Columbus Energy Resources Share Discussion Threads

[carpadium] 30/11/2018 09:10

offer, CERP have lost 40% since the start of this year. There's always going to be disgruntled shareholders who feel the line has been crossed and close their investment regardless of 2019 attractions.

[toploadermike] 30/11/2018 08:51

Nice one Carp and thanks for the info, wasn't aware and that sounds likely to me too.

ATB
TL

[carpadium] 30/11/2018 08:45

The Steeldrum deal involved 5 parties, WIEH, Rex Caribbean, Gelco Energy and two private individuals who were allowed to sell 10% of the base consideration shares once the deal was completed.

The deal was completed on Oct 8th which gave them licence to sell, if they wished, a total of 9.2m shares whilst the balance still held by them, some 83.5m, subject to a 6 month lock-in.

As sizeable selling has been particularly noticeable in the last couple of months my money would be on the above disposing, yesterday's 1.5m just maybe their last significant sell. Hopefully!

[smoggyg] 30/11/2018 07:27

Worth reading again,my thanks to the author.//////Management Resource Solutions (MRS) – Dig a single digit PE that is growing
Michael TaylorNovember 5, 2018 8:42 am 0
Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate.

Opportunity

MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap!

MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects.

MRS Service Group (MRSSG)

MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works.

As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work.

An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn’t add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond – they are a large customer and a FTSE 100 company. A good working relationship is necessary.

Bachmann Plant Hire (BPH)

Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on.

Recent accelerated bookbuild and turnaround

One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months’ trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company.

The swing in MRS’s fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the company’s £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing – such PE ratios are usually value traps, where the share price is falling faster than profits!

Competition

There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects.

The shed

The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome – there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements.

With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed.

Debt and cost savings

One of the reasons for MRS’s lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges – they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash.

Another concern was that maintenance capex was being delayed and so a cash call would come in the future – the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern.

The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases – this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business.

Conclusion

MRS is not without risk – if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.

[smoggyg] 30/11/2018 06:36

+
Lind issued monthly with millions of 4.5p shares SELL at 7,25p!/////// Shrewd dude that 12bn! :)

[smoggyg] 30/11/2018 06:32

Koot has increased production mainly by buying it in,by diluting your holdings! Someone sold 1.5m yesterday,only disclosed at the close,who was it? This would worry me if I was a holder as my guess would be either a placing or Schroders,either would be very bad for holders.

[toploadermike] 29/11/2018 23:29

From BusinessNewsWA:

Oil up as Russia leans towards output cut
Oil reversed course and rose as much as three per cent overnight after industry sources said Russia had accepted the need to cut production, together with OPEC ahead of its meeting next week.

[toploadermike] 29/11/2018 23:28

This is not investment or legal advice, the below is my interpretation of what is likely happening here.

So todays sells are becoming a little clearer to me regarding these constant sells...

In my view the late trades of 1.5 mil today were institutional and were either pre agreed, pre defined long term sells or MM's balancing trades.

I know from experience that it is possible when investing (as an institution or company) or (when owning or buying in-part or in-whole) a company or asset, or when agreeing a contract containing such terms and/or conditions that where payment or payments "are made in share capital" for remunerations or payment in lieu or otherwise, then it's possible that a pre defined market sale price and regularity be setup with MM's (under FCA rules and regulations). This can happen when a Director receives a forced or voluntary "leave of office" payment for example, and an agreement could be " yes I will leave" "but I want the monies you owe me, and I want it paid to me over the next 3 years and monthly, paid @ say .23pps by means of the company selling my shares to the market under an agreed condition".

So Jcgs @ other long termers,

You would know if this is the type of scenario which could be in place?

I'm going to look at those historic trades and previous Directors as I think we will get a better view of these spurious trades, which will make me more comfortable in investing more if they are MM, institutional or pre agreed disposal trades for sure, but I think the above is the most likely event for those constant sells, and if that is the case, great!! IMHO

ATB
TL

[toploadermike] 29/11/2018 22:52

From the FCA website:


Deferrals

Post-trade transparency has a wider scope than pre-trade transparency as it includes investment firms dealing OTC (i.e. outside the systems and/or the rules of a trading venue). The content of the post-trade information includes the time, price, volume and venue of executed transactions. MiFIR acknowledges that, in some circumstances, the immediate public disclosure of an executed transaction may reduce liquidity and increase the cost of execution for investors.

In accordance with MiFID, MiFID II gives us and other competent authorities the power to grant authorisation for post-trade deferrals. We will extend the current practice, and require market operators and investment firms operating a trading venue to apply for authorisation to defer the publication of details of the transactions. Under MiFID II the ability to defer the publication of post-trade information in relation to shares admitted to trading on an RM will be available to investment firms dealing OTC, should they meet a set of requirements.

ATB
TL

[toploadermike] 29/11/2018 18:18

Carp,

Still don't think that's an open sell, the price is too high. Might be wrong but it does show as a Large delayed announcement or "LRGS" deferral and this can bee seen on the LSE trading platform, but the sell price hasn't been that high all day, so I think this may well have been a sell but from an Institution.

Any ideas anyone?

ATB
TL

[carpadium] 29/11/2018 17:44

And there it is, the well-telegraphed sell, 1.5m showing after the bell.

[arrynillson] 29/11/2018 17:29

SmoggyG - more lies 12bn - ' one wrong call ' - you are seriously delusional 12bn - I've lost count of the number of times you've come on here and claimed the share price would fall only for it to finish a very dark shade of blue at the end of the trading day!

If you came on here and said I am trying to make money by giving investment advice and I don't care that my supporting prospectus is based on lies and misleading information some people might understand that but to spend so much time here and claim to be financially disinterested is difficult for most readers here to believe SmoggyG/12bn!

Your opinion about the company not turning a profit for years is just your typical posturing based on ignorance - you suggested Koot wouldn't make a difference-he has proved you wrong with increased production from Goudron and now multiple additional likely profit flows from the SD acquisition ( the CO2 Predator deal you seem most reluctant to talk about !).I give no guarantees on future performance of CERP but at least I'm aware of the potential and I'm happy to acknowledge the company needs to spend to develop - bit like your KOD recommendation 12bn!

[smoggyg] 29/11/2018 16:31

I was correct to say sell at 7.25p,7p,6.75p,6.5p,6.25p,6p,5.5p,5p,4.5p,4p,3.75p,3.5p but I did call it wrong at 2.4p! One wrong call and 50 correct calls.////// 'appalling investment advice',don't make me laugh! LGO/Cerp has been a serial diluter for many years,it has had to be because it is a loss maker and needs punters cash to pay running costs. It is for this reason that I am negative on Cerp as I don't think it will turn a profit for years,if ever. If anyone gives 'appalling investment advice' it is you and your pals on jcqswims rampers only thread. You should come with a wealth warning.

[arrynillson] 29/11/2018 16:23

SmoggyG - I don't need to defend myself because I don't give unsolicited investment advice. Whether I choose to buy sell or hold at any level is very much my own business and I don't come on here moaning about my own decisions.

I do find it absolutely astonishing that people like you give appalling investment advice based on ignorance and expect it not to be adversely commented upon!

[smoggyg] 29/11/2018 16:02

15:57:45 3.2000 130,000 O 3.2000 3.4000 Sell 1,613,346 813,840
15:49:07 3.3900 19,575 O 3.2000 3.4000 Buy 1,613,346 683,840
15:04:00 3.3000 150,000 O 3.2000 3.4000 Sell 1,593,771 683,840
14:50:25 3.3000 400,000 O 3.2000 3.4000 Sell 1,593,771 533,840
14:08:31 3.2300 131,790 O///// Sellers are out in force now,I cannot see 3.20p bid lasting this week but I could be wrong. :)

[smoggyg] 29/11/2018 15:48

arry 'reliable well researched info',don't make me laugh,you always accuse me of saying sell this at 2p but the share price only dropped to 2.4p at its lowest (0.12p old money at the time). This is the claim you make to defend yourself despite me admitting several times that I did not expect a bounce from that level just because LK took over. You seem to ignore the fact that I have been correct several times before and since. One error and you think that is enough to justify yourself holding on from 7.25p to now! I was correct to say sell at 7.25p,7p,6.75p,6.5p,6.25p,6p,5.5p,5p,4.5p,4p,3.75p,3.5p but I did call it wrong at 2.4p! One wrong call and 50 correct calls.

[arrynillson] 29/11/2018 15:24

SmoggyG - it’s not important what you think of me - can understand why you don’t like readers here getting reliable, well researched information from me and regularly suggesting that taking your share trading advice could quickly turn riches to rags!

[smoggyg] 29/11/2018 15:03

The question is 'who is the big seller amd why?' Could it be Schroders finally giving up on Cerp or another cash raise by Cerp?

[smoggyg] 29/11/2018 14:38

jcgswims29 Nov '18 - 13:24 - 6406 of 6411
0 2 0
Well judging by the trading today and in previous days, I'm expecting a large sell showing later of at least £2/2.5m. Whoever it is has been selling for a while, we'll see how many they've got left in the coming days I presume.///// For once I agree with jcqswims,it did take time for the penny to drop though! arry,you know that I think you are an idiot don't you? :)

[arrynillson] 29/11/2018 14:33

SmoggyG - I'm sure lots of investors would have liked to sell at 7.25p but they had taken your advice and sold at circa 2p!

[smoggyg] 29/11/2018 13:53

Afternoon arry,I sold Cerp/LGO at 3p old money,that's 60p by todays standard,I did sell a few Kod around 0.18p,about 10% of my holding but I sold 80% of them around 0.25p/0.26p making a great profit overall,thanks for reminding me but I fail to see the relevance of the comment. The MMs are soaking up the buys here today at 3.40p,fact,this is likely to be because they have a massive sell order to process,imo. Do have a nice day. ps you should have sold at 7.25p as that clever 12bn said to do! :)

[toploadermike] 29/11/2018 13:53

Sure, I get you Jcgs but not much else on this weekend and always good to try and establish where one is in the field of battle! I'm also a long termer but that's not a door to forever. I'm lined up nicely as I'm sure are you. Would be interesting to see if I can get an even better idea of movement potential as I'm sat on some more options that I want to time perfectly if possible.

My dad always taught me, perfection, perfection, perfection! Don't always stick to it but in investing I try too.

ATB
TL