Iofina Share Discussion Threads

[pugugly] 23/2/2014 14:03

Bought years ago at an average of 50p so one of the few still in profit. So how about you making a realistic effort on valuation. Looking forward to your considered thoughts.

[ih_405411] 23/2/2014 13:35

PUG

How can you sell out now if you haven't invested ?

[pugugly] 23/2/2014 12:31

Fellow watchers and Investors – While we are all agreed that IOF has developed ground breaking technology for a novel low cost method of production of Iodine nowhere (that I have been able to find are the level of costs quantified).

Irrespective of when or how many plants may or may not be in operation the crucial data of cash cost and sustaining capital costs per 1,000 tonnes production needed for making a decision as to whether to invest (or sell out now) are not available. OK this may well be for competitive reasons but until the net margins per kg (both sold to 3rd parties and used as low cost feed stock for the chemical division) can be determined the value of IOF as an investment is going to be in doubt especially as the trading update tells us that "in 2013 a decline in iodine prices of greater than 20% has occurred" If this is not reversed it will have a very severe effect on forward profitability.

While the interim accounts advise that nearly at breakeven I would suggest that as a nearly established business with potential growth a realist valuation at the moment would be at a p/e of 15 maximum [*edited 5:40pm calculation is at a p/e of 13 see post below. . At the current share price of 78p this suggests a post tax profit of £7,640,000 or some 6p [*5.2p for a p/e of 15] per share within the next 2 years.

Thoughts comments ??

[ammons] 23/2/2014 11:55

Underpromising? Until we see evidence of over achieving then it is not underpromising at all IMHO. It is what it is until proven otherwise. All we have clear evidence of so far is underachieving based on previous expectations.

[engelo] 23/2/2014 10:56

Monty: re timing I'm with noli in that they've had loads of time to get I04 and 5 operational. Underpromising is the new style: OK I'll go with that but now let's have some over achievement :-)

As of Jan 1st they were only held back by the towers which we know had both arrived on site at some point in Dec. Pretty obvious that the I04 tower arrived first and gave it a head start.

So assembling and integrating the towers, followed by initial brine connection and leak testing surely could be achieved by start of Feb imo. All been done before and on the critical path. On this basis we've had 3 weeks of the 2 weeks necessary to get initial commercial product :-)

Again imo its the timing of the RNS that's the only issue. Psychologically (not the Bod's strength, I know) it would be great to get it in Feb, beating 'expectations' and disappointing for it to drift into March.....

[noli] 23/2/2014 10:51

From the rns 29th

Construction of IO#6 is underway, with the concrete pad in place and ready for setting of the steel framework.

Even if you assume a 60 day build from the 29th Jan it should be built by the end of next month.

[naphar] 23/2/2014 10:23

Month
where we're we told Q2 for IO6?

[noli] 23/2/2014 09:29

MP, serious iodine will take time as more wells are tied in, imho 4+5 have been handed over to the operators for hydro testing. As long as the brine has been signed off by the operator then i have no reason to think the plants are not producing some iodine now. You are correct on serious iodine production, it will come as the weeks go by.

[monty panesar] 23/2/2014 09:15

I Think you may be out by a couple of weeks in your timing Noli just reading the RNS they didn't suggest serious iodine production on 4/5 would actually happen this month.

Also IO6 is scheduled to be completed in Q2 so April is a realistic.

Not long to go.


  22 Feb'14 - 22:09 - 16255 of 16257 1 0

Time for things to start to pick up now, we should have 5 plants up and running now with io#6 a month away imho. As for raw iodine sales, i would say IO#1+2 for IOC, the rest for raw sales for now until shift patterns change and derivatives sales increase.

[meadow2] 23/2/2014 07:23

We really do need a few encouraging RNSs which have no qualifications within them. Readers will always focus in on the doubtful aspects of any news. Hope needs to be turned into expectation.

[noli] 22/2/2014 22:09

Time for things to start to pick up now, we should have 5 plants up and running now with io#6 a month away imho. As for raw iodine sales, i would say IO#1+2 for IOC, the rest for raw sales for now until shift patterns change and derivatives sales increase.

[monty panesar] 22/2/2014 22:03

I imagine 4 and 5 are in the 2 week start up period.


Construction of IO#4 and IO#5 is progressing well. The Board is pleased to report that the steel framework has been completed and the towers have been installed at both plants. Current progress indicates a handover to our operations staff for both plants to occur in February with IO#5 expected to follow shortly after IO#4. Plant start-up activities will then begin and are expected to last approximately two weeks, at which time commercial iodine production will commence. Construction of IO#6 is underway, with the concrete pad in place and ready for setting of the steel framework.

[hurricane.] 22/2/2014 21:52

Time to let the plants do the talking and the share price to play catch up.

[n3tleylucas] 22/2/2014 21:33

Banging out a few big ones now eh?

I remember you...

[ammons] 22/2/2014 21:17

I agree that production would be going gangbusters if everything was running 110% smoothly at IO2 and IO3. Realistically this isn't ever likely to happen because of the nature of the business. That is almost certainly why they do not want to give figures for any individual plant in case people like us start extrapolating and getting unrealistically high or low numbers for 6 or 9 or whatever number of plants collectively. This is again why they do not want to start giving production figures in advance of a decent number of plants up and running so that problems at one plant will be offset by good figures at another. All the plant except IO1 would be "biggies" in an ideal world.

[n3tleylucas] 22/2/2014 20:17

"che7win has reasoned correctly"

That will be a fackin' 1st then

[engelo] 22/2/2014 19:57

ammons: re difficulties agree with you: what I believe is being underplayed is the production rates when all is running smoothly.

che7win has reasoned correctly imo that I02 is the biggy (as was originally thought) and IOF have attempted to underplay this. Where else is the capacity coming from for raw iodine sales?

Interesting that I06 is right next to I02 and they thought carefully before relocating it there. Would like to know the ins and outs of this.

[meadow2] 22/2/2014 19:23

"The Group was encouraged by its first external raw iodine sales in January and will continue to market raw iodine externally as production increases from new plants. January sales for the Group are as planned and order activity is promising."

Let's hope that 'order activity' and 'sales' are one and the same! Also, let's hope that the brine volumes are enough to generate sufficient iodine to provide a surplus available for sale.

[ammons] 22/2/2014 19:04

I don't agree that they are underplaying production. There undoubtedly are problems and at the moment we do not know how badly production has been affected. This is what they said on 29 Jan.

"Despite extremely cold weather in the area downtime in December and January has been limited as a result of appropriate planning and proper execution by the operations teams. Iodine production levels at IO#3 are coming in as expected when the volume of brine received from the Operator is as anticipated. However incoming brine volumes have been affected recently due to the Operator's significant fracking and drilling activity in the area, which is affecting overall iodine production levels. The Group is working with the operator to minimise brine volume inconsistencies amidst the ongoing fracking activity and looks forward to updating the market on progress in this respect."

[engelo] 22/2/2014 18:49

Bobsworth: Yes it was highly significant that IOF announced they had started to sell raw iodine: it somehow got lost in the general gloom. Good point about inventory.

Agree with you that IOF are underplaying their iodine production. Also that IOF are in a strong position to balance higher derivatives sales or raw iodine sales as the supply and demands both grow through 2014. Nice problem to have :-)

Not sure though whether IOF Chem are getting through as much as 400Mt atm, seem to remember a bit less. Being lazy, do you (or anyone) have a good ref for this figure?

Presumably the derivatives sales are more profitable than raw iodine: seem to remember Matrix or someone suggesting we regard IOF as a derivatives business over H1 2014.

edit: excerpt from Matrix post 13373

Inventory is not building due to lack of sales, the final order came in late and the inventory will be sold in 1q 2014 so 1q will be higher than expectations. They are not failing to sell. They have the customers and are supplying them and what we will see over the course of the next few months isnt a huge industry player in iodine production, but a chemical company that supplies itself at low margins showing strong growth. This was just a timing issue, happens all the time with business.

[che7win] 22/2/2014 18:44

Bob,
Excellent post, I think you can narrow your post to IO#2, it's the biggy, IO#3 wasn't up to full speed last month...

[bobsworth] 22/2/2014 17:40

On the last Operational Update 29th Jan it was significant to be told that Iofina had started selling Raw Iodine.

Assuming Iofina no longer imports raw iodine, this means that plants 1,2 & 3 alone + recycling are producing enough raw Iodine to constantly feed their Chemical Division alone that converts about 400,000kg or 400mt of Iodine per year to Iodine derivatives.

It also means that Iofina, having built up its raw iodine inventory and now selling raw iodine, is actually producing much more than 400mt/yr.

How much more time will tell!

Also with 3 plants capable of supplying the chemical derivatives division alone on just a one shift system with iodine to spare the arrival of IOF4,5 & 6 will give Iofina the iodine capacity to up their chemical Division to a two shift production system with even more profits as a result.

Whether we get to a three shift system with plants 7,8 & 9 time will tell!

[n3tleylucas] 22/2/2014 17:13

I have nothing to prove here.

Your initial point was well countered by someone else.

I merely echoed that.

You are clearly not the sharpest knife in the drawer, and that's not derision.

You have brought about your own downfall my good friend... without aid.

(but by all means keep on a digging :)