where Capital is the largest independent mining services company and focuses largely on tier-one assets managed by premier mining groups including AngloGold Ashanti (US:AU)Ashanti (US:AU), Centamin (CEY) and Barrick (US:GOLD).

Although there is competition in many of the countries where the group operates, international miners’ preference is to partner with established names with a good track record of safety and local workers. On both these fronts, Capital is a sector leader. The group is also bullish on the outlook for mining capital expenditure, citing the historic depletion of reserves across various metals and massive
forecast demand for materials that will be critical to the global energy transition.

Recent contract awards – and rising utilisation rates for Capital’s growing fleet of drilling rigs – suggest this demand is already on the up. Arguably, the customer base is more concentrated than is ideal, with around half of all revenues coming from the Centamin-operated Sukari mine and another unnamed project. However, these revenues are split across six on-site contracts, so are not as risky as they appear.

More broadly, by selling ancillary services to a hot sector – and having built up a good track record and scale since it began trading in 2005 – Capital Limited is a stock in the best tradition of ‘picks and shovels’ investment plays.

Even without growing organic sales from its dominant drilling business, its canny push into laboratory services looks like a strong driver of growth and is expected to generate more than $80mn in annual revenue by 2025, up from $30mn this year and just $3mn in 2019.

The volatility of the mining cycle means investors should be careful not to forecast too far ahead. But the strength of Capital’s near-term outlook could hardly be more detached from its market valuation."

Posted at 30/9/2022 12:51 by rivaldo
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:

Https://smallcapslife.substack.com/p/small-caps-live-weekly-summary-9ea?utm_source=post-email-title&publication_id=302785&post_id=75035111&isFreemail=true&utm_medium=email

"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."

Posted at 31/8/2022 15:35 by troc1958
YasX ... I don't understand why you are so negative about Capital. It's come a long way since the last down cycle from being a risky driller. It now has one of the newest and growing drilling fleets in the world, plus vertical integration into lab sample analysis and mining contracting.If you recall correctly many of its investments in "minnow" explorers were drilling contracts for shares in the explorer in lieu of cash. Most of these explorers could not afford the drill fees, thus paid in shares. It was a good way for Capital to utilise some of its excess capacity. Otherwise it would not have got the contracts. So it now has a range of investments in explorers for very little capital outlay. Why are you so concerned about their liquidity? If only one hits it big Capital most probably would get a ten fold return on investment. The share price of any mining related share, particularly gold mining, will be volatile over the coming months. In Capital's case any drop in share price, like today, is worth using to top up. The further it drops on market uncertainty the cheaper it becomes to top up. In 3 to 5 years I can see this share in the 300 to 400's. I'm happy to wait.
Posted at 18/8/2022 09:25 by adamb1978
Will be interesting to join the InvestorMeetCo presentation when it happens as I couldnt make this morning.

On the use of cash conversation, personally I think they need to keep leverage low given that the share price will inevitably otherwise get whacked when the environment is less positive for them. I'm not planning to hold CAPD forever but being nimble enough to exit before that time can be tough.

I think they've mentioned 1x EBITDA as the cap for where they'd go with leverage. The question is what EBITDA is used in that - I think its fine if its something of a cross-cycle EBITDA given that 1x EBITDA today will be a lot more times EBITDA if the top-line contracts and then operating leverage hits EBITDA.

With that limitation, I think a 3%-4% yield is fine given it brings in another group of investors (cost of say £6m p.a.?) and then supplementing that with a small/moderate buy-back programme (perhaps another similar amount to the divi) whilst they're trading around NAV and to support the share price makes sense. Then invest the remainder...which still is a decent chunk of capital to put to work

Posted at 28/7/2022 13:08 by concentrate
I've been invested here for perhaps 12-18 months - a fairly small position that I've added a little to. I'm currently flat re: share price - but have received dividends.

I've seen nothing but good news and a well run company.

There's a risk that the recent recession fears will derail the 'supercycle'.

But while many shares have taken huge losses, CAPD has weathered the storm quite well for now.

CAPD isn't exciting, but as far as I can see, it is delivering.

Still happy with my investment.

The growth in the company is real, even if the share price is flat.

Posted at 24/6/2022 07:42 by fozzie
If I didn’t laugh I would cry. Share price has been underwhelming here for years. Numerous fund managers say it is because of the investment portfolio as it muddies the waters. Share price doesn’t really go up (as much as it should) when the portfolio performs strongly but as soon as it doesn’t the share price is in free fall. The last eighteen months of trading have just been erased and back to just 76p, I give up.
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