RCR - RCR Tomlinson

[trinity]

thought I'd start a thread on this one ...

RCR is a multi-disciplinary engineering company specializing in the design, manufacture and maintenance of heavy equipment and industrial boiler systems and site maintenance and construction. RCR is headquartered in Perth, Western Australia, with facilities in Queensland, New South Wales, Victoria and South Australia.

since the start of the year, the sp started off at $2.31, and now stands at $1.26.

newbie question: it came out with their announcement yesterday, sp has continued to drop, around 18% drop yesterday, and another 4% drop today so far. according to it's announcement, the co has had a its fifth consecutive half year of record sales and profits. So, why is the sp going down quickly? is it because even if it recorded a profit half year, but it is not what the market expected? how do you find out the initial profit projections for such companies?

thanks.

ps. i hold RCR ...

 

[oldblue]

Probably has something to do with ABN Amro downgrading RCR from Buy to Hold on a " disappointing result".
They have dropped their target SP from $2-91 to $1-44.

Seems to me that other companies in the "mining engineering " sector have also taken a bit of a hammering lately. SWK, NMS, FGE and BKN are examples.

I guess to check profit projections you need to read company announcements, found on the ASX website or the company's website. I don't know what RCR were expecting profitwise.

 

[Miner]

RCR is a strong engineering company.
Recently it got Positron acquisition by which Jeff Hogan has joined the board and RCR diversified into process and Electrical and Instrumentation area. RCR used to have a very strong customer base. As a result they became a bit hard nosed ! The result has been reflected by their losing contracts. You might have read the statement from RCR Chairman that 'we need to bid for small and medium size companies as well.

After FMG contract the next big one to win a $50 M contract this week. Not a huge value but reasonable.

Jeff has his own client base and RCR could take a multi discipline contract than just SMP contracts like recent past.

However late Feb two of directors bought shares at price more than the current market. There could be some more acquisitions coming.

Some of the comparable companies are Southern Electrical, Logi Cam, Austin Engineer ANG, CRE (now part of Macmahon), Cootee . The difference is RCR has both the elements what none of the four has as a single unit. RCR to my own experience has more value added robust facilities and capability to take up complex fabrication, construction, machining and now electrical work as an one stop shop.

Gosh ! looks like I have been paid by RCR, posing as an expert or I am ramping. Relax !! I have no financial interest direct or indirect and all from personal experience as a MIner and not as an investor.

WIth the current price RCR will be an opportunity for an astute investor. I am not but still would keep an eye on it.

 

[exgeo]

18th Feb HY results. EPS 7.6 cps (7.3 diluted). FY results "skewed to second half due to business acquisition" according to management commentary on results. Doubling the HY eps gives a PE of less than 8 at 115 cents share price. Seems like a fairly large margin of safety to me, especially given the high demand for mining engineering services at the moment.

Hunter Hall and Perpetual both buying up after this ann. Both are value investors. Westpac selling out (don't know about their investment style).

Director purchases after the results: Jeffrey Hogan spent $2.5m on adding to his shareholding. David Dippie spent $0.6m as well. Seems like a fairly big vote of confidence to me. Peter Strachan of Stockanalysis seems to like it too and he's normally pretty conservative.

 

[adobee]

Directors still buying up...
I am thinking about taking a punt on this but from what I can see no matter what announcements come out .. new contracts / directors buying the share price seems to stay tanked ...

What was the original reason behind the steep decline? !?

 

[trinity]

hi Adobe,

I bought into RCR over a year ago, am at a loss since the SP just kept going down. Around early this year, announcements came out wherein the profits were not met. ( Bear with my "analysis" as I am still a newbie in the stock market ). IMHO, I think the Feb 18 report was a turning point for them.

http://www.aer.com.au/announcements/2008/0218/00812809.pdf

Hopefully the management has a lot of faith in the company and, things will start turning around for RCR.

cheers,
trinity

 

[tarlox]

RCR recently awarded a multi million dollar JV contract with BHP. Good to see some recent rises in SP. A rise above 50c would be nice.

 

[ausbronc]

RCR continuing to show strong signs of continued growth.

Posting a profit for the financial yr has definatley convinced me to hold onto my shares

 

[bonkerrs]

"Buy Back"
Anyone know what this means in layman's terms to share holders?

 

[adobee]

company buys back the shares.. maintains the price a bit.. less shares on the market means that your shares are worth more..

ie 100 shares market cap $100 = $1 per share

company buys back 50 shares

50 shares market cap $100 = $2 per share


(i think i got this right)

 

[skc]

company buys back the shares.. maintains the price a bit.. less shares on the market means that your shares are worth more..

ie 100 shares market cap $100 = $1 per share

company buys back 50 shares

50 shares market cap $100 = $2 per share


(i think i got this right)

Not really...

Company just spent $50 buying back it's own share. So the market cap is also reduced by the same amount.

50 shares market cap $50 = $1 per share

Buy backs does usually have a positive effect as market likes to hold on to the cash rather than having the company hoarding it. But not all buybacks are smart moves - take CDU for instance.

 

[ParleVouFrancois]

RE: Company buy backs can create shareholder wealth, for example, ZGL, their net assets are around 23.5 cents as per their last annual report, they have initiated a buy back and have bought up till around 21.5 cents, good value creating buy backs are always initiated and stopped at a price that is lower than NTA.

As per SKC's example it is possible that a company will pay more then NTA, and thus destroy shareholder wealth as in CDU's case.

As long as a company pays less than NTA for it's shares, it's earnings accretive on the remaining shares. E.g.

Total shares 100
NTA 200, or 2 dollars per share
Market Price 1 dollar.
MC 100 dollars.

Buyback initiated at 1 dollar, successfully buys 50 shares.

Therefore:

Total shares 50
NTA 150 or 3 dollars per share
Market Price 1 dollar
MC 50.

Obviously this is a simplified example, with the benefits clearly shown, but in general a buy back increases NTA and earnings per share.

 

[Out Too Soon]

Nice upwards forming triangle after up trend, this is looking good

 

[Intrinsic Value]

Nice upwards forming triangle after up trend, this is looking good
View attachment 49419

I would be careful as they are highly leveraged to one big contract with FMG. I think it is around 600million. Before that their revenue was only about 450 million. I also think that contract is coming to end very soon.

 

[Out Too Soon]

I did read that the FMG contract was very important to their fiscal well-being but that the contract had been long-term confirmed by FMG, wish I could find where because that was one of the fundamentals that backed the chart for me, will post when I come across it.

 

[Intrinsic Value]

I did read that the FMG contract was very important to their fiscal well-being but that the contract had been long-term confirmed by FMG, wish I could find where because that was one of the fundamentals that backed the chart for me, will post when I come across it.

Fair bit of risk with fmg especially if there is any downward movement on iron ore prices which seems likely.

 

[pavilion103]

This one is defying the market trend.

My best trade of the last month.


Entry 2.73
Stop 2.58
Current 3.30

Pink = trailing stop

 

[pavilion103]

Hit a high of $3.49 this morning, currently sitting around $3.40

 

[wombat40]

BBO system triggerd this at 2.86 as well...looking good

 

[Miner]

almost three years - last posting was done on RCR.
This company received some nice contracts in last 30 days.
What is the possible cause of share price fall today when others were up ?

Regards