BYL - Brierty Limited

[hangseng]

With so much forward order work on their books and growing, Brierty will be advancing strongly once project delays are sorted out.

MND and others had exactly the same problem not so long ago and it is a common problem with resources construction service contractors. The huge demand for civils contractors in resources construction will see BYL doing very well in the short and long term.

Excellent management and contractor who will continue to be on the priority tender list of projects in the pipeline in WA. Just wait until they start to spread their wings. The exposure to the residential market will mean zip as they are smart enough and good enough to be right in amongst the massive amount of resources construction work pending in WA alone.

Note:
The project delays are not due to Brierty and this will be resolved. Also noted is they continue to win contracts.

No wonder the directors have been buying so much at these levels. A company I am more than pleased to have joined them and taken a postion at this level.

 

[Miner]

What a day for BYL today .

A sincere business man but with sheer incompetency to run a publicly listed company like BYL could be the classic case study for MBA students, the analysts and share investors.

This is probably a tragic case of a company fall out worse than any one's speculation. BYL dropped to 25 cents today from 46 cents in one month's time. However honesty prevails and Mr Brierty accepted his lack of capability (probably too late) as the CEO and stepped down.

Unfortunately no one in the chair situation does not solve the problem but aggrevates it.

Lack of leadeship would probably see BYL losing few future contracts.

Hopefully the key players do not leave teh organisation or there could be some key bad players who made the collapse happen - what about finance guys, operations managers, the board and financial analysts who underwritten the IPO ?

Ironically Mr Brierty once again made a heavy investment only a couple of weeks back . He has been a believer, an honest person, courageous in his actions.

I honestly wish him and BYL shareholders all the good luck.

 

[hangseng]

To say I made a mistake in my assessment of BYL would be an understatement. The latest debacle is a sign of hidden systemic problems in project and contract management.

I have survived this train wreck and managed to get out unscathed thankfully. Lesson learnt, classic case of smoke and mirrors at the expense of shareholders. No more for me regardless of forward order work.

 

[countryboy]

I dont see it as a mistake...given the info you were presented with BYL was an attractive investment.

Given its basement price at present and the Federal gov, budget commitment to 20 billion in infrastructure I thinkd BYL could be a good investment for the next 3 years or so. If BYL was to double its SP in the next 3 years thats a super return on your money. I believe thats a realistic proposition.


I think we are all a bit too greedy after the last 3/4 years of continual growth.

 

[springhill]

Revisiting the BYL thread after reading they have picked up a $10m contract with GBG, for the Karara Project.
http://www.asx.com.au/asxpdf/20100818/pdf/31ryt5c62jws1k.pdf
This contract follows the recently awarded Mount Gibson IO Project, worth $18m
http://www.asx.com.au/asxpdf/20100504/pdf/31q51v0r32bxc6.pdf
Also securing 4 new contracts, worth $25m. 3 of the contracts are with Landcorp, fast tracking development of industrial land in the Pilbara. Fourth contract is with LWP Property Group for first stage development of Trinity Alkimos, a residential development 15km north of Joondalup.
http://www.asx.com.au/asxpdf/20100618/pdf/31qwn21twptgg8.pdf

BYL is also the developer of the Bellamark land development at Palmerston, NT, marketing 678 residential lots over 5 years.
http://www.asx.com.au/asxpdf/20100429/pdf/31q1cbskqshkgk.pdf

Don't really know alot about this company but seems they has been a bit of management turmoil over the years, including recently, with the resignation of the CEO, Steve Crofts.
http://www.asx.com.au/asxpdf/20100811/pdf/31rtj6mps6n6nj.pdf

Finally, BYL have an investor presentation, which details more of their current activities.
http://www.asx.com.au/asxpdf/20100301/pdf/31p02n307vn8l0.pdf

Currently sitting at near 12mth lows. Low of 22c/Current 26c.

Seem to have money and contracts coming in. Any thoughts?

 

[tinhat]

This company has come up on my screens. Mining, Civil construction, Housing development, seems to be entirely WA focused.

Some observations after just looking at the last full year results investor presentation:

- They have doubled their workforce over the past year and 30% of those recruited were aboriginal.
- They seem to be relying on work at Roy Hill and are doing a lot for FMG. Is Roy Hill going to happen?
- Although exposed to mining construction, they do seem to do a lot of civil construction for private and public (WA main roads) so potential to win royalties for regions tenders.
- They've spent a truck load on trucks both last year and this FY. They seems to be building up a big fleet of civil construction vehicles.
- They are towards the end of a housing development in the NT (Darwin?) with most dwellings sold.

I'm going to look into this company further. They seem to have both upside potential but downside risk from having grown so much and the risky outlook for mining construction. I also noticed mention of a joint venture to take on bigger contracts - don't know the details - but, hmmm, after FGE and Clough...

Is anyone holding or watching? Does anyone have more insight into this company? Reuters-Thomspon consensus data contains only one analyst.

From their website I found this Euroz analysis:
http://brierty.com.au/images/Documents/Third Party Research/Weekly_Informer_Aug12.pdf

Actually Euroz seem to follow them quit a bit, seem bullish on them.

Belll potter research is 12 months old
http://brierty.com.au/images/Documents/Third Party Research/Bell_Potter_Feb12.pdf

sorry if this is a bit vague but I've got to go to bed. will read more tomorrow.

Springhill, have you maintained an interest in the co?

 

[springhill]

Springhill, have you maintained an interest in the co?

I have not kept a close eye on them for the majority of the time since my last post, but I have started to increase my interest (not financial) in them over the last couple of months. BYL keep popping up in the media and a few announcements have caught my eye recently.

Interest in the activities of BYL is increasing from my end.

 

[trillionaire#1]

I added BYL to my portfolio in december and already have solid gains.
However it has been struggling to break clear of the 40 cent mark.Fingers crossed for a breakout.
A good dividend here as well!

 

[tinhat]

I bought on 16/2/13 @ $0.40. I've bought about half the position I'm willing to take. Will see which way it goes. It became a buy for me at $0.34 at the beginning of the month but I didn't have the funds available. So, I aim to ride it up in the ST/MT and either take profit or take back my capital and leave my profits (if any) for a free carry into the LT. They've ramped up in terms of capital and personnel. Let's see if they can sustain their growth.

 

[adds4]

unbelieveable result from byl, a company that has a pe of just 4. Yes 4. Have to be the most undervalued stock on the market by a country mile. Fge had a pe of 4 at 3.50, look at its price now?

Byl had revenue increase by 41%, profit increase by 29%, dividend increase by 25%. Dividend yeild is 7%. Net assets are 49m (excluding intangibles, which there are none) or 45 cents a share. Cash at bank of 16m. Low debt of 40m, all of the debt is hire purchases of equipment, so really the company is debt free.

All for only 40 cents, or pe of 4, and what makes it worse is the last three half yrs, profits and revenue have increased by atleast 20 per cent every half.

Diversified income steam, from three divisions - civil, mining, and land development.

Dividend of 1.25 cents per share for the half

One word - bargin

 

[skc]

unbelieveable result from byl, a company that has a pe of just 4. Yes 4. Have to be the most undervalued stock on the market by a country mile. Fge had a pe of 4 at 3.50, look at its price now?

Byl had revenue increase by 41%, profit increase by 29%, dividend increase by 25%. Dividend yeild is 7%. Net assets are 49m (excluding intangibles, which there are none) or 45 cents a share. Cash at bank of 16m. Low debt of 40m, all of the debt is hire purchases of equipment, so really the company is debt free.

All for only 40 cents, or pe of 4, and what makes it worse is the last three half yrs, profits and revenue have increased by atleast 20 per cent every half.

Diversified income steam, from three divisions - civil, mining, and land development.

Dividend of 1.25 cents per share for the half

One word - bargin

True. The order book however appears weak. They do ~$300m revenue a year yet FY14 order book is only $82.3m. So the FY14 earning visibility is low. A few large and longer term project wins should see them propelled forward.

 

[adds4]

True. The order book however appears weak. They do ~$300m revenue a year yet FY14 order book is only $82.3m. So the FY14 earning visibility is low. A few large and longer term project wins should see them propelled forward.

They have a 219m order book in total. The civil division does alot of smaller contracts, that are continually rolled over once work has been competed. E.g like road contracts, perth airport,and land development in perth and darwin, where work is award in stages. Thats why the order book looks weak. The mining services division, is weak because of fmg cancelling, and now retendering contracts for its expansion, which im sure byl will win some, because of byls strong workforce of indigenious people, of which fmg is actively looking for.

BYL has had the same issues in the past with regard to its order book, and has still increased revenue and profit. The only problem they had was in 2010, and that was from a couple of unprofitable contracts, which byl has learned from, and now every single contract this half yr has been profitable.

Margins have appeared to slip a little, but every mining service company has had that happen.

 

[tinhat]

I've just gone over the numbers in the report a bit and one thing about the results is that the margins are still very tight. The total group profit margin (profit before tax/revenue) is 5.2%, down slightly on the Full year 2012 result of 5.4%.

The main group expenses are administrative overheads of $6m for the half and depreciation of $5.7m for the half.

These very tight margins (and a previous history of problems with margins on contracts) may account for why the stock is priced at a low PE and is at around NTA per share.

Here are some business unit figures I threw together. Figures are expressed in millions of dollars:

 

[adds4]

management cant complain us shareholders arent paying them enough. They make more than shareholders. 9m in admin costs, which no doubt a big chuck is for management, and 5m after tax for shareholders. This is only for 6 months

On page two of the financial report says adminstration expenses are 9.2m. On page 10 of the segment information it says adminstration expense is 5.9m. Is the 3.3m difference the company gives to directors? Odd.

Gross margin was infact 12% (sales 148m divided by gross margin on sales of 18m)

After taking into account admin of 9.2m and finance of 1.7m.

The profit from continuing operations before income tax is 7.7m, or a margin of 5.2%.

As you can see the company does make the margins, just mangers and admin expenses are high for a company this size. Pretty easy for someone to come in and trim the fat, and increase the profit for shareholders

 

[tinhat]

adds4,

Although I didn't express it as eloquently as you, that's what I wanted to look at by working out the margins before tax for each business unit. They look OK until you add in the group overheads.

My conclusion from looking at those numbers is that the the first figure you mention of $9.3 million (page 4) is for total group "Administration expenses, excluding finance costs" and that the $6 million of "Administration overheads" on page 10 are the corporate level administration costs which have not been attributed to "operating segments" of the business. It's hard to know for sure because there isn't any breakdown given of costs attributed directly to the business units.

Looking at the 2012 report total director and key executive pay was around $4 million (up from around $3 million for 2011).

I just went back through the 2012 annual report and this half year report to see if I could find any mention about goals or strategies to cut corporate overhead but there is not which is a little disappointing.

 

[adds4]

Amazing no one tries to take over the company, i know the Brierty family own around 40 per cent, but a mining services company could pay a premium to the share price, because it would be easy to strip 5m in admin costs out of byl. Then the margins dont look that bad for the acquiring company, and most likely be very earnings accerative too

 

[adds4]

byl got there contract with atlas iron. 15m for 3 months work, to build a 60km rd. Be interesting to see if byl can leverage off this contract and get some more work from atlas. The civil division is looking really strong.

Byl have definately developed that niche market of having good quality equipment and personel, for short term contracts, at short notice.

 

[CairnsBirdwing]

Agree with Adds. I hold BYL because I think this company is ripe for a takeover and subsequent trimming of inefficiencies in management.

 

[Pioupiou]

Some months ago there was a flurry of interest in BYL, and some quality posts from the likes of Tinhat and Adds4, especially on the matter of the high so-called Administration expense.

The recently published full year result was good, plus there are a few themes that bode well for BYL's 2013/14 financial year. However, the Administration issue remains. I am stuffed if I can understand why BYL has such a high admin expense, and I certainly do not know what is debited thereto. The high (relative to net profit and dividends paid) executive remuneration is only part of the story.

Ignoring reasonable changes to expense categories, in round terms BYL increased Gross Profit by $5 million, and Administration by $4 million to increase net profit by $1 million. Why should an earth-moving company need such a high Administration expense, even if the word is stretched to cover Sales (tendering) and the like?

Anyhow, on the basis of a low PER, I bought 50,000 on 14/08/2014 at 30 cents. If some semi-competent manager comes in and lops a few million of that Administration cost, BYL could increase both its EPS and dividend pay-out ratio, and serve my interests well.

Any views on that so-called Administration expense?

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - FY 2013 - - - - - - FY 2012
Revenue from services and land sales - - -- - $292,416,142 - - $252,305,246
Cost of services and sales - - - - - - - - - - - ($254,837,140) - ($219,616,247)
Gross margin on services & land sales - - - - - $37,579,002 - - - $32,688,999
Other income - - - - - - - - - - - - - - - - - - - - - - - $402,548 - - - - - $298,532
Administration expenses, excl finance costs - ($19,977,546) -- ($15,970,117)
Finance costs - - - - - - - - - - - - - - - - - - - - - ($3,362,738) - - ($3,406,769)
Profit - continuing operations before tax- - - - -$14,641,266 - -- $13,610,645
Income tax expense - - - - - - - - - - - -- - - - - ($4,430,117) - -- ($4,168,171)
Profit after income tax - - - - - - - - - - - - - - - $10,211,149 - - - - $9,442,474

 

[Country Lad]

At least the market liked the results. I was going to compare some of the costs/revenue with those of SWL but unfortunately, SWL have not reported yet.

Cheers
Country Lad