# MND - Monadelphous Group



## BraceFace

OK, I've done a search and there doesn't seem to be a thread for this company.

This one has been on my watchlist for a while and appears to be good value at $6.00. Has been up to $7.00 when the resource sector was booming.

This is one of those companies that is still resources driven but does not have the same volatility as a true resource/exploration company. In other words, commodity price fluctuations shouldn't have such an impact on the share price.

Would any one else be prepared to make a comment or observation about MND and perhaps suggest a buy, sell or hold rating?

Most brokers seem pretty bullish on it.


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## pacer

*Re: MND - Monadelphous*

Worked for them up north.....don't have the best rep on the planet as far as I'm concerned in that way....try to pay workers peanuts so get monkeys...hence the rep.

good luck....that was a few years ago, but I doubt they've changed much though.


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## michael_selway

*Re: MND - Monadelphous*



			
				pacer said:
			
		

> Worked for them up north.....don't have the best rep on the planet as far as I'm concerned in that way....try to pay workers peanuts so get monkeys...hence the rep.
> 
> good luck....that was a few years ago, but I doubt they've changed much though.




Hi do you own MND?

*Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 35.2 52.0 58.8 62.3 
DPS 33.0 44.0 38.0 41.0* 

EPS(c) PE Growth 
Year Ending 30-06-07 52.0 17.1 47.5% 
Year Ending 30-06-08 58.8 15.1 13.1% 

thx

MS


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## Lert

*Re: MND - Monadelphous*

MND has been good for me.. Bought for 3.96 in Sep. 05 and were 8.94 yesterday.. I must admit that the PE is starting to get a bit high but..


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## michael_selway

*Re: MND - Monadelphous*



			
				Lert said:
			
		

> MND has been good for me.. Bought for 3.96 in Sep. 05 and were 8.94 yesterday.. I must admit that the PE is starting to get a bit high but..




However EPS 37c for the half year

*Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 35.2 53.9 59.8 65.1 
DPS 33.0 44.0 44.5 55.0 * 

Above expectations u think?

thx

MS


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## Halba

*Re: MND - Monadelphous*

2nd half to wind down - re read the ann

stock has already doubled mhkforever, lot of easy money has been made


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## michael_selway

*Re: MND - Monadelphous*



			
				Halba said:
			
		

> 2nd half to wind down - re read the ann
> 
> stock has already doubled mhkforever, lot of easy money has been made




February 20, 2007
SURGE IN RESOURCES PROJECTS DRIVE RECORD PROFIT
· Sales Revenue $499.4M (+105%)
· EBITDA $48.7M (+134%)
· Profit after Tax $31.4M (+152%)
· Earnings per Share 38.5c (+147%)
· Final Dividend 22cps ff (+144%)

“However, with a number of projects ramping down, the second half is expected to see a return to a more normalised level of activity. Full year revenues for 2006/07 are expected to exceed $800 million – over 50 percent up on the 2005/06 trading result of $532 million.

“The flow of revenues from engineering construction projects will, however, continue to be heavily impacted by project timing and capacity utilisation. Any expectations of continuous year-on-year growth for this part of the business should be treated with caution."

They always understimate themselves!

thx

MS


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## Halba

*Re: MND - Monadelphous*

its clearly gone mhkforever why bother, focus on other stocks


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## michael_selway

*Re: MND - Monadelphous*



			
				Halba said:
			
		

> its clearly gone mhkforever why bother, focus on other stocks




They say 800 million in revenue full year, i think they will get 1billion!

They are the next Worley Parsons imo! They have alot of potential thats the problem!

thx

MS


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## Halba

*Re: MND - Monadelphous*

do you hold mnd mhkforever? why haven't you bought this thing earlier, it has run from $5 to $12 in a yr. No point buying now, worley is international hard to compare


i had 3000 of these, sold em coz they did nothing for ages  

My response is to put lots of money in uranium stocks/metal stocks/iron ore and see how i go.

these resource companies have plenty left in the tank


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## michael_selway

*Re: MND - Monadelphous*



			
				Halba said:
			
		

> do you hold mnd mhkforever? why haven't you bought this thing earlier, it has run from $5 to $12 in a yr. No point buying now, worley is international hard to compare
> 
> 
> i had 3000 of these, sold em coz they did nothing for ages
> 
> My response is to put lots of money in uranium stocks/metal stocks/iron ore and see how i go.
> 
> these resource companies have plenty left in the tank




I bought them at $6.50 

thx

MS


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## michael_selway

*Re: MND - Monadelphous*



Halba said:


> do you hold mnd mhkforever? why haven't you bought this thing earlier, it has run from $5 to $12 in a yr. No point buying now, worley is international hard to compare
> 
> 
> i had 3000 of these, sold em coz they did nothing for ages
> 
> My response is to put lots of money in uranium stocks/metal stocks/iron ore and see how i go.
> 
> these resource companies have plenty left in the tank




Hi which iron ore stocks did u buy/hold?

*Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 71.1 73.0 81.4 92.6 
DPS 66.0 66.0 73.0 75.0 *

Thanks

MS




> Date: 6/11/2007
> Author: Steven Scott; Mark Skulley
> Source: The Australian Financial Review --- Page: 10
> There are many mining corporations preparing for a possible change of governmentafter the 24 November 2007 election. In early November, it is believed thatcompanies such as Monadelphous, Minara Resources and Newcrest are planning aswitch from Australian Workplace Agreements (AWAs) to the non-union collectiveagreements under the Australian Labor Party's proposed industrial relations(IR) policies and law reforms. BHP Billiton has also offered five-year AWAs toits Roxby Downs staff in South Australia


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## shaunnell

*MND - Monadelphous*

It has been heading north over some time now and I cannot find the reason.
The companies own outlook was for 'average'.


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## Julia

*Re: MND - Monadelphous*

I sold this at the beginning of the year (when it stayed below the MA for some weeks) in order to protect profits.  It's now about $3 higher so it was a pointless exercise.   Ah, wish there was the occasional crystal ball available.


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## Calliope

*Re: MND - Monadelphous*



Julia said:


> I sold this at the beginning of the year (when it stayed below the MA for some weeks) in order to protect profits.  It's now about $3 higher so it was a pointless exercise.   Ah, wish there was the occasional crystal ball available.




Its written in the stars Julia. Buy...the price goes down. Sell... the price goes up. A friend of mine says you can't go wrong by taking a profit. Still you can't help thinking of what might have been...


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## Julia

*Re: MND - Monadelphous*



Calliope said:


> Its written in the stars Julia. Buy...the price goes down. Sell... the price goes up. A friend of mine says you can't go wrong by taking a profit. Still you can't help thinking of what might have been...



Indeed.   And while I gnash my teeth over this and a similar situation with CPB, I remind myself of all the stocks where I did the same thing and they are now substantially lower.   A sense of balance has to be found.


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## nomore4s

*Re: MND - Monadelphous*

Anyone else still following this stock?

I hold parcels in both my trading account and longer term investment account so take my view with a grain of salt as currently I'm biased.

Technically looks to be forming a base with $6.00 very good support - my trading parcel is based off this, want to see a break and hold (consolidation) above $7.00 and eventually $7.50 for a continued bullish view.

Fundamentally (not my strong point so will be pretty basic). They have just released some good half FY figures and look to be in a very strong position atm even considering they are in a market that could be hit very hard by the economic downturn (this is the only concern I have) but atm they have a very strong order book.

-Not a large amount of shares on issue - about 84 million
-Very low debt levels
-Strong cash position
-Currently doing a share buyback (while most other companies are issuing shares to raise money)
-Very good yield atm.

If they can weather the current storm without blowing its cash and keeping its debt levels low it could be a very good long term yield stock with good growth potential as well (my investment account). The next 6-12 months will be interesting.


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## michael_selway

*Re: MND - Monadelphous*



nomore4s said:


> Anyone else still following this stock?
> 
> I hold parcels in both my trading account and longer term investment account so take my view with a grain of salt as currently I'm biased.
> 
> Technically looks to be forming a base with $6.00 very good support - my trading parcel is based off this, want to see a break and hold (consolidation) above $7.00 and eventually $7.50 for a continued bullish view.
> 
> Fundamentally (not my strong point so will be pretty basic). They have just released some good half FY figures and look to be in a very strong position atm even considering they are in a market that could be hit very hard by the economic downturn (this is the only concern I have) but atm they have a very strong order book.
> 
> -Not a large amount of shares on issue - about 84 million
> -Very low debt levels
> -Strong cash position
> -Currently doing a share buyback (while most other companies are issuing shares to raise money)
> -Very good yield atm.
> 
> If they can weather the current storm without blowing its cash and keeping its debt levels low it could be a very good long term yield stock with good growth potential as well (my investment account). The next 6-12 months will be interesting.




Yeah good results all round 

MONADELPHOUS DELIVERS
ON PROFIT GROWTH FORECAST
· Sales Revenue $562.7M (+22.3%)
· EBITDA $57.5M (+11.9%)
· Operating Cash Flow $74.5M (+400.1%)
· Profit after Tax $36.8M (+14.9%)
· Earnings per Share 43.7c (+13.1%)
· Interim Dividend 30cps ff (+3.4%)
· Net Cash Position $129.7M (+187.5%)

*Earnings and Dividends Forecast (cents per share) 
2008 2009 2010 2011 
EPS 77.2 87.0 76.9 73.0 
DPS 72.0 75.5 74.0 65.0 *







thx

MS


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## nomore4s

*Re: MND - Monadelphous*

This stock has really taken off lately - up over $9.00 now.

I would like to see some consolidation over $9.00 now to build a stepping stone for higher prices. Probably be some resistance somewhere between the $10-$12 range.

I still like this stock long term but lets see what the next 12 months brings.


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## michael_selway

*Re: MND - Monadelphous*



nomore4s said:


> This stock has really taken off lately - up over $9.00 now.
> 
> I would like to see some consolidation over $9.00 now to build a stepping stone for higher prices. Probably be some resistance somewhere between the $10-$12 range.
> 
> I still like this stock long term but lets see what the next 12 months brings.




Not bad this one but 10-12 is quite expensive, however it has been quite relaible this stock

*Earnings and Dividends Forecast (cents per share) 
2008 2009 2010 2011 
EPS 77.2 86.7 82.1 80.5 
DPS 72.0 75.0 74.0 65.0 *






thx

MS


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## wonderrman

*Re: MND - Monadelphous*

mnd has been trying to break over the past few days from a trading range between 10 and 12. Hasn't been able though volume has been low. One to watch, if it is able has a nice easy run to 16. further consolidation could be in order before hand. 

daily and weekly attached.

regards,w.


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## YELNATS

*Re: MND - Monadelphous*

No-one has commented on this company for quite some time.

It has been on my watch list for a while and a review of their recent annual report indicates a solid performance and a good outlook. They also pay a very steady dividend of over 5% fully franked.

Their price has just dipped below $13 and perhaps they look a good long term investment.

Does anyone have any current comments?


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## skc

*Re: MND - Monadelphous*



YELNATS said:


> No-one has commented on this company for quite some time.
> 
> It has been on my watch list for a while and a review of their recent annual report indicates a solid performance and a good outlook. They also pay a very steady dividend of over 5% fully franked.
> 
> Their price has just dipped below $13 and perhaps they look a good long term investment.
> 
> Does anyone have any current comments?




Agree the company has decent fundamentals. The chart however show that potentially cheaper prices to come in the short term. The channel in place for the last 12 month has just been broken. A micro pattern of decending triangle formed in the last week. Wouldn't surprise me for this to enter typical retracement zone at ~$10 if it was to break below $12.


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## condog

*Re: MND - Monadelphous*

In my opinion of the very best fundamentals on the entire ASX...

81% ROFE, 0 debt to eq, 33% Eq Ratio, Around value, slightly dear by about 10%, low liabilities, and a value adding stock that can dictate price in good times.  Outlook for its sector is very encouraging.


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## noie

*Re: MND - Monadelphous*

Nice contract with BHP announced today 

Leading engineering group Monadelphous Group Ltd (ASX: MND) (“Monadelphous” or “the
company”) today announced it has secured new contracts and work in Western Australia and Papua
New Guinea with a combined value of approximately $120 million.
The contracts and work are with major operators in the oil and gas, iron ore and water sectors.
In PNG, Monadelphous has been awarded a three-year extension of a contract with Oil Search for
field construction services at its oil and gas production and support facilities in the Southern Highlands
Province. This extension follows a previous three-year contract.
The agreement also includes additional work to upgrade Oil Search’s Kutubu and Gobe facilities in
preparation for the delivery of gas to the PNG LNG project. This work is scheduled to be completed in
the third quarter of 2012.
In WA, Monadelphous’s newly-acquired business KT Pipeline Services has been awarded a contract
to construct intake and outfall pipelines and associated work for the desalination plant at CITIC Pacific
Mining’s Sino Iron project at Cape Preston in the Pilbara. The contract is expected to be completed in
early 2011.
Monadelphous has also been awarded a contract with the WA Water Corporation to supply, construct
and commission a water treatment plant at Picton, near Bunbury. The plant, with a capacity of 11
megalitres a day, will treat underground water for supply to Australind and Eaton. It is scheduled for
completion in late 2011.
The company will also undertake structural and mechanical work for BHP Billiton Iron Ore on Rapid
Growth Project 5 at the iron ore port facilities at Finucane Island, Port Hedland. The work is expected
to be completed by December 2010.
The contracts and work are spread across Monadelphous’s three operating divisions of Infrastructure
(which includes KT), Engineering Construction, and Maintenance and Industrial Services.
“They reflect the emphasis we place on maintaining our relationships with customers in major
projects, securing new business and continuing our diversification into selected infrastructure areas
such as pipelines and water,” Monadelphous Managing Director Rob Velletri said


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## robusta

*Re: MND - Monadelphous*



condog said:


> In my opinion of the very best fundamentals on the entire ASX...
> 
> 81% ROFE, 0 debt to eq, 33% Eq Ratio, Around value, slightly dear by about 10%, low liabilities, and a value adding stock that can dictate price in good times.  Outlook for its sector is very encouraging.




Not a lot changed in 9 months. Most be a bit booring to a lot of people these guys still have great fundamentals.



noie said:


> Nice contract with BHP announced today
> 
> In WA, Monadelphous’s newly-acquired business KT Pipeline Services has been awarded a contract




Bought with open arms in May very happy with 20% (paper) capital gain and nice dividend.

The only slight annoyance with MND for me is why issue capital and take on debt to buy KT Pipeline while maintaining high dividend payout ratio?

IMO I think it would be better for shareholders to cut dividend and pay for KT out of retained profits as this would'nt have such a negative effect on ROE.


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## noie

*Re: MND - Monadelphous*

I am unsure of their Business decision to acquire KT they way they did i started following these guys early July,  they have picked up a few nice pipeline contracts since then, so i think the KT direction itself was on the money.

30million cost. (part deferred)

85million chevron contract one month later.

And i don't believe they have any net debt.  Annual report shows "The business remains net debt free"


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## robusta

*Re: MND - Monadelphous*



noie said:


> I am unsure of their Business decision to acquire KT they way they did i started following these guys early July,  they have picked up a few nice pipeline contracts since then, so i think the KT direction itself was on the money.
> 
> 30million cost. (part deferred)
> 
> 85million chevron contract one month later.
> 
> And i don't believe they have any net debt.  Annual report shows "The business remains net debt free"




Yes I think you are right about no debt I stand corrected (and happier).
This is from the Annual Report

"SIGNIFICANT EVENTS AFTER THE BALLANCE DATE

On 1 July 2010, Monadelphous Group Limited acquired 100% of the voting shares of KT Pty Ltd, a private
company based in Australia specialising in high pressure gas pipeline and facilities construction throughout
Australia and overseas. The acquisition will expand the range and capabilities of services offered by the
Group.
The upfront consideration comprised a cash payment of $10,000,000 and 422,627 ordinary shares. A
further deferred component is payable subject to KT Pty Ltd achieving certain financial targets over the
period to 31 December 2011. The deferred component will comprise approximately one-third cash and
two-thirds shares, and the total consideration payable will not exceed $30,000,000.
At the date the Financial Statements were authorised for issue, the initial accounting for the business
combination was incomplete with the fair value assessments of the identifiable assets and liabilities
acquired at acquisition and the estimation of the value of the deferred consideration to be finalised. As a
result it is not possible to disclose the carrying value or fair value of the identifiable assets and liabilities
that will be recognised at 1 July 2010, the acquisition date fair value of consideration transferred, or to calculate the value of goodwill."

That just leaves me hoping that the price paid for KT Pty Ltd does not dilute current equity per share. To be more positive however it does give MND some nice leverage into the booming energy sector. MND must know what they are doing look at performance to date.


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## robusta

*Re: MND - Monadelphous*

Sp has run a fair bit past intrinsic value IMO. Will have to think about taking some profits soon. Hard decision plenty of nice dividends to come while I think about it.


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## robusta

*Re: MND - Monadelphous*



robusta said:


> Sp has run a fair bit past intrinsic value IMO. Will have to think about taking some profits soon. Hard decision plenty of nice dividends to come while I think about it.




The time is here for me. Sold out of MND today at $20.06, love the company but my view is the sp has run too far past IV. Bought in Jan 2010 @ ~ 12.50 and again in May @ ~ $13.00 wanted to hold long term but could not go past market offer of $20.00 +


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## VSntchr

*Re: MND - Monadelphous*



robusta said:


> The time is here for me. Sold out of MND today at $20.06, love the company but my view is the sp has run too far past IV. Bought in Jan 2010 @ ~ 12.50 and again in May @ ~ $13.00 wanted to hold long term but could not go past market offer of $20.00 +




well done


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## voigtstr

*Re: MND - Monadelphous*

With the pivot point on the 17/2/11 it looked like it was going start a bit of a fall, a few days later and it started heading back up again. Today (4/3/11) was a 6.1% rise.    Why did it jump up so much today? I see some recent positive news but I couldn't see anything to explain today's jump. Just curious if this a true continuation of a trend, or if something fundamental is happening with the stock?

Obligatory disclosure:I own some shares in Monadelphous.


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## Julia

*Re: MND - Monadelphous*



robusta said:


> The time is here for me. Sold out of MND today at $20.06, love the company but my view is the sp has run too far past IV. Bought in Jan 2010 @ ~ 12.50 and again in May @ ~ $13.00 wanted to hold long term but could not go past market offer of $20.00 +






voigtstr said:


> With the pivot point on the 17/2/11 it looked like it was going start a bit of a fall, a few days later and it started heading back up again. Today (4/3/11) was a 6.1% rise.    Why did it jump up so much today? I see some recent positive news but I couldn't see anything to explain today's jump. Just curious if this a true continuation of a trend, or if something fundamental is happening with the stock?
> 
> Obligatory disclosure:I own some shares in Monadelphous.



This is one company I really regret selling when the GFC hit.
For what it's worth, Huntleys currently have a sell on it on the basis that it has run so hard.
If I were still holding it, that would not make me sell it.


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## robusta

*Re: MND - Monadelphous*



Julia said:


> This is one company I really regret selling when the GFC hit.
> For what it's worth, Huntleys currently have a sell on it on the basis that it has run so hard.
> If I were still holding it, that would not make me sell it.




Definately a extraordinary business Julia but it seems neither of us would be happy to hold at these prices.


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## voigtstr

*Re: MND - Monadelphous*



robusta said:


> Definately a extraordinary business Julia but it seems neither of us would be happy to hold at these prices.




Isnt it better to hold a stock that is going up? I'm happy to set a stop loss, either at a previous swing low, or the bottom of a trading channel, and if the stock drops there sell it.  If its heading to the sky, I want to stay on it.


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## Julia

*Re: MND - Monadelphous*



Julia said:


> This is one company I really regret selling when the GFC hit.
> For what it's worth, Huntleys currently have a sell on it on the basis that it has run so hard.
> If I were still holding it, that would not make me sell it.






voigtstr said:


> Isnt it better to hold a stock that is going up? I'm happy to set a stop loss, either at a previous swing low, or the bottom of a trading channel, and if the stock drops there sell it.  If its heading to the sky, I want to stay on it.



Agree entirely voigtstr.  Robusta misinterpreted what I said.


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## robusta

*Re: MND - Monadelphous*



robusta said:


> The time is here for me. Sold out of MND today at $20.06, love the company but my view is the sp has run too far past IV. Bought in Jan 2010 @ ~ 12.50 and again in May @ ~ $13.00 wanted to hold long term but could not go past market offer of $20.00 +






voigtstr said:


> Isnt it better to hold a stock that is going up? I'm happy to set a stop loss, either at a previous swing low, or the bottom of a trading channel, and if the stock drops there sell it.  If its heading to the sky, I want to stay on it.




Just a different philosophy voigtstr. I like to sell when the market offers me a price I calculate to be a significant premium to my calculation of IV af I have no way of predicting short to medium term price movement.



Julia said:


> Agree entirely voigtstr.  Robusta misinterpreted what I said.




Sorry Julia I thought you quoting Huntleys meant you agreed with their opinion re MND being overpriced.

On another subject we are a strange mob on ASF we have pages and pages of posts on speculative businesses such as CFU, MAD... amd here is a excellent business only up to page two after all these years


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## Boggo

*Re: MND - Monadelphous*



robusta said:


> On another subject we are a strange mob on ASF we have pages and pages of posts on speculative businesses such as CFU, MAD... amd here is a excellent business only up to page two after all these years




Agree, and an interesting observation especially when you look at the Telstra thread of 50 pages where they get excited when it turns up 5c, 90% of them have never heard of MND but they call themselves investors


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## Julia

*Re: MND - Monadelphous*



robusta said:


> On another subject we are a strange mob on ASF we have pages and pages of posts on speculative businesses such as CFU, MAD... amd here is a excellent business only up to page two after all these years






Boggo said:


> Agree, and an interesting observation especially when you look at the Telstra thread of 50 pages where they get excited when it turns up 5c, 90% of them have never heard of MND but they call themselves investors



 Yes, you're both right.  There are others similarly not much discussed compared with TLS, WOW etc, e.g. BKN (Bradken) and WOR (Worley Parsons).
Perhaps it's a reflection of what the media put up for discussion?  i.e. TLS is always being discussed.


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## voigtstr

*Re: MND - Monadelphous*

-4.7% today. Was there something fundamental going on, or just reaction to Japan's nuclear reactors again?


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## McCoy Pauley

*Re: MND - Monadelphous*

I've only briefly skimmed Monadelphous full year results announcements but they look impressive.  No wonder MND's share price has lifted almost 5% this morning.  Revenue up 31.4% on the previous year and NPAT up 44.5% on the same period.


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## Muschu

*Re: MND - Monadelphous*



McCoy Pauley said:


> I've only briefly skimmed Monadelphous full year results announcements but they look impressive.  No wonder MND's share price has lifted almost 5% this morning.  Revenue up 31.4% on the previous year and NPAT up 44.5% on the same period.




Seemed like an outstanding result.  Yet, why the plunge yesterday?  Sure, it filled a gap in the chart but did it make sense for any fundamental reason?

Could there be a connection to the BHP report?

I certainly didn't understand it.

Rick 

[Not holding MND or BHP]


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## skc

*Re: MND - Monadelphous*



Muschu said:


> Seemed like an outstanding result.  Yet, why the plunge yesterday?  Sure, it filled a gap in the chart but did it make sense for any fundamental reason?
> 
> Could there be a connection to the BHP report?
> 
> I certainly didn't understand it.
> 
> Rick
> 
> [Not holding MND or BHP]




Yes the BHP announcement knocked ~3% off every mining services company. MND basically said to the market that they never heard of the end of the mining boom... but the market decided that they'd listen to the BHP chief instead.

The mood for the sector (was it just me) has really changed in the last couple of days from buy the result to sell the pop imho.


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## craft

*Re: MND - Monadelphous*



skc said:


> Yes the BHP announcement knocked ~3% off every mining services company. MND basically said to the market that they never heard of the end of the mining boom... but the market decided that they'd listen to the BHP chief instead.
> 
> The mood for the sector (was it just me) has really changed in the last couple of days from buy the result to sell the pop imho.




Bit of a tug of war going on between those looking at the recent returns and those forecasting a reversion to the mean. We sure aren’t looking at cyclical low profitability in the actual results but BHP’s announcement gives weight to the mean reversion argument. 

My  Buy cyclical companies when profitability is low.


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## skc

*Re: MND - Monadelphous*



craft said:


> Bit of a tug of war going on between those looking at the recent returns and those forecasting a reversion to the mean. We sure aren’t looking at cyclical low profitability in the actual results but BHP’s announcement gives weight to the mean reversion argument.
> 
> My  Buy cyclical companies when profitability is low.




Or do a Roger method - take most recent ROE at peak of cycle and extrpolate to infinity and beyond.


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## craft

*Re: MND - Monadelphous*



skc said:


> Or do a Roger method - take most recent ROE at peak of cycle and extrpolate to infinity and beyond.




You know, that guy really used to annoy me and how he was leading so many people astray – but I have realised that my excess return comes from exploiting market inefficiencies (a nice way of saying other people’s mistakes/ignorance) So no soap box today.


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## McLovin

*Re: MND - Monadelphous*



craft said:


> You know, that guy really used to annoy me




Really? I would have never guessed.


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## McCoy Pauley

*Re: MND - Monadelphous*

I bought some MND yesterday (unfortunately not at the lows of the day).  MND's CEO seems positive about the flow of work for the next 12 months, and they did announce some contract wins a couple of months ago which suggested that their pipeline of work will be full for a while.

MND has had a track record of good company management so I'm prepared to risk the money on this play.


----------



## fanger

*Re: MND - Monadelphous*

Starting to look expensive at $26-$27 although I'm not complaining I got in around $19.50
Lets hope for a excellent report.


----------



## McCoy Pauley

*Re: MND - Monadelphous*

Seemed like a decent contract win announced this morning, but share price down just under 1% for the day.

I'm interested to see that MND has introduced a DRP.


----------



## tinhat

*Re: MND - Monadelphous*



McCoy Pauley said:


> Seemed like a decent contract win announced this morning, but share price down just under 1% for the day.
> 
> I'm interested to see that MND has introduced a DRP.




I hate DRP. They are a way of sequestering the dividend back from shareholders. As a shareholder you have a choice to receive a cash dividend but in doing so you dilute your ownership in the company or forgo the dividend in order to retain your stake in the company.


----------



## McCoy Pauley

*Re: MND - Monadelphous*

I thought the results announced this morning looked quite strong, but the market has disagreed, marking the price down 7% so far today. The executive management team did suggest a period of consolidation for next financial year, so I guess the premium is coming out of the stock price because the managers are implying that the company could be in for a period of low growth.


----------



## Knobby22

*Re: MND - Monadelphous*

Nice dividend rise and I always like to see long term maintenance contracts. 

The result was strong but the price implies strong growth in the future. Not that easy.


----------



## fanger

*Re: MND - Monadelphous*

I thought the results were excellent but punished again today down another 10%. I don't know what the market was expecting in the results.


----------



## Country Lad

*Re: MND - Monadelphous*



fanger said:


> I thought the results were excellent but punished again today down another 10%. I don't know what the market was expecting in the results.




The market is forward looking by about 12 months.  Today's prices generally reflect what may happen in 12 months or a bit longer, that is why prices move with any company's forecasts and outlook.

From MND's report:

_



			Whilst the opportunities for construction beyond this financial year remain solid based on the volume of approved projects, project delays and a slowdown in near-term new major project approvals are likely to reduce the pipeline of opportunities in the medium-term.
Looking beyond the current financial year, after two consecutive years of extraordinary growth of more than 30 per cent, 2013/14 is currently anticipated to be a period of consolidation in which the achievement of any revenue growth will be challenging.
		
Click to expand...


_​
This be a good lesson in how the market reacts.

Cheers
Country Lad


----------



## Huskar

*Re: MND - Monadelphous*

Pretty incredible stat in the AFR today. MND was the best performer on the ASX over the last 10 years, up 2740.24% and 4920% including dividends. That's ~50% compounded per annum for 10 years.

Anyone been holding that long?

Happy days


----------



## McCoy Pauley

*Re: MND - Monadelphous*

If only.

I have, however, recently added to my position on the current weakness.


----------



## Julia

*Re: MND - Monadelphous*



Huskar said:


> Pretty incredible stat in the AFR today. MND was the best performer on the ASX over the last 10 years, up 2740.24% and 4920% including dividends. That's ~50% compounded per annum for 10 years.
> 
> Anyone been holding that long?
> 
> Happy days






McCoy Pauley said:


> If only.
> 
> I have, however, recently added to my position on the current weakness.



So you're buying more on the basis of past performance?  Are you taking any account of the decided weakness in the sector, both now and projected into the future?  It would seem not.


----------



## McCoy Pauley

*Re: MND - Monadelphous*



Julia said:


> So you're buying more on the basis of past performance?  Are you taking any account of the decided weakness in the sector, both now and projected into the future?  It would seem not.




You're making an assumption about my investment criteria and decision making, and you know what they say about making assumptions.


----------



## Julia

*Re: MND - Monadelphous*



McCoy Pauley said:


> You're making an assumption about my investment criteria and decision making, and you know what they say about making assumptions.



Please feel free to correct my impression by explaining why you bought more.


----------



## fanger

*Re: MND - Monadelphous*

Does anybody have technical targets for MND? I was watching YMYC on foxtel and one for the guys said his target price for mnd with $10.


----------



## Sharkman

*Re: MND - Monadelphous*

so anyone else sell this at 17.50ish on monday like i did and are kicking themselves now? i thought there would be a bit of resistance there as it had tested it twice already in the space of a few weeks, and with a 7% rally on the day i thought it might ease off a bit on tues to profit taking, so i sold near the close on monday. didn't think there'd be two 7%+ days in a row. ouch.

happy with the entry - bought in early july at 15.30ish after seeing it bounce off there in may, and 17.50 was my target. left a fair bit of money on the table though, as it turns out.

seems to have been well supported thru 2012 at around the 19 level before breaking to the downside this may. support turned resistance? the 180 day EMA is also not too far away from that level. of course some spectacular numbers coming out next week could easily be a strong enough catalyst for it to blast thru those levels. pity this thing doesn't have any options, otherwise around mid-july i might have looked to a july-aug call calendar maybe struck at 17.50 to capture the earnings event with the back leg. anyone got any thoughts on where to from here? obviously much hinges on next weeks announcement.


----------



## Country Lad

*Re: MND - Monadelphous*

It is interesting to see many of the mining services companies doing well at the moment. It would appear that many have been oversold and the reporting season is expected to show they are actually doing a bit better than most expected.

Cheers
Country Lad


----------



## McCoy Pauley

*Re: MND - Monadelphous*

It was a big bounce yesterday, which MND seems to be consolidating (down only slightly today, the last time I checked).  I suspect it's a combination of a jump in the spot iron ore price and Bradken's result which had no downside surprises lifting all boats in the mining services sector.  MND reports next Tuesday, I believe.


----------



## piggybank

*Re: MND - Monadelphous*

Looking interesting on the weekly. Up to 50% on FIB and sitting on the neckline of an H&S pattern.


----------



## Sharkman

*Re: MND - Monadelphous*

not too keen to chase MND into earnings after what happened today. CBA, CSL, LEI all rallied strongly leading into the profit announcement so expectations might have gotten a tad lofty, and even though they turned in some solid numbers (well, at least CBA and CSL did, LEI was kinda ok i suppose), they all more or less got hammered post-announcement. could it be a similar scenario here? although MND would have to have a much smaller shareholder base than those three so one would have to wonder whether how much of its big moves could be attributed to insiders buying it up ahead of the announcement.

so i think i'll stay on the sidelines as far as MND is concerned leading into next week's profit report, and if it comes out with spectacular numbers, so be it. i captured the gain i was looking for when i entered the position... no point continuing to  over selling on monday


----------



## Intrinsic Value

*Re: MND - Monadelphous*



Country Lad said:


> It is interesting to see many of the mining services companies doing well at the moment. It would appear that many have been oversold and the reporting season is expected to show they are actually doing a bit better than most expected.
> 
> Cheers
> Country Lad
> 
> View attachment 53818




FGE is one that has shot up again to around 5.00.

I bought back in at 4.20 after selling out early in the year for mid 6 's.

I expect it will also report strongly and over deliver.


----------



## Sharkman

*Re: MND - Monadelphous*



Intrinsic Value said:


> FGE is one that has shot up again to around 5.00.
> 
> I bought back in at 4.20 after selling out early in the year for mid 6 's.
> 
> I expect it will also report strongly and over deliver.




you did very well on that trade. i also have FGE on my books right now at a tick over 4, i bought at 4 last year but then sold at 4.50 in dec as soon as it hit the 180 day EMA, thinking that because it bounced off the 180 day EMA in aug, it could do so again. and again was left  for a while after watching it rally to mid 6s. so this time around when it broke 180 day EMA a few days ago, i have held on. let's hope it comes out with some great numbers. can't seem to find it in intelligent investor's reporting dates list though, you know when the earnings announcement is out?


----------



## skc

*Re: MND - Monadelphous*



Sharkman said:


> not too keen to chase MND into earnings after what happened today. CBA, CSL, LEI all rallied strongly leading into the profit announcement so expectations might have gotten a tad lofty, and even though they turned in some solid numbers (well, at least CBA and CSL did, LEI was kinda ok i suppose), they all more or less got hammered post-announcement. could it be a similar scenario here? although MND would have to have a much smaller shareholder base than those three so one would have to wonder whether how much of its big moves could be attributed to insiders buying it up ahead of the announcement.
> 
> so i think i'll stay on the sidelines as far as MND is concerned leading into next week's profit report, and if it comes out with spectacular numbers, so be it. i captured the gain i was looking for when i entered the position... no point continuing to  over selling on monday




LEI has it's own cash flow issues and that's probably the main reason for the fall. 

MND was heavily shorted and so probably some short covering into the results, esp after DOW and BKN reported soundly and without negative outlooks. According to ASIC short position reports, on 8 Aug MND had 12.4% outstanding shorts. Would be interesting to see how much was covered in the 3 day rally earlier this week.


----------



## Country Lad

*Re: MND - Monadelphous*



Country Lad said:


> It would appear that many have been oversold and the reporting season is expected to show they are actually doing a bit better than most expected.




Well there you go.

Sales revenue up 37.8% to $2,614m
NPAT up 24.1% on prior year to $156.3m
EPS up 21.5% to 173c, 
DPS up 9.6% to 137c

One of those inverse head & shoulders I mentioned elsewhere which could break out today based on the results.  It will depend on whether the market dwells on the results or the outlook comments:



> With market conditions softening and after an abnormal surge in revenue in the past two years, the
> 2013/14 financial year will be a year of consolidation with revenue levels moderating and not expected
> to reach those achieved in the previous year.




Cheers
Country Lad


----------



## Julia

*Re: MND - Monadelphous*

BKN and WOR similarly seeming to be recovering.  BKN has a 6.5% ff yield.


----------



## McCoy Pauley

*Re: MND - Monadelphous*

As Julia Lee on Market Day loves to remind us the "market is forward looking" (urgh) and I suspect that the price drop today is a combination of (urgh) "buying the rumour, selling the fact" and the fact that the MD said in the media release accompanying the release of the reports that the announced result was a product of "abnormal growth which reflected an unprecedented volume of construction contracts from the record level of resources and energy developments in execution phase" and in the new financial year (ie., 2013-14), "market conditions have tightened significantly".

MND has $1.3 billion of revenue for the new financial year from new contracts and contract extension and MND is looking to expand into the LNG sector.  MND has established a support office in Mongolia to pursue "long-term opportunities in this emerging resource development market".

Effectively, MND has warned the market to expect lower revenue for 2013-2014 than for 2012-2013 with a lot of emphasis on "tightening market conditions ... as customers pulled back and reassessed their capital expenditure plans and focused on optimising asset performance and reducing costs".

Presumably, although MND did not provide guidance on expected NPAT for next year, lower revenue will almost certainly see lower NPAT and EPS for next financial year.  I suspect that this is a big driver for the falling SP this morning.


----------



## skc

*Re: MND - Monadelphous*



Country Lad said:


> Well there you go.
> 
> Sales revenue up 37.8% to $2,614m
> NPAT up 24.1% on prior year to $156.3m
> EPS up 21.5% to 173c,
> DPS up 9.6% to 137c
> 
> One of those inverse head & shoulders I mentioned elsewhere which could break out today based on the results.  It will depend on whether the market dwells on the results or the outlook comments:




Result is a slight beat from what I can see and the outlook statement is pretty much as expected. The revenue line is forecasted to be below FY13 (unquantified) but the challenge will be maintaining the margin while the miners drive their cost reduction while the other out-of-work contractors compete for new work.

Not a report that I could trade one way or the other... thought about shorting on open but with short interests already high (>12%) I thought the result was solid enough for some potential short covering as well.

Definitely a stock to keep an eye on when they provide updates through the year.

Technically there's support at $17.60 (the H&S breakout level) so a tap there might be a potential long setup.


----------



## Country Lad

*Re: MND - Monadelphous*



McCoy Pauley said:


> Presumably, although MND did not provide guidance on expected NPAT for next year, lower revenue will almost certainly see lower NPAT and EPS for next financial year.  I suspect that this is a big driver for the falling SP this morning.




Yep as I said, 




Country Lad said:


> One of those inverse head & shoulders I mentioned elsewhere which could break out today based on the results.  It will depend on whether the market dwells on the results or the outlook comments:
> 
> 
> 
> 
> With market conditions softening and after an abnormal surge in revenue in the past two years, the
> 2013/14 financial year will be a year of consolidation with revenue levels moderating and not expected
> to reach those achieved in the previous year.
Click to expand...



Which puts this one on my watch list to see how it goes from here as the level of work in hand, the tenders submitted and the likely other new work may not justify the price falls from here and profit for 2014 may just be a lot better than anticipated.  

Cheers
Country Lad


----------



## tinhat

*Re: MND - Monadelphous*



McCoy Pauley said:


> ...MND is looking to expand into the LNG sector.  MND has established a support office in Mongolia to pursue "long-term opportunities in this emerging resource development market".
> .




The problem is all the mining service companies are looking to expand into the LNG sector. It will be a question what margins are available due to competitive pressures.


----------



## McCoy Pauley

*Re: MND - Monadelphous*



tinhat said:


> The problem is all the mining service companies are looking to expand into the LNG sector. It will be a question what margins are available due to competitive pressures.




Very true, though MND appears (at least to this humble investor) to have a strong reputation for mining services and engineering work and it has already picked up contracts in this sector over the last 12 months.


----------



## McCoy Pauley

*Re: MND - Monadelphous*

From my morning FN Arena email newsletter this morning:



			
				FN Arena said:
			
		

> UBS rates MND as Sell (5) - Broker reports Monadelphous fell short of consensus on tighter margins as the operating environment declined and as several projects underperformed.
> 
> Broker believes FY14 outlook is challenging and has already included much-vaunted LNG projects in estimates.
> Broker maintains Sell rating, noting stock is trading on 35% premium to broker's DCF and price target of $13 (also unchanged).
> 
> Target price is $13.00 Current Price is $17.54 Difference: minus $4.54 (current price is over target). If MND meets the UBS target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).
> 
> The company's fiscal year ends in June. UBS forecasts a full year FY14 dividend of 107.00 cents and EPS of 133.00 cents . At the last closing share price the estimated dividend yield is 6.10%.
> 
> At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.19.
> 
> Market Sentiment: -0.6
> 
> How do these forecasts compare to market consensus projections?
> 
> Current consensus EPS estimate is 155.0, implying annual growth of N/A. Current consensus DPS estimate is 133.1, implying a prospective dividend yield of 7.6%. Current consensus price target is $ 17.49, suggesting downside of - 0.3%(ex-dividends).Current consensus EPS estimate suggests the PER is 11.3.




Ouch.  Expecting MND to drop during the course of today as investors digest UBS' latest prognostications.


----------



## Country Lad

*Re: MND - Monadelphous*



McCoy Pauley said:


> From my morning FN Arena email newsletter this morning...................




Oh dear, it is a case of brokers at 100 paces.

*UBS*
UBS rates MND as Sell (5) - Broker reports Monadelphous fell short of consensus on tighter margins as the operating environment declined and as several projects underperformed. 

*Another Broker*
We retain our Buy recommendation as we now consider the stock has more than priced in the likely earnings decline in FY14 with new contract awards a potential positive catalyst.



*UBS*
Broker believes FY14 outlook is challenging and has already included much-vaunted LNG projects in estimates.

*Another Broker*
We expect FY14 group revenue to decline around 10% driven by a 20% reduction in Engineering Construction divisional revenue (unchanged compared to our previous expectations) and consider FY14 a more appropriate base level of maintainable earnings for the group.
We have lowered our margin assumptions in FY14/15 partially offset by lower depreciation.  EPS downgraded by 2% in FY14 and FY15 unchanged.



*UBS*
Target price is $13.00 Current Price is $17.54

*Another Broker*
We rate MND a Buy with a 12-month target price of $21.64. We believe the company will find it increasingly difficult to replicate the exceptional level of earnings growth over FY12/13 but consider this more than reflected in the current share price.



*UBS*
DCF and price target of $13 

*Another Broker*
Our MND valuation is largely unchanged at $21.64 using a DCF methodology

Cheers
Country Lad

PS I have edited the post to delete broker name as the material will no doubt be copyrighted


----------



## fanger

*Re: MND - Monadelphous*

UBS is far too bearish on MND, like most brokers have been in this sector.


----------



## SeekingYields

*Re: MND - Monadelphous*

Revenue came in at $2.61 billion, up 38% from $1.9 billion. Likewise, net profit was up 13.8% from $137.3 million to $156.3 million. 

A final dividend of 75 cents per share fully franked. 

As a long term holder of MND I am reasonably happy


----------



## Valued

*Re: MND - Monadelphous*

I decided to buy into MND today, for better or for worse I have considered it trading at slightly under fair value or approximately fair value given 2014 and 2015 projections. If 2014 brings another year like 2013 then I think everyone invested is going to be quite happy. If it brings around projections, it will still be ok. I will re-assess my position if it hits around $18.50 but I am guessing that it's far more likely that I will either be forced to stick with it for the long haul due to price fluctuations between present price and the re-assessment point (like a soft version of a stop loss) or that the price will rise. I don't suspect we are going to see any kind of downtrend but anything is possible.

I would have liked a better of margin of safety. Too bad I didn't buy in at 17.50!

I might still buy into FGE depending what happens at the end of this month with their potential loan covenant breach. I just don't understand how their loan agreement with ANZ works so I will see if anything happens.


----------



## McCoy Pauley

*Re: MND - Monadelphous*

I have to say I'm somewhat bemused and surprised about the positive reaction in the share price to what amounts to less than 10% of the FY13 revenue.  However, given that MND updated the market that it had $1.4 billion of revenue from new contracts and contract renewals as at 1 July 2013, the extra $235 million it will earn from Rio for Cape Lambert is somewhat significant.


----------



## Valued

*Re: MND - Monadelphous*



McCoy Pauley said:


> I have to say I'm somewhat bemused and surprised about the positive reaction in the share price to what amounts to less than 10% of the FY13 revenue.  However, given that MND updated the market that it had $1.4 billion of revenue from new contracts and contract renewals as at 1 July 2013, the extra $235 million it will earn from Rio for Cape Lambert is somewhat significant.




I only invested because I considered we are trading at fair value even based off 2014 projections and that there is, what Buffet calls, a "cheery consensus". Everyone wants to buy, not many people want to sell unless they bought much lower, and the consensus is that this is a good company. Buffet once said you pay a premium for a cheery consensus. I take a cheery consensus when I can pay a fair price. The big part of this was the fact that a fair value stock was trending higher on the back of very positive news about the future prospects of the company. It did only amount to 236m but you also have to frame it in the fact that MND again turned over amazing ROE and record profits and when you combine that with more positive news, the market can't help itself. If they are going to do another 50% ROE year then it should be very good for investors but it will be good even if they meet the 2014 projections of 145 eps. 

I bought in for 20.59 and broke even today. We will see what the next few weeks/months hold.


----------



## piggybank

*MND - Monadelphous Group Limited*

2013 AGM Presentation and Updated Outlook - http://stocknessmonster.com/news-item?S=MND&E=ASX&N=658148


----------



## piggybank




----------



## McCoy Pauley

Been a volatile ride over the last six months, and the volatility has increased over the last 6 weeks.  I'm not a technical trader/analyst, but it looks like there could be a double bottom here, and if you stretch the chart back to July, possibly a triple bottom.

I hold, so DYOR.


----------



## tinhat

Relative to the sector in general, the MLD half year results are impressive and have pleased the market. This company continues to impress for being well managed. Overheads down, revenues holding up. Good dividend yield. The concern however, is that this company makes 75% of its revenue from engineering construction and only 25% from maintenance services. On T/A it looks a buy and it has a good dividend yield but I'm not convinced that it can maintain revenues and margins long term.


----------



## skc

tinhat said:


> Relative to the sector in general, the *MND *half year results are impressive and have pleased the market. This company continues to impress for being well managed. Overheads down, revenues holding up. Good dividend yield. The concern however, is that this company makes 75% of its revenue from engineering construction and only 25% from maintenance services. On T/A it looks a buy and it has a good dividend yield but I'm not convinced that it can maintain revenues and margins long term.




Definitely a clean and strong result... market was bracing for some sort of nasty miss so the shorts were scrambling to cover this morning. 

They are guiding to full year revenue down 10%. Considering that H1 revenue was about the same as pcp ($1.28B), H2 is going to be 20% lower ($1.07B vs $1.33B pcp). 

Share price wise it may have a little bit more momentum for a few sessions but I think the market will soon return to second guessing MND's guidance until the next reporting period.

Definitely the tallest Dwarf... but who like Dwarves at all? (Unless you are Tauriel from the Hobbit).


----------



## tinhat

Oops. MND. :


----------



## Julia

tinhat said:


> On T/A it looks a buy and it has a good dividend yield but I'm not convinced that it can maintain revenues and margins long term.



Can you say why you believe it's a buy on T/A?


----------



## Valued

Julia said:


> Can you say why you believe it's a buy on T/A?




I am guessing since he thinks we are at the bottom of the trading range that it's a good buy. Perhaps, but it's not a high probability setup. There has been a long downtrend and its at best a trading range with lowering supply points (pattern traders would consider this to be a descending triangle in the making) or the start of a new downtrend. There are better opportunities imo. At any rate, trading trading ranges before a breakout occurs is a difficult task. Trading them for the move up to the supply line imo is inferior to swing trading in an established trend. That's where opportunity cost comes into play.


----------



## tinhat

Julia said:


> Can you say why you believe it's a buy on T/A?




Obviously the stock is in downtrend, but as the posters above me mentioned, a potential double bottom has formed. The share price has bounced off the lower bollinger band on the daily and weekly charts but the gap up to yesterday's open might be of concern to some T/A. I should have chosen my words better and said that the stock might be a technical buy. I don't own and don't have any plans to invest in MND.


----------



## Julia

Valued said:


> There are better opportunities imo. At any rate, trading trading ranges before a breakout occurs is a difficult task. Trading them for the move up to the supply line imo is inferior to swing trading in an established trend. That's where opportunity cost comes into play.



+1.



tinhat said:


> Obviously the stock is in downtrend, but as the posters above me mentioned, a potential double bottom has formed. The share price has bounced off the lower bollinger band on the daily and weekly charts but the gap up to yesterday's open might be of concern to some T/A. I should have chosen my words better and said that the stock might be a technical buy. I don't own and don't have any plans to invest in MND.



OK.  
I had MND from about mid 05 to mid 07.  Wouldn't look at it unless there's a clear uptrend again.


----------



## Ves

Trading halt.... significant contract won according to the company statement.

Any chance it could be Roy Hill?   That'd go a long way to filling the revenue gap for the next couple of years.... and they probably have more bargaining power / capability than FGE and may get a better margin.


----------



## McCoy Pauley

Ves said:


> Trading halt.... significant contract won according to the company statement.
> 
> Any chance it could be Roy Hill?   That'd go a long way to filling the revenue gap for the next couple of years.... and they probably have more bargaining power / capability than FGE and may get a better margin.




Been appointed a subcontractor to JKC Australia Pty Ltd (a joint venture between JGC Corporation of Japan, Chiyoda Corporation, and Kellogg Brown & Root Pty Ltd) on the Icthsys Project Onshore LNG Facilities in Darwin.  Contract value is approximately $680 million and should go from now until mid-2016.

Presumably MND has done its sums on the agreement and it won't be too squeezed in undertaking the work.

Positive reaction this morning - up almost 5%.


----------



## piggybank

Monadelphous Awarded $680M Contract on Ichthys LNG Project - http://stocknessmonster.com/news-item?S=MND&E=ASX&N=668480

The stock closed @ $17.66 (up 6.5% on the day) with volume nearly 880,000.

​


----------



## SilverRanger

tinhat said:


> Obviously the stock is in downtrend, but as the posters above me mentioned, a potential double bottom has formed. The share price has bounced off the lower bollinger band on the daily and weekly charts but the gap up to yesterday's open might be of concern to some T/A. I should have chosen my words better and said that the stock might be a technical buy. I don't own and don't have any plans to invest in MND.




That sure is a double bottom now, can't see any obvious resistance after 17.3 is broken, perhaps 17.8 for the descending triangle?


----------



## Sharkman

SilverRanger said:


> That sure is a double bottom now, can't see any obvious resistance after 17.3 is broken, perhaps 17.8 for the descending triangle?




i'm out at 18.23 today

on the basis that it tested the 200 day EMA in early sept, late oct and late dec, and has yet to conclusively break above it, on the latter two occasions it pretty much rallied straight to the 200 day EMA then immediately reversed. it's gotten to around the 200 day EMA today, so i opted to take the money and run. if it drops back down to the 15'ish level again, i'll probably look to re-enter at that point


----------



## piggybank

Sharkman said:


> On the basis that it tested the 200 day EMA in early sept, late oct and late dec, and has yet to conclusively break above it, on the latter two occasions it pretty much rallied straight to the 200 day EMA then immediately reversed. it's gotten to around the 200 day EMA today, so i opted to take the money and run. if it drops back down to the 15'ish level again, i'll probably look to re-enter at that point




​


----------



## notting

Yeah, getting a bit happy looking forward to that dividend.
May put a short on it at the close on the night before it goes ex if it keeps running up.
MND is one of if not, the best in the sector.
This is what LYC, another good company in the sector, wrote to us today - 

Lycopodium’s services when compared to the preceding two years. Reiterating our prior advice, the
reduction in demand is attributable to the following factors:
•
Lower commodity prices across a wider range of commodities including gold.
•
Major mining companies belt tightening across all
facets of their business, a focus on opitimising
existing assets and limiting capital expenditure.
•
Junior mining companies finding it difficult to raise equity for studies and projects.
•
The manufacturing sector continuing its decline in Australia. This is also coupled with continuing
austerity measures.
•
Increasing competition between services providers,
increasing appetite for risk, as well as lower
margin expectation

Not a pretty picture!


----------



## notting

I meant LYL not LYC!!


----------



## pinkboy

MND broke it's double bottom today, close circa 4 year low. I occasionally do work for these guys here in Mackay and they all seem on edge and are not as busy as usual. That's just my take on them localized,  I'm sure their other big projects are keeping them going.

pinkboy


----------



## Sharkman

yeah danger signs here IMHO too. i sold out a few months ago and was looking for a re-entry at around the 15 level if it had tested 14.70'ish and support had held, but it just blasted right thru it today. and FGE is still fresh in everyone's minds. not saying it's going to become another FGE, but a bit (actually a lot) iffy on getting back in now...


----------



## McCoy Pauley

Down 3% in a market that fell about 1% today.

The share price chart looks very poor and I'm deep into the red, but I'm continuing to hold as it's one the best-managed engineering companies on the Australian market. I'm participating in the DRP, but I'm not at this stage prepared to buy more shares (mostly due to the fact that I don't have much cash to invest at present).

I haven't overlaid the iron ore price chart over the MND share price chart, but I suspect that the renewed weakness in the share price as coincided with the fall in the iron ore price. Although MND has spent some time diversifying away from supporting iron ore miners into the energy sector, it seems the market still perceives MND as a supplier to iron ore miners and is marking MND down accordingly.


----------



## skc

McCoy Pauley said:


> I haven't overlaid the iron ore price chart over the MND share price chart, but I suspect that the renewed weakness in the share price as coincided with the fall in the iron ore price. Although MND has spent some time diversifying away from supporting iron ore miners into the energy sector, it seems the market still *perceives MND as a supplier to iron ore miners *and is marking MND down accordingly.




From their full year presentation, iron ore was 35% of their revenue. Iron ore has plunged recently but coal hasn't been having much fun for even longer, and that's 16.8% of their revenue.

If you read the report by any of it's peers, everyone is trying to diversify into oil and gas. The oil and gas industry is currently propped up by the last stage of the LNG building spree and the related CSG areas. Be prepared for much lower revenue and profits when that segment comes off the boil.


----------



## galumay

skc said:


> From their full year presentation, iron ore was 35% of their revenue. Iron ore has plunged recently but coal hasn't been having much fun for even longer, and that's 16.8% of their revenue.
> 
> If you read the report by any of it's peers, everyone is trying to diversify into oil and gas. The oil and gas industry is currently propped up by the last stage of the LNG building spree and the related CSG areas. Be prepared for much lower revenue and profits when that segment comes off the boil.




Whilst I agree with all of the above, I still bought some MND for my SMSF this week, at $14 the revenue and profits can fall a long way and that price still represents reasonable value. 

I took a very conservative view of future earnings, but having worked in the industry for the last 20 years I know how much of the sort of work that MND does, still needs to be done. I genuinly think that there is a lot of upside in the whole mining services sector and I think the market has greatly over reacted. Time will tell if my contrarian instincts are correct!


----------



## Julia

McCoy Pauley said:


> Down 3% in a market that fell about 1% today.
> 
> The share price chart looks very poor and I'm deep into the red, but I'm continuing to hold



Just curious, and of course you don't have to answer, but how far would it have to fall before you'd get out?

Btw, several financial stocks fell substantially over the 1% today


----------



## Wysiwyg

From a technical view and knowing the future outlook is for slower growth I have gone to the Bulkowski well for a price target on the Descending Triangle formation. Thomas states that you deduct the formation high at the start from the formation low at the start, multiply this by the sample success rate hitting target and deduct that from the breakout price. So the calc. is 

A  $20.82 - B  $15.20 = $5.62
$5.62 * sample success rate  0.54 = $3.03
Deduct $3.03 from breakout price $14.49 = $11.46

C = $11.46 target price

Today's low was $11.40 and close price was $11.49

From a personal perspective, simply recording these observations.


----------



## Julia

Down another 2.6% today.  I'd forgotten all about this thread but note McCoy Pauley  in September said


> Down 3% in a market that fell about 1% today.
> 
> The share price chart looks very poor and I'm deep into the red, but I'm continuing to hold




I wonder if he's still holding?


----------



## McCoy Pauley

Julia said:


> Down another 2.6% today.  I'd forgotten all about this thread but note McCoy Pauley  in September said
> 
> 
> I wonder if he's still holding?




Yep, still holding. The industry is S-T-ruggling, of that there is no question, but management don't appear to be disclosing any adverse issues which would make me change my mind at this stage about holding shares in MND, as I rate MND the best operator in the industry. I'm participating in the DRP so add to my holdings every six months but otherwise not adding to my holding.

MND seems to be doing a reasonable job at diversifying into the oil & gas sector, but it would be nice if their contract wins were a little higher than $90 million from time to time!

Pure speculation but the slide in the iron ore price of late and the general perception that MND is primarily an engineering services company to the iron ore sector is working against sentiment in MND.


----------



## Klogg

McCoy Pauley said:


> Yep, still holding. The industry is S-T-ruggling, of that there is no question, but management don't appear to be disclosing any adverse issues which would make me change my mind at this stage about holding shares in MND, as I rate MND the best operator in the industry. I'm participating in the DRP so add to my holdings every six months but otherwise not adding to my holding.
> 
> MND seems to be doing a reasonable job at diversifying into the oil & gas sector, but it would be nice if their contract wins were a little higher than $90 million from time to time!
> 
> Pure speculation but the slide in the iron ore price of late and the general perception that MND is primarily an engineering services company to the iron ore sector is working against sentiment in MND.




The entire sector has been trashed out of fear of falling commodity prices. There's some value to be had, but McLovin's comments around the industry not being anywhere near the bottom concerns me. I'd rather sit it out than go contrary to his view.

BYL is probably most attractive at the moment, given the order book they have. Although their cap raising was a train-wreck.

@McCoy Pauley - are you aware of the order book amounts beyond FY15 for MND?


----------



## McCoy Pauley

Klogg said:


> The entire sector has been trashed out of fear of falling commodity prices. There's some value to be had, but McLovin's comments around the industry not being anywhere near the bottom concerns me. I'd rather sit it out than go contrary to his view.
> 
> BYL is probably most attractive at the moment, given the order book they have. Although their cap raising was a train-wreck.
> 
> @McCoy Pauley - are you aware of the order book amounts beyond FY15 for MND?




At one point I probably was, but I've been distracted by the pressures of life and I can't get the figures off the top of my head.


----------



## fanger

Wysiwyg said:


> From a technical view and knowing the future outlook is for slower growth I have gone to the Bulkowski well for a price target on the Descending Triangle formation. Thomas states that you deduct the formation high at the start from the formation low at the start, multiply this by the sample success rate hitting target and deduct that from the breakout price. So the calc. is
> 
> A  $20.82 - B  $15.20 = $5.62
> $5.62 * sample success rate  0.54 = $3.03
> Deduct $3.03 from breakout price $14.49 = $11.46
> 
> C = $11.46 target price
> 
> Today's low was $11.40 and close price was $11.49
> 
> From a personal perspective, simply recording these observations.
> 
> View attachment 60218




Technically now this has broken down again where is it heading now?


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## Wysiwyg

fanger said:


> Technically now this has broken down again where is it heading now?



Don't know and never do! Technically it has collapsed which I took advantage of today @ $10.43 for 400 shares, again at a technical level. To add confidence, by day end the price had extended back up to form a hammer candle. This means that there could be a short-medium term trend change as supply is exhausted. The U.S. markets can correct at anytime and our market may retreat further so the pressure to close out a position may return. React to market conditions/price action and use what you know (or think you know).


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## Wysiwyg

Definitely finding support again today. Completed the holding with 600 shares @ $10.62 for 1000 shares at an average price of $10.58 after brokerage. Chart shows another smaller hammer candle and although both bearish of type, they do show the bullish turnarounds with above average volumes. Not a common practice to buy in such a strong downward momentum and things could be very different.


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## piggybank

Today Deutsche Bank upgraded Monadelphous to a ‘hold’ on valuation grounds and has a target price of $11.43 a share on the mining services group.


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## Miner

piggybank said:


> Today Deutsche Bank upgraded Monadelphous to a ‘hold’ on valuation grounds and has a target price of $11.43 a share on the mining services group.




Hmm
How many times we saw Deutsche Bank valuation was right. 
Currently with mining down turn all mining services are in bad shape so is MND. Their venture into Oil and Gas when oil also dived to $80 is challenging its own capability.
Watching MND and do not want to take knee jerk reaction to buy it now. However I have been many times wrong.


----------



## Wysiwyg

Wysiwyg said:


> Not a common practice to buy in such a strong downward momentum and things could be very different.



Things are different and the overall market has weighed upon MND which I escaped at break even after brokerage. Overwhelming resistance. Must stop playing the buy low, sell lower game.


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## Julia

Wysiwyg said:


> Things are different and the overall market has weighed upon MND



There are still stocks that are going up in the present market, or at the very least, not showing the determined and pronounced downtrend of MND.  It has been trading below the EMA since July.

I'm just curious, and certainly there's no obligation for you or anyone else to respond, but is there a point at which the losses will be unacceptable, or is it a case of "too late now to sell"?   Or "I believe in this stock, am emotionally invested in it, so will find any point that will allow me to rationalise holding."


----------



## Wysiwyg

Julia said:


> There are still stocks that are going up in the present market, or at the very least, not showing the determined and pronounced downtrend of MND.



Am holding up trenders at the moment.



> I'm just curious, and certainly there's no obligation for you or anyone else to respond, but is there a point at which the losses will be unacceptable, or is it a case of "too late now to sell"?   Or "I believe in this stock, am emotionally invested in it, so will find any point that will allow me to rationalise holding."



Have not made any losses on MND and my approach is to cut these down trenders if they slip further, there is stubborn resistance and/or Index movement is negative. No emotional attachment.


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## galumay

Julia said:


> There are still stocks that are going up in the present market, or at the very least, not showing the determined and pronounced downtrend of MND.  It has been trading below the EMA since July.
> 
> I'm just curious, and certainly there's no obligation for you or anyone else to respond, but is there a point at which the losses will be unacceptable, or is it a case of "too late now to sell"?   Or "I believe in this stock, am emotionally invested in it, so will find any point that will allow me to rationalise holding."




For me Julia there is no reason to sell, to respond in order to your points, a loss is not made until I sell, and in general a loss is unacceptable full stop. The point at which I would sell would be if the fundamental reasons I bought changed to the extent that i could no longer justify holding. Its never "too late now to sell", its very often too soon to sell in my view. If you sell everytime the market, or a share drops you will realise a lot of losses! Finally I am not emotionally invested, I am rationally invested. The fundamentals of MND are compelling IMO, I do take a contrarian view of the extent and length of the impact of the mining industry coming to the end of a boom cycle and I am also more than happy to hold thru cyclic markets like the resources sector.

I suspect that you are more asking from a trading point of view than an investing one, but I thought I would share my thoughts regardless.


----------



## clinta44

I for one wouldn't mind seeing them announce a buy back, the price seems sensible at the moment, they are sitting on a bunch of cash and I personally prefer buy backs and organic growth over growth by acquisition. 
AGMs is today 10am WST will be interesting to see if the board makes any outlook statements for the half and FY...


----------



## skc

clinta44 said:


> I for one wouldn't mind seeing them announce a buy back, the price seems sensible at the moment, they are sitting on a bunch of cash and I personally prefer buy backs and organic growth over growth by acquisition.
> 
> AGMs is today 10am WST will be interesting to see if the board makes any outlook statements for the half and FY...




AGM update not as bad as some feared. They've mentioned revenue reduction of ~15-20% on H1 while H2 is dependent on contract award. So H1 revenue ~$1B while H2 say 20% lower put full year revenue @ $1.8B.

NPAT margin was ~5.9% and one'd expect that to fall on lower revenue... so say 5% @ $1.8B = $90m NPAT. With net cash of $180m at year end, it's trading at PE ~9x... So to me it's not a bargain yet given industry conditions.


----------



## galumay

skc said:


> So to me it's not a bargain yet given industry conditions.




You certainly need a contrarian view of the sector to see them as a bargain! I have that view, but I know its not commonly shared. What is hard to dispute is that of the mining services companies, MND are in one of the strongest positions, a good balance sheet, low debt, and reasonable prospects given the downturn in the sector overall. 

Even allowing for a continuing decrease in dividends in line with lower earnings thru this part of the cycle, they will return very healthy yields and the prospect of price growth as the sector improves over time if you pick them up at current prices.


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## McLovin

galumay said:


> You certainly need a contrarian view of the sector to see them as a bargain! I have that view, but I know its not commonly shared. What is hard to dispute is that of the mining services companies, MND are in one of the strongest positions, a good balance sheet, low debt, and reasonable prospects given the downturn in the sector overall.
> 
> Even allowing for a continuing decrease in dividends in line with lower earnings thru this part of the cycle, they will return very healthy yields and the prospect of price growth as the sector improves over time if you pick them up at current prices.




I'd be curious where you think the bottom of the cycle is, galumay? To me it doesn't seem like you have to make wildly outrageous assumptions about the business to end up with a SP that is significantly lower from here.

These two charts kind of tell me a lot about the whole industry, although they pertain to MND. The trend from 2003 on is pretty clear as is where MND was before the boom. Coming off a super-cycle like we have had it just seems to me like there will be one almighty hangover for this industry and despite how well managed MND they will feel it. I kind of think of mining services as flowers in the desert; when it rains they can look amazing, but it doesn't last.


----------



## Julia

galumay said:


> For me Julia there is no reason to sell, to respond in order to your points, a loss is not made until I sell, and in general a loss is unacceptable full stop. The point at which I would sell would be if the fundamental reasons I bought changed to the extent that i could no longer justify holding. Its never "too late now to sell", its very often too soon to sell in my view. If you sell everytime the market, or a share drops you will realise a lot of losses! Finally I am not emotionally invested, I am rationally invested. The fundamentals of MND are compelling IMO, I do take a contrarian view of the extent and length of the impact of the mining industry coming to the end of a boom cycle and I am also more than happy to hold thru cyclic markets like the resources sector.



Thank you for explaining your approach.  I respect your right to it, though rather hope you note McLovin's remarks.



> I suspect that you are more asking from a trading point of view than an investing one, but I thought I would share my thoughts regardless.



Glad you are prepared to share your thoughts:  that's what makes the forum interesting.
But re my asking from a trading pov rather than an investing one, actually no.   I've had a few goes at short term trading over the years with only mediocre results, so don't do that at all these days, along with no investment in airlines or miners.
I'd be happy to invest in MND again (made good $ from it in the past) but will never, ever buy into a downtrend, especially when the whole mining/services sector is looking lumpy to say the least.

Wysiwyg, thanks also for your response.  Any questions I ask are based entirely on interest about how other people do what they do and the reasons why, not any sort of prurient curiosity.


----------



## luutzu

galumay said:


> You certainly need a contrarian view of the sector to see them as a bargain! I have that view, but I know its not commonly shared. What is hard to dispute is that of the mining services companies, MND are in one of the strongest positions, a good balance sheet, low debt, and reasonable prospects given the downturn in the sector overall.
> 
> Even allowing for a continuing decrease in dividends in line with lower earnings thru this part of the cycle, they will return very healthy yields and the prospect of price growth as the sector improves over time if you pick them up at current prices.




Contrarian is putting it lightly given current trend. I think "ballz of steel" suits better - and you and I and a few others might have it; that or brain of steel .

Just bought a fair chunk of it today. Right after the order went through at $10.70 it drops 8 cents, so good omen


----------



## galumay

Julia said:


> Thank you for explaining your approach.  I respect your right to it, though rather hope you note McLovin's remarks.




No drama, also I always read McLovin's comments with interest, he is more pessimistic than I on the outlook for the sector, my beliefs are biased by my close involvement in the industry for the last 35 years, Mono's are one of the best contractors in the game, everyone uses them, and I know how much work there is for contractors in this game even in a slowing of the boom and transition to production from construction. 



> Glad you are prepared to share your thoughts:  that's what makes the forum interesting.
> But re my asking from a trading pov rather than an investing one, actually no.   I've had a few goes at short term trading over the years with only mediocre results, so don't do that at all these days, along with no investment in airlines or miners.
> I'd be happy to invest in MND again (made good $ from it in the past) but will never, ever buy into a downtrend, especially when the whole mining/services sector is looking lumpy to say the least.




I am with you on no miners or airlines, my only weakness is a couple of mining services providers!! 

I guess the significant difference in approach is I love buying into a downtrend!


----------



## McCoy Pauley

Several points I've picked out of the slide pack from the AGM:

* Revenue is highly geared towards engineering and construction (71.4% compared to 28.3% for maintenance and industrial services, and 0.3% for Skystar, which MND has since sold);
* MND has won $1.34b of new contracts in engineering and construction and $415 million of new contracts and extensions in maintenance and industrial services. Given the pressure on costs in the resources industry, I wonder how much MND has had to reduce the bid and therefore compress margins - skc assumed a fall of margins to ~5%, that could be optimistic, particularly in the engineering and construction division;
* A significant amount of MND's revenue is still derived from the Pilbara (see page 12 of the slide pack) and a significant amount of new contract wins come from the LNG fields in Darwin and Queensland (see page 13 of the slide pack);
* By market, MND derived 41% of revenue for FY 2014 in energy, 57% from resources and 2% in infrastructure. So while MND is diversifying away from its resources base (89% in FY 2008), unfortunately energy prices are falling hard as well; and
* MND wants to build new markets for itself in marine, power, water and transmission pipelines, and to expand internally. If MND can't execute, that's a recipe for trouble.


----------



## McLovin

galumay said:


> No drama, also I always read McLovin's comments with interest, he is more pessimistic than I on the outlook for the sector, my beliefs are biased by my close involvement in the industry for the last 35 years, Mono's are one of the best contractors in the game, everyone uses them, and I know how much work there is for contractors in this game even in a slowing of the boom and transition to production from construction.




You're in a much better spot to know what's going on on the ground than I am. I hope I'm wrong and you're right.


----------



## galumay

McLovin said:


> You're in a much better spot to know what's going on on the ground than I am. I hope I'm wrong and you're right.




Sometimes thats a disadvantage I think! I really appreciate the trouble you went to post up those graphs, it was food for thought and made me go and look into the numbers in more detail. 

I think one of the things that data is masked by is the massive size of infrastructure growth in the country as a result of the boom, if you look at mining sector production prior to about 2003 and then the massive and incredible growth in production over the next 10 years or so you get a picture of just how much more infrastructure is out there now.

I know from my travelling all over Australia and looking at it the growth has been incredible in the last decade, all over the country in the northern half especially. This infrastructure will need maintenance and replacement and we have yet to see the escalation in that sort of work because most of it is so new. 

I dont doubt the sector is still in for a rough ride, but the good companies will pick up work from the ones that cant survive the downturn and then their will be growth in maintenance and replacement as well as a steady stream of construction projects (at a much lower rate). 

Have we seen the bottom? Probably some way from it, but I am not looking to find the bottom, I just believe there is a reasonable liklihood of companies like MND & NWH being undervalued at the moment and that I will get a healthy yield while I wait for the price to move back in my favour, I am not in any rush and I certainly wouldnt suggest that there is any quick money to be made in the sector.

Ultimately the rest of the world needs our metals and energy resources and thats not going to change in the forseeable future.


----------



## Julia

That reasoning sounds logical enough, galumay.  Hope you're right.  Good luck with it.  Certainly if you're not worried about your capital investment, the yield is very good.


----------



## luutzu

McLovin said:


> You're in a much better spot to know what's going on on the ground than I am. I hope I'm wrong and you're right.




I also hope you're wrong and I'm right, but who knows... you might very well be right. But 

Another interpretation of your charts could be that given the great growth MND has in its engineering/construction businesses, it could have learnt and develop systems and structure, business contacts/reputation, establish its competitive and financial position, dig its roots further into the soil so that when the rain is over, it could maintain itself for a while yet... and in the mean time expand to where the rain is.

To see the massive growth from a super cycle then conclude that like a desert flower it will whither and die after... that might be true, might be very true for some businesses and MND could be one of that... BUT... what if MND or companies similar to it capitalise on that growth and further enhance itself?

Say a new graduate... been living off Austudy... so income low and first couple of years after graduation still better but not that great. Then the graduate got lucky, his company is booming and he's promoted, took further training, given more responsibilities... basically doing very very well for a decade.

Then the company slows down, can't afford him or most of his colleague. 

From looking at the company or its sector, can we conclude that that one time graduate who got lucky will now go back to middle management somewhere or back to his Austudy days? 

Depends right? He could leverage the skills and experience, the savings he had earned while time was great... use that and got his way into another sector or build his own business etc. etc.

I'm not saying that this is how MND is or will be... but it's not impossible.

The chances might be zero or slim... but as far as the future goes, I'd bet on a strong business whose management has proven to be very able in its project as well as capital and acquisition management. It might be worthwhile to put capital into business like that and let the able management do what they have been proven quite capable of doing. They might fail but then all businesses could fail, even ones in the most lucrative and booming industry.


----------



## McLovin

galumay said:


> Sometimes thats a disadvantage I think! I really appreciate the trouble you went to post up those graphs, it was food for thought and made me go and look into the numbers in more detail.
> 
> I think one of the things that data is masked by is the massive size of infrastructure growth in the country as a result of the boom, if you look at mining sector production prior to about 2003 and then the massive and incredible growth in production over the next 10 years or so you get a picture of just how much more infrastructure is out there now.
> 
> I know from my travelling all over Australia and looking at it the growth has been incredible in the last decade, all over the country in the northern half especially. This infrastructure will need maintenance and replacement and we have yet to see the escalation in that sort of work because most of it is so new.
> 
> I dont doubt the sector is still in for a rough ride, but the good companies will pick up work from the ones that cant survive the downturn and then their will be growth in maintenance and replacement as well as a steady stream of construction projects (at a much lower rate).
> 
> Have we seen the bottom? Probably some way from it, but I am not looking to find the bottom, I just believe there is a reasonable liklihood of companies like MND & NWH being undervalued at the moment and that I will get a healthy yield while I wait for the price to move back in my favour, I am not in any rush and I certainly wouldnt suggest that there is any quick money to be made in the sector.
> 
> Ultimately the rest of the world needs our metals and energy resources and thats not going to change in the forseeable future.




Hey gal

Thanks for the post. It's always good getting an insider's view. I definitely take on board what you've said, and your point about maintenance capex is certainly very relevant, and one I've considered though not attempted to quantify.

Just to be clear, I don't think MND is going back to where they were pre-2003. My thinking is something along the lines of if revenue falls to say $1.2b (which isn't that difficult to imagine IMO) and margins compress to below 5% then NPAT falls significantly to <$60m. It gets interesting at that point because that's when people start to throw in the towel and the SP can really do some strange things (hence my <$5 sp comment in the other thread on MND).


----------



## piggybank

McLovin said:


> I'd be curious where you think the bottom of the cycle is, galumay? To me it doesn't seem like you have to make wildly outrageous assumptions about the business to end up with a SP that is significantly lower from here.
> 
> These two charts kind of tell me a lot about the whole industry, although they pertain to MND. The trend from 2003 on is pretty clear as is where MND was before the boom. Coming off a super-cycle like we have had it just seems to me like there will be one almighty hangover for this industry and despite how well managed MND they will feel it. I kind of think of mining services as flowers in the desert; when it rains they can look amazing, but it doesn't last.
> 
> View attachment 60352




Hi McLovin,

Do you make those tables up yourself or do you have to subscribe to a site in order to obtain them?

Thanking you in advance of your reply.

Regards
PB


----------



## DeepState

Actual and consensus capex profile from BHP-AU





Same deal for RIO-AU





Same deal for FMG-AU





etc.



And then from the RBA from a speech this week by Stevens at CEDA:






I do not believe that the RBA is expecting a V-shaped recovery at the end of the forecast period.


An assumption of no growth, or even only slight declines, in any part of investment assessment is wildly at odds with what is clearly observable and assessable.  The outlook is outright poor.  Embedded in the above is an allowance for still high levels of capex for LNG developments for the time being.  The miners are the ones spruiking about EM demand coming from India etc. on top of existing demand from China. So it is not as if there is a hidden China in the world which has not yet discovered they need ore and coal.  They have also over-invested as a whole, as occurs though a cycle peak.

Perhaps the way to reconcile the poor outlook above and a possible organic outcome which is not traumatic is to believe that cost overruns will be gigantic relative to budget.  Not sure how strong a case that is though.

The constant remains...what is this thing worth?  A poor operational outlook does not make something a bad investment.


----------



## luutzu

DeepState said:


> Actual and consensus capex profile from BHP-AU
> 
> View attachment 60379
> 
> 
> 
> Same deal for RIO-AU
> 
> View attachment 60380
> 
> 
> 
> Same deal for FMG-AU
> 
> View attachment 60381
> 
> 
> 
> etc.
> 
> And then from the RBA from a speech this week by Stevens at CEDA:
> 
> View attachment 60382
> 
> 
> I do not believe that the RBA is expecting a V-shaped recovery at the end of the forecast period.
> 
> An assumption of no growth, or even only slight declines, in any part of investment assessment is wildly at odds with what is clearly observable and assessable.  The outlook is outright poor.  Embedded in the above is an allowance for still high levels of capex for LNG developments for the time being.  The miners are the ones spruiking about EM demand coming from India etc. on top of existing demand from China. So it is not as if there is a hidden China in the world which has not yet discovered they need ore and coal.  They have also over-invested as a whole, as occurs though a cycle peak.
> 
> Perhaps the way to reconcile the poor outlook above and a possible organic outcome which is not traumatic is to believe that cost overruns will be gigantic relative to budget.  Not sure how strong a case that is though.
> 
> The constant remains...what is this thing worth?  A poor operational outlook does not make something a bad investment.




What system are those data from RY?

-----


----------



## KnowThePast

McLovin said:


> I'd be curious where you think the bottom of the cycle is, galumay? To me it doesn't seem like you have to make wildly outrageous assumptions about the business to end up with a SP that is significantly lower from here.
> 
> These two charts kind of tell me a lot about the whole industry, although they pertain to MND. The trend from 2003 on is pretty clear as is where MND was before the boom. Coming off a super-cycle like we have had it just seems to me like there will be one almighty hangover for this industry and despite how well managed MND they will feel it. I kind of think of mining services as flowers in the desert; when it rains they can look amazing, but it doesn't last.
> 
> View attachment 60352




Great discussion here.

I thought I'd post up some charts on a group of companies for better visibility. Comparison is difficult as many mining services companies listed over the last several years. I've included those that had data since at least 2007, probably forgot a few. 

I'll add a chart for market cap as well.

Companies included: MND, LYL, RCR, SWK, NWH, BYL, WDS, SDM, MRM, EHL, ASL








While revenue and ebit are still historically high, and will possibly fall much further, market cap has already fallen to 2007 levels.


----------



## Wysiwyg

Being primarily a construction engineering company, where are the future significant construction projects? Galilee Basin coal, rail and port in Qld. and FLNG/LNG in W.A. 

Iron ore is covered for a while. Steel mills, Alumina Plants, Power Stations, Aluminium Smelters? None.


----------



## luutzu

Wysiwyg said:


> Being primarily a construction engineering company, where are the future significant construction projects? Galilee Basin coal, rail and port in Qld. and FLNG/LNG in W.A.
> 
> Iron ore is covered for a while. Steel mills, Alumina Plants, Power Stations, Aluminium Smelters? None.




Not commenting directly on MND as my interests would bias my argument...

I think that looking at the macro level then make general conclusions to individual company below can be dangerous.

Firstly, while geniuses can make close enough projections of general trend over next year or two, beyond that and all projections are pure guesses.

Second, how can you be sure the general projected changes will affect a certain company equally?

Third, how do you know that it won't happen that through genius or luck or hardwork, management will be able to win new contracts in unexpected places, in unexpected fields... they may even acquire and diversify to a different sector altogether before the pain really hit home?



Anyway, it's just opinions and approaches but I'm more comfortable with going bottom up... It's too much work to look at the entire world then figured out where each company fit into which and how they'd likely to do and what their likely moves will be.

It might be better to find good businesses and good management, and let them figured out what is best to do given what they have and what they see.

You and I are capitalist, our job is not running or managing the business, especially ones we see from high up.

--

With construction, or any business really but particularly true in construction... smart operators tend to not go for the lowest priced operator because it is cheap; smarter operators would want their contractors to make a decent profit - not to squeeze them dry and send them broke.

Reason is simple - if your contractor goes broke, your project will be delayed, and it will cost you more. If a bid is cheap but the bidder have a weak financial position or its practices hasn't been proven... it's not worth it to go cheap and end up paying more later through delays etc.; if the bid is cheap and the business is shaky, corners might be cut.

Not all operators are smart so some might just squeeze and hope for the best.. like Multiplex back then and got taken over.


----------



## skc

KnowThePast said:


> Great discussion here.
> 
> I thought I'd post up some charts on a group of companies for better visibility. Comparison is difficult as many mining services companies listed over the last several years. I've included those that had data since at least 2007, probably forgot a few.
> 
> I'll add a chart for market cap as well.
> 
> Companies included: MND, LYL, RCR, SWK, NWH, BYL, WDS, SDM, MRM, EHL, ASL
> 
> *While revenue and ebit are still historically high, and will possibly fall much further, market cap has already fallen to 2007 levels.*




Thanks for the charts, KTP. You seem to be holding back your interpretation of the bolded observation...? In deed, your observation is best summarised as PE compression. 

P.S. On the list of companies, I would have used MND, DOW, BKN, CDD, WOR, ALQ, RCR, MAH, NWH, EHL, ASL, BLY, TSE, DCG, FWD. I also would have used EV in lieu of market cap. But a great way to analyse the situation nonetheless.

P.P.S. For those who keep saying "MND is the best comapny in the industry and they will survive and thrive when the cycle turns"... the approach to profit from such "tallest dwarf" conclusion might be to buy MND and short one or several weak companies in the same sector to benefit from the relative performance.


----------



## KnowThePast

skc said:


> Thanks for the charts, KTP. You seem to be holding back your interpretation of the bolded observation...? In deed, your observation is best summarised as PE compression.




As you know, my portfolio has a few stocks in this sector, so this may be slightly biased.

I make two assumptions in my view of the future:
1. The industry is cyclical, and what is currently going down, will eventually start going back up.
2. Cutting through the cyclicality, demand is growing over the long term. An average of 5%/year is a figure I recall from somewhere. 

Based on that, I would think that the fair value of these stocks would be:
(Value before boom) + (average annual growth) - (time factor until next upturn).

On top of that, picking right/wrong companies can substantially change performance in a concentrated portfolio, as it does in any other industry. 

And so, I believe that the sector is now at, or below fair value. I have bought a few that I though were substantially under, so far it looks like I was too early. 



skc said:


> P.S. On the list of companies, I would have used MND, DOW, BKN, CDD, WOR, ALQ, RCR, MAH, NWH, EHL, ASL, BLY, TSE, DCG, FWD. I also would have used EV in lieu of market cap. But a great way to analyse the situation nonetheless.




Your wish is my command. 
I didn't have data from 2007 for all of these, so I've ran it on these: MND, DOW, BKN, WOR, RCR, NWH, EHL, ASL, TSE, DCG, FWD. The picture is even worse for them, with market cap dropping to 2006 levels. I've encluded EV for your viewing pleasure.









skc said:


> P.P.S. For those who keep saying "MND is the best comapny in the industry and they will survive and thrive when the cycle turns"... the approach to profit from such "tallest dwarf" conclusion might be to buy MND and short one or several weak companies in the same sector to benefit from the relative performance.




That would definitely be the way to go, if you were confident about your pick. I am sticking to safety in numbers.


----------



## luutzu

KnowThePast said:


> As you know, my portfolio has a few stocks in this sector, so this may be slightly biased.
> 
> I make two assumptions in my view of the future:
> 1. The industry is cyclical, and what is currently going down, will eventually start going back up.
> 2. Cutting through the cyclicality, demand is growing over the long term. An average of 5%/year is a figure I recall from somewhere.
> 
> Based on that, I would think that the fair value of these stocks would be:
> (Value before boom) + (average annual growth) - (time factor until next upturn).
> 
> On top of that, picking right/wrong companies can substantially change performance in a concentrated portfolio, as it does in any other industry.
> 
> And so, I believe that the sector is now at, or below fair value. I have bought a few that I though were substantially under, so far it looks like I was too early.
> 
> 
> Your wish is my command.
> I didn't have data from 2007 for all of these, so I've ran it on these: MND, DOW, BKN, WOR, RCR, NWH, EHL, ASL, TSE, DCG, FWD. The picture is even worse for them, with market cap dropping to 2006 levels. I've encluded EV for your viewing pleasure.
> 
> View attachment 60417
> View attachment 60418
> View attachment 60419
> 
> 
> 
> 
> That would definitely be the way to go, if you were confident about your pick. I am sticking to safety in numbers.




This is why investment by committee often fail. 

Your 3rd chart - value vs market cap - could be wrong. From pure guess, but it's unlikely that market value could be consistently below enterprise value like that. Possible, but might not be likely, not to that extend.


----------



## KnowThePast

luutzu said:


> This is *why* investment by committee often fail.




And why is that exactly?



luutzu said:


> This is why *investment by committee* often fail.




What does that have to do with what I posted?



luutzu said:


> Your 3rd chart - value vs market cap - could be wrong. From pure guess, but it's unlikely that market value could be consistently below enterprise value like that. Possible, but might not be likely, not to that extend.




Well spotted. This surprised me as well, so I double checked to see if it was right. I think it is, but I offer no guarantees


----------



## luutzu

KnowThePast said:


> And why is that exactly?
> 
> 
> 
> What does that have to do with what I posted?
> 
> 
> 
> Well spotted. This surprised me as well, so I double checked to see if it was right. I think it is, but I offer no guarantees




Why? Because each person have their own opinion and conviction, and I imagine that it's the boss and the boss's friends opinions that will win the day... that or the group reach a compromise, a consensus... that then lead to the junior of the team to not bother to do much work or much independent thinking because it's risky, who would want to stick their neck out and be wrong.

Some good charts there.

Is the Revenue chart to $3 Billion? or 3,000 billion?

I remember MND's revenue in 2013 being 2.2 billion.

Hope you don't mind my nitpicking, thought might be helpful.


----------



## McLovin

luutzu said:


> This is why investment by committee often fail.
> 
> Your 3rd chart - value vs market cap - could be wrong. From pure guess, but it's unlikely that market value could be consistently below enterprise value like that. Possible, but might not be likely, not to that extend.






I don't think you understand what enterprise value is. It will almost always be higher than market cap because it's the value of equity + the book value of debt - cash.

Nice charts KTP. One suggestion, it would really help if you used commas in those big numbers.


----------



## KnowThePast

luutzu said:


> Why? Because each person have their own opinion and conviction, and I imagine that it's the boss and the boss's friends opinions that will win the day... that or the group reach a compromise, a consensus... that then lead to the junior of the team to not bother to do much work or much independent thinking because it's risky, who would want to stick their neck out and be wrong.




Agreed, but only if there is a person in a group that truly does have a better than average judgement. Groupthink brings down good individuals but improves the poor ones.

I've just posted the data for previous years. I lean more towards being data driven and making decisions that have both data and theory supporting them. But that's another topic.



luutzu said:


> Some good charts there.




Thanks!



luutzu said:


> Is the Revenue chart to $3 Billion? or 3,000 billion?
> 
> I remember MND's revenue in 2013 being 2.2 billion.




$30bn. This kind of analysis can be very wrong if there is a stock that makes up a large part of the revenue, as the chart will then mainly show the data for that stock, with others contributing relatively little. 




luutzu said:


> Hope you don't mind my nitpicking, thought might be helpful.



Definitely helpful. I develop this software in my own time with no dedicated testing team, so this is the second best thing.


----------



## KnowThePast

McLovin said:


> I don't think you understand what enterprise value is. It will almost always be higher than market cap because it's the value of equity + the book value of debt - cash.
> 
> Nice charts KTP. One suggestion, it would really help if you used commas in those big numbers.




Thanks McLovin,

Funny how you do not notice such obvious and trivial to make improvements on software that you develop and use yourself until someone points it out. Done in about 2 sec, next time I post charts, they should be a little easier to read


----------



## luutzu

McLovin said:


> I don't think you understand what enterprise value is. It will almost always be higher than market cap because it's the value of equity + the book value of debt - cash.
> 
> Nice charts KTP. One suggestion, it would really help if you used commas in those big numbers.




yea true. I was assuming it's the estimated value vs market price.


----------



## luutzu

KnowThePast said:


> Agreed, but only if there is a person in a group that truly does have a better than average judgement. Groupthink brings down good individuals but improves the poor ones.
> 
> I've just posted the data for previous years. I lean more towards being data driven and making decisions that have both data and theory supporting them. But that's another topic.
> 
> ...
> 
> 
> Definitely helpful. I develop this software in my own time with no dedicated testing team, so this is the second best thing.




You meant 'fundamental data', a lot of things are also considered 'data', hehe.

What are you writing this software with? What platform?


Maybe use "Million or Billion" on your Y-axis... 
Maybe a constant line indicating the average or median of the group's could be useful on that chart.

---

Real developers don't need test team or business analysts.


----------



## KnowThePast

luutzu said:


> You meant 'fundamental data', a lot of things are also considered 'data', hehe.




Hey, there's price in there, and a chart. I am now a chartist 



luutzu said:


> What are you writing this software with? What platform?




C++, C# and SQL Server.



luutzu said:


> Maybe use "Million or Billion" on your Y-axis...
> Maybe a constant line indicating the average or median of the group's could be useful on that chart.




Good ideas, thanks.



luutzu said:


> Real developers don't need test team or business analysts.




A joke I often use myself. I also like to tell testers that there wouldn't be any bugs in the software if they didn't keep testing it.

I've been priviledged in the past to work on 2 outstanding teams, ones where we achieved great things. Both in a smaller companies where we've developed software only big boys do, and were way ahead of them. An absolutely perfect blend of individuals and what we achieved as a team could never have been done if any one of us was taken out.

Many subsequent jobs later, I realise how lucky I was to have such experience, let alone two. I now understand that few developers get to experience this, even after a lifetime of coding. 

An average corporate team could easily be replaced by a single "right" developer, but there's more to it. And having a second pair of eyes is always a good thing too.

It's Sunday evening, working week starts tomorrow morning with several useless meetings lined up in a row. I needed to rant, apologies to everyone.


----------



## McCoy Pauley

Fallen through $10/share this morning. I'm no technical trader but I imagine that crashing through double digits will be particularly bearish.


----------



## skc

McCoy Pauley said:


> Fallen through $10/share this morning. I'm no technical trader but I imagine that crashing through double digits will be particularly bearish.




Another day, another day of carnage in the mining services space. 

NWH has problems getting paid at Roy Hill and MND have heaps of work there so a negative readthru for them.


----------



## skc

KnowThePast said:


> Your wish is my command.
> I didn't have data from 2007 for all of these, so I've ran it on these: MND, DOW, BKN, WOR, RCR, NWH, EHL, ASL, TSE, DCG, FWD. The picture is even worse for them, with market cap dropping to 2006 levels. I've encluded EV for your viewing pleasure.




Thanks for your efforts! The numbers surprised me as I'd imgaine the profits to have fallen a bit more than what hte chart is shwoing.



skc said:


> Thanks for the charts, KTP. You seem to be holding back your interpretation of the bolded observation...? In deed, your observation is best summarised as PE compression.




I guess what I am trying to say is... you've identified a gap between actual profit reduction vs market cap reduction. To close such gap there are 2 possibilities... profits can keep falling or market cap can go back up. The market is saying the former... you don't disagree but you think the market cap line will head back up as well. 

I am gudessing the time to buy is when the market cap has turned up while the profit is still falling.


----------



## herzy

skc said:


> I am gudessing the time to buy is when the market cap has turned up while the profit is still falling.




I don't understand this comment (although the rest was a useful summary)

Wouldn't you ideally buy when profits plateau / start to increase but share price is still low? 

I suppose that probably wouldn't happen, assuming a vaguely efficient and foreseeing market. 

Are you trying to avoid catching a falling knife?


----------



## KnowThePast

skc said:


> Thanks for your efforts! The numbers surprised me as I'd imgaine the profits to have fallen a bit more than what hte chart is shwoing.




These are last reported profits. Estimated earnings for 2015 would be quite a bit lower.



skc said:


> I guess what I am trying to say is... you've identified a gap between actual profit reduction vs market cap reduction. To close such gap there are 2 possibilities... profits can keep falling or market cap can go back up. The market is saying the former... you don't disagree but you think the market cap line will head back up as well.
> 
> I am gudessing the time to buy is when the market cap has turned up while the profit is still falling.




My investment approach is somewhat different and this gap is not what I base my decision on. I buy cheap, beaten down stocks on a statistical filter, without much thought to what the future is likely to be. This analysis is more of a check that I am not buying into an anomaly. A dirty check that I am not buying at boom time prices. 

I now expect to wait 3+ years to find out if I am right.

Your approach is probably better, but I don't have the experience or judgement to make such calls, so I stick to automated strategies (for now).

NWH annoncement today hurts, I was silly enought to average down into it at $0.76.


----------



## skc

herzy said:


> I don't understand this comment (although the rest was a useful summary)
> 
> Wouldn't you ideally buy when profits *plateau */ start to increase but share price is still low?
> 
> I suppose that probably wouldn't happen, assuming a vaguely efficient and foreseeing market.
> 
> Are you trying to avoid catching a falling knife?




Plateau = an area of fairly level high ground. I assume you meant "Basing".

The market as a whole has some sort of hive-mind intelligence which somehow able to predict turning points ahead of the actual turning points. For example, stock market will trend up before the low in economic indicators are printed. The profit figures used in those charts are lagging (what happened in the last 6 months), while share price is forward looking. So a rising market cap chart indicates that the bottom is in sight, although the actual bottom of the earnings may still be half a period away.

That's the theory anyway!



KnowThePast said:


> My investment approach is somewhat different and this gap is not what I base my decision on. I buy cheap, beaten down stocks on a statistical filter, *without much thought to what the future is likely to be. *This analysis is more of a check that I am not buying into an anomaly. A dirty check that I am not buying at boom time prices.
> 
> I now expect to wait 3+ years to find out if I am right.
> 
> Your approach is probably better, but I don't have the experience or judgement to make such calls, so I stick to automated strategies (for now).




The bold part I don't get... from a rational being as yourself.

In 3 years time I don't know if you will be ahead or not. But I am pretty sure that there are plenty more opportunities to enter this sector (should one chooses to do so) in the next 3 years at lower prices. I am really impatient at holding stocks when the price is down. I want to limit paper loss as much as possible - it's much easier to hold and make rational decisions with a stock that is in the green. So I need a different approach that adapts to my weakness.


----------



## KnowThePast

skc said:


> The bold part I don't get... from a rational being as yourself.
> 
> In 3 years time I don't know if you will be ahead or not. But I am pretty sure that there are plenty more opportunities to enter this sector (should one chooses to do so) in the next 3 years at lower prices. I am really impatient at holding stocks when the price is down. I want to limit paper loss as much as possible - it's much easier to hold and make rational decisions with a stock that is in the green. So I need a different approach that adapts to my weakness.




Finding something that works with my weaknesses - absolutely.

For me, I feel more calm and rational when I have a proven set of data to work off. Make predictions of the future does not fit this mindset. 

Also, everyone is already making predictions about the future and trying to factor it into the price. If one does it, you need to be confident of doing it better than majority, if it is to be of any use.

I prefer to look for pockets of inefficiencies where the crowd psychology tends to miscalculate the odds on a somewhat regular basis.


----------



## luutzu

KnowThePast said:


> Hey, there's price in there, and a chart. I am now a chartist
> 
> C++, C# and SQL Server.
> 
> Good ideas, thanks.
> 
> 
> A joke I often use myself. I also like to tell testers that there wouldn't be any bugs in the software if they didn't keep testing it.
> 
> I've been priviledged in the past to work on 2 outstanding teams, ones where we achieved great things. Both in a smaller companies where we've developed software only big boys do, and were way ahead of them. An absolutely perfect blend of individuals and what we achieved as a team could never have been done if any one of us was taken out.
> 
> Many subsequent jobs later, I realise how lucky I was to have such experience, let alone two. I now understand that few developers get to experience this, even after a lifetime of coding.
> 
> An average corporate team could easily be replaced by a single "right" developer, but there's more to it. And having a second pair of eyes is always a good thing too.
> 
> It's Sunday evening, working week starts tomorrow morning with several useless meetings lined up in a row. I needed to rant, apologies to everyone.




C# and SQL... you don't muck around ey? Good stuff. Web or Windows based?


----------



## luutzu

KnowThePast said:


> Finding something that works with my weaknesses - absolutely.
> 
> For me, I feel more calm and rational when I have a proven set of data to work off. Make predictions of the future does not fit this mindset.
> 
> Also, everyone is already making predictions about the future and trying to factor it into the price. If one does it, you need to be confident of doing it better than majority, if it is to be of any use.
> 
> I prefer to look for pockets of inefficiencies where the crowd psychology tends to miscalculate the odds on a somewhat regular basis.




Nothing is sounder than making decisions from what we can see and can do. It might not be the "right" way or the best way, but I think it's better to play the game in ways we understand rather than with skills we don't have and others are already good at.


----------



## KnowThePast

luutzu said:


> C# and SQL... you don't muck around ey? Good stuff. Web or Windows based?




Windows, but I've built it so that it can be ported to Web relatively easily.


----------



## luutzu

KnowThePast said:


> Windows, but I've built it so that it can be ported to Web relatively easily.




Big plans I see


----------



## skc

Article from SMH today.

http://www.smh.com.au/business/mini...g-projects-at-10year-low-20141126-11u8yl.html

This is not good.


> In the six months to October, just three new projects worth $597 million reached the committed stage, the lowest number and value of projects in a decade, the Bureau of Resources and Energy Economics (BREE) said




This is frightening.


> Liquefied natural gas (LNG), oil and other gas projects accounted for around 87 per cent of the value of Australian projects at the committed stage, according to BREE.
> 
> Seven LNG projects, worth an estimated $200 billion, are under construction in Australia, enough to make the nation the world's largest producer of the super-chilled fuel by the time the last is commissioned around 2018.




FWIW, Santos provided a market update today, stating that sustaining capex for the LNG plant is ~$1B for 2016-20, then $0.5B post 2020 (page 23). This compares to the US$18.5B build cost. So the additional work from maintenance is about 2.5% of the capital cost.


----------



## McLovin

I just read that in the AFR, you beat me to posting it! It's prognosis negative. 



			
				skc said:
			
		

> FWIW, Santos provided a market update today, stating that sustaining capex for the LNG plant is ~$1B for 2016-20, then $0.5B post 2020 (page 23). This compares to the US$18.5B build cost. So the additional work from maintenance is about 2.5% of the capital cost.




That's less than I thought and I thought I was being pessimistic. I thought capex for this sort of stuff would be around 5%/year.


----------



## galumay

McLovin said:


> I just read that in the AFR, you beat me to posting it! It's prognosis negative.
> 
> That's less than I thought and I thought I was being pessimistic. I thought capex for this sort of stuff would be around 5%/year.




Not sure what the numbers would be, but capex is not maintenance, they are separate items. Plant will have a capex budget for increased production, replacement of major items that fail and so on, they also have a maintenance budget for the plant which covers the cost of keeping the plant running, routine shutdowns, planned maintenance and breakdowns etc.


----------



## luutzu

galumay said:


> Not sure what the numbers would be, but capex is not maintenance, they are separate items. Plant will have a capex budget for increased production, replacement of major items that fail and so on, they also have a maintenance budget for the plant which covers the cost of keeping the plant running, routine shutdowns, planned maintenance and breakdowns etc.




I think maintenance would fall under Operational Expense (Opex).

Sometimes, the same work done could be under Opex or Capex, depending on the stage of the project. 

Smaller budget/projects within the major project to improve operations and efficiencies etc. could fall either as well, depends in stage but could just depends on where managers can get the money from.


----------



## galumay

luutzu said:


> I think maintenance would fall under Operational Expense (Opex).
> 
> Sometimes, the same work done could be under Opex or Capex, depending on the stage of the project.
> 
> Smaller budget/projects within the major project to improve operations and efficiencies etc. could fall either as well, depends in stage but could just depends on where managers can get the money from.




good points, in my experience in the industry though, its much easier to get maintenance budget (Opex) funds than to access Capex! The prequalification with RIO for instance to get your hands on any Capex is years of work and extremely high bars to jump.


----------



## McCoy Pauley

I generally assume that maintenance falls under the operating expenditure part of the budget and construction on the capital expenditure part of the budget, though I think luutzu has a good point.

Another thing to toss into the mixer is that one of MND's big contracts is that it won a large construction contract (as part of a joint venture with a couple of Japanese companies) back in February for works related to the Icthsys LNG project in Darwin. Given the issues that another mining services company has run into recently, that won't help sentiment, particularly if it results in delays to MND carrying out the works for the operators.


----------



## McCoy Pauley

Dropping commodity prices = dropping MND share price. Down another 6% today, to $8.55/share (last time I checked).


----------



## needsajet

MND is looking worthwhile to me (5-year horizon), and I'm interested to hear other perspectives.

Pros - good long-term record, lots of work as the resource flywheel maintains a decent % of their work going.

Cons - could be catching a knife; share price may drop more (e.g. a dividend change or contract surprise might create a better buy)

If div were to be cut in half to $0.60, I would get a yield of 7% on $8.67 share price while I wait.


----------



## Wysiwyg

needsajet said:


> MND is looking worthwhile to me (5-year horizon), and I'm interested to hear other perspectives.



70% of their contract wins ($1.8 billion) were oil and gas and those commodities are down big time. You could be right though, buy in gloom. Nothing has changed since the last wave of posts (see below) on this company came through. Also at this link but please ignore my delusional raving there.

https://www.aussiestockforums.com/forums/showthread.php?t=28781&highlight=dividends


----------



## notting

needsajet said:


> Cons - could be catching a knife; share price may drop more (e.g. a dividend change or contract surprise might create a better buy)
> 
> If div were to be cut in half to $0.60, I would get a yield of 7% on $8.67 share price while I wait.




Sounds like a good definition of a value trap.
There is likely to be a run toward March dividend ex date into which many still stuck in it and in pain will be looking to sell into.  You may find some joy in that small time frame. 

After the div payment, however, if conditions have not substantially changed, what do you think will happen then? 

As that collapse unfolds, what then, buy even cheaper than now 2 months before the next dividend hopefully with no further cuts and a turn around to the end of 30 year commodity boom?

If it still looks like a falling knife, it probably is.

For me if it rallies up for the div, I'll be shorting it more along with all the others in the sector.
Unless China starts building more ghost cities.  If it goes against me too hard i'll stop out and wait till it turns and short from there.  Simples.


----------



## tinhat

notting said:


> Sounds like a good definition of a value trap.




Been there, done that; BCI, NWH. Came home with the free mouse pad and stress ball.


----------



## needsajet

Thanks for your feedback. I'm intending to invest in the resource services area at some point, and looking at MND, MRM, WOR and DCG. So far, I like the looks of MND's balance sheet, given the factors you mention.


----------



## notting

Had another crack at being one of the best performers and traders jumped on as it flew through 10.  Only to be smashed again back down below.
Guess they were betting on a China stimulus to help mining. 
I don't think it will be that kind of stimulus.


----------



## peter2

I hope the shorters have been scared off. If the price rise is due to stimulus then I want some of the same. Actually this price rise is stimulating enough and the div a bonus. 

The ASX was given the Schultz defense, "I know nothing." in their response to the speeding ticket. 

Probable resistance levels are 13.00 then the gap above 15.00.

Longer term investors have got it easy. their TS should be at BE and they can continue their round the world cruise without any concerns.


----------



## galumay

peter2 said:


> Longer term investors have got it easy. their TS should be at BE and they can continue their round the world cruise without any concerns.




I think most investors would not consider a TS to be an appropriate part of their strategy! 

It is noce to see the shorters drying up, I suspect there will be continued volatility in the price until and if MND can actually turn the business around. As we know its a troubled sector, but there will be survivors and it remains a good contrarian investment IMHO, but you need patience and big hairy cohones to dabble in this sector!


----------



## Wysiwyg

Unreal bonus after the divvy and looking good for an extra bonus of the 45 day franking credits.


----------



## peter2

> I think most investors would not consider a TS to be an appropriate part of their strategy!




Pardon me galumay, but I'd like to think you are incorrect in that opinion. Although it may be a matter of the definition of the trailing stop (TS) strategy. 

I use a price based TS to prevent >1% losses of capital. Some investors use a percentage of price based TS, commonly 20-25% of share price. Other investors use fundamental/commonsense based approach (referring to skc's excellent old thread) as triggers to sell an investment position.

Even Warren Buffett has sell stops (triggers that would indicate time to sell to reduce loss of invested capital) and in his latest Berkshire Hathaway letter (2014 - A must read for everyone interested in businesses and investments) he mentions that in 2013 he "soured" on the then Tesco management team and sold 114M of 444M shares that BRK held. Tesco's problems worsened and he (WB) sold the remaining shares during 2014. The after-tax loss from this investment was $444M, which was only 0.2% of Berkshire's net worth. He then mentions in the past 50 years, BRK have only once realized an investment loss of 2% net worth and only twice experienced 1% losses. 

WB keeps his investment (trading) losses small by actively monitoring his positions. His TS strategy was triggered by a change in his opinion of the mgt team.  

ps: I won't mention to Mr Buffett, that he might have saved some money if he used a chart based break down of support as his sell signal. His selling probably caused the chart based sell signal.


----------



## galumay

peter2 said:


> Pardon me galumay, but I'd like to think you are incorrect in that opinion. Although it may be a matter of the definition of the trailing stop (TS) strategy.




I hope not, plenty of evidence of the damage TS's do to portfolios. There is actually a good thread on here somewhere that comes to the conclusion that even for traders they are damaging - let alone investors.



> Even Warren Buffett has sell stops




I reckon that requires and extremley broad definition of a TS, to suggest that Buffett uses them because he sells a company if the fundamentals change sufficiently is a very, very long bow!!



> ps: I won't mention to Mr Buffett, that he might have saved some money if he used a chart based break down of support as his sell signal. His selling probably caused the chart based sell signal.




The day you can make more money than the most successful investor in history you will be well entitled to suggest he totally drops his strategy and adopts one that is the opposite of everything he believes!

Its all good though, if we were all trying to do the same thing then no one would consistently make money, so "vive la diffÃ©rence"


----------



## craft

galumay said:


> I hope not, plenty of evidence of the damage TS's do to portfolios. There is actually a good thread on here somewhere that comes to the conclusion that even for traders they are damaging - let alone investors.




Hi Galumay.

Very important to draw a distinction between a directionally informed and an arbitrary exit when considering that thread. 



galumay said:


> I reckon that requires and extremley broad definition of a TS, to suggest that Buffett uses them because he sells a company if the fundamentals change sufficiently is a very, very long bow!!




Maybe not so long really - If you are wrong you cut it. - Universal rule really. Just the definition of wrong varies.



galumay said:


> The day you can make more money than the most successful investor in history you will be well entitled to suggest he totally drops his strategy and adopts one that is the opposite of everything he believes!




Maybe you missed the last line and wink.


----------



## galumay

craft said:


> Hi Galumay.
> 
> Maybe not so long really - If you are wrong you get out - Universal rule really. Just the definition of wrong varies.




I sort of get your point, but I think the accepted meaning of 'trailling stop" is a million miles from deciding a valuation is no longer valid. Buffett might be as poor as you and I had he used "trailling stops" in his investment career!



> Maybe you missed the last line and wink.




No, i saw it, hence the lighthearted response, maybe i needed an emoji too!


----------



## craft

galumay said:


> I sort of get your point, but I think the accepted meaning of 'trailling stop" is a million miles from deciding a valuation is no longer valid. Buffett might be as poor as you and I had he used "trailling stops" in his investment career!
> 
> 
> 
> No, i saw it, hence the lighthearted response, maybe i needed an emoji too!






I see your point also on accepted meaning of 'trailing stop' but beyond what each of us think trailing stop means, their is a similarity. Technical traders have a price based story or script that they follow - trailing stop to them means they get out when reality doesn't confirm their script any longer.

FA has a business performance based story or script that they follow - we also need to exit when reality doesn't confirm with our script.


----------



## skc

peter2 said:


> I hope the shorters have been scared off. If the price rise is due to stimulus then I want some of the same. Actually this price rise is stimulating enough and the div a bonus.




MND is just about the only stock in the sector that is powering ahead. It has nothing to do with the stimulus.

I don't know the story but I am guessing some combination of short covering, takeover rumour and recent S&P rebalance. And to have all this happens at a time when iron ore and oil are both falling is simply astonishing.

To me the price action says buy, but the relative correlation (as measured against the peers) says sell. If I bought the break of $10 I'd have a much tighter stop.


----------



## skc

skc said:


> MND is just about the only stock in the sector that is powering ahead. It has nothing to do with the stimulus.




Forgot the attachment.


----------



## notting

I was short and getting hurt but was, on this rare occasion reluctant to take the loss.  I figured that an idiot with too much money was going for the yeild and causing a short squeeze.  So I just doubled up on the short quite close to the top.

Fortunatly I was right.  SKC logic regarding this stock which had gone ex was spot on and I felt that as well the above.



> The increase in Black Rock’ share holding to more than 20% of the voting power in the Company was a result of index tracking and not an intention to hold more than 20% of the voting power of the Company. Upon becoming aware of the fact that Black  Rock’ share holding had reached 20.77% of the voting power of the Company, Black Rock promptly sold shares in the Company to reduce its voting power in the Company to less than 20%



:cuckoo:


----------



## McLovin

Fairly sobering chart in MND's FY results today. Maybe I'm missing something because that chart alone hardly inspires a 5% rally in the stock.




When you marry it up to this, a picture of O&G helping soften the loss of revenue from iron and coal emerges. What happens if that anticipated cut in energy investment plays out?




No surprise the company expects margins to stay under pressure.


----------



## notting

McLovin said:


> Fairly sobering chart in MND's FY results today. Maybe I'm missing something because that chart alone hardly inspires a 5% rally in the stock.




I'd say value trap hunters were heartened by the affirmation of the 15% fully franked dividend maintained.  Then our entire market got smashed by Chinese front running the Chinese brokerage announcements to restart margin finance and short-selling.  The volumes indicated big international selling today.


----------



## Wysiwyg

McLovin said:


> Fairly sobering chart in MND's FY results today. Maybe I'm missing something because that chart alone hardly inspires a 5% rally in the stock.



Agree this news is reflected in the down trending share price but a day range of 5% is common with MND on a trading basis.


----------



## skc

McLovin said:


> Fairly sobering chart in MND's FY results today. Maybe I'm missing something because that chart alone hardly inspires a 5% rally in the stock.
> 
> When you marry it up to this, a picture of O&G helping soften the loss of revenue from iron and coal emerges. What happens if that anticipated cut in energy investment plays out?
> 
> No surprise the company expects margins to stay under pressure.




You have to give it credit though.... it's financials are deteriorating much slower than many of its peers.

Nonetheless, I think MND will have a massive revenue hole in the next period or two, that itself and the market knows, although not specifically disclosed. It never really put forward guidance apart from description of the general industry market conditions.

MND is heavily shorted so it almost always rallies on report. But the rally this time barely lasted the morning.


----------



## McLovin

skc said:


> You have to give it credit though.... it's financials are deteriorating much slower than many of its peers.




No argument there. It seems, along with WOR, to be one of the few mining service companies that were beyond the cycle during the boom. I don't think there's any chance of them going bust, but the tide is about to really start running out. Interesting times to watch and learn!


----------



## skc

McLovin said:


> No argument there. It seems, along with WOR, to be one of the few mining service companies that were beyond the cycle during the boom. I don't think there's any chance of them going bust, but the tide is about to really start running out. Interesting times to watch and learn!




Yes... very interesting to see. 

I made that comment thinking this... that management has done great doing what it's supposed to do... i.e. win projects and build them profitably without stuffing up. Picking a company with great track record helps in the downturn of the cycle, but only on a relative basis. It's up to the investor to decide how they'd deal with the cycle. Hopefully I will learn a thing or 2 and be in position to benefit more from the next boom / bust cycle. 

Having said all that... most of these engineers have massive operational leverage that a 15% blowout on a $2B project will probably blow them up (or drive them nuts with the ensuing court battle).


----------



## McLovin

skc said:


> I made that comment thinking this... that management has done great doing what it's supposed to do... i.e. win projects and build them profitably without stuffing up. Picking a company with great track record helps in the downturn of the cycle, but only on a relative basis. It's up to the investor to decide how they'd deal with the cycle. Hopefully I will learn a thing or 2 and be in position to benefit more from the next boom / bust cycle.




Yeah. A cyclical company is...cyclical. I still don't think many investors appreciate that the cycle we went through wasn't normal and likely won't be repeated for a very long time (really, was MND actually ever worth more than $20?). And therein lies the rub; where capex is now might still be considered the top (or higher) of a normal cycle, in which case we're along way from the bottom. If you go back to where mining capex was ($ and % of GDP) in 2002/2003 it puts things in perspective a bit better.

So, my rambling aside, I completely agree with your points.


----------



## Ves

There's also the WICET contract dispute in the MMM JV,  which I understand would cost them about $130m if they lost the court battle.

At 50% share that is a $65m hit.   Post-tax (30%) it's around $0.49 per share.  Which isn't insignificant at the current price.

No word about it in the results release,  but they were fairly confident recently it wouldn't go against them.

Latest estimates for capex figures seem to point to earnings bottoming out in 2017 or 2018 (as McLovin posted).  Could it get even worse than this?   However, based on the current estimates I wouldn't be surprised to see EBIT as low as 50m-75m  (EBIT margins closer to 5%). Share price of $5 definitely possible on those numbers.

Then there's also contract mispricing risks....   as skc pointed out,  the leverage is massive on the contracts these kind of companies undertake.


----------



## Rainman

I am starting to think MND looks attractive below $6.50.  But the question is how bad can it get?  

That is a quantitative question.   You could try to model a range of MND's revenues and operating margins to get an indication of the point at which MND's current "cheapness" begins to look expensive.  But MND does not have historical earnings covering a full boom-bust cycle.  It is also a different company from what it was at the beginning of the current cycle.  

The analysts listed on CommSec have MND's EPS collapsing to 0.841 for FY 2016 and to 0.772 for FY 2017.  But even at 0.772 that still puts MND on a current earnings yield of 12.1%.  There is quite a margin of safety in that - assuming of course that things don't get too much worse beyond 0.77 per share.


----------



## skc

Rainman said:


> I am starting to think MND looks attractive below $6.50.  But the question is how bad can it get?
> 
> That is a quantitative question.   You could try to model a range of MND's revenues and operating margins to get an indication of the point at which MND's current "cheapness" begins to look expensive.  But MND does not have historical earnings covering a full boom-bust cycle.  It is also a different company from what it was at the beginning of the current cycle.
> 
> The analysts listed on CommSec have MND's EPS collapsing to 0.841 for FY 2016 and to 0.772 for FY 2017.  But even at 0.772 that still puts MND on a current earnings yield of 12.1%.  There is quite a margin of safety in that - assuming of course that things don't get too much worse beyond 0.77 per share.




May be you can take a copy of analyst's report for MND 3 years ago and see what EPS was forecasted for FY15... and compare that to what they reported.

That way you can at least have some ideas on whether the forecasts should be relied upon.


----------



## Rainman

skc said:


> May be you can take a copy of analyst's report for MND 3 years ago and see what EPS was forecasted for FY15... and compare that to what they reported...




Yes, the research that I have seen on analysts' forecasts shows that they are rarely accurate: they are invariably too optimistic on the upside and too pessimistic on the downside.  

I suppose one needs to ascertain the minimum capex and opex that the mining, oil/gas and utilities sectors require in order to meet projected demand and to remain operational and efficient and then one needs to work out how much of that expenditure MND is reasonably likely to get.   Some allowance would need to be made for the players in this space that have dropped and are dropping out of the industry, e.g. Forge, WDS and the many dozens of unlisted companies.

It is not a task that lends itself to mathematical precision  - more an attempt to arrive at a level where one can comfortably conclude: "Ok, from here, it might go lower - but not much lower".


----------



## skc

Rainman said:


> It is not a task that lends itself to mathematical precision  - more an attempt to arrive at a level where one can comfortably conclude: "Ok, from here, it might go lower - but not much lower".




Agree. And I highly doubt we are anywhere near that level.


----------



## Rainman

skc said:


> Agree. And I highly doubt we are anywhere near that level.




Really?  On what basis?


----------



## skc

Rainman said:


> Really?  On what basis?




I didn't see your post last week. The forecast for resource investments is looking pretty grim. There are various forecasts around but some are pointing to a 2017 number that is ~30% of the 2013 peak.

https://bluenotes.anz.com/posts/2015/02/australias-major-project-spend-in-decline/

MND had revenue of $2.6B in 2013. If it's revenue was to fall in line with total resource investment spend.. revenue could be as low as $800-$1B in two or three years time. It's not unrealistic to expect MND earn <5% NPAT on $1B... which makes it <$40-50m NPAT. Compared that to the current market cap of $600m. 

One can make various assumptions about margins (likely down), competitive pressure (likely up), market share (unknown, but any gain would come at the expense of margin), diversification (all players are going for it), additional revenue from maintenance etc. But you can't escape the giant elephant in the room... namely the resource capex cliff that is coming.

The future is uncertain... but conditions for MND can easily get much worse.


----------



## Rainman

skc said:


> I didn't see your post last week. The forecast for resource investments is looking pretty grim. There are various forecasts around but some are pointing to a 2017 number that is ~30% of the 2013 peak.
> 
> https://bluenotes.anz.com/posts/2015/02/australias-major-project-spend-in-decline/
> 
> MND had revenue of $2.6B in 2013. If it's revenue was to fall in line with total resource investment spend.. revenue could be as low as $800-$1B in two or three years time. It's not unrealistic to expect MND earn <5% NPAT on $1B... which makes it <$40-50m NPAT. Compared that to the current market cap of $600m.
> 
> One can make various assumptions about margins (likely down), competitive pressure (likely up), market share (unknown, but any gain would come at the expense of margin), diversification (all players are going for it), additional revenue from maintenance etc. But you can't escape the giant elephant in the room... namely the resource capex cliff that is coming.
> 
> The future is uncertain... but conditions for MND can easily get much worse.




Thanks for the link.  If ANZ's projections prove accurate, then my valuation of MND is wrong.


----------



## DeepState

skc said:


> But you can't escape the giant elephant in the room... namely the resource capex cliff that is coming.




...has come.

The RBA believes that Mining Capex (as % of GDP) is only presently about half way through to finding the trough for this cycle.  Maxed at ~8% of GDP 2.5yrs ago. Heading to 5%. [Glenn Stevens, 18 Sept 2015]

FWIW, EPS consensus patterns against the above, suggesting that 2017 EPS will pretty much match what it had been in 2007.


----------



## McLovin

skc said:


> MND had revenue of $2.6B in 2013. If it's revenue was to fall in line with total resource investment spend.. revenue could be as low as $800-$1B in two or three years time. It's not unrealistic to expect MND earn <5% NPAT on $1B... which makes it <$40-50m NPAT. Compared that to the current market cap of $600m.




EBIT margins from the late 90's early noughties. Late 90's is probably the best "normal" margins, so EBIT at ~5%-5.5%. 




My assumption is they will revert to somewhere around there (margins wise).

I'm not sure I really believe in the different company today than it was then story. How much of MND today is really just it being a solider of fortune in the right industry at the right time?


----------



## Rainman

McLovin said:


> EBIT margins from the late 90's early noughties. Late 90's is probably the best "normal" margins, so EBIT at ~5%-5.5%.
> 
> View attachment 64420
> 
> 
> My assumption is they will revert to somewhere around there (margins wise).




Makes for sobering reading.


----------



## skc

McLovin said:


> EBIT margins from the late 90's early noughties. Late 90's is probably the best "normal" margins, so EBIT at ~5%-5.5%.
> 
> View attachment 64420
> 
> 
> My assumption is they will revert to somewhere around there.




Very true... it shows that one doesn't even need heroic assumptions to come up with a scenario where the financials can get much worse.



DeepState said:


> FWIW, EPS consensus patterns against the above, suggesting that 2017 EPS will pretty much match what it had been in 2007.




I think these EPS numbers are too high. With my guesstimate $50m NPAT, the EPS is $0.54. And my guess is that, it would surprise no one if MND run into trouble with one or more of its projects during the downturn. It's facing some issue with WICET that could wipe away 2 years of profit, and quickly turn a healthy balance sheet into a shaky one.


----------



## DeepState

McLovin said:


> EBIT margins from the late 90's early noughties. Late 90's is probably the best "normal" margins, so EBIT at ~5%-5.5%.




Market is pricing about 6%.


----------



## McLovin

skc said:


> I think these EPS numbers are too high. With my guesstimate $50m NPAT, the EPS is $0.54. And my guess is that, it would surprise no one if MND run into trouble with one or more of its projects during the downturn. It's facing some issue with WICET that could wipe away 2 years of profit, and quickly turn a healthy balance sheet into a shaky one.




I agree. I think to get those EPS numbers you need to have a short memory on where margins could go, or you think the revenue cliff isn't so bad.


----------



## McLovin

DeepState said:


> Market is pricing about 6%.




Curious if you think that's realistic and/or where you think they're heading?


----------



## Rainman

McLovin said:


> I'm not sure I really believe in the different company today than it was then story. How much of MND today is really just it being a solider of fortune in the right industry at the right time?




But conversely how realistic is it that the mining industry and the capex that is required to sustain it will revert to more or less the level that it was at prior to the boom?  I don't mean to suggest by that that I don't subscribe to the force of mean reversion.  But is it possible to have 1.3 billion people coming online and all wanting a western lifestyle - modern apartments, plumbing, cars, roads, bridges and so on - and for all resource demand to revert to more or less where it was prior to China's emergence?  

I was betting it was not possible and that FY 2016 marked the bottom of the cycle.  But I could well be wrong.


----------



## McLovin

Rainman said:


> But conversely how realistic is it that the mining industry and the capex that is required to sustain it will revert to more or less the level that it was at prior to the boom?




It won't, but no one is suggesting that. If that was the base case then we'd be discussing MND heading <$1. 



Rainman said:


> I was betting it was not possible and that FY 2016 marked the bottom of the cycle.  But I could well be wrong.




IMO, if you're waiting for things to get back to where they were 3-4 years ago you're going to be waiting a very, very, very long time. The big game in town was the ramp up that peaked a few years ago, not maintenance capex once the supply response was up and running.

To be fair to MND, they're pretty honest with their industry outlook.


----------



## DeepState

McLovin said:


> Curious if you think that's realistic and/or where you think they're heading?




I do not have a detailed knowledge of this.  So just reporting consensus.  

Rough thoughts:

Revenue movement 2013-2017 is in line with mining capex movement per RBA.  They have a big oil and gas book.  I do not know the projects, but the overall idea on LNG is that the projects are coming on stream and should be moving more to maintenance mode.  Offsetting this is that about a third of revenue is maintenance and not so cyclical and some of their revenue (meaningful, but not major) is infra related.

Street EBIT margin at 6% not unreasonable given super-profits and capex urgency have declined.  Could be 4% could be 8%.  More likely to 4%.

Consensus EPS 2017 has been doing the downward shuffle as we would expect from estimates anyway in general.  I have the files, but have not read what the rationale is from the street.

This stock is not obviously expensive to me on first glance.  If anything, my rough guess is that, even with a 13% pa required return (healthy premium to the market, pick a number), there is a meaningful buffer to the cheap side.  This is based on consensus free cash flow of 73m in 2017 capitalized with 2.5% perpetuity growth with consensus 2015 and 2016 FCF.  You can flex this and still find it hard to say it was categorically expensive.


Anyway, just first pass stuff.


----------



## DeepState

Scratch that valuation comment.  It looks about fair if required return on FCF is 13% or so. Market req'd return is maybe 7-8%. So pricing a healthy premium to that, but it needs one.  

All in all, I can't make a strong case to buy or sell. Looks cheapish on consensus, but allow for the usual trickle down of expectations and this moves towards fair. This is within the valuation bounds on first pass. There is a wide range of valuation possibilities and they seem to comfortably envelope the current price.  Nothing for me here, at least on fundamental grounds.


----------



## Rainman

McLovin said:


> It won't, but no one is suggesting that.




Aren't you suggesting that when you write that: 



> EBIT margins from the late 90's early noughties. Late 90's is probably the best "normal" margins, so EBIT at ~5%-5.5%... My assumption is they will revert to somewhere around there (margins wise).




MND is not the same company that it was in the late 1990s.   My understanding is that it has one of the best reputations among its competitors in this space.  My bet is that that will allow it to maintain margins at or around their current levels - along with close attention paid to costs.


----------



## Rainman

There is a balanced analysis by Morningstar available here: http://analysisreport.morningstar.com/stock/research?t=MND&region=aus&culture=en-US&productCode=MLE

Morningstar has MND's operating margins averaging 7.3% during the next five years.  But that estimate is clearly subject to the high degree of uncertainty that Morningstar recognizes MND faces in the coming years.


----------



## McLovin

DeepState said:


> This stock is not obviously expensive to me on first glance.  If anything, my rough guess is that, even with a 13% pa required return (healthy premium to the market, pick a number), there is a meaningful buffer to the cheap side.  This is based on consensus free cash flow of 73m in 2017 capitalized with 2.5% perpetuity growth with consensus 2015 and 2016 FCF.  You can flex this and still find it hard to say it was categorically expensive.




Interesting thoughts Deep.

I wonder how much balance sheet liquidation is baked into that FCF forecast? As the company shrinks it will release a bit of cash that's tied up in WC.



Rainman said:


> Aren't you suggesting that when you write that:




I thnk we may be getting out lines crossed.  Are we talking about margins or the level of spend? I thought it was the latter, which is what I was commenting on.





Rainman said:


> MND is not the same company that it was in the late 1990s.   My understanding is that it has one of the best reputations among its competitors in this space.  My bet is that that will allow it to maintain margins at or around their current levels - along with close attention paid to costs.




So are you saying it had a poor reputation back then? Otherwise what has changed?


----------



## Rainman

McLovin said:


> So are you saying it had a poor reputation back then?




There is some suggestion that MND's reputation has improved as it has grown.  See post #2 on this thread.  The member appears to have worked for MND in 2006.



McLovin said:


> Otherwise what has changed?




Well, it has a water and infrastructure business that it didn't have back then.


----------



## Wysiwyg

Listening to Skynews YMYC the other night and I heard MND had a potential Mongolian project that would be the largest MND has ever taken on. Googled it but found no information. They have an entity Monadelphous Mongolia LLC that is all I could find. I am positive I heard correctly. Meanwhile trend remains down to around 2009 levels.


----------



## Rainman

Wysiwyg said:


> Listening to Skynews YMYC the other night and I heard MND had a potential Mongolian project that would be the largest MND has ever taken on. Googled it but found no information. They have an entity Monadelphous Mongolia LLC that is all I could find. I am positive I heard correctly. Meanwhile trend remains down to around 2009 levels.




Rio has the huge Oyu Tolgoi copper-gold mine in Mongolia and MND has a good commercial relationship with Rio.  MND will have to announce to the market any contract win that it gets.  

I think the posts by the other members on here that MND could decline much further is a fair assessment.  Equally, though, one big contract win like that for the Oyu Tolgoi copper mine would mean a lot of the pessimism baked into MND's future prospects would need to be revised.


----------



## Tom32

Rainman said:


> But is it possible to have 1.3 billion people coming online and all wanting a western lifestyle - modern apartments, plumbing, cars, roads, bridges and so on - and for all resource demand to revert to more or less where it was prior to China's emergence?




I agree that it is unlikely mining activity will revert to pre boom levels, chiefley because I agree with your assumptions that too many around the world are urbanising. That said CAPEX spend easily could not only reach pre boom levels but could fall below it.

For many resources it requires capacity to reduce before costs of production are under gross revenue for the marginal producer. Who knows who is the marginal producer, though I cannot imagine all our current capacity will make the cut. While capacity is retiring CAPEX spend is unlikely. Too late for the likes of Roy Hill which will only exacerbate the issues into 2016 and beyond.

Like some of our smaller producers running at a loss and being able to sustain this through chewing through capital mining services companies can unfortunately do the same for a time. This is not a rosy picture in my view.

While capacity is being retired in mining services and construction around mines It wouldn't surprise me if making a profit becomes a thing of the past for a time. The other unfortunate thing is unlike a high grade ore deposit for a solid miner allowing them safe passage through a supply glut, mining services are a pretty level playing field where one is not exceedingly better / cheaper than the next. 

The picture for their more diversified construction business is unfortunately pretty tough from where I'm sitting as well, in all but perhaps NSW. Overseas may offer up better margins but there is a reason some parts of the world offer construction outfits better margins, with payment risk being higher than in Aus, South Africa and Europe.


----------



## Wysiwyg

Rainman said:


> Rio has the huge Oyu Tolgoi copper-gold mine in Mongolia and MND has a good commercial relationship with Rio.  MND will have to announce to the market any contract win that it gets.



Thanks. Just had a read about that mine and 95% of the workforce are Mongolian and the mine has been running for a few years now so I suppose maintenance/operation contracts are established. My hopes are dashed on anything significant coming out of there for MND because it would have happened in the earlier years. Bit of false hope by the commentator I heard it from.


----------



## luutzu

You guys value it as though you're actually running the business, and the business you're running does not change and adapt, but go with RBA and industry forecasts - for Australia.

From the annual reports and the activities I read from MND, seems like its management have been aware of the mining capex downturn some 3 years before; have made concrete plans and took steps to diversify their businesses. They have already expanded into water/sewage/waste infrastructure before this year's acquisition of WI, which then led to a new contract into NZ - WI acquisition have not added its earnings to the latest report yet.

There's a fair number of new water infrastructure the state and federal gov't is planning right?

MND had planned to expand into Mongolia some 2 years ago, that has yet to bear fruit - could be tough condition, or RIO and the Mongolian gov't were in disputes and they just resolved and greenlight further expansion there... so might be good for MND there soon.

There's SinoStruct that's expanding to serve third parties instead of just MND itself; Expansion into the US growing shale gas/oil industry that's underway; a fair amount of maintenance of a few major LNG projects that's going to need an eye or two on.

WICET disupte... it already won the first round and are now dealing with an appeal right? 

So yes, there is a lot that could go wrong for MND but also a fair chance that things might also go right too.

It just won something like nine new projects in the past year, have some extra 30+ contract it's working on... roughly 55/45 construction/maintenance... So will be shrink back to where it was 10 years ago? You can't really say can you?

If you project its future based on what's happening in mining/oil/resources in Australia... yea, it'll shrink. But with $200m in cash, management who have done an amazing job in both project management and delivery as well as foresight... the future might not be so gloomy.


----------



## DeepState

McLovin said:


> Interesting thoughts Deep.
> 
> I wonder how much balance sheet liquidation is baked into that FCF forecast? As the company shrinks it will release a bit of cash that's tied up in WC.




This from Baillieu Holst last month as an example given the figures are in the ball park of consensus for 2017 although bearish to 2018 but factoring in some revival of WC for whatever reason.  They are the most bullish for the near term estimates...which is interesting because the title of the report was "Livin' on a Prayer":





Cashflows not being boosted by WC release.  Assumptions in the market appear to still be factoring a drain on cash from WC through to 2017.


----------



## Rainman

luutzu said:


> ... From the annual reports and the activities I read from MND, seems like its management have been aware of the mining capex downturn some 3 years before; have made concrete plans and took steps to diversify their businesses. They have already expanded into water/sewage/waste infrastructure before this year's acquisition of WI, which then led to a new contract into NZ - WI acquisition have not added its earnings to the latest report yet.
> 
> There's a fair number of new water infrastructure the state and federal gov't is planning right?
> 
> MND had planned to expand into Mongolia some 2 years ago, that has yet to bear fruit - could be tough condition, or RIO and the Mongolian gov't were in disputes and they just resolved and greenlight further expansion there... so might be good for MND there soon.
> 
> There's SinoStruct that's expanding to serve third parties instead of just MND itself; Expansion into the US growing shale gas/oil industry that's underway; a fair amount of maintenance of a few major LNG projects that's going to need an eye or two on....




No doubt all this is true.  But what's it worth to the top line?


----------



## luutzu

Rainman said:


> No doubt all this is true.  But what's it worth to the top line?




A lot or a little, depends on how they pans out and what else comes along. Point is management has not been sitting idle and have not been reckless in their investments and management.

They weren't caught by surprise with their industry downturn... and if you look at their cash position, they've been hoarding it since 2005 or 2006 and kept accumulating to where it's now $200m. So they're very conservative and given what's happening in the industry, better make a massive acquisition soon or else be taken over.

They could have easily gone out and buy companies but their approach works out very well - those they acquire actually add synergies, and the price they paid have been what I think is very reasonable.

So at prices that's around $600m, with $200m in cash and practically little to no debt... earns $105m last year and if you were to project declines so it earns on average half that over next decade starting next year... payback is still only 8 years... if things turn around as its MD is optimistic it is looking up, especially in maintenance; if the oversea ventures bear some fruit... payback could be within 5 years... in the meantime, dividends is 12% [?], say it declines to 6% over next few years that still beats the bank.

But then its market price could still fall much further, and we all want to catch the bottom but yea.


----------



## Tom32

To a point the following will be factored into their price; construction margins throughout construction can turn from positive to negative as soon as there is excess capacity in the market. We are a stubborn lot and will happily keep tendering work and come up with ways we think we can turn in a project cheaper than everyone else. Especially when we use other people's money.

The trouble in a tough market is that the feedback you get on losing bids makes it a fast race to the bottom. 

You either give up market share and shrink / stop or do work for no margin. They are onto it with maintanace and to a degree water infrastructure though there isn't many contractors / engineering firms who are not doing one or both of the same. Water because it's another process with infrastructure similar to mines and maintenance because they have the contacts in the miners who trust them.


----------



## OPERAKAT

*MND and Shorts.*

I have a small position in Monadelphous, I notice that it has been shorted quite heavely. should I be worried?


----------



## luutzu

Tom32 said:


> To a point the following will be factored into their price; construction margins throughout construction can turn from positive to negative as soon as there is excess capacity in the market. We are a stubborn lot and will happily keep tendering work and come up with ways we think we can turn in a project cheaper than everyone else. Especially when we use other people's money.
> 
> The trouble in a tough market is that the feedback you get on losing bids makes it a fast race to the bottom.
> 
> You either give up market share and shrink / stop or do work for no margin. They are onto it with maintanace and to a degree water infrastructure though there isn't many contractors / engineering firms who are not doing one or both of the same. Water because it's another process with infrastructure similar to mines and maintenance because they have the contacts in the miners who trust them.




All true but I guess we hope for the best given MND's record and proven management. That and maybe MND may have a better reputation and lots of cash on hand to not be pushed around too much... smart operators tend not to want their subbie going bankrupt, would want them to make a reasonable profit. But yea, hope the past records prove a good guide to future operations.

Guess that's also the fun part about investing... find well managed and dominant companies and see what the future holds. Though with the benefit of hindsight have jumped the gun early on this one. Let's hope it's not taken over any time soon.


----------



## luutzu

*Re: MND and Shorts.*



OPERAKAT said:


> I have a small position in Monadelphous, I notice that it has been shorted quite heavely. should I be worried?




Depends... I'm not worried  When I do, a couple of Tooheys does the trick, hehe.

Its recent JV with Mascaro in Pennsylvania region might add to this or next year's revenue streams - read they're targeting a big Shell gas project and plant there; that project just got approval from EPA so probably in tendering stages at the moment.

Then on top it has won total of $600M in new/extended work so far this FY; some $200Billion of gas/oil projects has or will come online within next few years and MND has done some major construction work for 4 or 5 of them... those stand a good chance of maintenance work continuing for next couple decades.


----------



## peter2

MND is on my reversal watch list. It remains in a weekly down trend but price has started to see some demand recently.


----------



## luutzu

So they just won a $200M+ contract... OK so it runs for 7 years, or about $30M a year... But it's still $200M, adding to a total of $800M new or extended contracts won so far this FY (5 months)... and the share price goes down?

Heard at the annual meeting that they are bidding for new maintenance work on the major LNGs around Australia that's coming online. With strong balance sheet and high reputation, they would at least get a couple. Then there's the new "beach head" JV with Mascaro; potentially new JVs with other companies around the world they're in talks with; SinoStruct bidding for new work in the Americas; expansion into New Zealand etc.... 

Am I missing something? It's crazy.

btw, John Rubino was pretty funny. Man of few words but those words get to the point. "we don't bid to win jobs, we bid to make money ey".


----------



## skc

luutzu said:


> So they just won a $200M+ contract... OK so it runs for 7 years, or about $30M a year... But it's still $200M, adding to a total of $800M new or extended contracts won so far this FY (5 months)... and the share price goes down?
> 
> Heard at the annual meeting that they are bidding for new maintenance work on the major LNGs around Australia that's coming online. With strong balance sheet and high reputation, they would at least get a couple. Then there's the new "beach head" JV with Mascaro; potentially new JVs with other companies around the world they're in talks with; SinoStruct bidding for new work in the Americas; expansion into New Zealand etc....
> 
> Am I missing something? It's crazy.
> 
> btw, John Rubino was pretty funny. Man of few words but those words get to the point. "we don't bid to win jobs, we bid to make money ey".




There's a steady amount of revenue in the books being run off every month too... so looking at the wins only produces half the picture. Also, without knowing the margin situation, winning contracts may not translate to increased profits. Just ask NWH - the winner of the massive Roy Hill concrete works a few years back. 

As a general observation from my trading... contract wins rarely provide sustained boost to the share price in most mining companies. Commodities all plunged again overnight... that impact overshadows any small wins MND has recorded.


----------



## luutzu

skc said:


> There's a steady amount of revenue in the books being run off every month too... so looking at the wins only produces half the picture. Also, without knowing the margin situation, winning contracts may not translate to increased profits. Just ask NWH - the winner of the massive Roy Hill concrete works a few years back.
> 
> As a general observation from my trading... contract wins rarely provide sustained boost to the share price in most mining companies. Commodities all plunged again overnight... that impact overshadows any small wins MND has recorded.




True what you say, but MND hasn't seem to lose money on their contracts though. I mean it's a cyclical industry so they can't grow their revenues in a downturn... best we could hope for is a strong balance sheet and good control of margins.

Construction is where the risk of loss is highest and they've managed their margins and project deliveries pretty well from what I see. In maintenance the chance of loss are much much lower. But yea, condition may be too tough and their eyes might not be on the ball but they seem to be a sensible team taking cautious approach.

Interesting to see how these pan out over next couple years.


----------



## Wysiwyg

Announced NPAT down 38%, dividend slashed and price jumps 8%.  Oh it's the new contracts secured.


----------



## notting

Wysiwyg said:


> Announced NPAT down 38%, dividend slashed and price jumps 8%.  Oh it's the new contracts secured.




The mining boom is back on Iron Ore was up 6% last night!   Don't you know anything? jeez


----------



## luutzu

notting said:


> The mining boom is back on Iron Ore was up 6% last night!   Don't you know anything? jeez




MND acquires (some of ?) EVO Access Pty. Ltd.

Probably bought a major or all of the company seeing how one of EVO's directors wore MND's polo on their facebook. 

Strange how this news is not broadcast and I only saw it from reading MND's latest Appendix 3.


----------



## Wysiwyg

luutzu said:


> MND acquires (some of ?) EVO Access Pty. Ltd..



That is a niche business and only so because the need for this sort of work is not common. Elevated work platforms and scaffolding are the preferred access methods.


----------



## galumay

Wysiwyg said:


> That is a niche business and only so because the need for this sort of work is not common. Elevated work platforms and scaffolding are the preferred access methods.




Mono's and other similar contractors have their own EWP's and Scaffies, but increasingly rope access is the preferred method from a workplace safety aspect. 

I suspect there will be a fair bit of this sort of consolidation in the mining services sector, companies like Mono's can pick what are, as you say niche businesses, that are directley related to their core business, cheaply due to the overall downturn. Saves have to build their own rope access capacity from scratch - something that their clients will increasingly be demanding.


----------



## luutzu

Wysiwyg said:


> That is a niche business and only so because the need for this sort of work is not common. Elevated work platforms and scaffolding are the preferred access methods.




I think platforms and scaffolding are preferred when under construction. Once completed it seem that this kind of rope access is the preferred way to inspect and do minor repairs. Particularly useful on those smoke stacks and offshore rigs.

But yes, a niche business. Always minor steps with these guys. I like. Like better if they could put some of those $200M to some major acquisition at current period in the cycle.


----------



## luutzu

luutzu said:


> I think platforms and scaffolding are preferred when under construction. Once completed it seem that this kind of rope access is the preferred way to inspect and do minor repairs. Particularly useful on those smoke stacks and offshore rigs.
> 
> But yes, a niche business. Always minor steps with these guys. I like. Like better if they could put some of those $200M to some major acquisition at current period in the cycle.




They own EVO now. Woo hoo

"I'm happy to announce that Evo Access is now a fully owned subsidiary of Monadelphous Group. Thanks to everyone that has supported us over the years, I truly couldn't have done it without you. Shout out to the fam for sticking by in tough times. Goes to show that working your a** off all the time does eventually have benefits. 
What does it mean for Evo? We'll continue to offer a superior product in training and operations under Evo's management. Now with the corporate backing of Mono's it's far from being the end... it's just the beginning"

-- EVO Access FaceBook account 29th April 2016


----------



## Wysiwyg

luutzu said:


> They own EVO now. Woo hoo



They might want to look at Neptune Marine Services so they have underwater maintenance covered as well. (Just joking in present time but NMS was a flyer back in the resource expansion period.)


----------



## luutzu

Wysiwyg said:


> They might want to look at Neptune Marine Services so they have underwater maintenance covered as well. (Just joking in present time but NMS was a flyer back in the resource expansion period.)




I will 

I did thought maybe they ought to take out MMA Offshore. But guess they weren't really listening to what I have to say.


----------



## Rainman

This turned out to be a satisfactory investment for me in the end.  But I am out now.  

I started building a position in MND in the last quarter of 2015 between the $6.40 to $5.70 range which turned out to be the bottom - one of the rare occasions when my bottom-feeding really was along the bottom.  But MND is starting to look a little "toppy" for me now.


----------



## ReXXar

What's happening with this stock??  Its up 40% since a few months ago, today it pops almost 4% and no announcements, I noticed MND tends to behave this way, pop around 3% on random days even without any announcements??  Is there some insider trading or something??


----------



## luutzu

ReXXar said:


> What's happening with this stock??  Its up 40% since a few months ago, today it pops almost 4% and no announcements, I noticed MND tends to behave this way, pop around 3% on random days even without any announcements??  Is there some insider trading or something??




It's a good business with able management, strong cash and competitive position... and is about to get a whole lot better. 

Rio's Toyu Olgoi [?] expansion should see MND cashing in a few major contracts there. There's water and waste infrastructures; expansion into NZ, the US; winning the new Windfarm job with JV Zenviron [not yet announced for some reason].

Quite a few things going on and about to bear fruit.


----------



## ReXXar

luutzu said:


> It's a good business with able management, strong cash and competitive position... and is about to get a whole lot better.
> 
> Rio's Toyu Olgoi [?] expansion should see MND cashing in a few major contracts there. There's water and waste infrastructures; expansion into NZ, the US; winning the new Windfarm job with JV Zenviron [not yet announced for some reason].
> 
> Quite a few things going on and about to bear fruit.




Hmm, good points.  What potential risks do you see?  At what point does it become too expensive?


----------



## luutzu

ReXXar said:


> Hmm, good points.  What potential risks do you see?  At what point does it become too expensive?




I jumped in with both feet at $15.60 so ahem.... 

Managed to averaged down to about $12 so personally, $30 is alright by me.

In the short term - next year or two... hard to say. Share price might crash again to $8 or $9 like it tend to once it reach current level.

In the longer term, this one is a keeper for me. I like what its management has been doing and while I got in way way, way too early at first... with dividend reinvestment and longer term holding, even at those prices it might end alright.

Would I buy it now... depends if you see any other opportunity. There probably are and I'd probably wait for it to drop lower.


In term of risks...

Its planned expansion into the US's Bakken Oil fields/fracking might not go smoothly given the protests. So might not grow that aspect of its piping business.

Though its JV there are currently more for the chemical plant construction, so that should still go ahead and do well.

Its SinoStruct fabrication into the US and S.Americas seems to be onto a good start from what Rob said at the AGM [no, we're not on first term basis, I just like to feel special].

Infrastructure, particularly water, is picking up pace... both here in Aus. and in NZ.

There's also the renewable with ZEM Energy [?] - i.e. Zenviron.... there's some, from memory, $17B in approved renewable projects in Aus. to be completed by 2020-2022. They should win at least some of that being who they are and what's in their bank account.

Waste is also a potentially massive area for MND. Its 30% in Anaeco and the recent transaction with China's XEPT waste company should see some massive opportunity in the waste/plant construction business both here, China and S.E. Asia. That's XEPT's plan when they take a majority stake in ANQ recently.


So yea, hard to say whether one should get in now or wait for a price retreat. But definitely worth a real close look.


----------



## ReXXar

luutzu said:


> I jumped in with both feet at $15.60 so ahem....
> 
> Managed to averaged down to about $12 so personally, $30 is alright by me.
> 
> In the short term - next year or two... hard to say. Share price might crash again to $8 or $9 like it tend to once it reach current level.
> 
> In the longer term, this one is a keeper for me. I like what its management has been doing and while I got in way way, way too early at first... with dividend reinvestment and longer term holding, even at those prices it might end alright.
> 
> Would I buy it now... depends if you see any other opportunity. There probably are and I'd probably wait for it to drop lower.
> 
> 
> In term of risks...
> 
> Its planned expansion into the US's Bakken Oil fields/fracking might not go smoothly given the protests. So might not grow that aspect of its piping business.
> 
> Though its JV there are currently more for the chemical plant construction, so that should still go ahead and do well.
> 
> Its SinoStruct fabrication into the US and S.Americas seems to be onto a good start from what Rob said at the AGM [no, we're not on first term basis, I just like to feel special].
> 
> Infrastructure, particularly water, is picking up pace... both here in Aus. and in NZ.
> 
> There's also the renewable with ZEM Energy [?] - i.e. Zenviron.... there's some, from memory, $17B in approved renewable projects in Aus. to be completed by 2020-2022. They should win at least some of that being who they are and what's in their bank account.
> 
> Waste is also a potentially massive area for MND. Its 30% in Anaeco and the recent transaction with China's XEPT waste company should see some massive opportunity in the waste/plant construction business both here, China and S.E. Asia. That's XEPT's plan when they take a majority stake in ANQ recently.
> 
> 
> So yea, hard to say whether one should get in now or wait for a price retreat. But definitely worth a real close look.




Good analysis.. yes it is hard to value this company due to the volatile nature of winning new contracts through a cyclical industry, I definitely agree with you MND is a long-term stock, I haven't kept pace with what's happening with the resource industry, but cyclical stocks usually pick up just before it hits bottom, so perhaps this is a signal that the resource crash is coming to an end/has come to an end.  If so, there's no reason why not hold on to this stock for several years to come if management keep up what they're doing.  I like how they're able to quickly switch to maintenance contracts during a cyclical downturn and I definitely agree their venture into renewables and overseas markets is huge plus.  So I guess the only significant risk I see is management, if they start selling their holdings or sudden change of management it might be a warning sign..

I'm glad you held on to your position after it hit rock bottom, I guess with dividends you'll be coming out about even now, you don't use stop loss?


----------



## galumay

I hold MND but I wouldnt be under any illusions about a turnaround in the end of the mining boom, its gone and finished, but there will be consolidation and there is still work that the miners and prooducers will always use contractors for and the well managed, low debt businesses like MND will survive. Margins will be much lower going forward, but I still think they will do ok.


----------



## luutzu

ReXXar said:


> Good analysis.. yes it is hard to value this company due to the volatile nature of winning new contracts through a cyclical industry, I definitely agree with you MND is a long-term stock, I haven't kept pace with what's happening with the resource industry, but cyclical stocks usually pick up just before it hits bottom, so perhaps this is a signal that the resource crash is coming to an end/has come to an end.  If so, there's no reason why not hold on to this stock for several years to come if management keep up what they're doing.  I like how they're able to quickly switch to maintenance contracts during a cyclical downturn and I definitely agree their venture into renewables and overseas markets is huge plus.  So I guess the only significant risk I see is management, if they start selling their holdings or sudden change of management it might be a warning sign..
> 
> I'm glad you held on to your position after it hit rock bottom, I guess with dividends you'll be coming out about even now, you don't use stop loss?




I haven't looked closely at management buy/sell. But from scanning the news releases, it does not seem like they've been buying or selling.

I'm somewhat surprised they have not been buying, but then put that down to it either being within the market sensitive period or around the financial reports update. They do tend to release a few (small) project wins together. Smart way to not give away their bid to competitors.

Yea I missed loading up a couple of times when it was in the mid 5s and 6s. Was either sucking my thumb, got greedy and thought it'd go lower, then missed its massive gain, then buy something else. Usual story I guess.

But the dividend reinvestments have done very well so yea.

Don't do stop loss because I got a big ego    that and fear that I could jump out then miss the boat as it rises. Happened a couple of times before and so thought it's not worth it. In hindsight, would have been worth it on a few of my stocks but hard to predict that. I mean take S32. More than halved its price earlier this year and pretty much triple at current prices. No way I could predict that kind of jump.


----------



## luutzu

galumay said:


> I hold MND but I wouldnt be under any illusions about a turnaround in the end of the mining boom, its gone and finished, but there will be consolidation and there is still work that the miners and prooducers will always use contractors for and the well managed, low debt businesses like MND will survive. Margins will be much lower going forward, but I still think they will do ok.




Yea the mining boom would be at least a few years away. But as Rexxar was saying, they did managed to win enough maintenance after the construction to be quite acceptable given the bust.

Yea I am also hoping/thinking that they're going to make some major acquisition soon. Sector is ripe for consolidation. Though these guys seem to have that slowly-slowly approach. Very cautious and tend to establish beachheads, as the MD say through JV or make minor acquisition where they can really leverage the new company's skills and contacts to boost the skills and potential work from existing resources. 

They bought some rope access company last year. Hardly mention the dam thing. But after digging around, they probably spent maybe a couple million on it. Peanuts really. But then they use the new subsidiary's training centre and skilled personnel... train up their staff all over the place; then offer non-conventional access in bidding for maintenance jobs.

They've done similar leveraging on pretty much all of their acquisitions... and that's a great thing to see. 

So hoping that with all that cash they've been hoarding the past two years, they're about to make a "transformative" acquisition soon.


----------



## Rainman

galumay said:


> I hold MND but I wouldnt be under any illusions about a turnaround in the end of the mining boom, its gone and finished, but there will be consolidation and there is still work that the miners and prooducers will always use contractors for and the well managed, low debt businesses like MND will survive. Margins will be much lower going forward, but I still think they will do ok.




Agree.  The easy money in MND has been made.


----------



## ReXXar

I noticed something curious about MND today, was just messing around with my spreadsheet, looking at last 10 years of data, 2 things jumped out:

1) Their capex/cash flow went from a steady trend from 65% in 2012 down to 1% in 2016
2) Their operating working capital as percentage of assets also underwent a steady trend from -21% in 2008 to +24% in 2016, likewise their cash conversion cycle went from negative in 2009 to 38 days in 2016

I'm not sure the reason for this, has anybody else noticed this?


----------



## luutzu

ReXXar said:


> I noticed something curious about MND today, was just messing around with my spreadsheet, looking at last 10 years of data, 2 things jumped out:
> 
> 1) Their capex/cash flow went from a steady trend from 65% in 2012 down to 1% in 2016
> 2) Their operating working capital as percentage of assets also underwent a steady trend from -21% in 2008 to +24% in 2016, likewise their cash conversion cycle went from negative in 2009 to 38 days in 2016
> 
> I'm not sure the reason for this, has anybody else noticed this?




To 2014:
From 2012 to 2014, their net capex went from $33.68M to $5.08M. So this could explain your question 1, drastic decrease in capex/cash flow. Though I use net operating cash flow in the chart.

If we compare its net capex to net op.cash, the decline from 2012 isn't so drastic. But note the orange line - net op cash b4 interests to both net capex & interests... picks up towards 2008 level. Indicating good management.









*WORKING CAPITAL*

Net working capital has been increasing, and the details would show that most of it is cash.
With the current ratio (red line) trending up ( I don't see MND ever having a negative working capital). 






take the above, note the increasing current ratio, combine with its capital structure (see below) where CA (dark blue) kept rising with NCA (red) making a smaller proportion of total assets while long and short debt both drops... business was slowing down (obviously in hindsight and on the chart) but in proportion to its cap structure. All the while NWC increases.







*CASH CONVERSION CYCLE*






Cash conversion cycle was very good during the good times due to good sales/inventory turnovers, taking a longer time to pay others. Sales has slowed and debtors are more on top of wanting their pay paid on time, i.e. from some 75 days between pay to about 40 days in 2014.



That's only to 2014 in the quickLook analysis, 2015 in the detailed and 2016 haven't bothered since I already know . You can download from the DangInvestor's Research Exchange your own copy then update the rest.


----------



## ReXXar

Nice charts, you find it a good program?  I still don't quite know why, sure capex/cash flow decreased due to decrease in capex but why is that, when MND gets a new contract to build something, from what I understand and correct me if I'm wrong, they're basically a consultancy company, so for any construction projects they don't own the assets, the assets belong to the clients, so why did we see those huge capex numbers 5 years before then steadily decreasing to almost nothing now, unless they also bought many construction machinery that they need for construction and stopped buying ever since?? 

also, what is this "net op cash b4 interests to both net capex & interests"?? I don't understand this

Regards to the second chart, yes working capital has consistently increased year on year, once again? why is this so from MND's business point of view?? As far as I know this is not really a good thing.  Also you said that CA is rising, while NCA is decreasing as a proportion of total assets, that means CL is rising faster than CA, is this what you mean when you said the business is slowing down?

for the cash conversion cycle, that basically correlate directly working capital, as working capital increases cash conversion cycle also increase, which is a bad thing I think.  The cash cycle was negative in 2009, which means MND was able to collect their receivable way faster than paying to their supplier, and since then it steadily increased, as both receivable and payable days increased, with payables days rising faster than receivable days hence the increase in cash cycle, once again, why is this so??  Is MND delaying payments to their own suppliers due to their own customers delaying payments?  And if so why are all their customers delaying payments, is this some kind of industry thing?


----------



## galumay

Its typical of the cycle of mining services companies that operate in a cyclical commodity based sector. Capex is high in the boom times as they gear up, earth moving equipment, cranes, drilling rigs, and all the Capex associated with expanding workforce and worload.

As the boom came to a close obviously Capex dropped as the work stopped rolling in and costs needed to be reduced, employee numbers dropped, no new equipment was bought and some was sold off.

I havent bothered to look at the cash cycle stuff as generally its not a metric i consider in valuation, but I would assume its also related to the nature of the business and sector.


----------



## luutzu

ReXXar said:


> Nice charts, you find it a good program?  I still don't quite know why, sure capex/cash flow decreased due to decrease in capex but why is that, when MND gets a new contract to build something, from what I understand and correct me if I'm wrong, they're basically a consultancy company, so for any construction projects they don't own the assets, the assets belong to the clients, so why did we see those huge capex numbers 5 years before then steadily decreasing to almost nothing now, unless they also bought many construction machinery that they need for construction and stopped buying ever since??




Yes I do find DangInvestor an awesome business analysis and valuation program, there is nothing like it in the world. And that's not just because I wrote it from scratch but because it is really that awesome 






Just added the 2015 and 2016 data...

From above chart, Net Capex is defined as cash spent (outflow) on PPE after deducting cash received from sales and disposal of PPE (inflow). So the negative Net Capex meant MND sold more PPE than spent on new ones.

Such definition assumes a whole lot of stuff that only honest and responsible management would do. That is, whatever amount is needed to maintain and expand PPE to keep it running smoothly are actually spent in cash getting it done. That whatever is claimed as depreciation etc., are for tax purposes only. So it's not a perfect definition but note that is is part of the quickLook analysis module and also where users get to define what they meant by capex. i.e. does capex include opex and anything that is a PPE... or capex is only "capex" required to maintain their own operation's PPE. Such definition can be quite important depending on the business you're looking at.

Anyway, MND actually have a negative CAPEX over the past 3 years. i.e. it was getting rid of its machineries more than buying/leasing new ones. So the ratio of capex to net op. cash flow does not really indicate much for MND over recent years.

Capex are MND's properties, plant and equipment... they're not the assets of their client's project. They're what MND spent on PPE to get the job done. So they buy(sell or lease) PPE and this number goes up or down depending on project wins. Note too that MND lease a lot of their PE rather than owning them inhouse.

But yes, MND does not own the assets they're hired to construct. The high Capex in other years were due to them needing to spent more on capex to get the tools, the recent negative capex show they're getting rid of PPE overall (less work) but still buying, not completely stopped.

I guess it's an example of how important it is to look at the detail rather than just the resultant ratio.




ReXXar said:


> also, what is this "net op cash b4 interests to both net capex & interests"?? I don't understand this




As with other series in that chart, I was trying to see how well the company's operating cash flow manage against the cash capex and interest during the year.

So net op cash b4 interests to net capex plus interests simply compare the kind of margin the company's net cash from operation could pay for these two crucial expenses (pay the bankers and maintain the machinery).






So for 2013, net op. cash could cover interests and net capEx 8.32 times. Flip that and both expenses consumes 12% of MND's net cash earnings. i.e. the remaining 88% can pay dividends.

But note that for 2013, the Blue and the Red bars could not equal to the stacked Green (dividend) and capex and interest. i.e. cash from operation alone could not cover dividends and the other two expenses.

You'd not want a business that show this kind of pattern over the years. But again, it depends... and MND have plenty of cash at the bank, so a single year isn't too bad... that and give this is the start of its industry's downturn.

Note too that net op.cashflow more than cover all these expenses the previous three years... so business, while smaller, more than covers dividends and etc. Indicating good management not playing the share market price game by sensibly managing its cash position.

It's one of the very important charts that after you get use to it, can tell a heck of a lot about the business.




ReXXar said:


> Regards to the second chart, yes working capital has consistently increased year on year, once again? why is this so from MND's business point of view?? As far as I know this is not really a good thing.  Also you said that CA is rising, while NCA is decreasing as a proportion of total assets, that means CL is rising faster than CA, is this what you mean when you said the business is slowing down?









NWC is defined as Current Assets minus Current Liabilities. 

MND's NWC has risen again in 2016.

Though a positive and rising NWC is generally a good thing to see, whether this is reasonable and good or not depends... we'd need to look at the detail in its Balance Sheet (Fin.Position).

So it could be a bad thing since you don't want a lazy balance sheet where management aren't making good use of cash beside putting them at the bank. But then you don't want them to not be able to pay liabilities that are due within the year either.

For industrial companies, particularly one experiencing a marked downturn, you'd want it to have a lot of cash (or assets that is expected to be turn into cash within the year). This would allow the business  to survive and maybe start to acquire struggling competitor or new businesses on the cheap. Something MND has managed to do very well... though they still have yet to make a big acquisition so far. That could be a good thing, maybe too cautious but yea, I like how they think.





ReXXar said:


> Also you said that CA is rising, while NCA is decreasing as a proportion of total assets, that means CL is rising faster than CA, is this what you mean when you said the business is slowing down?




Business slows down because the revenues are down 

While the accounting equation of Assets = Liabilities + Equity might give the impression of what you said there about CL rising faster than CA... If that's the case it's, to me, just coincidental. And you can't figure if they're related from CA and NCA rising and falling.

For MND, its CA rises mean its still earning money (and storing up the cash) while selling off its NCA (the PPE being sold probably play a major part in that). 

To see if CL rises faster than CA... best to look at the Current Ratio (i.e. CA over CL).






See how the current ratio (purple line) rises? It mean that the change in CA is always higher than the change in CL (for years where CRatio rises).

If you refer back to the Capital Structure chart, CA generally rises while CL decreases.





ReXXar said:


> for the cash conversion cycle, that basically correlate directly working capital, as working capital increases cash conversion cycle also increase, which is a bad thing I think.  The cash cycle was negative in 2009, which means MND was able to collect their receivable way faster than paying to their supplier, and since then it steadily increased, as both receivable and payable days increased, with payables days rising faster than receivable days hence the increase in cash cycle, once again, why is this so??  Is MND delaying payments to their own suppliers due to their own customers delaying payments?  And if so why are all their customers delaying payments, is this some kind of industry thing?




From DangInvestor's note:


> ... “cash cycle”, or “net operating cycle”, measure how many days it takes for the company to convert its assets into cash flow. That is, it looks at how many days, on average, does every company dollar is tied up in production, marketing and other sales processes before it returns as cash to the company....
> 
> Cash Cycle = Receivables Collection Period + Inventory Processing Period – Payables Payment Period.




So Cash Cycle depends on 3 factors, not just the working capital. 

Then yes, increasing CC is bad but we should also look at which of the above three factors contribute to the increase. You can see this in the chart next to the CCC chart earlier:






MND has been able to have a negative CC from 2007 to 2012 mainly due to it paying others later while its sales was great and it was good at collecting its pay from clients.

The last few years reverses this, but with the exception of last year 2016, MND has historically pay its due faster than collecting its due. Mainly due to big clients, and you got to play nice with those guys perhaps. 

But the CC is not just paying and collecting, it's also getting the work done (inventory) quicker or not. This seem to play a big role in the increases in its CC than the other factor. So why? Maybe the projects it had won (they consider this their inventory) are delayed... delayed by clients who's short on cash perhaps.

You can see how big inventory turnover affect CC by seeing above how erratic the Inventory Turnover (light blue) line moves compare to the generally stable Payables and Receivables Turnovers.

But yea, when it took MND longer to collect, they also take a bit longer to pay too. Seems all normal except for the great few years where it managed to pay slower.


----------



## peter2

Attractive low sized risk, trend continuation setup on MND. There's nothing to stop price going to 15.00.


----------



## luutzu

peter2 said:


> Attractive low sized risk, trend continuation setup on MND. There's nothing to stop price going to 15.00.
> View attachment 70320




All its ducks seems to have been lining up. With any luck, we might see a major acquisition with all that cash.

Zen Engery is working with Santos to try and save SA out of its blackouts. I think MND has a JV with Zen and are working together on a new Wind Farm project. The Market probably assumes that this JV will also take part in the SA work as well.

Within 2 weeks, one of MND's other diversification strategy might see a major Chinese waste operator taking a 55% stake - with MND controlling 30%. Both sides have all agreed and the holdup seem to have been the new Chinese rule to control capital flight. 

If that goes ahead, MND will soon be seriously expanding its Waste Management business across China, Asia and ANZ. 

I bought in too early though, dam it.


----------



## Porper

Looking good technically.

Rounding Bottom pattern aligns with the 50-61.8% projection.

Only headwind is bearish divergence on 2 time frames.

Looks like a 5 wave structure down from major highs so may struggle to get up through the target area longer term.

I hold.


----------



## peter2

MND is approaching the initial chart target of 15.00. There's going to be some people very happy to sell at 15.00 after holding onto losses for three years.


----------



## ReXXar

luutzu said:


> Yes I do find DangInvestor an awesome business analysis and valuation program, there is nothing like it in the world. And that's not just because I wrote it from scratch but because it is really that awesome
> 
> View attachment 69742
> 
> 
> Just added the 2015 and 2016 data...
> 
> From above chart, Net Capex is defined as cash spent (outflow) on PPE after deducting cash received from sales and disposal of PPE (inflow). So the negative Net Capex meant MND sold more PPE than spent on new ones.
> 
> Such definition assumes a whole lot of stuff that only honest and responsible management would do. That is, whatever amount is needed to maintain and expand PPE to keep it running smoothly are actually spent in cash getting it done. That whatever is claimed as depreciation etc., are for tax purposes only. So it's not a perfect definition but note that is is part of the quickLook analysis module and also where users get to define what they meant by capex. i.e. does capex include opex and anything that is a PPE... or capex is only "capex" required to maintain their own operation's PPE. Such definition can be quite important depending on the business you're looking at.
> 
> Anyway, MND actually have a negative CAPEX over the past 3 years. i.e. it was getting rid of its machineries more than buying/leasing new ones. So the ratio of capex to net op. cash flow does not really indicate much for MND over recent years.
> 
> Capex are MND's properties, plant and equipment... they're not the assets of their client's project. They're what MND spent on PPE to get the job done. So they buy(sell or lease) PPE and this number goes up or down depending on project wins. Note too that MND lease a lot of their PE rather than owning them inhouse.
> 
> But yes, MND does not own the assets they're hired to construct. The high Capex in other years were due to them needing to spent more on capex to get the tools, the recent negative capex show they're getting rid of PPE overall (less work) but still buying, not completely stopped.
> 
> I guess it's an example of how important it is to look at the detail rather than just the resultant ratio.
> 
> 
> 
> 
> As with other series in that chart, I was trying to see how well the company's operating cash flow manage against the cash capex and interest during the year.
> 
> So net op cash b4 interests to net capex plus interests simply compare the kind of margin the company's net cash from operation could pay for these two crucial expenses (pay the bankers and maintain the machinery).
> 
> View attachment 69743
> 
> 
> So for 2013, net op. cash could cover interests and net capEx 8.32 times. Flip that and both expenses consumes 12% of MND's net cash earnings. i.e. the remaining 88% can pay dividends.
> 
> But note that for 2013, the Blue and the Red bars could not equal to the stacked Green (dividend) and capex and interest. i.e. cash from operation alone could not cover dividends and the other two expenses.
> 
> You'd not want a business that show this kind of pattern over the years. But again, it depends... and MND have plenty of cash at the bank, so a single year isn't too bad... that and give this is the start of its industry's downturn.
> 
> Note too that net op.cashflow more than cover all these expenses the previous three years... so business, while smaller, more than covers dividends and etc. Indicating good management not playing the share market price game by sensibly managing its cash position.
> 
> It's one of the very important charts that after you get use to it, can tell a heck of a lot about the business.
> 
> 
> 
> 
> View attachment 69746
> 
> 
> NWC is defined as Current Assets minus Current Liabilities.
> 
> MND's NWC has risen again in 2016.
> 
> Though a positive and rising NWC is generally a good thing to see, whether this is reasonable and good or not depends... we'd need to look at the detail in its Balance Sheet (Fin.Position).
> 
> So it could be a bad thing since you don't want a lazy balance sheet where management aren't making good use of cash beside putting them at the bank. But then you don't want them to not be able to pay liabilities that are due within the year either.
> 
> For industrial companies, particularly one experiencing a marked downturn, you'd want it to have a lot of cash (or assets that is expected to be turn into cash within the year). This would allow the business  to survive and maybe start to acquire struggling competitor or new businesses on the cheap. Something MND has managed to do very well... though they still have yet to make a big acquisition so far. That could be a good thing, maybe too cautious but yea, I like how they think.
> 
> 
> 
> 
> 
> Business slows down because the revenues are down
> 
> While the accounting equation of Assets = Liabilities + Equity might give the impression of what you said there about CL rising faster than CA... If that's the case it's, to me, just coincidental. And you can't figure if they're related from CA and NCA rising and falling.
> 
> For MND, its CA rises mean its still earning money (and storing up the cash) while selling off its NCA (the PPE being sold probably play a major part in that).
> 
> To see if CL rises faster than CA... best to look at the Current Ratio (i.e. CA over CL).
> 
> View attachment 69750
> 
> 
> See how the current ratio (purple line) rises? It mean that the change in CA is always higher than the change in CL (for years where CRatio rises).
> 
> If you refer back to the Capital Structure chart, CA generally rises while CL decreases.
> 
> 
> 
> 
> 
> From DangInvestor's note:
> 
> 
> So Cash Cycle depends on 3 factors, not just the working capital.
> 
> Then yes, increasing CC is bad but we should also look at which of the above three factors contribute to the increase. You can see this in the chart next to the CCC chart earlier:
> 
> View attachment 69751
> 
> 
> MND has been able to have a negative CC from 2007 to 2012 mainly due to it paying others later while its sales was great and it was good at collecting its pay from clients.
> 
> The last few years reverses this, but with the exception of last year 2016, MND has historically pay its due faster than collecting its due. Mainly due to big clients, and you got to play nice with those guys perhaps.
> 
> But the CC is not just paying and collecting, it's also getting the work done (inventory) quicker or not. This seem to play a big role in the increases in its CC than the other factor. So why? Maybe the projects it had won (they consider this their inventory) are delayed... delayed by clients who's short on cash perhaps.
> 
> You can see how big inventory turnover affect CC by seeing above how erratic the Inventory Turnover (light blue) line moves compare to the generally stable Payables and Receivables Turnovers.
> 
> But yea, when it took MND longer to collect, they also take a bit longer to pay too. Seems all normal except for the great few years where it managed to pay slower.




Hey sorry for late reply, I haven't been on this site for very long time, I'll look into your post and get back to you.  You still holding on to MND?  I'm still holding since last September and with dividend reinvestment its up almost 80%, I noticed 5 brokers have a sell rating, looking at PE its definitely overvalued but FCF multiple is a whole different story. What are your thoughts??


----------



## galumay

I still hold, MND are the pick of the mining services sector IMO, they are well managed and have coped with the end of the construction phase of the so called mining boom well. PE is a next to useless metric IMO, FCF is much more important from a valuation point of view.


----------



## skc

galumay said:


> I still hold, MND are the pick of the mining services sector IMO, they are well managed and have coped with the end of the construction phase of the so called mining boom well. PE is a next to useless metric IMO, FCF is much more important from a valuation point of view.




They had very strong cashflow in the H1 report and revenue decline has slowed on a half-on-half basis. And as has been for some time, strong balance sheet and no operational stuff up.

Interesting to read back some of the posts in the last 2-3 years and that the financial performance of the company has largely played out... lower revenue, EBIT margin and EPS have all come to bear.

But of course the share price is well off the bottom. In fact it's some 200% higher than the low ~$5 achieved in early 2016. Although it is also around the same share price in much of mid 2013 to 2014. The dividends since 2013 has made holding since that time somewhat bearable.... but it's not something to write home about. Timing is important in terms of total return...

Where to from here? Is there more downside to the financial numbers or are we at the bottom like the share price is predicting? The FCF metric based on FY16 of ~$75m is ~6.55% yield on market cap less cash - so it is neither a bargain or grossly expensive (Noting however that H1 FY17 FCF was already $72m but it feels like a one-off working capital release somewhere rather than the norm).

Let's see what's in store in the full year numbers.


----------



## McLovin

skc said:


> Is there more downside to the financial numbers or are we at the bottom like the share price is predicting?




I still wonder if the bottom is all that meaningful, and oil and gas still construction still hasn't bottomed out (fy19 is when it will per MND prezzo).  We went through an earnings super-cycle that won't be repeated. IMO, if you look at the numbers from '09-'13 and plug those into a valuation as where the business should be back to in a few years you'll probably end up disappointed. MND was reasonably cheap at around $7...I bought a bit, but I find the current SP pretty hard to justify. What's a fair multiple for through the cycle earnings for a contractor given the business risk? I'd say around 10-13x everything else being equal. With where I think revenue is heading and where margins will stabilise the price at the moment looks pretty full.


----------



## luutzu

ReXXar said:


> Hey sorry for late reply, I haven't been on this site for very long time, I'll look into your post and get back to you.  You still holding on to MND?  I'm still holding since last September and with dividend reinvestment its up almost 80%, I noticed 5 brokers have a sell rating, looking at PE its definitely overvalued but FCF multiple is a whole different story. What are your thoughts??




Congrats on the gain. 

I recently offloaded some of MND at $13.40s. But that's so I can buy more of Sirtex at $11.65. Still hold a fairly large chunk of it. You know, cutting the flowers while watering the weed with the stuff I didn't offload 

MND is one of the best companies out there. Current prices, based on current known operations, would put its current share price at the "reasonable" range - not a bargain, not overpriced. BUT....

The companies efforts over the past three years to expand and diversify is about to bear fruit, so there is a lot more upside. 

So there's its SinoStruct - gas well heads, pipes and other fabrication business in China - expansion into the Americas is going pretty well. Its JV - Monaro - in the US was last heard tendering for a major chemical/gas plant in Pennsylvania [?]; Its office in Mongolia next to RIO/Mongolian copper should pick up a few major contracts as the disputes between them two was settled last year.

Then there's all those recent project wins in its traditional businesses in Australia; The new Sapphire windfarm in NSW with its JV - Zenviron? A possible finalisation with China's XEPT - waste management to acquire debt Anaeco owe to it, giving MND 30% ownership and a ticket to China's [and AsiaPacific] waste management market. There's also the Water Infrastructure acquisition that's been winning a fair number of smaller projects across ANZ. 

Then there's rumour that it's about to make some sizeable acquisition of a civil infrastructure firm. I mean MND has some $220M in cash just sitting there for over 3 years now. With new projects bringing in the cash in coming quarters and years, with management been saying for some time that they're actively looking for opportunities... could be company-changing [in a good way] acquisition coming up.

So no idea how the share price will do, might go down, might just stay as the market has fully priced in those possibilities I've read and repeated above. But for the longer term, MND is one of those rare gem I can own and sleep well at night. 

I did try to time buying more of MND when it was in the $6 then $5 range. Missed the order by a few ten cents each time... So yea, smart move trying to bottom feed.


----------



## ReXXar

skc said:


> They had very strong cashflow in the H1 report and revenue decline has slowed on a half-on-half basis. And as has been for some time, strong balance sheet and no operational stuff up.
> 
> Interesting to read back some of the posts in the last 2-3 years and that the financial performance of the company has largely played out... lower revenue, EBIT margin and EPS have all come to bear.
> 
> But of course the share price is well off the bottom. In fact it's some 200% higher than the low ~$5 achieved in early 2016. Although it is also around the same share price in much of mid 2013 to 2014. The dividends since 2013 has made holding since that time somewhat bearable.... but it's not something to write home about. Timing is important in terms of total return...
> 
> Where to from here? Is there more downside to the financial numbers or are we at the bottom like the share price is predicting? The FCF metric based on FY16 of ~$75m is ~6.55% yield on market cap less cash - so it is neither a bargain or grossly expensive (Noting however that H1 FY17 FCF was already $72m but it feels like a one-off working capital release somewhere rather than the norm).
> 
> Let's see what's in store in the full year numbers.




Great analysis.. here's something I never understood which I hope people care to explain here..

How the heck do all those brokers value a company like MND??  From what I understand they're using DCF to arrive at some valuation using future cashflow from existing contracts, but for a company like MND they're constantly tendering for new contracts, nobody, and I mean NOBODY (including management themselves) know how many contracts they will get in the future, hence the management don't put out any earnings forecasts.

Give you an example, when I bought MND I had no idea if it will go up or not, all I knew it has minimal downside risk (strong net cash and proven cashflows during the bottom of the cycle), at the time it was the top 10 shorted stocks on ASX and straight after a broker's report came out putting a price target far below my entry price, then a week later MND won some contracts and price popped, since then that broker has pulled the report and I can't find it anywhere.

I agree with everything you said, 6.5% on EV is not bargain nor excessively expensive, but that is also based on existing contracts and information, what if they win another major contract next month?


----------



## ReXXar

luutzu said:


> Congrats on the gain.
> 
> I recently offloaded some of MND at $13.40s. But that's so I can buy more of Sirtex at $11.65. Still hold a fairly large chunk of it. You know, cutting the flowers while watering the weed with the stuff I didn't offload
> 
> MND is one of the best companies out there. Current prices, based on current known operations, would put its current share price at the "reasonable" range - not a bargain, not overpriced. BUT....
> 
> The companies efforts over the past three years to expand and diversify is about to bear fruit, so there is a lot more upside.
> 
> So there's its SinoStruct - gas well heads, pipes and other fabrication business in China - expansion into the Americas is going pretty well. Its JV - Monaro - in the US was last heard tendering for a major chemical/gas plant in Pennsylvania [?]; Its office in Mongolia next to RIO/Mongolian copper should pick up a few major contracts as the disputes between them two was settled last year.
> 
> Then there's all those recent project wins in its traditional businesses in Australia; The new Sapphire windfarm in NSW with its JV - Zenviron? A possible finalisation with China's XEPT - waste management to acquire debt Anaeco owe to it, giving MND 30% ownership and a ticket to China's [and AsiaPacific] waste management market. There's also the Water Infrastructure acquisition that's been winning a fair number of smaller projects across ANZ.
> 
> Then there's rumour that it's about to make some sizeable acquisition of a civil infrastructure firm. I mean MND has some $220M in cash just sitting there for over 3 years now. With new projects bringing in the cash in coming quarters and years, with management been saying for some time that they're actively looking for opportunities... could be company-changing [in a good way] acquisition coming up.
> 
> So no idea how the share price will do, might go down, might just stay as the market has fully priced in those possibilities I've read and repeated above. But for the longer term, MND is one of those rare gem I can own and sleep well at night.
> 
> I did try to time buying more of MND when it was in the $6 then $5 range. Missed the order by a few ten cents each time... So yea, smart move trying to bottom feed.




I wasn't exactly trying to bottom feed, it just seemed cheap at the time for a quality company and momentum was building. On a side note why you invested in Sirtex? I also glanced over this a while back, think gave it a pass due to lack of growth potential as its primary product failed the test for early stage cancer treatment.


----------



## skc

ReXXar said:


> Great analysis.. here's something I never understood which I hope people care to explain here..
> 
> How the heck do all those brokers value a company like MND??  From what I understand they're using DCF to arrive at some valuation using future cashflow from existing contracts, but for a company like MND they're constantly tendering for new contracts, nobody, and I mean NOBODY (including management themselves) know how many contracts they will get in the future, hence the management don't put out any earnings forecasts.




Most companies are valued on the basis that it has perpetual value... i.e. it'd exist for a long long time to come. However, no company has customers that are perpetual (except may be cemetery), so the problem you've stated is not unique to MND or the contractor industry.

What investors/analysts do are trying to forecast using a range of factors... past performances, industry trends, competitive dynamics, management ambition, balance sheet strength etc etc. Much of these are qualitative as much as quantitative, so forecasting is more art than science. So that's why one should always read someone else's research with a grain of salt and make sure the underlying assumptions are understood and robust.

And that's why contract win announcements don't usually move the share price a great deal... because most of those are already in the valuation model to replace the ever depleting work-on-hand.


----------



## luutzu

ReXXar said:


> I wasn't exactly trying to bottom feed, it just seemed cheap at the time for a quality company and momentum was building. On a side note why you invested in Sirtex? I also glanced over this a while back, think gave it a pass due to lack of growth potential as its primary product failed the test for early stage cancer treatment.




I did tried after averaging down at $12, then $10.70... then a massive purchase, big to me anyway, at $7.50... then the bastard just kept on going to $6 then $5.50s so I thought I better be smarter and wait for zero 

----------

Sirtex didn't really failed its few latest major research. I mean it didn't meet the Overall Survival end point beyond other drug/treatments... but it did not do any worst either. Would be great if it were to extend patients life... both for them and for shareholders too of course. But the results, as far as I can see them, isn't as bad as the market or the headlines suggests.

For one, the patients quality of life improves quite significantly with SIRT. If the other drug don't significantly beat SRX's on OS, but SRX beat it on QOL... that's SIRT extending people's life really isn't it? Imagine living bearably the last few months of your life... that's a miracle when the alternative is sickness from side effects etc. 

Then there's the Right Sided [?] colon cancer where SIRT perform really well against whatever its competitor was offering. That and it seem that SIRT is complimentary to Chemo too... So if cost is not much of an issue, the latest research on just that alone would open new application of its existing business.

But when I value SRX, I didn't take into account all the potential positives from their studies. I just simply based it on its already existing business. And there are lots of room for growth there... heaps.

It has only penetrated 2%to 3% of its existing market. It has just started into China and Japan... where growth last year was above 10%. 

No debt, crazy profit margin, potentials from both R&D as well as existing market... Anywhere under $16 was a real bargain... $20 being fair value I reckon. So to get a handful at $11.65, and a few for the kids at $11.35... quite lucky.


----------



## luutzu

skc said:


> Most companies are valued on the basis that it has perpetual value... i.e. it'd exist for a long long time to come. However, no company has customers that are perpetual (except may be cemetery), so the problem you've stated is not unique to MND or the contractor industry.
> 
> What investors/analysts do are trying to forecast using a range of factors... past performances, industry trends, competitive dynamics, management ambition, balance sheet strength etc etc. Much of these are qualitative as much as quantitative, so forecasting is more art than science. So that's why one should always read someone else's research with a grain of salt and make sure the underlying assumptions are understood and robust.
> 
> And that's why contract win announcements don't usually move the share price a great deal... because most of those are already in the valuation model to replace the ever depleting work-on-hand.




I thought analysts only forecasts based on 2 factors... what the company forecast for them... and then they add one or two scenarios above and below that fed estimate?


----------



## ReXXar

luutzu said:


> I did tried after averaging down at $12, then $10.70... then a massive purchase, big to me anyway, at $7.50... then the bastard just kept on going to $6 then $5.50s so I thought I better be smarter and wait for zero
> 
> ----------
> 
> Sirtex didn't really failed its few latest major research. I mean it didn't meet the Overall Survival end point beyond other drug/treatments... but it did not do any worst either. Would be great if it were to extend patients life... both for them and for shareholders too of course. But the results, as far as I can see them, isn't as bad as the market or the headlines suggests.
> 
> For one, the patients quality of life improves quite significantly with SIRT. If the other drug don't significantly beat SRX's on OS, but SRX beat it on QOL... that's SIRT extending people's life really isn't it? Imagine living bearably the last few months of your life... that's a miracle when the alternative is sickness from side effects etc.
> 
> Then there's the Right Sided [?] colon cancer where SIRT perform really well against whatever its competitor was offering. That and it seem that SIRT is complimentary to Chemo too... So if cost is not much of an issue, the latest research on just that alone would open new application of its existing business.
> 
> But when I value SRX, I didn't take into account all the potential positives from their studies. I just simply based it on its already existing business. And there are lots of room for growth there... heaps.
> 
> It has only penetrated 2%to 3% of its existing market. It has just started into China and Japan... where growth last year was above 10%.
> 
> No debt, crazy profit margin, potentials from both R&D as well as existing market... Anywhere under $16 was a real bargain... $20 being fair value I reckon. So to get a handful at $11.65, and a few for the kids at $11.35... quite lucky.




You do a really amazing in-depth analysis of MND and Sirtex, where do you get all this info?? You just look this stuff up yourself through Google and come to your own conclusion or work with other people?? You trade full-time?? This must take awfully a lot time..  

You created DangInvestor?? You mean DangCorp is your company??


----------



## ReXXar

galumay said:


> I still hold, MND are the pick of the mining services sector IMO, they are well managed and have coped with the end of the construction phase of the so called mining boom well. PE is a next to useless metric IMO, FCF is much more important from a valuation point of view.




PE is not fully useless, I agree its not as useful as FCF, but it is helpful when compared to growth rate, and secondly it can reveal when a company has been noticed by the market, e.g. when MND was <10 it was discarded, now its over 20 so the market has took notice, when its over 30 or 40 it most likely would become a "hot" stock by then


----------



## galumay

Its useless in my view because on of the factors is price.


----------



## Knobby22

galumay said:


> Its useless in my view because on of the factors is price.




Price is important, you want it cheap.
But MND is a low growth company so I would want to buy at a PE of say 11.
CSL on the other hand is a bargain at a PE of 20.


----------



## ReXXar

Knobby22 said:


> Price is important, you want it cheap.
> But MND is a low growth company so I would want to buy at a PE of say 11.
> CSL on the other hand is a bargain at a PE of 20.




Do you mean the future growth rate? How would you know how many contracts they will win/lose in the future? 

If you're talking about past growth rate, latest half year FCF exceeded entire FY2016 FCF by 340%.

Not that I'm defending this stock in anyway, I do agree there are more bargains elsewhere.


----------



## luutzu

ReXXar said:


> You do a really amazing in-depth analysis of MND and Sirtex, where do you get all this info?? You just look this stuff up yourself through Google and come to your own conclusion or work with other people?? You trade full-time?? This must take awfully a lot time..
> 
> You created DangInvestor?? You mean DangCorp is your company??




All the information you'd need to analyse a company you can find from their annual reports and website. Now and then some news site might point to some latest development the company doesn't want release yet, but they generally just repeat what's been released publicly by the company. 

Yea I generally study companies myself. Using DangInvestor and Google. On one other company I'm currently discussing with another smarter guy but yea, no one can really make investment decision for you so it's helpful but at the same time useless to work with others.

I mean it'd be good to work with others just that you'd want someone with no social skills so they'd laugh at you when they need to. Just who needs friends like that anyway. It's good to bounce ideas around but it could be distracting. 

I design and code all of DangInvestor's core modules. The other, "non-important" bits , like hardware, URL and stuff I had my smarter brothers done for me. They don't have much respect for this useless investing business, hehe, so are busy working at real important work that affect actual corporations.


----------



## luutzu

ReXXar said:


> Do you mean the future growth rate? How would you know how many contracts they will win/lose in the future?
> 
> If you're talking about past growth rate, latest half year FCF exceeded entire FY2016 FCF by 340%.
> 
> Not that I'm defending this stock in anyway, I do agree there are more bargains elsewhere.






ReXXar said:


> Do you mean the future growth rate? How would you know how many contracts they will win/lose in the future?
> 
> If you're talking about past growth rate, latest half year FCF exceeded entire FY2016 FCF by 340%.
> 
> Not that I'm defending this stock in anyway, I do agree there are more bargains elsewhere.





I personally followed Ben Graham's rule of thumb, short hand, valuation formula and it generally work pretty well. 

In general, don't invest in companies where its PE is above 22 times. Others might think that PE ratio is useless because of the price... that's not true.

Graham's rule, and this is one of those with "all things being equal" caveat... is 

V = E *(8.5 + 2g)

where V is the company's value, E is its earning power [or, in his example, the latest company's reported earning if you are interested in trying to figure out what the professional analysts are thinking]... and g is the expected growth in earnings over the next 7 to 10 years. [or the sales growth if you want to know what the smart money is thinking, again].

So at PE, or VE in this case, of 22... anual growth over next decade should not exceed 6% to 7% p.a.

I know, it's too simple etc. But it does work out pretty well on both current and historical companies I've looked at.

So while it might not be genius-level DCF forecasting, it does a pretty dam good job at knowing what' the marke tis expecting given the price it's asking. Understand the business well enough so that you can decide whether they are too optimistic or too pessimistic... and decide how long you are willing to wait for it to work out. A couple of years, a decade... 

best to find quality businesses, then you can be a bit off on the price but it'll work out pretty well... all because that's what good businesses tend to do. Buffett said that. 

---------

You're on to what I think is a great point about investing in businesses. That who could really know whether the company will win or lose a tender; know if one or two of its projects/product fail or succeed. No one knows... So find businesses where tolerance for a few failures are fine... don't price/value too close for comfort.

Smart monies, it appears, are moving towards robotics, AI and other algorithm to time stocks and the market. It might do wonders for those old fashioned investors who's clueless about these high-tech stuff. All one need is an alternate source of income other than stocks, patience and an ego big enough to never admit you're wrong


----------



## ReXXar

luutzu said:


> All the information you'd need to analyse a company you can find from their annual reports and website. Now and then some news site might point to some latest development the company doesn't want release yet, but they generally just repeat what's been released publicly by the company.
> 
> Yea I generally study companies myself. Using DangInvestor and Google. On one other company I'm currently discussing with another smarter guy but yea, no one can really make investment decision for you so it's helpful but at the same time useless to work with others.
> 
> I mean it'd be good to work with others just that you'd want someone with no social skills so they'd laugh at you when they need to. Just who needs friends like that anyway. It's good to bounce ideas around but it could be distracting.
> 
> I design and code all of DangInvestor's core modules. The other, "non-important" bits , like hardware, URL and stuff I had my smarter brothers done for me. They don't have much respect for this useless investing business, hehe, so are busy working at real important work that affect actual corporations.




So you did programming for them, that's great.  My best friend in high school is a programmer specialising in web scraping, he studied AI at Oxford and now works at a hedge fund in New York still doing something with web scraping.  He puts all his money in an index fund though, not good at stock picking I guess.  I'll sign up to your program, how does the program access all the financials, does the ASX website shares APIs for all the companies' financials??


----------



## ReXXar

luutzu said:


> I personally followed Ben Graham's rule of thumb, short hand, valuation formula and it generally work pretty well.
> 
> In general, don't invest in companies where its PE is above 22 times. Others might think that PE ratio is useless because of the price... that's not true.
> 
> Graham's rule, and this is one of those with "all things being equal" caveat... is
> 
> V = E *(8.5 + 2g)
> 
> where V is the company's value, E is its earning power [or, in his example, the latest company's reported earning if you are interested in trying to figure out what the professional analysts are thinking]... and g is the expected growth in earnings over the next 7 to 10 years. [or the sales growth if you want to know what the smart money is thinking, again].
> 
> So at PE, or VE in this case, of 22... anual growth over next decade should not exceed 6% to 7% p.a.
> 
> I know, it's too simple etc. But it does work out pretty well on both current and historical companies I've looked at.
> 
> So while it might not be genius-level DCF forecasting, it does a pretty dam good job at knowing what' the marke tis expecting given the price it's asking. Understand the business well enough so that you can decide whether they are too optimistic or too pessimistic... and decide how long you are willing to wait for it to work out. A couple of years, a decade...
> 
> best to find quality businesses, then you can be a bit off on the price but it'll work out pretty well... all because that's what good businesses tend to do. Buffett said that.
> 
> ---------
> 
> You're on to what I think is a great point about investing in businesses. That who could really know whether the company will win or lose a tender; know if one or two of its projects/product fail or succeed. No one knows... So find businesses where tolerance for a few failures are fine... don't price/value too close for comfort.
> 
> Smart monies, it appears, are moving towards robotics, AI and other algorithm to time stocks and the market. It might do wonders for those old fashioned investors who's clueless about these high-tech stuff. All one need is an alternate source of income other than stocks, patience and an ego big enough to never admit you're wrong




I find Graham's rules too rigid, bear in mind he made developed his system after the crash of 1929, when stocks trading below NTA were everywhere, the market has changed since then.

Nothing wrong with high PE stocks, ever heard of Gary Pilgrim?? I think for 10 straight years his refund returned 40%+  He was buying stocks with very high PEs, above 50 and 60, what he focused on was growth rate in earnings.  This is why PE should always be viewed in conjunction with growth rate, and not by itself.

Regarding smart money moving to algorithm trading, this doesn't effect value investors.  It will cause the market to be more volatile, but in the long-term, as Graham said, its a weighting machine.


----------



## luutzu

ReXXar said:


> So you did programming for them, that's great.  My best friend in high school is a programmer specialising in web scraping, he studied AI at Oxford and now works at a hedge fund in New York.  He puts all his money in an index fund though, not good at stock picking.  I'll sign up to your program, how does the program access all the financials, does the ASX website shares APIs for all the companies' financials??




You enter the financial data yourself. I know, people love to do that. But I've thought long and hard about APIs and buying data from vendors... honestly all those data are inadequate, and what is of use you can get them for free all over the internet.

DangInvestor is for those who want to really know the company they're looking to invest in. It's not for browsing or shortlisting and such. That's why you can use it to study and analyse any company... public, private, all over the world. And you get to own your research and data on it. 

So yea, use it to carefully study and value companies you've been browsing elsewhere. Then just enter the financials and it'll really tell you what you should focus on. Companies like AHY, APA, and probably MYX... the basic financials from elsewhere won't tell you to stay away, this one does.

I should probably get on with making how-to videos.

btw, email server is currently down so notification won't work. Sign up and message me if you happen to register next day or two.


----------



## luutzu

ReXXar said:


> I find Graham's rules too rigid, bear in mind he made developed his system after the crash of 1929, when stocks trading below NTA were everywhere, the market has changed since then.
> 
> Nothing wrong with high PE stocks, ever heard of Gary Pilgrim?? I think for 10 straight years his refund returned 40%+  He was buying stocks with very high PEs, above 50 and 60, what he focused on was growth rate in earnings.  This is why PE should always be viewed in conjunction with growth rate, and not by itself.
> 
> Regarding smart money moving to algorithm trading, this doesn't effect value investors.  It will cause the market to be more volatile, but in the long-term, as Graham said, its a weighting machine.




Yea, robots and algo will cause more volatility, and so would benefit value investors in general. 

The way Graham personally invested might be too rigid and cautious, but pretty much everything that can be said of investing he had said it. Both on growth and value.

As Buffett often repeat a Graham's adage: growth is part of value. So when an investor buy into a business, they expect it to continuing growing - that's what a good business does. But how  much can it grow, at what rate on average over the years. Most quality, financially established businesses just cannot grow at more than 7%p.a. for a decade. Maybe there's a few that can do that if given enough time and enough luck... just that it might not be sensible to bet on that.

For companies with PE above 30, there might be companies that grow at such expected rate... at 30 times that's about 10% a year for  adecade, at 60 times it's 25.75% a year. 

If an established business, heck, if any business, could compound its earnings at such rate, it'll soon enough take over the world. So while it's possible to achieve that... any disappointment will see the share price, and possibly the business, crashing.


----------



## ReXXar

Those are momentum investors, they continuously rotate into growth stocks which exhibits growth rate exceeding their PEs, and exit once after there is positive earnings surprise, they would not hold a stock for more than few weeks or months, let alone a decade.

Regarding Buffett, be careful with his quotes, most individual investors follow everything he says to the letter, Buffett has also changed his strategy, when he was younger he was flipping stocks all the time, as he got older and managed more money, he have no choice but to buy out whole companies due to the size of his fund and transaction cost, this actually lowered his return. 

Having said that, I remember you said somewhere in an earlier post you don't use stop loss and just wait it out until the stock rebounds, I've seen stocks that fell from 15x to 5x earnings with excellent growth trading sideways for years, its unbelievable how low a stock can get and how long it can stay there until momentum builds up again, I hope you won't experience that.  I've seen a stock trading at 0.5x FCF for over ten years with cash per share more than share price itself. It's dangerous to assume time will fix everything, after all in the long run we're all dead anyway. On a side note, I'm going to spend less time on this board, I need to work on my system.


----------



## galumay

Its a bit hard to tell who you are replying to when you dont use quotes, ReXXar. But if you are continuing to reply to me regarding PE ratios, I am well aware there are many who see something meaningful in them. I dont, price is not a useful input IMO. 

I dont use stop losses, I can give you plenty of examples contrary to yours, where a stop loss would have forced you to sell at a loss and you would have missed very large profits when the the share price later went up strongly. Dont assume my strategy for investing doesnt work just because it doesnt fit your world view.


----------



## Knobby22

ReXXar said:


> Do you mean the future growth rate? How would you know how many contracts they will win/lose in the future?
> 
> If you're talking about past growth rate, latest half year FCF exceeded entire FY2016 FCF by 340%.
> 
> Not that I'm defending this stock in anyway, I do agree there are more bargains elsewhere.




MNDs income is lumpy, in competition with other businesses and relies on growth of the economy.
No real fences. So you shouldn't pay too high a PE for it. It has come back but that's because it went backwards. Not saying you shouldn't own medium term but not a company that will just keep growing strongly forever.


----------



## skc

skc said:


> MND had revenue of $2.6B in 2013. If it's revenue was to fall in line with total resource investment spend.. revenue could be as low as $800-$1B in two or three years time. *It's not unrealistic to expect MND earn <5% NPAT on $1B... which makes it <$40-50m NPAT. *Compared that to the current market cap of $600m.
> 
> The future is uncertain... but conditions for MND can easily get much worse.




MND released their FY17 report on Tuesday and the stock has rallied strongly for the last 2 sessions. I was interested to look back at some of the posts made in August 2015, after the FY15 report. Overall, the numbers presented by MND certainly headed in the same direction as my forecast. NPAT is $57.5m which is a bit over half of of that reported in FY15. NPAT margin is 4.54%, on revenue of $1.27B (management has done well growing the maintenance business).







What is not envisaged however is how much the market is looking forward to the next upswing. I can only guess that's why MND is somehow trading at some 25.5x earning. That is a multiple for a company with steady reliable growth. From a trading perspective, what I said below certainly turned out to be correct. But fundamentally.. it just feels a bit rich.



skc said:


> I am gudessing the time to buy is when the market cap has turned up while the profit is still falling.


----------



## galumay

skc, I agree its looking pretty fully valued at the moment, I think that there is some pricing in of just how well managed MND is, the success of their transition out of the construction boom and their transitioning of the business to a broader base. 

I think I have said before, from an inside point of view they were always one of the best positioned to survive the cyclic events in the industry, I certainly paid too much for them when I first took a position, but I held on largely for the reasons described above, and now my patience has been rewarded.

Its been a pretty constant stream of positive events for MND this year, I suspect that it would only take one small negative event to cause a substantial drop in price - for the exact reason you mention - Mr Market looks to be factoring in a continuing favourable environment.


----------



## notting

Appeared to complete it's short squeeze on 23 Aug
Now it would need some fundamental buying to keep it going.
The fundamentals aren't really stacking up at this level!


----------



## Value Hunter

This is a classic case of a cyclical company, where Ben Graham's thinking to use the last 10 years average earnings per share should be applied as an analytical tool for the earnings figure in the valuation (combined with a view of the future of course).


----------



## luutzu

notting said:


> Appeared to complete it's short squeeze on 23 Aug
> Now it would need some fundamental buying to keep it going.
> The fundamentals aren't really stacking up at this level!




The market might be pricing in that "upswing" as skc said... Since I'm not told what part of MND's business they're expecting to swing up, if it were to include an optimistic view of all of MND's new ventures since the mining collapse, the current $15 is undervaluing all that potential.

I mean there's the water infrastructure in ANZ, the potential of finally entering into waste management. There's the gas and chemical plant and piping/engineering work in the states; the potential to get some of that planned $1trillion infrastructure spent the yanks have been talking about all these years to replace their crumbling infrastructure.

The fabrication works... the Rio Tinto mine in Mongolia they've been chasing and starting to win a job package so far.

So there's all these seedlings they've sown since the mining bust. Then a potential for the upswing in mining and offshore gas/oil works. Then there's the rumoured acquisition of a sizeable civil engineering company.

One of those company that if it keep on doing what it's been, it's to hold for life.


----------



## Miner

How is MND going forward ?
$110 M contract only a week back.
A new announcement - see attached
24 Nov - Director sells 1/3 of the holding 1 million shares in one day.  Desperate financial need or something else ? Not to that volume overnight. Market will see tomorrow. DNH but will watch


----------



## luutzu

Miner said:


> How is MND going forward ?
> $110 M contract only a week back.
> A new announcement - see attached
> 24 Nov - Director sells 1/3 of the holding 1 million shares in one day.  Desperate financial need or something else ? Not to that volume overnight. Market will see tomorrow. DNH but will watch




I own a fair bit of MND so could be biased... But the prices the directors sold at did have what I'd reckon is a couple of years forward pricing priced into them. So if I need the cash I'd sell too.

I think a different director recently bought some $30K at the $16 to $17 mark. 

I don't see anything fundamentally wrong or weak with the company. In fact, it's looking like it'll report a fairly impressive half and final year coming up. Things are looking very good for them.


----------



## Miner

Good point of course. But do I compare $30 K vs $17 M ? It is almost like giving tips to bar tender after spending (actually earning) $17 M .
Let us see what pans with MND in next 4 weeks. I am not holding but would check temptation if goes below $14.


----------



## luutzu

Miner said:


> Good point of course. But do I compare $30 K vs $17 M ? It is almost like giving tips to bar tender after spending (actually earning) $17 M .
> Let us see what pans with MND in next 4 weeks. I am not holding but would check temptation if goes below $14.




Rubino was a top10 shareholder in Immuno [therpeutics?] a couple of years back. Maybe he made a massive capital loss there and this wouldn't be a bad time to sell those MND stocks he might have bought during its 20s some years back?

It's hard to know why a Chairman/Director sells. Rubino pretty much founded MND and made it to what it is today. So it is a bit of a worried seeing him halving his holdings. 

But yea, I can't see anything wrong with MND future prospects. I put its price at $16 a couple of years back and it'd be some $20 over next couple of years. Maybe a bit higher... depends on how its other prospects turn out.

Its waste management venture [in Anaeco] looks to be stuffed. But there's Water Infrastructure; Renewables; it's looking to get/acquire a civil/infrastructure company soon... Australia is getting into that infrastructure business to hopefully prevent a full blown crisis when property goes to heck soon enough.

The rising costs of energy/oil should make renewables tempting.

Then there's RIO's work in Mongolia it's winning and are tendering for a couple more packages. The potential for new work as recent bust mean capex/opex was on hold and the wheels need more grease and deposits need new fields...


----------



## peter2

The MND chart has got me interested. Price has fallen with the market and has found support at it's prior BO level ($15 -$16). The daily chart shows an ascending triangle with the BO level at $16. The volume indicators OBV and TMF are rising, indicating accumulation. The initial target would be the old high at 18.50. This provides an acceptable RR for short term trading opportunity.

Since the prior move down was impulsive and the current price movement corrective. It's possible that any BO might be short lived. In the case that this price movement remains corrective I'll be taking some profit at 17 to lock in a BE result.


----------



## peter2

My last BO-HR trade in MND fell apart after re-testing the BO level. Price is now at an interesting level being an equal swing low. If price falls below 14.40 MND goes into the bin. All is not forlorn yet. If we see a little "spring" (doji, tweezers) to get rid of the last sellers (others like me) at this level then that would be very interesting. 

@luutzu  What's happening? The chart indicates that all is not well with MND.


----------



## luutzu

peter2 said:


> My last BO-HR trade in MND fell apart after re-testing the BO level. Price is now at an interesting level being an equal swing low. If price falls below 14.40 MND goes into the bin. All is not forlorn yet. If we see a little "spring" (doji, tweezers) to get rid of the last sellers (others like me) at this level then that would be very interesting.
> 
> @luutzu  What's happening? The chart indicates that all is not well with MND.
> 
> View attachment 87560




No idea. Only guesses and wishful thinking 

Did google news search but came up with nothing the past week.

So guessing that either it's about to do that major acquisition it's been scouring the world for, and some in the market know how stupid that is. 

Or, there are players pushing the price down enough to then make a takeover offer for MND.

With over $200M in cash, market cap about $1.31... good reputation, well managed, practically zero debt... with the macro environment looking positive on many fronts. Good candidate I reckon.

Its JV and syndicate just won another wind farm project today.


----------



## peter2

Thanks for the update. I'll keep an eye on MND for a failed break-down setup (spring).


----------



## peter2

Today's price action was ugly. It opened below my support line and closed lower. 
MND is demoted and dumped into a reversal watch list, but I'll need to see immediate buying and a higher low on the daily chart before getting interested again.


----------



## luutzu

peter2 said:


> Today's price action was ugly. It opened below my support line and closed lower.
> MND is demoted and dumped into a reversal watch list, but I'll need to see immediate buying and a higher low on the daily chart before getting interested again.
> 
> View attachment 87621




Strange. There's no news, that I know of, and somehow it just get hammered. And looking like it'll get lower for a bit more while yet.

Comparing MND to WorleyParsons... MND is a far superior company. Yet WOR's share price is steady while MND drops. Maybe the fact that MND haven't been awarded that many projects lately as compare to WOR. 

Gotta get work but only at a decent price though. Else you'll just be working and losing money... something not to do. 

But yea, still holding. Hoping it gets a lot more depressing.


----------



## tinhat

I'm popping this one on the watchlist. Solid company. It's been in a downtrend all year. But why this company? The sector overall has been bullish, yes? Has MND been front-running the rest of the sector? Technically, it looks like it is headed down to the 50% retracement level ($12.60) from the bull run of Dec 2015 (low $5.32) to Nov 2017 (high $19.81)


----------



## peter2

Looking over some charts of companies that reported well. My definition of well is seeing the price spike up after the report is released. MND fits this category. I've bought a half position today. The chart looks sloppy (= corrective) and I'm hoping the next swing is going to be up, back to 15.50. Expect the price to fall 0.32 when it goes XD soon. My line in the sand is 13.50.


----------



## peter2

MND is looking better after a month of strong demand. The Sept18 monthly bar was a bullish outside reversal bar, off support and with above average volume. All good. Not far to get to a prior high ($16.8).


----------



## luutzu

peter2 said:


> MND is looking better after a month of strong demand. The Sept18 monthly bar was a bullish outside reversal bar, off support and with above average volume. All good. Not far to get to a prior high ($16.8).
> 
> View attachment 89558




Could be just me but seem there's some market manipulation going on to depress the share price around the dividend-reinvestment price setting period. 

Man, these guys sure know how to sit on their cash pile. I don't mind it, it show careful management... something you need to be in the construction/engineering business. 

But afraid that sitting on it too long will see missed opportunities, or be taken over on the cheap.


----------



## Triple B

peter2 said:


> MND is looking better after a month of strong demand. The Sept18 monthly bar was a bullish outside reversal bar, off support and with above average volume. All good. Not far to get to a prior high ($16.8).
> 
> View attachment 89558



Looks good. appears accumulation under $15. high vol downbar as price hit $15 then quiet accumulation. lower vol mark up indicates supply still being held as demand is medium. ex div on 13th Oct used as catalyst for mark up as divvy chasers buy up to $18.50 . will need the help to jump Resistance at $16.50
price below Vwap $16.93 Broke all MAs
Got all the signs.
Good luck
Just noticed the high vol after the gap above the trading range. Lots of stock changing hands there.
top 20 share holder hold 54%


----------



## luutzu

Just realised that MND is a rare 112-bagger since 1994. 

Its share price in 1994 was around 50c. Had a stock split of 1 to 4 in 2005... not counting the dividends, that's some great gain.


----------



## luutzu

Just done reading through 24 years of MND's annual reports. Yea, I got no life.

One of Australia's best companies I reckon.

Its drive into Infrastructure started way back in the early 2000s, in the middle of a surge in mining and mierals; formally established around 2011 with management teasing that big hunt for a faster push into "infrastructure"... any time now boys.

As to its infrastructure plans... incredible how Rubino and Velletri's stated objective for it are already gaining great traction without the market, I guess, appreciating it so much.

There's the water infrastructure and irrigation; the JV with ZEM Energy winning windfarm projects - four in the past year. 

The geographic expansion for Water, irrigation... I'm guessing also renewable into NZ.

There's the Oyu Tolgoi project they've been hanging around with RIO in Mongolia since, from memory, about 2013. They've won a couple work packages and things are about to pick up there. With MND establishing an upskilling and training operation in Mongolia specifically for the project... they're going to win work either way I reckon.

There's the 3 major Iron Ore projects with FMG, RIO, BHP that's been greenlighted and MND is bidding for all three of them. They're each about $300M a pack.

With the liberation of Venezuela, and soon Iran... the four or so years of oilers starving... opportunities in this sector will likely pick up soon.

Funny that with fossil picking up, investment in renewable will also likely to pick up too. MND's Zenviron JV should further benefit from that.

I own the stock and could be biased... but looks like the ducks are lining up... and MND got $208M in cash, practically zero debt, great management and highly capable workforce to take advantage of that.

My "research" and "forecast"...


----------



## peter2

This thread has been quiet due to the falling price of MND shares. However I noticed today that there seems to have been some accumulation recently. The weekly chart shows multiple bars with tails (closes off the lows). Average trading volumes have been above average as well. I've had a nibble and will add when price closes above my break-out line.


----------



## RobL

BraceFace said:


> OK, I've done a search and there doesn't seem to be a thread for this company.
> 
> This one has been on my watchlist for a while and appears to be good value at $6.00. Has been up to $7.00 when the resource sector was booming.
> 
> This is one of those companies that is still resources driven but does not have the same volatility as a true resource/exploration company. In other words, commodity price fluctuations shouldn't have such an impact on the share price.
> 
> Would any one else be prepared to make a comment or observation about MND and perhaps suggest a buy, sell or hold rating?
> 
> Most brokers seem pretty bullish on it.



The daily price 50MA has just fallen below the 200MA indicating a bearish trend.


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## Porper

RobL said:


> The daily price 50MA has just fallen below the 200MA indicating a bearish trend.




True, but when looking at reversal setups the trend will usually be down, depending on your timeframe.


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## peter2

As @Porper mentions, this setup I've posted on MND is a reversal setup. The weekly price trend is most definitely down and one up bar doesn't make a new up trend or even change the down-trend. Perhaps I should have posted it in the "Have we hit the bottom yet?" thread.

I like to have a go at a few reversals in my portfolios when the overall market is struggling and I'm unaware of any issues with the company. @luutzu has always given this company a thumbs up.  It's similar to a value investor buying a beaten down stock that might provide a good reward for the risk. I've a list of stocks that are in strong monthly and weekly up trends that I'd like to buy/trade when their prices dip.

MND is near the bottom of a monthly trading range.


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## Trav.

I was about to post here yesterday on the way that the market responded to the announcement that MND released ( lack of response ) and thought nah then deleted it.

Then today the SP went up 2% ( with most of the market ) and thought why not post something here as it might stimulate some conversation.

I am short on this so we will see who comes out on top ( i am thinking that I am probably the underdog in this fight with points in the early rounds going to MND )

Chart - comments re news today is actually yesterday as stated above I had typed this out last night.

so up 2.1% today with a high of $17.495 which could have been a gain of ~3.5 which would of hurt me but closed lower than the open ( red bar ) hopefully tomorrow it will continue my down trend


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## Dona Ferentes

It's a lovely stock to own and really hard to sell... the CGT would kill me!. Bought before the 1 for 4 split and now I usually  get initial capital back each year by way of dividends.

The management has run a tight ship, rode the resources boom in WA then, in the downturn, diversified into new areas like infrastructure and renewables, where margins are lower but enabled them to keep their loyal workforce. They have maintained relationships with the majors for decades. BHP and Rio are still important sources of new work.


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## galumay

Yep, its a well run business. I sold out a couple of years ago. One I should have kept holding.


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## Dona Ferentes

> .one  of those companies that is still resources driven but does not have the same volatility as a true resource/exploration company. In other words, commodity price fluctuations shouldn't have such an impact on the share price.



 I've been trying to work the vol out. Not directly related to commodities but a by a second variable. The lags in meeting demand are extended as the complexity increases. Getting projects up can take decades. Then if there's oversupply and lower receipts, what happens? Cost cutting, abandoned projects, maintenance delayed or on hold. But can only do this for a while.

A smart company like MND doesn't run too much debt, or bid just for the sake of work. Others do and get crunched. 

I notice a lot of commentary is trying to get a TA interpretation on shareprice. The lumpy nature of contract winning and second dependence on the big boys implies, for me, balance sheet strength is more important for performance.


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## Dona Ferentes

Serious accident in Kalgoorlie workshop. Death of a worker.


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## Dona Ferentes

_*Strategic review of Water Infrastructure business*_ 

- Several water projects approaching completion have recently experienced an escalation in contract disputes and disappointing levels of profitability.  
- After undertaking a strategic and operational review of its Water Infrastructure business in Australia and New Zealand, the Company has decided to discontinue its operations in New Zealand and consolidate its east coast engineering construction operations into a single Eastern Australian business unit. The restructure will enable the Company to reduce costs and focus on improving the quality of its earnings from the water sector.
- As a result of the decision to refocus the business and the disappointing project outcomes, the Board of Directors will make a provision of $14 million before tax in the financial report for the year ended 30 June 2020 for project underperformance and restructuring costs.  

_- dropped 10%_


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## Dona Ferentes

make that 15% - professionals @ close


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## finicky

Monadelphous

With April's close below March's close it wouldn't surprise me to see MND revisit the GFC and 2015 lows of ~$6 in this climate. Might sound a bit glib but I have stared at the chart for 10 whole minutes.

Great company but it doesn't seem worth buying except near major lows - assuming one can pick it.

Treating the chart as a double top, the price should never have sliced through the $12 trough - that gives me a rough measured target of $4, so $6 seems a decent possibility given the s.p has been there twice before.

I remember chatting about MND on another forum during the GFC; the $6 number came up then but it seemed so unlikely for the quality company that MND is. Anyway when it actually reached that price I still lacked the nerve to buy any. 

Be great to pick up MND and cousin LYL at a major low.

*MND* Mthly with April's close not showing yet


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## finicky

@Dona Ferentes following LYL comment:
Yes, looks like it'll be a long wait for $6 MND now, have to wait for the 2021 'global deflationary bust' @DaveHcontrarian
Strong move above the ABC April corrective move and as long as it holds today looks good for more I suspect.
Not a trader and trying to accumulate cash as soon as fy20 concludes so I'll wait for a major low if/when in future, MND high on my wishlist.


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## finicky

Still waiting for $6. Maybe in a year or so? In my top 10.

*Monadelphous wins $150m in mining deals*

Australian Associated Press
1 June 2020

Engineering group Monadelphous has won around $150 million worth of contracts from the energy and resources sector, including BHP, Fortescue and Rio Tinto.

The big three miners have all handed Monadelphous more work from their iron ore operations in Western Australia's Pilbara region.

Monadelphous will take on the dewatering of surplus water for BHP at one mining area, and its time on BHP's engineering panel has also been extended by two years to enable it to provide civil, structural, mechanical, piping and marine services.

Rio Tinto has given the company a three-year deal to maintain its Pilbara marine infrastructure, while Fortescue has extended Monadelphous' two contracts for fixed plant maintenance and shutdown crane services by another year.

In Queensland, Monadelphous has gained a separate four-year contract to continue providing mechanical and electrical maintenance services in coal seam gas from an unnamed customer.

Monadelphous has also retained business with Newcrest Mining in Papua New Guinea.
The company will provide civil, mechanical, structural, piping, blast and paint services to gold mining operations on Lihr Island for three years.


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## Dona Ferentes

Treasurer Josh Frydenberg told a press conference yesterday the mining sector was the one bright spot in the latest economic statement.

_Mining investment is forecast by Treasury to *grow by 4 per cent* in the 2020 financial year – the first sign of growth in seven years. The *2021 financial year growth is forecast to be even stronger *at 9.5 per cent._

_"Industry consultation and recent capital expenditure data suggest that investment in large iron ore projects is expected to continue in order to sustain productive capacity and maintain large capital stocks accumulated over the investment boom," Treasury said._


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## Miner

Dona Ferentes said:


> Treasurer Josh Frydenberg told a press conference yesterday the mining sector was the one bright spot in the latest economic statement.
> 
> _Mining investment is forecast by Treasury to *grow by 4 per cent* in the 2020 financial year – the first sign of growth in seven years. The *2021 financial year growth is forecast to be even stronger *at 9.5 per cent._
> 
> _"Industry consultation and recent capital expenditure data suggest that investment in large iron ore projects is expected to continue in order to sustain productive capacity and maintain large capital stocks accumulated over the investment boom," Treasury said._



@Dona Ferentes  - thanks for the posting. I tried to find a correlation or exclusivity of the announcement with Monadelphous. Is it because Monos are working on iron ore ? But so are others. Sorry - may be you give more info on this. DNH MND


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## Dona Ferentes

nasty

_MEA had been performing maintenance shutdown services prior to the fire commencing [Jan 2019], and Rio Tinto has alleged that MEA was in breach of the maintenance contract, thereby causing the fire. Although the writ does not specify any damages, Rio Tinto has separately informed MEA that its claim is for  AUD493m in loss and damage.  This amount comprises AUD35m in material damage costs associated with the re-construction of the Sinter Fines processing facility, and AUD458m for a temporary operating solution and business interruption losses arising from the alleged inability to process iron ore during the period of reconstruction of the facility.
_
- lawyers field day


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## Miner

Dona Ferentes said:


> nasty
> 
> _MEA had been performing maintenance shutdown services prior to the fire commencing [Jan 2019], and Rio Tinto has alleged that MEA was in breach of the maintenance contract, thereby causing the fire. Although the writ does not specify any damages, Rio Tinto has separately informed MEA that its claim is for  AUD493m in loss and damage.  This amount comprises AUD35m in material damage costs associated with the re-construction of the Sinter Fines processing facility, and AUD458m for a temporary operating solution and business interruption losses arising from the alleged inability to process iron ore during the period of reconstruction of the facility.
> _
> - lawyers field day



Truly so - specially under such situation - bad breadth spreads fast among mining community


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## Miner

End of the day MND dived down by more than 10 pc . almost lowest in last 12 months.
1.1 million shares changed hands. The volume is almost three times more than the previous day and one of the highest volume. Would Tuesday be any better - legal case is just the beginning.
I feel bad for the organisation having known them since 1994 or so being a miner in Kalgoorlie region at that time.
They used to have good crafts but many have retired. Many of the existing personnel are frustrated and looking for exit.  Good policies on paper but poor execution. Many staff are very green. HR is useless to differentiate chaff from wheat.
Not holding. Had a wish but would wait on the sideline . Would like to hear from others too, should I be seeing too much on this.


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## Dona Ferentes

AGM time

"While the economic outlook in the wake of COVID-19 remains uncertain, the resources sector is expected to provide a steady inflow of opportunities over (the) coming years,” Rob Velletri said.

“… In the longer term, demand for maintenance services is expected to grow on the back of aging assets and customers deferring non-essential work in prior periods.

“… The short to medium-term financial performance of the business will be dependent on the extent and duration of the impact to the company’s operational activity and productivity levels resulting from the spread of COVID-19.”


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## Dona Ferentes

I should have put MND in the November comp; at least 50% lift over the month!


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## Dona Ferentes

MND won an appeal on a $7million R&D tax ruling from 2015-16


> The Company has been notified that, upon review, AusIndustry has set aside its original findings and substituted new findings that the relevant activities in the 2015 and 2016 years were eligible for the incentives. Accordingly, the Company will reflect the reversal of the provision it had made in respect of this matter in the period ending 31 December 2020, and commence the process to obtain a refund of amounts paid to the Australian Taxation Office.


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## Dona Ferentes

*Performance Highlights  * 

Revenue $947.8 million, up 19% on 2H20 and 11% on pcp  
Net profit after tax $31.6 million 
Interim dividend 24cps, fully franked 
Secured $360 million of new contracts and extensions 
High level of activity in iron ore sector 
Substantial improvement in safety performance 
Strategic focus on people initiatives in tightening labour market 
 


> _"While the global economic outlook in  the wake of COVID19 remains uncertain, the resources sector is  expected to provide a steady flow of opportunities for Monadelphous over  coming years_,"


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## Dona Ferentes

Rio Tinto had filed a Writ of Summons against one of Monadelphous’ wholly owned subsidiaries in respect of a fire incident which occurred at Rio Tinto's iron ore processing facility at Cape Lambert, Western Australia, in January 2019.

Monadelphous is pleased to announce that a confidential out-of-court settlement has now been reached in this matter, with the settlement being covered by the proceeds of insurance. The parties consider the matter has now been concluded. 


> Monadelphous highly values its long-term business relationship with Rio Tinto, is pleased that this matter has been resolved amicably, and is looking forward to continuing to work closely with this very important customer into the future.




_-good to hear. One uncertainty removed_


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## Dona Ferentes

Performance Highlights  

Revenue $1.95 billion, an 18 per cent increase on pcp 
*Unprecedented shortfall of available skilled resources experienced *
Net profit after tax $47.1 million, up 29 per cent 
Secured $950 million of new contracts and extensions 39 per cent improvement in safety performance 
*Skills labour shortage to continue to be major challenge* 
 final dividend of 21 cents per share, taking the full year dividend to 45 cents per share fully franked. This equates to a payout ratio of approximately 90 per cent of reported net profit after tax.

Wow, 2 out 6 Highlights are about shortages


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## Dona Ferentes

Dona Ferentes said:


> Performance Highlights
> 
> *Unprecedented shortfall of available skilled resources experienced *
> *Skills labour shortage to continue to be major challenge*
> Wow, 2 out 6 Highlights are about shortages



and while the payout ratio is about normal, there is not much wriggle room. And if the capacity is limited, and there is pressure on margins, then earnings could be squeezed, no matter how much cherry-picking of select projects



> _The shortage of skilled labour will continue to be the major challenge for the Company’s operations in Australia. High levels of industry activity and the prolonged effects of COVID-19 international border restrictions limiting skilled migration are contributing factors. As highlighted earlier, the impacts are particularly acute for fly-in flyout construction work in the resources and energy sectors where restrictions in the mobility of personnel due to unpredictable interstate border restrictions are impeding labour mobilisation and impacting operational productivity. _





> _In response, Monadelphous will strategically target new work opportunities that best utilise the skills of its workforce, working collaboratively with customers in this regard. The Company will also focus on bolstering its employee attraction and retention practices, including performing a review of its variable remuneration practices to support the retention of key talent_.




I sold a parcel of MND just prior to 30 June for $10.10 then thought I had been silly to let tax considerations drive things as the SP clambered 15% higher .  Now down with a thud, to about that exit point.


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## Miner

With labour shortage going to be short lived but iron ore price slump will start the process of lower capex , lesser maintenance and construction works on brownfield  as well.


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## divs4ever

Miner said:


> With labour shortage going to be short lived but iron ore price slump will start the process of lower capex , lesser maintenance and construction works on brownfield  as well.



 i disagree  , labour will remain restricted forcing more automation and mechanization ( which SOUNDS great  until you try to reduce costs during the slumps , and the financiers still demand you keep up the lease payments )

 now there SHOULD be an increase  in mining expenditure ( a genuine boom ) coming in the next two or three years  , so be careful 

 the resources cycle is severely out of kilter  , add in the mania for EV minerals  and things could go seriously wrong ( or right )

 take care 

 i hold several rivals to MND

 but MND around $9 MIGHT tempt me to dabble here as well


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## Miner

divs4ever said:


> i disagree  , labour will remain restricted forcing more automation and mechanization ( which SOUNDS great  until you try to reduce costs during the slumps , and the financiers still demand you keep up the lease payments )
> 
> now there SHOULD be an increase  in mining expenditure ( a genuine boom ) coming in the next two or three years  , so be careful
> 
> the resources cycle is severely out of kilter  , add in the mania for EV minerals  and things could go seriously wrong ( or right )
> 
> take care
> 
> i hold several rivals to MND
> 
> but MND around $9 MIGHT tempt me to dabble here as well



Slightly more than a month from your posting  - looks like your temptation to grab MND is coming to fruition


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## divs4ever

divs4ever said:


> i disagree  , labour will remain restricted forcing more automation and mechanization ( which SOUNDS great  until you try to reduce costs during the slumps , and the financiers still demand you keep up the lease payments )
> 
> now there SHOULD be an increase  in mining expenditure ( a genuine boom ) coming in the next two or three years  , so be careful
> 
> the resources cycle is severely out of kilter  , add in the mania for EV minerals  and things could go seriously wrong ( or right )
> 
> take care
> 
> i hold several rivals to MND
> 
> but MND around $9 MIGHT tempt me to dabble here as well



  ** Slightly more than a month from your posting - looks like your temptation to grab MND is coming to fruition  **

 i weakened and bought a few MND  @ $9.75 not long after that and currently  have a second order for more @ $8.75 

 sometimes it is only the share price that deters me from buying a good company 

 since i am looking ahead  for 3 or more years i can be patient  if i desire


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## Miner

divs4ever said:


> ** Slightly more than a month from your posting - looks like your temptation to grab MND is coming to fruition  **
> 
> i weakened and bought a few MND  @ $9.75 not long after that and currently  have a second order for more @ $8.75
> 
> sometimes it is only the share price that deters me from buying a good company
> 
> since i am looking ahead  for 3 or more years i can be patient  if i desire



You truly endorse that "patience is a virtue"


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## finicky

I'll wait for $6 *glib*
Probably in the context of_* the most horrendous crash of all time*_.
But don't let me dissuade you

All Data Quarterly


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## Miner

finicky said:


> I'll wait for $6 *glib*
> Probably in the context of_* the most horrendous crash of all time*_.
> But don't let me dissuade you
> 
> All Data Quarterly
> View attachment 130761



Great.
But why you even think so?
Look at last two insider trading.


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## finicky

Discussed it here
$6 is my long term target for MND but not meant too seriously
Not much strength in the chart yet that I can see


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## So_Cynical

Certainly looks to be a good time to buy if you like it, SP certain can move around a bit over the long term considering the revenue and profit doesn't seem to move much.


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## Dona Ferentes

MND holding its AGM today, so the communications are flowing.

In the slides there are some impressive photos of recent jobs done. The size of, especially, the Pilbara iron ore and LNG projects is "Boys Own" stuff.

OUTLOOK
• Australian iron ore industry remains buoyant
• Significant capital and operating expenditure levels driving heightened demand
• Maintenance activity expected to be strong
• Demand for battery metals rapidly increasing, presenting opportunities in Australia and overseas 
• Market conditions in oil and gas improving 
• Transition to clean energy will drive renewable energy developments
• 1H22 revenue expected to be similar to pcp
• FY22 revenue forecast to be lower than FY21
• Stronger construction activity expected in FY23
• Skilled labour shortages expected to continue
• Focus on attraction and retention, working collaboratively with customers and strategic targeting of new work


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## DrBourse

Just looked at the Financials for MND.

I would suggest caution.

Balance Sheet Ratio’s & Margins of Safety are Very Good – BUT Current IV is $8.82 to $9.34, which, with todays SP @ $9.23 makes MND FULLY PRICED atm.

SP is still in a 12mth long DOWNTREND, although it looks like finding Support around the $9.00 Line.

Most ST Indicators are not happy, with most being below their Centrelines, and others close to the Oversold Lines.

Any immediate SP rise should be treated with Caution IMO.

Personally, I would be waiting for another ST pullback B4 I considered trading MND again.

NOTE: I do NOT hold MND atm.

Remember to DYOR


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## DrBourse

My Research on MND Financials for anyone that's interested.








Rember to DYOR - My evels of tollerance may not meet your needs.

Cheers,
DrB


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## DrBourse

Today is 16/12/21 10am - Back on 23/11/21 (ABOVE), I posted my Analysis on MND.

The Chart below shows that punters had 2 chances to buy in @ abt $9.00.






Anyone astute enough to buy in on 29/11/21, the First opportunity, with a sell sometime the next day would have made a reasonable profit.

The second opportunity was on 6/12/21.

Cheers.
DrB


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## Miner

DrBourse said:


> Today is 16/12/21 10am - Back on 23/11/21 (ABOVE), I posted my Analysis on MND.
> 
> The Chart below shows that punters had 2 chances to buy in @ abt $9.00.
> 
> 
> 
> 
> 
> 
> Anyone astute enough to buy in on 29/11/21, the First opportunity, with a sell sometime the next day would have made a reasonable profit.
> 
> The second opportunity was on 6/12/21.
> 
> Cheers.
> DrB



@DrBourse  - did you buy the medicine as per your own prescription


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## divs4ever

my initial buy was in September 2021 ( @ $9.75  , so 'fully priced ' )

 have a second order in @ $8.30 

 but be careful i am only nibbling at this


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## DrBourse

Miner said:


> @DrBourse  - did you buy the medicine as per your own prescription



Hi Miner,
I am no longer authorised to give Buy Sell advice, I can only suggest something punters may care to "have a look at".
I always give my TA &/or FA observations, and always quote the standard DYOR phrase.
Just realised I may have given too much info away on my last FMG post - Ooh Ahh.
Better crawl back into my cave - time to hibernate again.
DrB


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## divs4ever

my tip  for the February comp. is MND ( which i am expecting to slide )

 i have an order in @ $8.30  ( just a nibble )

 but weakened earlier this week to also pick up a small parcel @ $8.90 

 now while i expect  the mining infrastructure spending boom  to begin in the next 2 years , the exposure  to energy infrastructure will make some rather cautious 

 DYOR

 good luck everyone


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## Dona Ferentes

MND doing quite well today  .... +10% and above $12.50. Closing on a high?

No news; I wonder how the other contractors are doing?


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## galumay

Most of them seem to be making money hand over fist, but Mr Market is disinterested.


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## divs4ever

Dona Ferentes said:


> MND doing quite well today  .... +10% and above $12.50. Closing on a high?
> 
> No news; I wonder how the other contractors are doing?



 MCE ( i don't hold )  put out an ann today on a contract win   lifting them around 10%


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## divs4ever

galumay said:


> Most of them seem to be making money hand over fist, but Mr Market is disinterested.



 i would be watching for staff shortages and cost blowouts  , so carefully carefully 

 is up nearly $6  for me since i bought in November 2021 

 MIN has been a little goer for me since buying in  December 2018  ( av. SP $13.92 )


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## Dona Ferentes

Monadelphous continues to pick up contracts across the major miners:

_new contracts and contract extensions in the resources and infrastructure sectors totalling approximately $220 million. _
_ 
The Company has secured a number of contracts for work in the Pilbara region of Western Australia, including: 
• A five-year contract to provide maintenance, repairs, general shutdown services and minor projects across *Fortescue *Metals Group’s Pilbara operations; 
• A multi-disciplinary contract with *Rio Tinto *for the construction of a new conveyor at the Tom Price iron ore mine, which is expected to be completed in the first half of 2023; and
 • A contract associated with the construction of a pipeline and access road at the *Roy Hill Mine* site. The work is expected to be completed towards the end of 2022. 

And in Queensland, Monadelphous has secured a 12-month extension to its existing contract with *BHP Mitsubishi Alliance* for the provision of dragline shutdown and maintenance services to its operations in the Bowen Basin.  _


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## divs4ever

was an inspired ( lucky ) glance  to buy the first parcel ( of MND ) back in September 2021  @ $9.75  

 having already dipped my toes  buying more in January this year @ $8.90  , was just an obvious choice 

 will sit back and wait  for the actual mining investment downturn  so can buy more cheaper


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## Dona Ferentes

FF *dividend of 25c*, (total for FY is 49c). dividend payout ratio 90% ... which means performance and returns are conditional on continuing work. So we turn to the future:

_Markets and Outlook  _
_The outlook for Monadelphous’ core markets continues to be strong. The resources sector in Australia and in the Company’s overseas locations will continue to provide a large number of significant opportunities across a broad range of commodity markets._

_The outlook for the Australian *iron ore i*ndustry is expected to remain buoyant with capital and operating expenditures required to sustain iron ore production levels continuing to drive strong demand for the Company’s services._

_High levels of global demand for* battery metals *are driving significant investment in lithium, copper, nickel and rare earths which will provide numerous prospects in the coming years. These markets, along with the gold sector, will present ongoing opportunities for Monadelphous in Australia, South America, Mongolia and Papua New Guinea._

_Conditions in the* oil and gas s*ector are also buoyant with construction opportunities from the development of new LNG projects currently in the pipeline, and demand for oil and gas maintenance services expected to remain strong._

_Australia’s transition towards clean energy will continue to strengthen and provide opportunities in the *renewable energy* sector. An increasing pipeline of new wind farms coming to market in the next few years will provide opportunities for Zenviron, both in the electricity market as well as in the private sector, as industrial operators move rapidly to meet their decarbonisation objectives. Rapid development of the hydrogen sector is also expected to provide opportunities in coming years. _

_More broadly, buoyant conditions and aging assets across all resources and energy sectors will continue to drive strong demand for *maintenance *services._

_The shortage of skilled labour will be the most significant challenge for the Company’s operations, especially in Australia. The Company is also mindful of the challenges posed by heightening supply chain risks and an escalating cost environment._

_*With capacity constrained, the Company will be taking a strategic and targeted approach to new work opportunities, engaging and collaborating earlier with customers and focusing on earnings quality. *_

_The Company will continue to focus on employee attraction, training and development and making Monadelphous a great place to work. With travel restrictions lifted, the Company has also recently re-engaged its international labour sourcing strategy._

_Supported by its strong balance sheet, the Company will continue to assess acquisition opportunities to achieve ongoing service and customer market diversification and support long-term sustainable growth._

_As highlighted in the 31 December 2021 interim results, following a ramp down in construction activity as a number of large-scale projects completed in the first half of FY22, a new wave of construction projects, currently in the tendering phase, is expected to see activity ramp up over the 22/23 financial year and into following years. Revenue for FY23 will be dependent on the timing of awards and commencement of these projects, and will likely be skewed to the second half. ...._

(HOLD .._. since 2005_)


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## Dona Ferentes

And into THE index

MND to be added to the S&P/ ASX200 in December


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## divs4ever

Dona Ferentes said:


> And into THE index
> 
> MND to be added to the S&P/ ASX200 in December



 i wonder if that will help  or just allow more  traders to sell short 

 there are some take-over plays in motion  MND could stay in the TOP 200 for a while ( as normal residents in the TOP 200 disappear )


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## systematic

Have entered MND into the 2023 yearly comp. They've entered the main index, and broker consensus is buy/hold. This stock is quite capable of making decent sized moves...I think it could run up a positive return in 2023, and that's about all I'm going for!


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