Australian (ASX) Stock Market Forum

DCG - Decmil Group

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@Miner Wishing you and your family and friends a safe and happy holiday season. I'm pleased to reply to your questions.

(1) Support level at 0.65. A price level is important if a swing high or swing low (pivot point high/low) forms at a level at least twice. On the weekly/monthly chart of DCG, price made a low at 0.655 (April/16), then again at Dec18. This defines an important level and we call it support because it's below price and price bounced off it twice so far. Last Friday price traded at/below 0.655 once more and closed above. Will longer term investors (instos) buy again at this level? As it happened no because DCG released an update outlining further concerns.

A chart support level is merely a line on a chart that indicates prior support. It didn't stop price falling further today. I never presume that a chart line will hold price, but I am interested to see what happens at that price level.

(2) The root cause for the loss is that not enough people bought DCG after I did. The demand that I saw in the chart, disappeared. Supply offset demand and so price traded sideways on low volume for many months until the recent news.
I sold one day later than I should have, so I'm not happy about that.

(3) Additional supply hit the market today and forced prices well below the support line. Prior support now becomes resistance as there's bound to be lots of unhappy holders that will sell if price gets near 0.65 in the future.

(4) Now that I'm out. I can reassess the situation with a clearer head. Has this gone down too far? I'm unable to form an opinion on this as it's outside my area of expertise. I won't know until I see what happens next. I thought the Sunraysia Solar delay was inconvenient but hardly worth the selloff. However the additional concerns imply that management are not in control of multiple projects. I believe that margins are very thin in the engineering/construction business so it doesn't take much for a project to become a problem.

I did notice that two directors bought shares yesterday. They can buy more now at a lower price.
 
peter2 said:
@Miner Wishing you and your family and friends a safe and happy holiday season. I'm pleased to reply to your questions.

(1) Support level at 0.65. A price level is important if a swing high or swing low (pivot point high/low) forms at a level at least twice. On the weekly/monthly chart of DCG, price made a low at 0.655 (April/16), then again at Dec18. This defines an important level and we call it support because it's below price and price bounced off it twice so far. Last Friday price traded at/below 0.655 once more and closed above. Will longer term investors (instos) buy again at this level? As it happened no because DCG released an update outlining further concerns.

A chart support level is merely a line on a chart that indicates prior support. It didn't stop price falling further today. I never presume that a chart line will hold price, but I am interested to see what happens at that price level.

(2) The root cause for the loss is that not enough people bought DCG after I did. The demand that I saw in the chart, disappeared. Supply offset demand and so price traded sideways on low volume for many months until the recent news.
I sold one day later than I should have, so I'm not happy about that.

(3) Additional supply hit the market today and forced prices well below the support line. Prior support now becomes resistance as there's bound to be lots of unhappy holders that will sell if price gets near 0.65 in the future.

(4) Now that I'm out. I can reassess the situation with a clearer head. Has this gone down too far? I'm unable to form an opinion on this as it's outside my area of expertise. I won't know until I see what happens next. I thought the Sunraysia Solar delay was inconvenient but hardly worth the selloff. However the additional concerns imply that management are not in control of multiple projects. I believe that margins are very thin in the engineering/construction business so it doesn't take much for a project to become a problem.

I did notice that two directors bought shares yesterday. They can buy more now at a lower price.
Click to expand...
@peter2
what is your current update on DCG.
I could see the prices are going up slowly. But the signs of MUFG to unload on the same day and others to get out - gives something strange signal if long term is going to be good.
Since 27 Dec all I see the reduction of holding by instos. MUFG was too excited to publish two notices on same day.
On personal side, I bought at a very low price on 23 Dec 2019, and less than 15 days, the price has gone up more than 20%. But that makes me think seriously. What instos saw to get out ? Confused, if i should hold it or sale. Any one chart analysis ? Your support level of 65 cents is yet to arrive. So is the rise before going down massively ?
Any other poster can share their observation on DCG's recent trend ?
https://www.asx.com.au/asxpdf/20200106/pdf/44d2x76ntgbdd2.pdf
https://www.asx.com.au/asxpdf/20200106/pdf/44d2wjjjy97sh0.pdf
https://www.asx.com.au/asxpdf/20200102/pdf/44d0rz7wvtdv35.pdf
https://www.asx.com.au/asxpdf/20191231/pdf/44czpcf69ffqhq.pdf
https://www.asx.com.au/asxpdf/20191227/pdf/44cxrtqnqzvwdz.pdf
 
DCG appeared in this arvo's 1st BB scan and I thought hmm... that's interesting. This is not a reversal setup for me yet as I'd like to see another dip that doesn't make a new low.

The recent notices are informing the market of those that sold off some of their holdings after the recent poor news. I'd call it capitulation volume as a few insto's sold. The reduction in holdings of these insto's was approx 1% so they haven't bailed yet. Interestingly I noticed that TOP (Thorney) added to their position on the big down day.

No more updates from the management after their last brief that mentioned another delayed project (NZ prison), a write down of an asset and the departure of the CFO.

0601a.PNG
 
peter2 said:
DCG appeared in this arvo's 1st BB scan and I thought hmm... that's interesting. This is not a reversal setup for me yet as I'd like to see another dip that doesn't make a new low.

The recent notices are informing the market of those that sold off some of their holdings after the recent poor news. I'd call it capitulation volume as a few insto's sold. The reduction in holdings of these insto's was approx 1% so they haven't bailed yet. Interestingly I noticed that TOP (Thorney) added to their position on the big down day.

No more updates from the management after their last brief that mentioned another delayed project (NZ prison), a write down of an asset and the departure of the CFO.

View attachment 99508
Click to expand...
Excellent and many thanks Pete.
Your very balanced view and approach is admiring..
I will be on side line watching for any further dip before exiting.
All the best for prosperity and happiness. In the new decade.
 
DCG has requested two consecutive trading halts (2 x 2 days) to confirm a capital raising.

They've also announced a new CEO. Shares will resume trading on Mon 25th May, 2020.
 
Decmil has often popped up in my systems.been in out in the past years.never made it to a positive long trend.on a fundamental basis, the more i learn, the worst..new management to help?
 
peter2 said:
DCG has requested two consecutive trading halts (2 x 2 days) to confirm a capital raising.

They've also announced a new CEO. Shares will resume trading on Mon 25th May, 2020.
Click to expand...
I gather market will responding to a steroid AKA new CEO when opens on 25 May.
Watching to see the ailing baby recovering.
 
Hey Miner, there's an article in the AFR about Decmil...... and it's not really flattering!

Sounds like there's more dilution to happen, more shareholder pain.
With an order book it wants to see through, and plenty of promises about restructuring initiatives, the company and its broker Hartleys asked for a fresh start on Tuesday and will ramp up the pitch on Wednesday. Decmil wants $40 million. It wants existing investors to pile into the rights issue and those same investors - with the help of some of its former supporters - to head into the placement.

While the deal had not priced as of Tuesday night, fundies said they were asked to mull about 10¢ a share, which would be a 50 per cent discount to the last close. In reality, fundies reckon the discount may end up even wider. A bookbuild is scheduled for later this week. Anything at or above 50 per cent would be a big discount - but indicative of Decmil's situation, and not far off what [other distressed companies] had to do to secure their own lifelines.

The raising came as Decmil has been fighting for survival. It secured some relief from its bankers and surety bond providers earlier this month, and flagged that it was exploring "a range of capital options" to recapitalise the balance sheet. It's also looking to sell its Homeground Gladstone accommodation village in Queensland.
Click to expand...
 
OMG! Capital raising pro-rata non-renounceable entitlement offer of 4.2 new shares for every 1 existing share at an issue price of 0.05 per new share to raise up to 50Mill.
Retail offer closes 17 June, 2020.

This looks like an IPO. Scrap the old DCG and recapitalise a new one.

From the front page of the prospectus.

dcg2805.PNG


My main concern is whether the new management team can do better than the old. The old team stuffed up badly.
 
I knew I was in for a solid hit with the huge recapitalisation of DCG. I was anticipating an opening about 0.06 (last close before the trading halt at 0.20).

Opening at 0.075 I was surprised to see it rise to 0.15. I scrambled to exit at 0.12. Price settled at 0.093. A loss of 53% since the last close.

OK that's done. The loss has been realised and this always feels better. What happens next. I believe I'm entitled to participate in the retail entitlement offer. For every 1 share I owned I'm entitled to buy up to 4.2 new shares at 0.05 each.

DCG is currently trading above 0.08 so I'll keep an eye on this while waiting for the entitlement offer documents to arrive.

dcg0306.PNG
 
OH no, please don't ask me to go to investorcentre. I don't deserve this.

dcg0706.PNG
 
DCG retail entitlement decision time (offer closes 17th June 2020).
Current closing price 0.053. Offer price 0.05.
TERP when offer announced 0.079. At that time the decision to buy was much easier, now with minimal premium the decision is much harder.

This decision has to based on fundamental and commonsense reasons. The price chart has been damaged by this offer.

DCG is in this predicament because they've poorly managed many of their customer relationships. DCG is currently in dispute with too many of them (NZ Dept of Corrections, Sunraysia Solar Farm, SCEE arbitration, BHP, UPL, SBS, NAB bank Standstill agreement). COVID-19 border closures have prevented their workers from travelling interstate.

Reading through all the risks I feel like the punk in the Dirty Harry movie, "Do you feel lucky, punk?".
 
Got out of this years ago at a significant loss - but waay less than if I were still holding today. Surprising - and I suppose noteworthy - that Thorney Group thought it was worth upping their stake at these low prices. Decmil still retains two of its executive directors from its period of intense failure. They must have a lot of clout.
 
I am not sure it can survive. Its close to folding I think, one significant finding against them in any of the many disputes would probably be the straw that breaks the camel's back.
 
galumay said:
I am not sure it can survive. Its close to folding I think, one significant finding against them in any of the many disputes would probably be the straw that breaks the camel's back.
Click to expand...

I'm not a fan of the business, but at $45m MC and working capital at $55m, it could fall into the realm of net-net.

Not to mention it won't go completely bust. I could see a situation where Thorney prop it up so much (continually underwriting any raising), they install their own management. A little like Palla Pharma.
 
You are right Klogg, when I had a bit of a closer look, its unlikely they would go under, even if they lost a few of their disputes they would still probably be solvent.
 
The DCG retail entitlement offer garnered 65% acceptance and the existing backers underwrote the rest. I'm using the July monthly comp to keep an eye on DCG.

It's in my reversal watch list.
 

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