Capital Share Discussion Threads

[lord gnome] 24/8/2017 15:28

Yes, delighted to read that gleach23. Can now look forward to a recovery in the share price. 5-6x EV/EBITDA would equal a share price in the range of 100 - 120 which makes Finncap's target of 109 look right on the money. Still too much in my view, but who am I to argue with experts? WTFDIK?

[rivaldo] 24/8/2017 15:03

Cheers gleach23, that's good to hear. I hadn't realised that their Tanzanian contracts are unaffected by the new rules. That's even more reason for this share being well undervalued.

[gleach23] 24/8/2017 10:35

As I began to suspect, today's buying explained by a Shares mag write up - in fact it's a full page write up. It is after all one of their Top 10 tips for this year but happens to be over 20% down for them to date.

Interesting snippets for me -

- severity of downgrade in share price has been an overreaction, particularly as its 2 Tanzania contracts involve drill work on mines unaffected by gov's new rules
- if share price remains this low CAPD will soon become a potential target for an opportunistic takeover
- Broker Tamesis says CAPD now trading on 2.1x EV/EBITDA, significantly below the 5-6x at which established service companies should be trading

[lord gnome] 21/8/2017 19:10

I would certainly hope so rivaldo. Finncap's target of 109p looks a bit optimistic to say the very least. That would put CAPD on a PE of 20. Not very likely. I'd settle for half that.

[rivaldo] 21/8/2017 12:30

Finncap have retained their 109p target price and forecast $23.9m EBITDA this year rising to $28.4m EBITDA next year (equating to 5.5p EPS), against a £53m m/cap.

They also see a $3.78m cash pile at the end of this year, rising to $8m at the end of next year.

The key point here is that despite the Tanzanian situation and therefore reduced revenues estimates, CAPD stated that they expect to achieve existing profit expectations.

IMO the share price will continue to bounce, especially given the excellent tangible asset backing and generally optimistic and solid environment now around copper and gold. Plus the variety of new contracts won by CAPD in H1 in the likes of Mauritania, Mali, Egypt etc.

[pugugly] 17/8/2017 10:25

Caution - finnCap House Broker - usually rose tinted glasses. (imo)

rhomboid - Excellent point re Tanzania at 40% of revenue - had not spotted it was such a large %age - Agreed watch only

[mfhmfh] 17/8/2017 10:03

finnCap tp re-iterated at 109p

[mfhmfh] 17/8/2017 10:02

hxxp://www.capdrill.com/media/investors/Presentations/CAPD-H1-2017-Results-Presentation_Final-20170817.pdf

[rhomboid] 17/8/2017 09:37

Agreed very upbeat ... but Tanzania as a whole is 40% of revenue and until the local partnership structure is clear we can't see what the loss of profits will be and there remains the possibility of asset confiscation by Tanzania govt of Acacia assets. I wouldn't rule out issues emerging around repatriation of funds or drilling rigs from Tanzania either.

Still it goes back on my watchlist

[darlocst] 17/8/2017 09:25

Listening to the conference call. Extremely bullish management commentary, highly supportive environment and business has been very positive in last 3 months. Margins are improving. Drilling opportunities opening up beyond just gold sector now.

Optimistic that production mining at North Mara site won't be affected in Tanzania - this is not the site affected by concentrate dispute. Makes up circa 10% of revenues.

Dividend been set conservatively due to Tanzania uncertainty but actual cash generation would support a much higher payout.

Been listening to these calls for last few years, most positive I've heard in all that time.

[rhomboid] 17/8/2017 08:29

Resilient numbers given Tanzania backdrop, not enough to tempt me back in though as I'd like some clarity on Tanzania first, which will no doubt see the shares move sharply higher if it's positive

[mfhmfh] 17/8/2017 08:25

increased revenue guidance in Q1 update from May of $120 - $130 million retained although will be at the lower end. previous guidance was of $105 - $112 million.

[pugugly] 17/8/2017 07:57

Better than I expected - but agreed with gleach23 PLUS general pressure on exploration budgets and downward pressure on contact pricing.

[gleach23] 17/8/2017 07:54

Yes such a shame about Tanzania. Given the situation there and ongoing uncertainty, the outlook statement is about as good as we could have expected. Looks like being marked down from the bell though.

[sleveen] 17/8/2017 07:14

Great results, Tanz still the fly in the ointment.

[mfhmfh] 16/8/2017 17:12

half year results tomorrow...

[thepopeofchillitown] 31/7/2017 08:36

Next step is to nationalise all foreign companies

[thepopeofchillitown] 31/7/2017 08:33

Good question gleach. I believe the board should have issued a statement detailing their exposure in Tanzania and what impact it would have. If it was upto me I'd a just pull out of Tanzania entirely removing the uncertainty and taking the hit on the chin. It's down nearly 50% in the last few months. Let them find the minerals with a bucket and spade. Africa as a continent has learnt nothing in the last 50 years. Still cannot see past their noses.

[gleach23] 25/7/2017 23:25

So it was some of your sells I was following on Fri :)

Thanks for being open about your trades. It'll be interesting to see where we go from here but I'm keeping the faith with the remainder I have...at least until the interims and/or news on Tanzania, which as you say feels rather uncomfortable just now.

[rhomboid] 25/7/2017 18:21

Yup that was me 🙄clearing out the last lump..I was in a hurry as I wrongly thought Bodycote which was where I was rotating to was likely to rise during the day. I was also selling last Friday so doubly guilty. Like you probably I have vivid memories of how sh*t shaped it went in Egypt and I didn't want to start doing a reenactment 🙂 Plus the bulk was bought at 24p which plus divis wasn't too shabby..

[gleach23] 25/7/2017 17:34

Hope yours wasn't the 110k @ 36.5 rhomboid! Good luck anyway.

Frustrating is the word. I had to follow some of the selling last Fri morning to reduce what was an overexposed position.

One could take the view that the share price is now half of what it might have been were it not for this Tanzania issue which seems very harsh. Anyone know exactly what proportion of CAPD's business is in Tanzania?

Interims due shortly btw....17th August

[kinbasket] 25/7/2017 17:11

Yep, it's very frustrating, this is a good little company and they can't seem to catch a break. First it was problems in Egypt now this. I'm less hopeful about a good outcome with Tanzania than Egypt. Experience elsewhere has taught me that when African governments talk about local shareholdings and local partners, they don't mean any locals, they mean "me and my mates". Unfortunately this makes it impossible for UK companies to do business thanks to the corruption laws here. Difficult to see a fair resolution in the near to medium term.

[rhomboid] 25/7/2017 16:36

I finally sold my last chunk this morning, Tanzania looks like going the Mugabe route which elevates risks beyond where I'm comfortable, I'm sure holders will do well from here as it really is in the Bargain bucket now

[paleje] 18/7/2017 14:42

Not so straightforward, services and goods co providers to the mining industry under the spotlight too.