Hydro Intl Share Discussion Threads

[cheap] 09/5/2007 12:24

Riv - your efforts much appreciated.
I did email Frost and Sullivan yesterday to ask if they were going to be referring to Hydro and included your link to Hydro's sludge products.
Got a reply but only to say the relevant person was out of the office until today.

[rivaldo] 09/5/2007 12:03

OK, talked to the FD now:

- there will be an AGM statement on the 24th May
- he's due to meet with Peel Hunt in the next couple of weeks, with hopefully a full broker note to follow shortly
- the points I made above have been noted!
- the sludge RNS I posted above has been passed on to the wastewater team

He above all correctly noted that the PBT growth rate I quoted was after the 2005 exceptional for restructuring - although of course there was also an exceptional property gain.

So I calculate that stripping out exceptionals and both amortisation charges HYD made £1.87m PBT in 2006, 18.4% above 2005's £1.46m. This is still well above the 15% 2007 growth assumed by Peel Hunt.

If you extrapolate this to 2007 you come out with around 11.4p EPS, giving a current year P/E of 16.4. But strip out the £2.7m of cash, and remember that many companies are on forward (not current year) P/E's of 16-20 whereas HYD's forward P/E, net of cash, is probably only 12 or so, and HYD remains pretty good value imo, even without the huge global growth potential.

[rivaldo] 09/5/2007 09:18

Ticking up again.

Perhaps I'm being a bit harsh on the analyst, as his original forecast was made prior to all the recent contract wins. But it would be nice for the private investor to know that actually the forecast is cobblers since its EPS is apparently based on fully diluted shares in issue, which no-one uses, and on conservative tax assumptions (as well as highly conservative growth assumptions).

I know the original plan was a small broker update and then a full broker note. I suppose it's possible the full note is yet to come = perhaps after the upcoming AGM?

[rivaldo] 08/5/2007 20:57

I talked with the Collins Stewart analyst about his forecast for 2007. I asked if his EPS was "basic" or "adjusted" and he said "Oooh, that's a bit technical" and had to rustle through his papers and look it up! Unbelievable...I should have been an analyst, these guys are just useless.

It turns out that his 10.68p EPS is not worth the paper it's written on as far as I can see - my notes were as follows:

- it's fully diluted based on 14.3m shares rather than on the 14.13m in issue
- it uses a 30% tax rate which he admitted was conservative compared to last year's 27%
- and it assumes just 15% PBT growth when last year achieved 28% and even the prior year achieved (despite Vexamus) 18%!
- plus it ignores the 3 large recent contract win RNS's

Simply use the same rate of growth as last year (28%) and HYD should achieve £2.4m PBT. At 27% tax that's £1.75m PAT, or around 12.4p EPS for 2007.

That's more like it imo. A current year P/E of 15 is good value imho for a stock with HYD's obvious and global potential. Hopefully the AGM statement in 16 days' time will confirm the rosy picture in the results and contract wins.

[mustau] 08/5/2007 12:36

Riv,
Well pointed but the PR would be great.

[cheap] 08/5/2007 09:41

Well spotted Riv.
Have you checked with Hyd that they are aware/involved if appropriate?

[rivaldo] 08/5/2007 08:43

Ticking up again to new highs I see.

An encouraging RNS has just come out which applies particularly to HYD's sludge products:



"LONDON, May 8 /PRNewswire/ -- Sludge dewatering equipment is a multi-billion dollar industry worldwide with the European market that plays an important part in this context. In fact, it would easily account for a significant proportion of the global market share. Moreover, the European Sludge Dewatering Equipment Market is set to grow especially in Southern and Eastern Europe where the potential is huge.

On this topic Frost & Sullivan will host an exclusive interactive
briefing on 15 May 2007, at 1 p.m. BST, to provide manufacturers,
distribution channels, end-users and other industry participants with an
overview of the European Sludge Dewatering Equipment Market.

To participate, please email Chiara Carella - Corporate
Communications at [e-mail] with the following information:
your full name, title, company name, telephone number, e-mail address, city,
state, and country. Upon receipt of the above information, a registration
link will be emailed to you. Additionally, a recorded version of the briefing
will be accessible to anyone at any time for three months following the live
briefing date.

The market for sludge dewatering equipment in Europe is seeing
increasing consolidation as well as increasing technology maturation
competition. The market is set to see significant growth in under-serviced
markets such as Southern and Eastern Europe. This presentation will provide a
strategic analysis of the market forces at play, the key growth
opportunities, the competitive scenario in the market and the direction the
market is taking.

"In the current scenario, stricter EU legislation on sludge disposal and
targeted EU funding to countries in Eastern and in Southern Europe have
spurred demand for sludge dewatering equipment in these regions. Also the
need for refurbishment of existing outdated equipment has seen significant
demand in otherwise mature markets in Europe. Novel and innovative sludge
dewatering technologies and products are starting to address issues related
to better performance, higher throughput or cost efficiency", explains Frost
& Sullivan senior research analyst Jaishri Srinivasan.

This briefing will benefit wastewater and sludge treatment equipment
manufacturers, suppliers and water and wastewater Design, Build, Operate
(DBO) contractors. It will aim to provide an overview of the current state of
the market, as well as current and future trends by region and technology.
This will have the benefit of making a strategic growth and expansion path
clear for all the players active in the market."

[rivaldo] 07/5/2007 18:41

Mustau, I'm hoping we DON'T have a similar run to biofuels - hype, then crashing and burning isn't on the itinerary for HYD. A gradual rise in price and City recognition as has occurred since I bought 2 years ago at the lowpoint on the Vexamus acquisition is just fine by me.

I can see 300p on the horizon given good H1 results and a bullish outlook. Given the nature of HYD's business and global prospects a current year P/E of 20 doesn't seem unreasonable given continued annual PBT growth of 28% as per last year.

[mustau] 07/5/2007 11:44

Hi Riv,

As mentioned it was pointed out to me over 4 weeks ago, normally an area I would not touch nor have an understanding. I researched back ground info and felt it was not only a safe bet but as you mentioned eco-friendly.

I opened a position on Friday as I felt it was a safe long term bet and more importantly not touted by Numis (their rec's taken with a pinch of salt). My broker is very bullish but I personally feel confident.

I do have a number of speculative punts (I guess GNG can no longer be classed as one), HYD is my safe bet.
Who knows we could have the same run as biofuels of few years back.

[t0pgrader] 07/5/2007 10:58

Agree with you Rivaldo and thought JTC may perhaps have been a little hasty in dismissing this one. Am considering taking a position. Rgds

[rivaldo] 07/5/2007 09:54

Ta mustau, I hope your guy's sources are well informed. IMO you have to look at the big picture, and a small decline in operating margins is largely irrelevant when HYD have been growing the business and integrating acquisitions which instantly double the size of the business.

As I wrote elsewhere, the big picture is the global requirement for solutions for, and the UK's ramping up of billions of pounds of expenditure in the AMP4 water industry capital investment programme in, HYD's areas of expertise:

- wastewater
- stormwater
- sewage overflows
- rainwater harvesting etc

and combine with HYD's successful global expansion in the USA, Australia and New Zealand, Ireland, Korea and Japan, the Middle East, Eastern Europe etc...

HYD is in my view an investment where demand for its products is only going to grow exponentially over the next few years as water becomes more and more precious and weather becomes more extreme. And new legislation to make houses and housing developments more water and eco-friendly is being considered as we speak which could make HYD's CSO and rainwater products must-haves rather than choices - especially with so many developments on flood plains now.

Lots to go for here in both the short-term given the run of large contract RNS's and in the medium/long-term as water becomes the new oil.

[lpf] 07/5/2007 08:02

Masurenguy, the shares went ex-div on Wednesday. First thing on Wednesday morning, the shares went down by about the amount of the divi.

If you were registered 3 days before the 4th of May, you get the divi - that was Tuesday 1st. If you bought on Wednesday 2nd, nominal 3 day settlement means you miss the 4 May record date, and don't get the divi. Hence, the share went xd on Wednesday 2nd.

And, if you click on the financials tab at the top of this page, and read all the way down to the dividends table, you'll see all the dates there.

NB Ex-div is always on a Wednesday for shares on AIM and the Main Exchange.

Regards,
Le Petit Fou

[masurenguy] 06/5/2007 14:23

capa - 2 May'07 - 1645 of 1664: Ex divi today, may have contributed to the drop.
...............................................................................

According to the results announcement on 5/3/07 the dividend was due to be paid on June 1 to all shareholders on the register as at May 4 (Friday). Unless those dates were subsequently changed, wouldn't it make this Tuesday the xd date !

[stegrego] 06/5/2007 11:31

Bit of a feature in this weeks Moneyweek on how the US pipework (sewerage and freshwater) infrastructure is completely knackered and in dire need of replacing / upgrading.

Id say that somewhere in the mix HYD products could figure....

[mustau] 06/5/2007 10:31

Hi Riv,

Broker's been recommending these for over 4 weeks, one of their fund managers has been accumulating for the last few months. HYD has been researched in dept by them and they feel undervalued. From the city; right place, right time.

Price of £4/5 is being touted not so much by them but their sources.
Like JT I did question margins (hence my hesitation to buy in the first place), I was told they have completed a lot of integration, margins will reduce in time and their bottom line will be much higher in due course.

They feel HYD should move forward with a lot more contracts worldwide in a very short time. How many have they announced in the last 2 months?
I normally don't buy on their rec (have been burt EPD, langbar and a few others) but HYD looks a good bet.

[rivaldo] 06/5/2007 09:26

No probs GI. Mustau, re your comment about high hopes in the City for HYD, I notice on JTC's blog thread you say your broker is hoping for 400p-500p for HYD this year. I like your broker already! Can you say which company he works for and how he comes by these targets?

I do believe HYD is an excellent investment and could well go much, much higher. But I'm not sure about 400p-500p this year....:o))

[greek islander] 04/5/2007 18:30

Thanks Rivaldo
Wont go off topic again re Corpora.
I only have 3000 stg in Hydro but might go more once I get to know it better. All the basics are there for good things.

[mustau] 04/5/2007 16:50

My broker has been telling me to buy these for weeks, anyway dipped toe today hopefully pays off.
Boroker tells me city has high hopes.

[rivaldo] 04/5/2007 14:46

As real as you like, and there's the reason - a 50k buy at 180.5p. Someone's happy buying large chunks at new highs.

[traderabc] 04/5/2007 10:31

yummy!! The break-out.Hope it's real.

[rivaldo] 04/5/2007 10:28

Hi GI, it won't last! But HYD will continue to thrive imo, of that I'm sure.

OT : re Corpora I'm not convinced any fundraising won't be highly dilutive given their overriding need for cash, so imo it's better to be safe than sorry. I won't post that on the thread though - unlike certain other posters I've raised the question once on the Corpora thread so won't do so again.

[greek islander] 04/5/2007 10:12

Riv

I knew if I bought some shares here they would take off. What confidence we have in your stock picking. Still waiting to hear what you think of Corpora - up again this morning on PI buying pressure I think.

[gac100] 04/5/2007 10:06

Could now make cheap's 200p by the AGM imo