DCG - Decmil Group

[Miner]

Hi

Is there any one who following this stock ?

I noticed it is an interesting rising star. Look its graph and order booking position.

Solid booking for next two years. Very few companies can claim so.

They are also working in a unique area where risk is minimum compared to construction in engineering plant and machinery.

Also look at the transaction on 24 th July - almost four times of other days

Have a look and let me know your thoughts. (attached doc)

 

[Pallen]

Scope for improvement?

Wasnt a recent contract cancelled on the back of a mine closure? One of the two big boys I think?

 

[bobdog]

Hi Miner

Looks pretty good to me. Wish i had see them in Feb.
I kike the fact that the directors are are major shareholders and the possibility of the 500m piping project. will only be good for the SP if they land it. Bought a few today so hope it all goes well.
Cheers

 

[drlog]

Hi all,

The prospects for this little stock look pretty good. I have been working on some software to plot Intrinsic Value (IV) and price.

DCG is trading around fair value as far as I can tell but that value looks like it should increase over the next few years. Note: the IV is calculated based on commsec's forecast EPS and DPS which, as we all know, are probably wrong

Anyway, just a bit of fun, the program is going quite well. Disclosure: I hold.

 

[Noddy]

Hello drlog.

What are you using to calculate I/V.
I normally use DCF.
Do you have a more sophisticated method ?

Regards

 

[drlog]

Hello drlog.

What are you using to calculate I/V.
I normally use DCF.
Do you have a more sophisticated method ?

Regards

I use the method in Value.able - Roger Montgomery's book. I am interested in adding more IV calculations to my program so I will look in to implementing the DCF model.

The Value.able method is based on Richard Simmons' book and the main inputs are ROE, payout ratio and required return. So, I think it is quite a simple model but as you can see in the graph above, from 2009 to now it has been reasonably accurate.

If I could find the current forecast EPS and DPS for all days in the past, I think there would be a better fit. At the moment, all I use is the reported information at the end of the financial year and interpolate between those points. Hence the straight line segments.

Anyway, it's a work in progress and the main point I was trying to make is that DCG looks like it is at about fair value.

 

[McCoy Pauley]

Looking to invest some money and DCG has come up on the watch-list as a possible destination for my money. The first half results seemed to be very positive and they since announced another contract win worth $55 million over 12 months from Fortescue Metals Group. I have it trading at a discount to predicted intrinsic value of about $4.30/share at the moment, based at a premium to the intrinsic value from the end of the previous financial year.

Anyone have any thoughts on Decmil?

 

[drlog]

Looking to invest some money and DCG has come up on the watch-list as a possible destination for my money. The first half results seemed to be very positive and they since announced another contract win worth $55 million over 12 months from Fortescue Metals Group. I have it trading at a discount to predicted intrinsic value of about $4.30/share at the moment, based at a premium to the intrinsic value from the end of the previous financial year.

Anyone have any thoughts on Decmil?

Yes, the market seems to have not cared about that contract, leaving DCG undervalued. I bought more recently. My IV isn't as high as yours but it is still higher than the current share price!

 

[McCoy Pauley]

Yes, the market seems to have not cared about that contract, leaving DCG undervalued. I bought more recently. My IV isn't as high as yours but it is still higher than the current share price!

Thanks drlog.

IMO, it's a bit difficult to predict the intrinsic value for DCG because the company has given only broad guidance about the second half of the year, including saying that the board intends to declare a dividend without saying (as far as I've been able to tell) the size of the dividend. I suppose that's where RM's advice of being vaguely right rather than precisely wrong comes into play.

 

[VSntchr]

I sold out of DCG a few months back as I felt it had surpassed my estimate of what its worth. That value may have risen slightly now, although in my opinion I cant see any decent margin of safety currently present...

 

[drlog]

I sold out of DCG a few months back as I felt it had surpassed my estimate of what its worth. That value may have risen slightly now, although in my opinion I cant see any decent margin of safety currently present...

Heh, I may have snatched your shares from you Seriously though, when I bought my MOS was small but the future IV of DCG is going up (with my current valuations - see my graph above).

 

[VSntchr]

Haha you may very well have. I think I bagged $2.88 for them, at first this seemed a perfect move...but I see it has tipped over the $3.00 mark now.
Im not too unhappy as I used the funds to buy TSM which has performed very well thus far.

Out of interest, what are your future NPAT forecasts for DCG?
I have
2011 - 23m
2012 - 27m
2013 - 31m

keep in mind these are from a while ago and may be outdated as I havent updated my research on DCG since selling.
Based on that NPAT, my value for DCG for 2013 is still only $2.77, hence why I chose to bail out!

Best of luck.

 

[McCoy Pauley]

Haha you may very well have. I think I bagged $2.88 for them, at first this seemed a perfect move...but I see it has tipped over the $3.00 mark now.
Im not too unhappy as I used the funds to buy TSM which has performed very well thus far.

Out of interest, what are your future NPAT forecasts for DCG?
I have
2011 - 23m
2012 - 27m
2013 - 31m

keep in mind these are from a while ago and may be outdated as I havent updated my research on DCG since selling.
Based on that NPAT, my value for DCG for 2013 is still only $2.77, hence why I chose to bail out!

Best of luck.

I have an NPAT of $28 million for FY11 based on the company's (admittedly vague) guidance in its half-year results, where they basically said that they expect second half performance to be similar to first-half performance. From memory, DCG announced an NPAT of just over $14 million for the first half of FY11.

 

[McCoy Pauley]

Another contract win announced yesterday - $71 million job with BHP Billiton Iron Ore to install buildings for accommodation facilities in WA with work to commence immediately and an expected completion date of October 2012. The job lifts the order book for 2011/2012 to $250 million worth of contracts.

Nice one.

 

[tinhat]

Anyone got the insider info on DCG? What's happening? Share price coming right back. Down 5% as of 2pm today! Currently 2.48 Which is right on the fib 61.8% pullback from the Sept 2010 breakout to April 2011 bull run.

 

[skc]

Anyone got the insider info on DCG? What's happening? Share price coming right back. Down 5% as of 2pm today! Currently 2.48 Which is right on the fib 61.8% pullback from the Sept 2010 breakout to April 2011 bull run.

Probably a bit of nervousness ahead of their full year results. Anyone who bought in since the HY result are pretty much underwater.

The old saying "It's falling so market must know something" tends to scare plenty of people away.

If one is trading technically he/she probably should have been stopped out some time ago.

If one is trading fundamentally I don't know why he/she wouldn't hold until the report comes out.

 

[tinhat]

Still getting hammered today on very little volume. Last year they reported in late August. Could be a good buy if the price turns around. I'm detecting a higher degree of nervousness in the market over the pick and shovel, mining services companies.

 

[VSntchr]

In the goldman sachs investor pres. DCG spoke of unprecedented contract tendering with a heap of upcoming potential contracts from companies that they have reputation with.

The sell off in service stocks is being put down to a lack of contracts...so it seems that the market is selling on the rumour...I guess we will have to wait to see if buying on the fact occurs??

As stated earlier in this thread I sold out at near $3, but with the price dropping back below my valuation...I am interested once again...will be stalking this one closely!

 

[McCoy Pauley]

In the goldman sachs investor pres. DCG spoke of unprecedented contract tendering with a heap of upcoming potential contracts from companies that they have reputation with.

The sell off in service stocks is being put down to a lack of contracts...so it seems that the market is selling on the rumour...I guess we will have to wait to see if buying on the fact occurs??

As stated earlier in this thread I sold out at near $3, but with the price dropping back below my valuation...I am interested once again...will be stalking this one closely!

Just to clarify this - does DCG need to re-tender for current contracts or is it only for new contracts?

Price down to $1.89/share and still falling. Back on my radar after I sold out a few months ago.

 

[VSntchr]

Just to clarify this - does DCG need to re-tender for current contracts or is it only for new contracts?

Price down to $1.89/share and still falling. Back on my radar after I sold out a few months ago.

New contracts...
No news would suggest either slow processes/projects being delayed or cancelled. Or unfortunately alot of failed attempts.

If this gets much lower ill be swooping...but with not much capital to play with I'm being very tentative with what im buying at the moment