BYL - Brierty Limited

[skc]

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

I am assuming it's not in the notes to the account?!

Admin can mean different things to different companies even in the same sector, so it's quite hard to compared like-for-like. One can safely assume that executive salaries are involved, but given the large figure, I wonder if some sort of project admin is included... and one might question why they are not simply part of cost of services and sales.

Pure speculation only as I have neither read the report in detail or know the company well enough to say.... I did take a trade on the release of the report however.

 

[Ves]

Disclaimer; don't hold and don't plan to, so haven't put much effort into decoding the statements:

The administration expenses most likely include the following:

Depreciation & Amortisation - $12.586 mil (see notes bottom of page 59 of AR)
Rental expenses - $1.372 mil (page 61 of AR)
Directors & key management personnel wages - $2.717m (page 34 of AR)

Unsure of difference. But probably some of the wages & super relate to head office personnel that do not come under directors or key management. Possibly advertising and other sundry items.

Could be wrong, but hope it helps you guys find the answer.

 

[craft]

This is my data suppliers breakdown.

 

[Pioupiou]

Disclaimer; don't hold and don't plan to, so haven't put much effort into decoding the statements:

The administration expenses most likely include the following:

Depreciation & Amortisation - $12.586 mil (see notes bottom of page 59 of AR)
Rental expenses - $1.372 mil (page 61 of AR)
Directors & key management personnel wages - $2.717m (page 34 of AR)

Unsure of difference. But probably some of the wages & super relate to head office personnel that do not come under directors or key management. Possibly advertising and other sundry items.

Could be wrong, but hope it helps you guys find the answer.

I think you are substantially right, because by including depreciation of equipment, the large number and the significant increase in one year is understandable. BYL holds equipment as a head office asset, so it may simply treat depreciation as a head office expense, and for some mental quirk or other calls it Administration, which is semantically sloppy.

 

[crazymofo]

Fist time poster it seems like a decent buy at the moment with the stock market over all industries being down. Possibly a good keeper for the next couple of years on the figures released it can not go any lower bar a catastrophic event.

Market Cap is 37.4 Mil based on 35 cent share price Net assets are 52.5 Million and have increased by about 8 Million from FY12 to 13 with the net debt up by 2.5 to 3 Mil over the same time, it looks like these guys are either hammering their debt or financing more than half of their new assets out of their own pocket instead of just getting into more debt and forcing up their financing costs.

Downside is that these guys have not broken into the market in anywhere other than Western Australia (aside from the NT with the single job), this is an assumption because I have not seen any releases for any further work gained in NT or anywhere outside WA.

Another note is EPS 9.28 cents with a share price at 35 cents. Thems some good numbers.

If the market doesn't react to this the directors should consider buy back maybe allocate a couple of Mil for the first year $2 million should be enough to drive up the share price high enough and attract some attention that is if $2mil of shares can actually be traded in this company it seems that everyone that has them is holding them, the daily volume trades are miniscule.

 

[Pioupiou]

Hi Crazymofo

An excellent effort for a first-time poster. This site is in dire need of good posters.

BYL is certainly a good keeper, which by definition means we holders should not be concerned if the SP drops, as long as the long-term EPS and DPS holds (fluctuations about an upward trend line are tolerable). BYL is tightly held and lightly traded, so small selling pressure can easily reduce the SP for a while. If one buys BYL for a short-term trade, then the thinking is different to the one mooted in my response to your post.

If any one of the top twenty shareholders wanted to exit, that would suffice to reduce the SP, but not the intrinsic value of the BYL shares. One cannot read much into such selling – there are many reasons why a shareholding may be liquidated – estate wind-ups, divorce settlements, portfolio balancing and other needs for cash (e.g., pay tax and acquire something at a bargain, to mention two). Currently, it seems to me that a large holder wants to sell, because one often sees a large parcel for sale (say 60,000 shares), and when it sells, a similar parcel pops to the fore at the same SP. In time this selling will exhaust itself.

On the matter of debt, BYL has no corporate debt – its debt relates to hire-purchased equipment, perhaps with some performance-bond debt. If BYL can keep the equipment busy, there is no problem, and if it cannot, the problem may take the shine of BYL for a few years, but it will not destroy it. The punt is, will BYL find the work to keep its equipment and employees busy, or will it not, so that is what should exercise the minds of shareholders and would-be shareholders.

One man's downside is another man's upside. BYL is a small company (about 10% the size of NWH), so if its activities were spread over a larger geography, that would be an EPS detraction. BYL has comparative strength in WA and the NT, so the best interests of its shareholders is served if it concentrates on those markets. This allows it to optimise the strong relationships (customers, potential customers and synergistic relationships with other business entities including JVs with Indigenous groups) that BYL has in these areas, and it allows equipment and staff to be redeployed from job to job more easily than would be the case if its activities were more geographically dispersed. If after the wind-down of the Bellamack project, BYL finds staying in the NT less attractive than focusing on WA, then withdrawing to focus on WA makes sense. Bellamack was not very profitable, so I see its wind-down as a positive.

On driving the SP up, I am tempted to think that the directors are more focussed on BYL's business performance than its short-term SP trajectory. As a long-term holder of what is a high-yield dividend payer, I am happy with that approach. Preservation of a sustainable dividend stream is all I ask management to focus on, and in the long-term that will dictate the SP. The words “sustainable dividend” implies an upward trending (glitches allowed) long-term EPS, plus a healthy balance sheet.

As for your “Thems some good numbers” the focus should be on the long-term sustainability of the EPS and DPS. Good numbers today followed by poor numbers in future would not be good.

 

[Pioupiou]

Much to my joy, the SP dropped to 33.5 cents today, and as I was a bit light on BYL, and some funds fell out of the sky, I bought 100,000 to bring my personal (non-SMSF) holding to 150,000, which is where I am inclined to leave it, other things being equal. If my view of BYL's business outlook changes, or its SP does, then I'll review this hold-the-shares attitude. In essence, I like to focus on the business, and think about the SP within that framework.

For now I regard BYL as worth 50 cents, although I have forgotten how I invented that number some months ago (all I know is that nothing has changed since then). I think it will perform better than its current Thomson Consensus Estimates, which are:

- - - 2013 - 2014 - 2015 - 2016
EPS - 9.3 - - 7.8 - - 8.5 - - 7.3
DPS - 3.0 - - 3.1 - - 3.8 - - 3.3

I am stuffed if I know how the gurus who came up with these metrics derived their numbers. The latest valuation of which I am aware is that of Bell Potter dated February 2013, and its valuation was 70 cents - see http://www.brierty.com.au/files/Bell_Potter_Research_Note_Feb_13.pdf. Again, I am stuffed if I know how they guesstimated that, but it seems a tad toppy to me. Now that I own more BYL, I should invest time getting a feel for its reasonably-likely EPS and DPS trajectories.

 

[Ian]

Liquidity is a concern for me with BYL.
Similarly it is a concern for me with TWD.
Both are companies I find impressive enough to invest in but lack of liquidity prevents me in both cases.
Too much stock in too few hands.
IMO it leaves the stocks open to manipulation and presents too many possible restrictions.

 

[skc]

Liquidity is a concern for me with BYL.
Similarly it is a concern for me with TWD.
Both are companies I find impressive enough to invest in but lack of liquidity prevents me in both cases.
Too much stock in too few hands.
IMO it leaves the stocks open to manipulation and presents too many possible restrictions.

+1. Although I am not too concerned about manipulation. I am simply concerned that if things go wrong there's no exit. Having said that when things go right it can rise quickly as well.

 

[Ian]

+1. Although I am not too concerned about manipulation. I am simply concerned that if things go wrong there's no exit. Having said that when things go right it can rise quickly as well.

Skc,
I suppose that is really what I mean. There are no shortage of days when a total days volume is less than (and sometimes substantially less) than 100,000 in total. Even a roaring day would be 250,000.
If you held 100~200k and needed a quick exit for any reason it's possible there may be problems.
The prospect of manipulation is a lesser probability but I do recall a few years ago someone did play games with TWD (a stock of similar potential to me) and anyone who watched what happened over a period of time could see the pattern and I kept out of it. The fact is however history proves that if I had entered that stock it would have gone well for me but it's easy to see in hindsight and what we have to do is plan for the future.
Both look to me like ideal 'set and forget' stocks but these days I increasingly feel the need to be cautious about that. I am a long term investor but I hope not to become forgetful.

 

[Pioupiou]

Low liquidity and the tightly-held majority of BYL's stock are negatives, which is why it often popped to the fore when I was trawling for value, but I did not buy. When I put that restriction aside and I looked seriously at BYL, part of the process was to compare it to similar stocks, MLD and NWH, and in the process I decided to drop BYL and run with NWH. However, I continued to look at BYL, and the more I looked, the more I liked it, so I bought in later, and have upped my stake a few times since (bought 100,000 earlier this week - Monday, 11/11/2013).

On the matter of illiquidity, I decided that if BYL represented no more than 5% of my total portfolio, and I needed funds, then I had other investments that I could sell for that purpose. This limits my exposure to a situation where I want to get out because I no longer want to be invested in BYL for reasons of its business performance. This is a gamble that I am prepared to take. As a long-term investor, the SP gyrations that are possible if any one of the top-20 shareholders wanted out, do not concern me. If the fully-franked DPS rises in two or three years to 5 cents, those who bought in at below 40 cents would be getting a sufficient yield to allow them to sit on BYL for a long time (years).

Apart from the dividend yield, what are the possible upsides to BYL shareholders? The obvious one is an amicable takeover at a premium SP. It has to be amicable, because Alan Brierty and his wife own about half of BYL, so their co-operation is a sine qua non (without which nothing). Alan is no longer a young man, and so there are estate-planning and other reasons why he and his wife may be willing to exit BYL if a suitable suitor could be found. BYL is a small company, so it would be a digestible bolt-on for the likes of MLD or NWH. An LBO involving the current management is also a possibility. One does not buy a stock based on such flimsy musings, but in BYL's case the dividend yield can be sufficient justification, and these other potential upsides are merely possible cherries on the cake. Of course, a fertile imagination could easily invent a few bitter pills too.

 

[adds4]

The company has won quite a few small civil/land development contracts the last month and half. Its good to see, they will replace the lost revenue from the mining division, from the karara contract going back to normal operations,, from the acceleration that is going on in the first half. Looks like second half revenue could increase, and infact this yr, revenue could be similar to 2013, or even be better, even though the company has mentioned revenue could drop in 2014.

The half yr result is in a couple weeks, and the guidance we get from that will indicate where the share price will go. For me I believe the first half of 2014, will be the same as 2013 in revenue and profit, and if so I believe the directors will increase the interim dividend to 1.5 cents.

For me the company needs to look at acquisitions in the civil/land development area, for me a quite defensive area, instead of chasing a mining services company. And for me, they need to expand geographically too. The most obvious would be to expand into SA, and try and buy a company like LRM pty ltd, who do civil work for national companies for devine, lend lease and SA government. M and B civil, P.d excavations, tron civil contracting are others the company could look at.

 

[Pioupiou]

The $300 million RIO deal announced late 1/05/2014 is significant IMO, especially as it must ramp up quickly, and just when the Karara deal was nearing its end. The RIO deal is for four and a half years, so that makes it $66 million a year - a big deal for a $40 million market capitalisation company. That helps to underpin earnings until about December 2018. BYL routinely picks up small civil works contracts, and the odd larger contract like the Zoccoli Phase 2 housing estate in the NT, so its EPS and DPS are fairly secure. I'll probably sit on it for years and garner the double digit yield that its dividend and franking credits give me on my buy-in price of circa 35 cents.

 

[Pioupiou]

With the flow of time, BYL has improved as an investment stock. It secures many small contracts, about two a month on average, and it gets a lot of repeat business. In a recent announcement pertaining to BYL's 19th contract from Perth Airport, a $17 million contract to construct the new Airport Drive and associated infrastructure at Perth Airport, BYL stated, "Following this contract award, Brierty has work in hand of approximately $570 million of which $250 million relates to work secured for the 2015 Financial Year." $570M is over ten times BYL's equity, and over eleven times its market capitalisation of $.45 x 110 million = $49.5.

I have over the year shifted from regarding my investment in BYL as a punt in my personal portfolio to regarding it as an SMSF-quality investment, and hurled funds at it. I now hold 460,000 BYL in my SMSF, and 200,000 personally. I may sell some held personally if I need the funds, but in the interest of balance, I am more likely to sell TGA shares that I hold in my personal portfolio, and of which I hold many.

I value BYL now at about 60 cents, 10 cents more than a year ago. I expect DPS to be 3 cents for FY2014, but maybe more, and 4 cents in FY2015. My average buy price for the shares in my personal portfolio is 34 cents, and it is 39.2 cents for the SMSF portfolio. The SP closed today at 45 cents, and I think it will dribble up to 50 cents as we get closer to the Annual Report that is published on 20 August, or soon thereafter. I'll probably sit on BYL for years - that's my yield-focused investing style. SP appreciation is the icing on the cake.

Check out BYL's webpage to see the long list of contracts secured - 28 contracts in FY2014.

 

[agumby]

With the flow of time, BYL has improved as an investment stock.

I have over the year shifted from regarding my investment in BYL as a punt in my personal portfolio to regarding it as an SMSF-quality investment, and hurled funds at it. I now hold 460,000 BYL in my SMSF, and 200,000 personally. I may sell some held personally if I need the funds,

I value BYL now at about 60 cents, 10 cents more than a year ago. I expect DPS to be 3 cents for FY2014, but maybe more, and 4 cents in FY2015. My average buy price for the shares in my personal portfolio is 34 cents, and it is 39.2 cents for the SMSF portfolio. The SP closed today at 45 cents, and I think it will dribble up to 50 cents as we get closer to the Annual Report that is published on 20 August, or soon thereafter. I'll probably sit on BYL for years - that's my yield-focused investing style. SP appreciation is the icing on the cake.

Check out BYL's webpage to see the long list of contracts secured - 28 contracts in FY2014.

The market seems to agree after BYL's update to the market today, now trading at the over 50 cent range, glad i picked some up for my wifes portfolio earlier in the year at the 37 cent range but nowhere near as many as you, well done

 

[agumby]

nice

Diversified contractor Brierty Limited (ASX: BYL) is pleased to announce its Board of Directors has declared
a fully franked Special Dividend of 8.0 cents per share.

The Brierty Board has resolved to raise up to $8.25 million by way of a special Placement to institutional
investors and high net worth individuals.
Under the Placement, 16,500,000 million shares will be issued at $0.50 to institutional and sophisticated
investor clients of Bell Potter Securities Limited and Hartleys Limited.

The record date for the Special Dividend is 8 October 2014 and is payable on 20 October 2014.

 

[skc]

nice

Diversified contractor Brierty Limited (ASX: BYL) is pleased to announce its Board of Directors has declared
a fully franked Special Dividend of 8.0 cents per share.

The Brierty Board has resolved to raise up to $8.25 million by way of a special Placement to institutional
investors and high net worth individuals.
Under the Placement, 16,500,000 million shares will be issued at $0.50 to institutional and sophisticated
investor clients of Bell Potter Securities Limited and Hartleys Limited.

The record date for the Special Dividend is 8 October 2014 and is payable on 20 October 2014.

Placing shares @ 50c and those new shares include the 8c special franked dividend. That's a pretty good deal for the sophisticated investor!

 

[Miner]

Placing shares @ 50c and those new shares include the 8c special franked dividend. That's a pretty good deal for the sophisticated investor!

Indeed it is an excellent deal for SI who also are with Hartleys and Bell Potter. It is one way of saying thanks to them because of their heavy pumping on BYL when it was at $2 . It went down to 30 cents and so many restructure. Irony is the SI of those brokers will get the shares below 42 cents against market rate of 64 cents. 50 cents placement plus special dividend 8 cents. They gave nothing to long holders who are not SI nor with Hartleys and BP.
Any one invests now with special dividend still due until early Oct will basically be buying it a much higher price than those SI any way. Good for some and Bad for some

 

[systematic]

Just doing a fun scan for value and then a little further analysis...and BYL came up as what looks like a potentially excellent value stock. Current price 0.40

 

[Huskar]

Just doing a fun scan for value and then a little further analysis...and BYL came up as what looks like a potentially excellent value stock. Current price 0.40

Yes Forager Funds has been pushing it too. Question as is often the case - will E decrease or P increase to normalise P/E?