Zirax Share Discussion Threads

[greengnu] 07/4/2008 09:21

Excellent results!
52% of revenue from oil and process chemicals
80% increase in EPS
Net assets exceed net liabilities by $10 million
with $8 million in cash!!!

[masurenguy] 07/4/2008 09:06

Looks promising but:
a) Historic PE circa 10 - not expensive but not cheap either in this climate either.
b) Overdependence on domestic Russian market (80% of sales)
c) Moscow de-icing contract still a critical part of the business

Still remains on my Watchlist for the time being !

[whonosewhy] 07/4/2008 08:56

Quick read through I agree - good results. No reason I can see for the steep fall from 13p.

Profit percentage increase bigger than revenue percentage increase. Better margin business being done? Good cost control? or Both?

Hopefully I will get chance to have a good read at the results over the next few days.

[philjeans] 07/4/2008 07:38

Nothing wrong with those results; should see a significant re-rating this week.

Excellent value play down here.

[whonosewhy] 04/4/2008 17:38

I'm hoping for good things too koolio.

In one of my earlier posts I reported getting an email reply from the company that said they were looking forward to reporting the results to update the market properly.

I'm just a bit annoyed that today my monthly investment wa spurchased and it was purchased at the top price of the day ! Typical of my luck.

In the long run I'm not worried the company seems solid and profit making and perhaps most crucially at the moment they are debt free (according to the last figures I saw anyway)

[koolio] 04/4/2008 16:51

Whonosewhy and all others that hold,the results coming out on a Monday is a good sign (I hope). It has always said that bad news comes out on a Friday and the market has the weekend to get over it vise-versa I hope. The blip in price may be a good sign but it may just be the traders getting on board. I hope for a good start to the tax year, i've got a few dogs that I would like to offset.

[masurenguy] 02/4/2008 17:51

Don't hold your breath !

[ncjs2] 02/4/2008 17:02

I purchased 100k shares on monday; I have to say that a company that is this strong and in a growing market clearly has been mispriced but also is suffering due to lack of free float. The brokers, deliberately dumping their stock, have clearly woefully failed the company and their position should be reviewed.

[tricky1992000] 02/4/2008 14:07

I hold haike, and Hanson Westhouse are their house broker as well, some of the shareholders on the haike bb are less than impressed.

[buzzaldrinsballs] 02/4/2008 14:01

Lamentable?

[tricky1992000] 02/4/2008 13:40

what do people think of the preformance of the house broker?

[buzzaldrinsballs] 02/4/2008 11:40

Here's hoping for good news on Monday - announcing within this tax year might have been better though?

[azalea] 28/3/2008 15:15

I am amazed as any at the fall, some companies would be grateful if they made for FY profits what ZRX made in H1!

O/T. Keep an eye on GTE(I hold). FY also next month.

[whonosewhy] 28/3/2008 15:10

I'm sure lots of others will be able to comment about charts better than me!

I too have been buying I have a monthly plan buying every month for small amounts and I am about to add another small amount as this price looks too low too me.

This is a profitable company with no debt problems so should not really be effected by credit crunch in fact they have a cash pile that they have just used a bit of to buy an acquisition.

I will now stop talking it up until my monthly purchase goes through next week.

[koolio] 28/3/2008 14:04

I've been buying almost every week fr some time now. Looks to be a highly underestimated frecast of earnings for 2007. Am I nervous, yes but because of the market not the company. 40% of T/o from Oil fields, production should be up by 20% in 2007.

DYOR but these look a solid buy and hold for growth. What does a chart tell us about the future?

[whonosewhy] 28/3/2008 13:34

I wonder what's causing this fall then?

The results are due April and I am hoping they will be positive there has been no indication otherwise.

I am hoping this is maybe just market sentiment but the chart looks steeply down now.

[koolio] 14/2/2008 17:14

That sounds about as positive as "close period" will allow...

[whonosewhy] 14/2/2008 14:35

I did get a reply from Zirax about my query on what happened surrounding the Moscow Contract but they have merely repeated that they have won the contract and are happy to have done so for the 5th successive year.

They did say they were looking forward to announcing the results so that they can provide the market with an updated position properly.

[azalea] 06/2/2008 07:57

If ZRX produces the FY results we expect, the 'city' could finally give it the recognition it deserves.

[koolio] 05/2/2008 17:50

Nice Post Lecks17...Thank you. This (RHPS)publication tipped CRA which I hold and now these in a two week period, small investors obviously pay attention to it as both share price have shown positive movement.

[whonosewhy] 04/2/2008 17:53

Thanks lecks an interesting read. Some of it is lifted from Zirax website but it was interesting to read the US / Cargill link up parts.

On the whole it backs up what I have read over recent weeks/months. For those that have been following my comments my only reservation is still what really went on with the Moscow contract as this spooked me at first.

I have emailed the company and if I receive a response I will let you know.

[lecks17] 04/2/2008 17:20

RHPS tip

The John A. Blatnik Bridge carries Interstate Highway 535 and US Highway 53 over the Saint Louis River. It connects the cities of Superior in Wisconsin with Duluth in Minnesota. It is a mighty fine structure - but it has been a dangerous one. There were 20 crashes here in four years, caused by bad weather. But since 2005 there have been none.

The Ironwood Bridge in Indiana has been another danger spot. It had a long history of crashes caused by snow and ice. Since 2005 there have been none. Steve Giese is the operations manager at the Indiana Department of Transportation's Plymouth sub district. "If I can get 36,000 vehicles over that bridge in an ice storm without any crashes, it is worth its weight in gold," he says.

'It' is a road surface treatment called SafeLane Surface Overlay, a unique anti-icing and anti-skid coating that is applied to the road surface before the onset of winter. It seals the road surface to prevent degradation, and also, like a rigid sponge, it stores chemicals that are automatically released as icy conditions develop. These chemicals include calcium chloride, and as they dissolve they give off heat, melting the snow and ice.

Now you may think that global warming will put paid to treacherous winter roads, but it will be at least a few decades before municipal officers like Steve Giese need stop worrying. So treating roads in winter is big business, and it is a changing business too. Until now the conventional form of treatment has been the scattering of salt. This is cheap, but it is now considered a pollutant. Salt splashed from streets corrodes vehicles and when it lands on lawns and gardens it kills vegetation. It can also dramatically change salinity levels and the chemical composition of receiving waters. Calcium chloride has none of these harmful side effects - indeed it is used as a calcium source for certain fruits and vegetables.

Calcium chloride comes in different forms. There are flakes, granules and pellets. The latter generate the most heat and penetrate the ice further. There are only six manufacturers of calcium chloride pellets in the world, and Zirax is now the second largest. Last year it signed an agreement with Cargill to market the SafeLane Surface Overlay in Russia and the 10 other countries of the Commonwealth of Independent States. But demand for new solutions to the problem of icy roads is only one of the opportunities beckoning Zirax. Last year, chief executive Valery Andosov said something that every chief executive of a small company would like to be able to say. It was this: "We are in the fortunate, but sometimes frustrating, position that demand is outstripping our supply; while we cannot fulfill every order, we can select our customers."

That is changing - for the right reasons - and when Andosov said, in September: "We have entered an exciting period in the company's history which should see a step-change in the size and shape of the business going forward," I have no doubt that he was right. Put simply this step-change is arising from the fact that Zirax has doubled its production capacity in the last two years. This will enable it to satisfy its hitherto frustrated customers and will, according to the forecasts of broker Hanson Westhouse, see the value of its sales jump from the $25m achieved in 2006 to $54.5m in 2008. The share price has so far refused to acknowledge this considerable progress, but in 2008 it will surely do so.

As you may have guessed from the name of the chief executive Zirax is a Russian company, but it raised £6.3m through a placing of shares on AIM in December 2005. The majority of shares are held by Russian investors, and the list of 'Risk Factors' in the AIM prospectus runs to six pages and refers to such delightful features of Russian business life as 'significant criminal activity' 'inconsistent and unclear laws' and 'governmental authorities that have a high degree of discretion which may result in arbitrary actions or decisions'. This is Russia, and we must go in with our eyes open. That said, Zirax has so far done everything that it promised at the time of its London stock market debut. It clearly has the respect of major global companies, Cargill amongst them. And if this was a British company with a factory in Blackburn instead of Volgograd, I have no doubt that the share price would be twice the current level.

There is a Chemical Park in Volgograd and Zirax used to be a part of a producer called Kaustik until it was spun out into a separate unit in 2005. Kaustik supplies hydrochloric acid to Zirax, which mixes it with limestone (calcium carbonate), and then by using a 'Fluid Bed' drying technology produces calcium chloride in the form of pellets. Zirax's own IceMelt treatment is manufactured by mixing the pellets with other solid salts, primarily sodium chloride, before further adding some corrosion inhibitors. Much of this goes to the City of Moscow. Just before Christmas Zirax announced that for the fifth consecutive year it won the de-icing contract for Moscow City Council. Although, in truth, Zirax faces minimal competition for this business it did account for about half of its total 2006 sales. Clearly having so many eggs in the same basket presents a certain risk, but it is a risk that is becoming less material as Zirax expands its sales in other directions.

In particular Zirax is fast growing its sales to the oil industry, for which it has developed its own brand of calcium chloride pellets called 'PelletOil', with a smaller particle size and a calcium chloride content of 94-98%. Products with such a high calcium chloride concentration are considered premium products in the oilfield service sector, and have a number of applications. They are a constituent of the drilling muds that cool and lubricate the drill bit allowing longer bit life and reducing drilling times by up to 25%. They are used in completion fluids, which flush the drilling hole clean of solids prior to the casings being cemented in place. And as a part of chemical flooding technologies they contribute to enhanced oil recovery by improving the percentage of oil that is extracted. Zirax's sales to this industry are growing fast. On the back of strong demand from Russian oil and gas exploration markets Zirax reported a 163% increase in sales of oilfield process chemicals in its latest interim figures, overtaking the revenue contribution from its de-icing products. This, though, should be only the start of rapid sales growth, because Zirax has just completed a doubling of its production capacity.

Two years ago Zirax had a production capacity of 80,000 metric tonnes of calcium chloride. A principal reason for its AIM flotation was to raise the funds to finance expansion at Volgograd. Then in June 2006 Zirax announced a deal with the giant Belgium chemicals company Solvay to build a new plant at the latter's Rosignano facility on Italy's west coast. This was opened in November - on schedule - and can produce 80,000 tonnes of calcium chloride pellets per year, of which Zirax will retain 55,000 tonnes for sale to oil companies operating in the Middle East and Africa. Zirax has already been marketing to potential customers in these regions, in some cases supplying them from Volgograd, and is confident of selling its whole production quota.

What all this means is that after a two year period of investment Zirax is poised to reap the rewards of the increased production capacity. And it will also improve the efficiency of its operations by supplying existing customers from Italy instead of Russia. As capital spending falls away Zirax's profit margin will widen, and a positive cash flow should further strengthen a balance sheet that already boasts net cash of $8.6m.

RHPS Verdict: Last month Zirax continued its development by acquiring for a maximum of euro 3.7m an Austrian specialllist in de-icing products by the name of Solith Anlagenbau und Service GmbH in a deal that will give Zirax access to central and western European markets and will broaden its product range. This is another step forward for a small company that has done everything the City could have wished in its two years as a public company - but is still awaiting recognition. BUY

[whonosewhy] 04/2/2008 14:33

I think you are right masurenguy - I am here for the long haul but I could easily have taken 10% profit for holding for a couple of months and I am sure some did.

I also wish we could get some figures on the size of the Moscow deicing deal - maybe I will email the company and see what they say.

[masurenguy] 04/2/2008 13:35

Obviously, since there has been no news to trigger this volume. Some existing holders also took advantage of the initial spike to sell and/or exit too !

[tumshie11] 04/2/2008 13:32

The RHPS tip must account for the large number of PI buys today.