# VRS - Veris Limited



## System (19 December 2011)

OTOC Limited (OTC) was formerly known as Emerson Stewart Group Limited (ESW).


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## VSntchr (4 February 2013)

*Re: OTC - OTOC Limited*

Interesting stock that looks very cheap based on the cash flow report (22/1).

Anybody following this one?

Cash flow does look really good now, but without seeing the full accounts - its hard to determine how much is just cash in advance?? 
Despite the parabolic surge this still looks very cheaaaaap!!


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## skc (4 February 2013)

*Re: OTC - OTOC Limited*



VSntchr said:


> Interesting stock that looks very cheap based on the cash flow report (22/1).
> 
> Anybody following this one?
> 
> ...




Yup. Holding some from 7.5c or so. I am sure it is wrong to take 4x qtrly cashflow and call it the year, and i await the full report to decide what to do with the holding. But like you said, it's cheap enough so the report doesn't need to knock the ball out of the park. 

But the market was in a buy first, ask later mood when the qtrly came out and it would be silly not to take a position despite the unknowns.


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## VSntchr (4 February 2013)

*Re: OTC - OTOC Limited*



skc said:


> Yup. Holding some from 7.5c or so. I am sure it is wrong to take 4x qtrly cashflow and call it the year, and i await the full report to decide what to do with the holding. But like you said, it's cheap enough so the report doesn't need to knock the ball out of the park.
> 
> But the market was in a buy first, ask later mood when the qtrly came out and it would be silly not to take a position despite the unknowns.




Agree here, looking forward to the report!


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## Huskar (27 February 2013)

*Re: OTC - OTOC Limited*



VSntchr said:


> Interesting stock that looks very cheap based on the cash flow report (22/1).
> 
> Anybody following this one?
> 
> ...




Interesting I love these sort of microcaps. 

But looking at Sep 12 quarterly cash flow it looks the same but with a minus sign in front of the $4m... The explanation was due to timing of receipts from customers. Maybe they all just came in?


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## VSntchr (28 February 2013)

*Re: OTC - OTOC Limited*

Report out after the close today.

Complicated report, interesting to see what others make of it..

Obviously normalised NPAT is solidly up....but work in progress is down - causing assets to be substantially down.
Revenue is down, but margins have improved....

Im not sure if the commentary is honest, or just marketing to fit how the numbers appear...either way tomorrow the market will voice its almighty opinion!


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## skc (28 February 2013)

*Re: OTC - OTOC Limited*



VSntchr said:


> Report out after the close today.
> 
> Complicated report, interesting to see what others make of it..
> 
> ...




The gross profit margin improvement (from 9.65% to 17.9% despite lower revenue) and the cash flow (+$6.3m for a $20m company) were the highlights. This time last year they have plenty of work but couldn't make any money. Now they seem to make decent money but not doing enough work... 

H2 forecast is $80m in revenue so if they make say 14% gross margin (mid point between the two periods, it was 13% in FY12) and keep the same overhead expenses, H2 NPAT can be $2-$2.5m. And that's not bad on a normalised basis relative to the market cap.

So the result is a hold for me. It would be a buy if it was 2010 without the threat of significant sector slowdown. But OTC is such a small fish they only need 2 tiny contracts (relatively speaking) to fill their revenue goals.


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## skc (5 March 2013)

*Re: OTC - OTOC Limited*



skc said:


> So the result is a hold for me. It would be a buy if it was 2010 without the threat of significant sector slowdown. But OTC is such a small fish they only need 2 tiny contracts (relatively speaking) to fill their revenue goals.




Changed my mind and sold out. The result is still a hold, but the sector is a sell and the lack of liquidity means that, if something goes wrong it'd be quite ugly. 

While I don't doubt it is possible for them to achieve the FY figures I've outlined, I have no way of knowing the probability of such... So my risk manager (i.e. me) says sell...


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## notting (5 March 2013)

*Re: OTC - OTOC Limited*

BLY which seems to be the canary for this sector had a bit of an off the perch day today too.


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## skc (5 March 2013)

*Re: OTC - OTOC Limited*



notting said:


> BLY which seems to be the canary for this sector had a bit of an off the perch day today too.




Negative comments from Major Drilling, their key global peer / competitor.


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## notting (5 March 2013)

*Re: OTC - OTOC Limited*



skc said:


> Negative comments from Major Drilling, their key global peer / competitor.




Thanks SKC timely insight!


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## skc (5 March 2013)

*Re: OTC - OTOC Limited*



notting said:


> Thanks SKC timely insight!




Not much insight. Just email alert from some analyst. Managed to take a good short trade on ASL on the back of that... 15 ticks but position was too small.


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## notting (5 March 2013)

*Re: OTC - OTOC Limited*



skc said:


> Not much insight. Just email alert from some analyst. Managed to take a good short trade on ASL on the back of that... 15 ticks but position was too small.




I hadn't connected the BLY and MJDLF dots. Helps with a bit of insight into what BLY etc might do next after the night before.
Glad you nailed ASL, was tempted, from the BLY action but took to biting my fingernails instead.

This sector is just bonkers at the moment.  BLY looking for the rare triple bottom or doom!?
I'm always nervous about going for a third tilt on the long, can be a bit of a ball breaker!
But I don't think the mining boom is over, so will be hovering.

There are just too many populist printing and infrastructure parties raging on and on and on.


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## odds-on (6 March 2013)

*Re: OTC - OTOC Limited*



notting said:


> I hadn't connected the BLY and MJDLF dots. Helps with a bit of insight into what BLY etc might do next after the night before.
> Glad you nailed ASL, was tempted, from the BLY action but took to biting my fingernails instead.
> 
> This sector is just bonkers at the moment.  BLY looking for the rare triple bottom or doom!?
> ...




The problem with the mining boom is the scale of the boom – it does just not come to a stop straight away, it could take decades to slow down. The switch in media outlook over the last couple of years makes me think there is a real opportunity here – nobody is going to be able to accurately predict the future of such a complex situation as mining and China. Mining services companies were trading too cheap. I agree there might be consolidation within the industry, and I agree that margins might get squeezed for a few years, but to say it is all over is ridiculous. I am enjoying this sector at the moment, taken some profits, and will be keeping an eye on BLY, ASL….long may the volatility continue.


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## skc (6 March 2013)

*Re: OTC - OTOC Limited*



odds-on said:


> The problem with the mining boom is the scale of the boom – it does just not come to a stop straight away, it could take decades to slow down. The switch in media outlook over the last couple of years makes me think there is a real opportunity here – nobody is going to be able to accurately predict the future of such a complex situation as mining and China. Mining services companies were trading too cheap. I agree there might be consolidation within the industry, and I agree that margins might get squeezed for a few years, but to say it is all over is ridiculous. I am enjoying this sector at the moment, taken some profits, and will be keeping an eye on BLY, ASL….long may the volatility continue.




Mining boom isn't over, it is moderating. But mining services margin boom is definitely over.

The cost is too high in Australia making investments uncompetitive. To make projects economically viable, you either need skyhigh (yet stable) commodity prices, or squeeze the builders to do them cheaper.


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## notting (6 March 2013)

*Re: OTC - OTOC Limited*



skc said:


> Mining boom isn't over, it is moderating. But mining services margin boom is definitely over.
> 
> The cost is too high in Australia making investments uncompetitive. To make projects economically viable, you either need skyhigh (yet stable) commodity prices, or squeeze the builders to do them cheaper.




And a lower AU$


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## odds-on (6 March 2013)

*Re: OTC - OTOC Limited*



skc said:


> Mining boom isn't over, it is moderating. But mining services margin boom is definitely over.
> 
> The cost is too high in Australia making investments uncompetitive. To make projects economically viable, you either need skyhigh (yet stable) commodity prices, or squeeze the builders to do them cheaper.




IMO - the mining services sector is the game for 2013. I intend to play the game all year.


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## skc (6 March 2013)

*Re: OTC - OTOC Limited*



odds-on said:


> IMO - the mining services sector is the game for 2013. I intend to play the game all year.




Long or short?  

P.S. There's a mining services thread here so if there's a moderator with spare time...
https://www.aussiestockforums.com/forums/showthread.php?t=24663&highlight=mining+services


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## piggybank (13 March 2014)

*Re: OTC - OTOC Limited*

The latest item presented to the ASX was the company's presentation on the 5th March - Here is the link to it:- http://stocknessmonster.com/news-item?S=OTC&E=ASX&N=669745


​


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## galumay (15 October 2016)

*Re: OTC - OTOC Limited*

This one popped into my companies of interest recently, wary of roll-ups, but still quite interesting. Anyone else looked at it lately?


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## Triathlete (16 October 2016)

*Re: OTC - OTOC Limited*



galumay said:


> This one popped into my companies of interest recently, wary of roll-ups, but still quite interesting. Anyone else looked at it lately?




Here is the comment from Lincoln:


*Strategic Comment*

Last Updated: 17 August 2016

OTC is in a Strong Financial Health position, but fails our management assessment criteria as the company does not currently meet Return on Assets  and Earnings Per Share * requirements for a small cap company *, preventing the company from being a Star Growth Stock. The company provides construction and turnkey camp/village installations, environmental, surveying, mapping, town planning, engineering, project delivery and specialist consulting services across the infrastructure, resources and energy sectors . OTC remains unsuitable for most retail and institutional investors due to the below average liquidity .

Thomson Reuters June 17 (A) Forecast........                           June 18 (A) Forecast

ROA...............12.59  .............                                                     13.44
ROE...............171.33.............                                                     164.44
REV GRTH..........0.20 .............                                            minus -6.28
EPS GRTH.......minus -58.60 ..............                                           13.79

Consensus price target $0.42

Returns (inc div)

1 year...109.80%
3year...46.54%
5year..9.49%

Technically seems to be in a sideways pattern 3 months

14 day free membership...www.lincolnindicators.com.au


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## galumay (16 October 2016)

*Re: OTC - OTOC Limited*

Thanks Triathlete, but I have no interest in Lincoln's opinion, they are no different to other similar companies selling advice. I am sure like the others the owners are getting richer by the day!

Anyhoo, back to OTC, I have been having a closer look at OTC, so far the only real concern I have is that the profit for last year is inflated by about 100% or $10m by tax benefits- including a one off due to overpayment of tax previously. 

I have tried to price the impact of the tax benefit. Overall the income statement shows tax benefits of $9.75m, when you break this down its hard to separate out the way the $7m tax credit impacts the bottom line - the AR says the impact is $4.2m on income and $4.2m as a deferred tax asset on the balance sheet. (which i can't get my head around, I suspect they are offsetting the $3m tax that otherwise would be owing)

 I have assumed an impact of $4.2m on NPAT which means when you take the one off out EPS drops to 5.8c from 7.4c

It still looks very cheap on those metrics, EV/E is still only about 5x on the adjusted numbers and my conservative range of IVs is from $1.00-$1.20. 

I just wonder how the market will react when the next report shows a significant drop in NPAT due to the normalising of tax benefits.


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## Triathlete (16 October 2016)

*Re: OTC - OTOC Limited*



galumay said:


> Thanks Triathlete, but I have no interest in Lincoln's opinion, they are no different to other similar companies selling advice. I am sure like the others the owners are getting richer by the day!
> 
> Anyhoo, back to OTC, I have been having a closer look at OTC, so far the only real concern I have is that the profit for last year is inflated by about 100% or $10m by tax benefits- including a one off due to overpayment of tax previously.
> 
> ...




With stocks like these I tend to let them go because of the liquidity myself....that is just me though.

It has had a good run up from $0.07 in July 2015 to $0.35 in August 2016....If you are correct about its value then from my technical perspective it may have another run up if it closes above $0.36 and then starts a run from there, but I like to see EPS growing which by the reports is not happening until into 2018.

My quick view is if the break occurs above $0.36 then a run to $0.46 would be what I would look for so about 27%.


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## galumay (16 October 2016)

*Re: OTC - OTOC Limited*



Triathlete said:


> With stocks like these I tend to let them go because of the liquidity myself....that is just me though.
> 
> It has had a good run up from $0.07 in July 2015 to $0.35 in August 2016....If you are correct about its value then from my technical perspective it may have another run up if it closes above $0.36 and then starts a run from there, but I like to see EPS growing which by the reports is not happening until into 2018.
> 
> My quick view is if the break occurs above $0.36 then a run to $0.46 would be what I would look for so about 27%.




The liquidity doesn't concern me too much, but then I have no interest in trading. 

I don't look at charts so the rest doesn't mean much to me. EPS growth has already been very strong, although part of that is a result of the tax benefit I mentioned. Its a bit hard to extract the true picture because historical EPS was depressed by tax they shouldn't have paid and this years is increased because of it. I am still trying to fully understand the tax benefit situation. Even discounting the tax benefits EPS growth has been strong and I can't see any indication of that changing. 

As I said earlier, the biggest issue I see is that once the tax benefits are expired there will be a negative impact on EPS and Mr Market may punish the share price in ignorance. I guess that just presents an opportunity to accumulate!


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## Triathlete (16 October 2016)

*Re: OTC - OTOC Limited*



galumay said:


> The liquidity doesn't concern me too much, but then I have no interest in trading.
> 
> I don't look at charts so the rest doesn't mean much to me. EPS growth has already been very strong, although part of that is a result of the tax benefit I mentioned. Its a bit hard to extract the true picture because historical EPS was depressed by tax they shouldn't have paid and this years is increased because of it. I am still trying to fully understand the tax benefit situation. Even discounting the tax benefits EPS growth has been strong and I can't see any indication of that changing.
> 
> As I said earlier, the biggest issue I see is that once the tax benefits are expired there will be a negative impact on EPS and Mr Market may punish the share price in ignorance. I guess that just presents an opportunity to accumulate!





I can understand that.....but surely if you have a decent position in whatever stock you may have you would like to know that you can get out....this particular stock only trades $70K a day......I mean what if their is some bad announcement?? with no liquidity it may be difficult if everyone is trying to get out????

If the stock checks out based on your analysis and you start to accumulate do you have a price where you would exit..??? or does that depend on the Fundamentals  staying within your selection criteria???

 and  if the stock continues to go sideways for an extended period of time say 1 to 2 years are you happy to continue to accumulate and just picking up the dividends as long as the analysis continues to hold up????


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## galumay (16 October 2016)

*Re: OTC - OTOC Limited*



Triathlete said:


> I can understand that.....but surely if you have a decent position in whatever stock you may have you would like to know that you can get out....this particular stock only trades $70K a day......I mean what if their is some bad announcement?? with no liquidity it may be difficult if everyone is trying to get out????
> 
> If the stock checks out based on your analysis and you start to accumulate do you have a price where you would exit..??? or does that depend on the Fundamentals  staying within your selection criteria???
> 
> and  if the stock continues to go sideways for an extended period of time say 1 to 2 years are you happy to continue to accumulate and just picking up the dividends as long as the analysis continues to hold up????




I think its a double edged sword, conversly to your first point, if there is good news the lack of liquidity tends to make these type of companies go up very quickly as buyers have to raise their bids strongly to flush sellers out. I guess part of the process is to try to pick companies where the liklihood of bad news is less likely - eg low debt, good management, competitive advantage etc.

I dont set a price where I would exit, I generally apply the principle that if I cant find a better home for the capital with more potential for profit then I dont sell.

I would not be concerned about a company trading sideways for 1-2 years, my time scale is much longer than that. I wouldn't necessarily accumulate, but would likely hold.


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## Triathlete (16 October 2016)

*Re: OTC - OTOC Limited*



galumay said:


> I think its a double edged sword, conversly to your first point, if there is good news the lack of liquidity tends to make these type of companies go up very quickly as buyers have to raise their bids strongly to flush sellers out.
> 
> *I guess part of the process is to try to pick companies where the liklihood of bad news is less likely - eg low debt, good management, competitive advantage etc.
> 
> ...




OK... I can see your logic.


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## galumay (16 October 2016)

*Re: OTC - OTOC Limited*



Triathlete said:


> OK... I can see your logic.




Not sure if its always logical! Its my strategy and I understand it and have confidence in what I am doing - I suspect thats pretty important in investing. Always learning though - and the chance for self reflection when answering questions like yours is definitely part of the process.

I know I dont have the analytical skills of others like skc, klogg, craft, vc, ves maclovin etc. but I fell like I am slowly learning - 12 months ago I wouldn't have picked up the tax credits in OTC's AR and therefore would have overlooked an important part of the jigsaw puzzle!


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## System (28 November 2016)

On November 28th, 2016, OTOC Limited (OTC) changed its name and ASX code to Veris Limited (VRS).


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## So_Cynical (2 May 2017)

galumay said:


> As I said earlier, the biggest issue I see is that once the tax benefits are expired there will be a negative impact on EPS and Mr Market may punish the share price in ignorance. I guess that just presents an *opportunity to accumulate!*




Are you buying galumay? i bought a few today @13c after watching for a year or so, the selling seems over done, perhaps a little negative sentiment spilling over from other roll up disasters and disappointments? property development exposure?

From 33c to 13c is a hell of a dive for what seems to be a good business.
~


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## galumay (2 May 2017)

I havent bought more as I had other areas to place capital in what I saw as better opportunities. I think you will do well at that price if you are patient.


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## Miner (18 June 2019)

So_Cynical said:


> Are you buying galumay? i bought a few today @13c after watching for a year or so, the selling seems over done, perhaps a little negative sentiment spilling over from other roll up disasters and disappointments? property development exposure?
> 
> From 33c to 13c is a hell of a dive for what seems to be a good business.
> ~
> View attachment 70931



@So_Cynical
Just visiting this thread triggered by a job advertisement from VERIS for an engineering manager
Noticed the directors have bought and the share price is sluggish.
very thinly threaded.
Last treaded 0.055 and the trend is south wards
https://www.asx.com.au/asxpdf/20190228/pdf/4432521tkyl58t.pdf
Any chartist comment ?
DNH - but put on my watch list now.


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## Trav. (18 June 2019)

@Miner looks like you are chasing stocks that have the possibility to turn around the SP for massive gains.

maybe stalk this thread  https://www.aussiestockforums.com/threads/the-bottom-is-in.34575/ and identify signs of recovery displayed in some of these companies that managed the turn around and apply it to your watch list.


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## Miner (18 June 2019)

Trav. said:


> @Miner looks like you are chasing stocks that have the possibility to turn around the SP for massive gains.
> 
> maybe stalk this thread  https://www.aussiestockforums.com/threads/the-bottom-is-in.34575/ and identify signs of recovery displayed in some of these companies that managed the turn around and apply it to your watch list.



Thanks  @Trav. 
I do follow the thread you linked.. A real good one. However whenever the report is on ASF, the market often senses it before @greggles publishes it and the price jumps too high  . Mr  @greggles is really good honestly to skim through thousands of stocks to bring the lotus.


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## IFocus (18 June 2019)

Miner said:


> @So_Cynical
> Just visiting this thread triggered by a job advertisement from VERIS for an engineering manager
> Noticed the directors have bought and the share price is sluggish.
> very thinly threaded.
> ...




Chart looks woeful

No base or life in SP as of yet

Down side risk IMHO


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## Miner (18 June 2019)

IFocus said:


> Chart looks woeful
> 
> No base or life in SP as of yet
> 
> ...



@IFocus many thanks for taking the effort to analyze and sharing.


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## galumay (18 June 2019)

Miner, its probably best to wait now until the full year results come out, that will give a clearer view of how management are executing the transition of the business.


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## Miner (18 June 2019)

galumay said:


> Miner, its probably best to wait now until the full year results come out, that will give a clearer view of how management are executing the transition of the business.



All good @galumay and thanks. 
I shared my posting purely to learn all of your views. Glad to get that. Market for some reason has opened with a slight higher price. But it could be like a candle to flare up before extinguishment.
I am on side line for VRS


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## galumay (18 June 2019)

Miner said:


> Market for some reason has opened with a slight higher price. But it could be like a candle to flare up before extinguishment




Whatever, its almost certainly irrelevant. As an investor I try to ignore short term volatility, its totally unpredictable, despite what anyone tells you. 

Is VRS a good investment at the moment? I dont think so, its easy for me to find better homes for the capital where the probability of long term IRR are far higher with less downside. 

Despite that I have a tiny position (getting smaller!) in my personal portfolio. Its not enough to be bothered selling and maybe there is a viable business in there!


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## So_Cynical (19 June 2019)

VRS is a good business that is under the pump a bit, a niche player with work and cash flow but in an industry subject to the whims of governments and larger contractors. i have a small position thats under water and looking to add or take the loss, undecided.


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## galumay (30 August 2019)

another sad year for VRS, luckily my position is tiny and who knows, one day they might turn it around. 

If you were looking for a positive, I guess its the free cash flow which was put to use in reducing debt.


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