Enteq Technologies Share Discussion Threads

[masurenguy] 28/9/2017 11:33

Quite agree but the market is often behind events where very small caps are concerned. The current market cap is $17m, with $15m of that in cash, so the enterprise value of the whole company is just $2m or circa £1.5m. A ridiculous valuation when they also had circa $7m (£5.2m) in inventory & receivables at the March year end without even considering some residual value in property and equipment.

[1gw] 28/9/2017 10:48

Isn't it about time we got some buying interest based on the recovery in the oil price?

[1gw] 21/9/2017 14:33

I've added some more just now on further consideration of the AGM.

[mr macgregor] 20/9/2017 15:04

Thanks for your interpretation. I'm sure holdings announcements could be issued in a more straightforward manner.

[1gw] 20/9/2017 13:45

Edit.

Looking at the chain of ownership, the Canaccord holdings notice is because they've acquired Hargreave Hale, which previously had an 8% disclosed position (according to the Enteq site). So with Canaccord's own position and/or any new purchases they're now above 10% and appear to be the biggest shareholder.

[masurenguy] 20/9/2017 11:34

Here’s why I reckon oil could be heading higher

EXTRACT

Global oil demand has, for the third year in a row, risen by more than International Energy Agency predictions. Chinese oil demand is of particular note. It is growing at double last year’s pace, rising by 690,000 barrels per day (bpd) in July, with year-to-date data showing average growth of 550,000bpd, compared to 210,000bpd growth over the same period in 2016. I can start drawing all over charts, showing that the trend is this, while sentiment is that. But I don’t want to. It would be almost dishonest to say anything more than the truth, which is that I’ve got this nagging feeling at the back of my mind that oil is getting set for a run. I don’t think it necessarily starts tomorrow, just that something is brewing. What’s more, I don’t think that many in the investment world, the business world or the political world are ready or prepared; and a price surge could take a lot of people by surprise.

[brugen] 19/9/2017 19:59

Thank you for your very positive feedback from the AGM. If H2 is the new normal then we are in deep value territory indeed.

[1gw] 19/9/2017 16:11

That's me back from the AGM and happy to be buying more this afternoon.

I was impressed with what I would characterise as a quiet confidence in the business. I was also relieved to discover that inventory hadn't disappeared beneath the Houston floods.

I did specifically ask about the notable difference between 1HFY17 and 2HFY17 and MP confirmed that it was 1H17 that could be considered the "aberration" not 2H. He said that he thought Investec in their analysis had modelled the business on the basis of the 2H run-rate.

No-one ventured a credible explanation as to why the business traded so close to cash in terms of market cap and indeed someone pointed out that they had some "deep value investors" on the share register who were attracted by exactly this.

International seems to be coming along quite nicely, although somewhat "lumpy" compared to the US business. I had mistakenly thought that the Saudi contract was a one-off but it sounded more like the beginning of what is hopefully a long-term and growing relationship.

The company seemed to me to believe that it has come through the low oil price period with an enhanced competitive position due in part to the impact of various M&A transactions affecting its competitors.

[rivaldo] 19/9/2017 12:27

Pretty good AGM statement just out, with trading in line - as good as could be expected. Note that the $15m cash pile is almost untouched:

"The increase in the number of oil and gas rigs drilling on land in the USA to a current level of around 950 (approximately 500 in September 2016, but approximately 2,000 in the Autumn of 2014) has created some stability amongst the US based directional drilling companies, who are Enteq's primary customers. Some spare capacity of older Measurement While Drilling (MWD) kits remain in the market however upgrade programmes replacing older equipment are in progress.

Outside of the USA market cash flow for the funding of new drilling programmes, and hence the demand for equipment, remains slow. However, new opportunities exist and the previously announced Saudi Arabian contract remains on plan regarding equipment commissioning and contractual payments.

The Enteq Board is confident that the company is maintaining or increasing market share for Measurement While Drilling equipment.

The Company continues to invest in new product development while exercising tight controls over costs and, as a result, cash balances remains strong as at 18 September 2017 being US$ 15.0 million (US$ 15.2 million as at 30 September 2016).

The Enteq Board continues to believe in the potential for a strong long-term future, and expect the Company's current full year trading to be in line with its expectations.

The Company plans to release its interim results for the six months ending 30 September 2017 on 15 November 2017."

[masurenguy] 19/9/2017 07:57

Last year the AGM statement was issued about an hour prior to the scheduled start of the meeting.

[1gw] 18/9/2017 20:14

Tomorrow's the day then!

I hope for evidence in their AGM statement that the strong 2HFY17 performance has continued into FY18 and that they can build on their annual report statement that "market conditions have seen some improvement since the beginning of 2017".

[1gw] 14/9/2017 15:38

Nice to see the oil price ticking back up ahead of the AGM. Here's hoping it inspires them to write a bullish statement for Tuesday morning. Almost looks and feels like NTQ is suspended at the moment.

[happyholder123] 09/9/2017 11:47

HNR -
TWO wells successfully drilled with abundant oil and gas in samples extracted!
Fracking and FIRST OIL next month!
Don't miss this train!

[brugen] 01/8/2017 21:47

1gw, if you do get to the AGM a report back here would be very welcome.

[dan_the_epic] 01/8/2017 20:11

Entirely reasonable - management here are also backing the story. If liquidity wasn't so bad I'd probably be in

[1gw] 01/8/2017 19:32

Fair point on the liquidity, Dan. Having seen the price move when I've bought a relatively small volume, I shudder to think what would happen if I wanted to get out in a hurry!

On revenues, I don't know. They disclosed 4 big (10%+)customers in the annual report ($1,222k, $1,030k, $853k and $513k), so together these accounted for about 75% of the total of $4.8m. I'm not sure it would necessarily make much impact in the cash holdings if 1 of them dropped out. Gross margin in FY17 was 65%, so losing the biggest customer ought to take out about $800k of gross margin, maybe offset (in terms of cashflow) by the release of some working capital? They've done a pretty good job on opex with just 19 staff at end-March and a fair bit of equity-based compensation. Of course if they start making significant inventory investments in anticipation of a big contract which then doesn't materialise then that could be more significant.

What intrigues me is the jump in revenue from 1H to 2H ($0.7m to $4.0m), with not really any explanatory comment. Clearly if they could add a few customers as the market improves, or even if the $4.0m in 2H is indicative of run-rate then there's potential for a nice bump up in FY18 revenues.

Given NTQ is now my biggest holding, I think I'll try to get to the AGM next month and try to chat through some of the basics.

[dan_the_epic] 31/7/2017 20:44

The worry I would have is if revenues fall off a cliff because one large customer doesn't buy in any particular year - that looks like it would leave a gaping hole in cash burn and put a decent dent in the cash balance.

Yet at the same time, this looks incredibly cheap if the product is any good, as Brugen says. Liquidity sways this towards just being on my watchlist

[1gw] 31/7/2017 10:37

Well just to be boring I've bought some more - at 20.7p. NTQ now my top holding despite the fall in share price from the highs.

[brugen] 24/7/2017 05:29

I bought into NTQ over the last year for similar reasons to 1gw. A high margin of safety in cash in bank plus a likely increase in revenue as rigs increased and cannibalisation decreased.

What I don't know however is if NTQs products are any good. If I fancied doing a bit of directional drilling and wanted a new widget would I go to NTQ or could I get better performance and a lower price from Schlumberger.

Does anyone here have any industry knowledge on the relative merits of NTQ products?

[1gw] 20/7/2017 10:21

To me it seems one of the best risk-reward bets out there at the moment. A play on the oil price in general and the US shale market in particular, but underpinned by 20p/share or so of cash & equivalents (plus another 10p or so of net working capital, inventory and property) and a management that appears to have done a great job of preserving that cash through the last year or two.

I don't know what the charts say, but this has moved fairly sharply on small volume in the past and I keep expecting the market to wake up to what to me looks like a severe undervaluation. At the very least I would have thought it would be a steal for a competitor at the current sort of price if the worst came to the worst and management decided they wanted to sell out.

But as I said before, perhaps I'm missing something.

[dan_the_epic] 19/7/2017 21:17

Why? This probably weakens further before it gets better.

[1gw] 19/7/2017 15:55

Me in for yet more. Able to average down at this price of course!

[1gw] 18/7/2017 17:46

Well those buys of mine at 28p back in April don't look so well-timed now! Even showing a small loss on my overall holding at the current price.

Current share price seems odd to me given approx 20p/share of cash/equivalents, 30p/share of net assets (both at end-March) and what looks to be a fairly encouraging market environment in US shale.

I must be missing something, I suppose.

[1gw] 17/7/2017 07:34

Encouraging words from Weir in their trading update this morning on the state of the US market.