Capital Share Discussion Threads

[gleach23] 02/5/2017 21:33

In light of today's update it's worth remembering the operational gearing that Shares magazine pointed out last Dec when highlighting CAPD as one its Top 10 tips for 2017 and the expectation that increases in revenue should fall straight to the bottom line.

Not intending to make this too much of a ramptastic post but when looking at the 7 year chart this should have £1 in its sights for later this year imo

[thepopeofchillitown] 02/5/2017 19:30

Congrats to all long term holders. Looks like your patience has been rewarded. Was in this share several years ago and has been on my shortlist for a while but missed out today. Still more to come I think.

[flagon] 02/5/2017 11:10

Took a position here this morning. With the pullback from the 65p high reached in January to the recent low of 50p this looks like a low risk entry point for a stage 2 bull move that started in February 2016.

From Finncap this morning -

Capital Drilling Ltd. (DI) (CAPD) Finncap
1 minute ago
Capital Drilling* (CORP)

Strong Q1 trading update drives significant EPS upgrades

The group has released a very encouraging Q1 update. The revenue line is the strongest it has been since 2013, with exploration drilling activity recovering and recovery expected to continue in underlying markets. It has also highlighted a number of new and repeat contracts, pointing to momentum continuing through the year. We have raised our forecasts on the back of management’s revenue guidance range of $120-130m, which prompts us to upgrade EPS by 30% in 2017, with a conservative knock on to EPS of 15% in 2018. We therefore also increase our price target by 15% from 95p to 109p. The shares should react strongly to today’s statement.

David Buxton

020 7220 0542

[rhomboid] 02/5/2017 10:19

I'm intrigued to see how this upswing unfolds, this time CAPD seems to have a much wider spread of clients and is operating in more countries, I seem to recall Centamin used to be the dominant client and Egypt was the largest & it turned out riskiest market.

So earnings quality is much improved in my view

[valhamos] 02/5/2017 09:51

Good to see the increase in ARPOR (the highest it has been for a few years) with "exploration activity becoming more consistent during the quarter" and stronger production.

I have thought for a while that recent forecasts (eg. 2.3c for this year) are far too low considering both the recovery story and in comparison to the profit levels some years ago for similar revenue.

[gleach23] 02/5/2017 08:49

cheers rivaldo...nice surprise to have such an early and positive update...they were obviously keen to issue it :)

should hopefully be attacking this year's highs before too long

[rivaldo] 02/5/2017 08:36

Finncap have today increased their target price to 109p (from 95p).

[paleje] 02/5/2017 08:16

Ditto that rivaldlo, earlier than expected too, must be chuffed and rightly so.

[rivaldo] 02/5/2017 07:16

Wow - a terrific update just out. "Multiple" new contract wins, revenue guidance for the year lifted heavily, strongest Q1 result for years....



There should be a BIG mark-up today and a very nice re-rating going forward - certainly back to 65p and likely well above that imo.

[rhomboid] 19/4/2017 12:35

Q1 numbers & commentary will be fascinating, I think the mkt has totally mispriced this as there are numerous costs attached to setting up new countries of operation and bringing the rig fleet back into higher levels of availability, we've seen those costs but CAPD will now be reaping the benefits in terms of cashflow

[gleach23] 19/4/2017 11:47

Would love to be proved wrong by a tick up in the share price but these mid-price trades listed as buys seem to be sells to me, based on the online quotes I'm getting.

Chart still looks good to me and Q1 update due in a few weeks.

[gleach23] 29/3/2017 09:13

Hi GR78...I'm also prepared to be patient here. Having more than trebled between Feb 16 and Feb 17 it's obviously had a strong year so perhaps some consolidation above 50p is now due.

Having said that, one good thing about CAPD is that it provides regular trading updates so the share price doesn't tend to stagnate too much.

Nice to see a tick up this morning!

[greenroom78] 24/3/2017 23:42

Thanks for sharing gleach, I'm not known for buying and holding but CAPD is one I'm doing just that with.

[gleach23] 24/3/2017 13:51

Full page write up in Shares this week.

In summary -

- don't be put off by full year results in case you were expecting booming profits as a result of resurgence in activity across mining sector
- a lot of new business in the year came from revival in exploration drilling for gold miners which is currently less profitable for the group
- pricing for exploration drilling still low relative to historic levels and single shifts are also currently being performed
- as mining cycle improves, should see double shifts and higher pricing (Jamie Boyton, Exec Chairman)
- most contract opportunities for exploration drilling lie in gold but Boyton believes there could soon be more work in base metals following recent price gains
- company now planning wider range of services hence the planned investment in a private lab testing business (A2) in a bid to get more money from existing clients
- Boyton says best margins among mining service companies are found in those with a lab business - one of biggest complaints from miners is how slowly they get lab results back as it slows their decision making

As one of their share picks for the year, Shares remain big fans of the stock

[rivaldo] 23/3/2017 09:06

Good spot paleje, thanks:

""Alecto Minerals plc (AIM: ALO), the African-focused gold and copper exploration and development company, is pleased to provide a positive operational update in relation to the Mowana Copper Project in Botswana ("Mowana" or the "Project").

Capital Drilling Limited (LSE: CAPD) has been awarded the contract for Drill and Blast and is currently mobilising its equipment to site"

[rhomboid] 22/3/2017 15:45

Good spot thx

I hope CAPD have the payment schedule written in their favour as Alecto are a tiny and financially stressed counterparty.

[deanowls] 22/3/2017 15:41

Excellent news, wonder how many rigs?

[paleje] 22/3/2017 10:12

Another contract win for Alecto Minerals in Botswana, not sure what it's worth but Alecto seem excited about it:-



EDIT: sorry that's misleading, to be clear the win is for CAPD, Alecto are to project owners

[rivaldo] 17/3/2017 09:17

Good summary here, with analyst comment as follows:

http ://www.proactiveinvestors.co.uk/companies/news/174925/capital-drilling-caps-a-year-of-progress-with-a-savvy-investment-174925.html?utm_source=Sign-Up.to&utm_medium=email&utm_campaign=7163-363489-Proactivity+-+16%2F03%2F2017

"Bang on forecast

House broker finnCap said the results were in line with the recent trading update.

“Market conditions continue to improve, with a strong improvement in exploration activity,” the broker said, as it left its recently updated current year estimates unchanged.

Capital Drilling recapped a number of exploration contracts it had won during the year, the benefits of which are expected to feed through this year.

“After a strong run, the shares have recently seen some profit taking and now offer an excellent buying opportunity,” the broker said."

[greenroom78] 16/3/2017 16:13

Nice long wick on that candle on the chart. Reversal from here hopefully.

[deanowls] 16/3/2017 16:02

They flagged up that the divi would be under review a while ago as they saw costs for start ups increasing. I expect it to resume an upward trend over the next year.

[twistednik] 16/3/2017 14:14

It's a tough business to evaluate.

EBITDA and revenue growth are heading in the right direction as you would expect with improved utilisation rates as we come out of the down-cycle.

The important bit is trying to assess how the EBITDA converts to cash (and what this will look like over the next 3 yrs). Clearly not very well in the current year as they are investing in new rigs and A2 (not sure the strategic rationale for this 50% acquisition except for having the same customer base).

How much cash is required to maintain the current fleet (at an average age of less than 5 yrs) vs growth capex and investment to grow profit in future years? This isn't easy to unpick from their presentation on 2016 capex numbers...

If you value this business on an EBITDA minus depreciation (as a proxy for maintenance capex) basis, it isn't generating much cash! The hope is that assets are depreciated on the BS at a faster rate, and will continue to generate further cash over their true useful life.

Further, as demand picks up and rig utilisation increases, this additional profit falls to the bottom line and should improve the Return on Capital from its current low base.

[greenroom78] 16/3/2017 09:50

Thanks all, I agree after a period of heavy investment it doesn't make sense to pay a huge dividend and put the balance sheet at risk. At least they retained some of the dividend and now see a period of growth for shareholders which should see a boost to FCF and then the dividend can return.