KSC - K&S Corporation

[So_Cynical]

For those that don't know, KSC is a major trucking/Transport company, probably number
3 or 4 by size/market share in the Australian road/rail freight industry.

• First listed 1971
• Operating revenue over 450 mill P/A
• Operating from 34 locations in Aust and NZ
• 1500 staff
• 11+ year history of fully franked interim and final dividends
• Top 20 shareholders have 80% - largest holder Scott 58%
• Low debt

With the economy at or near/past bottom i figure its got to be a good time to look at
these types of closely held, and fundamentally sound businesses, KSC is trading at near
8 years lows... and considering there profit has only been marginaly affected so far, the
current SP seems to be value buying.

Brought some today at $2.12

 

[So_Cynical]

Looks like my timing was a little off with my initial purchase...so took a small average down yesterday @ 1.75..the SP held well today with unusually big volume (big for KSC anyway) so here hoping the turn around is close.

Makes me paranoid when any company's SP keeps falling on no news, as has been happening with KSC, have noticed that KSC usually release a Preliminary Final Report/Full Year Accounts type statement around Mid to late August.

 

[So_Cynical]

KSC usually release a Preliminary Final Report/Full Year Accounts type statement around Mid to late August.

Share price took off today after the profit announcement yesterday...took that as my cue to exit today for a 15% profit left the profit in "as usual" along with 15% of my original capital, i look at this strategy as like the divi's being profits on profits, forever....or until the next global meltdown.

I like KSC as a long term hold, especially at the price i got in for, i was expecting a profit fall of less than 10% and the divi to hold at above 4 cents and i was right on both counts....and for the life of me i just cant see how anyone else could see it any other way.

Road transport is like an essential service in a county like Australia, and there's like a core level of activity that's needed for all the essentials of life to continue...business like KSC are complex and costly to duplicate and this provides a kind of industry insulation, we have 4 major players in the Aussie industry...and will do for decades to come.
.

 

[So_Cynical]

Its been 7 months since the last post in this thread so time for an update on one of my favourite holdings...The KSC half yearly revealed a 4% fall in profit and a 12.5% fall in operating revenue, 6 months on corresponding 6 months.

EPS was 13.1 cents, with a FF dividend of 7 cents, cash flow generation was up 31% and gearing reduced to 20.2% down 54.8% compared the the same quarter last year....KSC also took over a smallish WA transport company and had its cartage contract with Onesteel continued and expanded.

http://www.asx.com.au/asxpdf/20100224/pdf/31nwjcmwp7c2ph.pdf

Chart wise KSC has been channelling between 2.70 and 3.00 for the last 7 months, spending most of the time at the top end of that channel, a break out would seem to be on the cards eventually.
~

 

[So_Cynical]

KSC has announced a Share Purchase Plan at a reasonable discount, i figure $2.56 per share is a reasonable discount considering KSC has been going sideways between 2.70 and 3.00 for 6 months....its been 5 years since the last capital raising which was a 1 for 10 rights issue at 2.80 back in 2005, so its not like this is a regular event.

With only 1829 share holders registered on the 2009 annual report its fair to say the cap raising wont have much of an impact on the overall financial position of KSC but will be a nice little bonus to there loyal share holders.

http://www.asx.com.au/asxpdf/20100412/pdf/31pqr4jhyr145q.pdf

 

[So_Cynical]

(April 2010) KSC has announced a Share Purchase Plan at a reasonable discount, i figure $2.56 per share is a reasonable discount considering KSC has been going sideways between 2.70 and 3.00 for 6 months....its been 5 years since the last capital raising which was a 1 for 10 rights issue at 2.80 back in 2005, so its not like this is a regular event.

With only 1829 share holders registered on the 2009 annual report its fair to say the cap raising wont have much of an impact on the overall financial position of KSC but will be a nice little bonus to there loyal share holders.

Another cap raising only 7 months after the last one however this time its a non-renounceable entitlement offer (not sure how that differs from a rights issue?) anyway i prefer per share cap raisings as they treat all holders equally and this ones at a significant discount again.

1 new share for every 6 held at $2.15 per share, with KSC trading today at around $2.50.. money to be used to pay down debt from the recent purchase of Regal Transport and Pacific Transport and to provide options for expansion into the future.

Works out well for me because i only took a small parcel at the last cap raising due to lack of funds...so participating in this issue will be a reasonably large average down into the last (still open) trade, my expectation level is high with this one.

http://www.ksgroup.com.au/data/news...n renounceable entitlement offer 23-11-10.pdf

 

[nulla nulla]

Another cap raising only 7 months after the last one however this time its a non-renounceable entitlement offer (not sure how that differs from a rights issue?) anyway i prefer per share cap raisings as they treat all holders equally and this ones at a significant discount again.

1 new share for every 6 held at $2.15 per share, with KSC trading today at around $2.50.. money to be used to pay down debt from the recent purchase of Regal Transport and Pacific Transport and to provide options for expansion into the future.

Works out well for me because i only took a small parcel at the last cap raising due to lack of funds...so participating in this issue will be a reasonably large average down into the last (still open) trade, my expectation level is high with this one.

http://www.ksgroup.com.au/data/news...n renounceable entitlement offer 23-11-10.pdf

With Capital raising, I tend to look at the impact on dilution of the net tangible assets and earnings per share. I have kept KSC on the radar for a long time but not as a short term trader.
Wasn't this the freight company that had to deal with an internal missappropriation of funds some time back by one of the financial staff/mangers?

 

[So_Cynical]

With Capital raising, I tend to look at the impact on dilution of the net tangible assets and earnings per share. I have kept KSC on the radar for a long time but not as a short term trader.

Yes there's dilution if you don't cough up...but ill be fully participating so wont be diluted...and its not like there wasting the money, the Regal and Pacific transport buys were significant moves into the WA industry where K&S didn't previously have much of a presence....i have some indirect working experience with Regal, they are a respected and significant player in the WA transport space so a great buy for K&S

Wasn't this the freight company that had to deal with an internal misappropriation of funds some time back by one of the financial staff/mangers?

I had no idea :dunno: as i didn't look that far back when i did my first research....Google found the answers, turns out they got done for 22 million by there long-serving K&S company secretary Dennis Craig Telford.

http://www.theage.com.au/articles/2002/04/19/1019020709739.html

looks like they successfully took action against his bookies.

Sunday, 7 Aug 2005 07:20pm EDT

K & S Corporation Limited announced that the South Australian Supreme Court litigation commenced by it in November 2002, against Vanuatu gaming company, Number One Betting Shop Ltd and UK gaming company, Sportingbet plc, over part of the Craig Telford misappropriation from K&S, has been settled out of court on a mutually acceptable basis and without any admissions.

http://www.reuters.com/finance/stocks/keyDevelopments?symbol=KSC.AX&pn=2

People are funny, wonder how Mr Telford is doing now...probably outa jail already as he only got 9 years.

http://www.theage.com.au/articles/2004/10/26/1098667758896.html

 

[nulla nulla]

Goes some way to demonstrating the underpinning strength of the company and it's board to be able to weather a $22 million rip off. In more recent times other companies have gone to the wall, even after recoverring much of what got ripped off.

 

[So_Cynical]

The KSC share price got hammered today on the back of Fridays profit warning/downgrade/market update...what ever you want to call it...so i figured with the SP at below my lowest buy in price and actually lower than its GFC low, that i had better buy some more...so i did.

In today at the crazy low price of $1.62 :cowboy:

 

[Pioupiou]

The guy, Dennis Craig Telford, who stole $22M from KSC a decade ago is now living in Mount Gambier. They let him out early because he was so contrite! Just as well Alan Scott, who substantially owned KSC, has since died, because he did not take kindly to being ripped off.

On the matter of the SP, Alan Scott's son-in-law, Legh Winser, who is now the CEO, bought 528,000 KSC shares on 12 April 2011, 14 April 2011, 15 April 2011 for the following consideration:

* 200,000 shares @ $1.61 per share (ie., a total consideration of $322,000)
* 28,000 shares @ $1.677388 per share (ie., a total consideration of $46,966.86)
* 300,000 shares @ $1.645 per share (ie., a total consideration of $493,500.

This suggests that things might be working out well, or there is something in the wind.

Shares moved up nicely today to close at $1.70, I think.

Pioupiou

 

[nulla nulla]

The KSC share price got hammered today on the back of Fridays profit warning/downgrade/market update...what ever you want to call it...so i figured with the SP at below my lowest buy in price and actually lower than its GFC low, that i had better buy some more...so i did.

In today at the crazy low price of $1.62 :cowboy:

Good call So_Cynical, up 5% on your entry.

 

[jbocker]

Got into this stock at 1.20 last week and it almost immediately fell to 1.00. Has climbed back well and is now 1.40.

Thanks to So_Cynical for you great posts on this stock. Took the opportunity to buy some in the downturn last week. Reason I bought were; their expansion into the booming west; and while the floods impacted this stock some months ago - I thought business might boom when rebuilding is underway. Long history as a dividend payer.

 

[So_Cynical]

Got into this stock at 1.20 last week and it almost immediately fell to 1.00. Has climbed back well and is now 1.40.

Yep i almost chocked on my corn flakes that morning when i saw it trading at a $1, had to slap myself to get a grip...i freed up some money late that afternoon but the SP had already bounced so my buy order never got filled.

Dear Sir/Madam,

CommSec wish to confirm that your order was received at 2:56 PM (Sydney Time) on Tuesday, 9 August 2011 for Account ********.

You have asked us to buy **** shares in KSC at a price no higher than $1.030.

 

[Pioupiou]

Notice the recent buying by directors, Greg Boulton and Raymond Smith - the news within the castle cannot be too bad.

 

[ADIOZ]

I've been following and buying KSC for about a year. I found it to be very undervalue stock. Not sure why people are selling it.

At the moment, it is trading much below its book value. Therefore, it is undervalue by this account.

On the other hand, its RoA and RoE has been declining for years. Therefore, I believe, that this is a very competitive industry. If I can only hope 1 thing, I hope that the purchase of the Regal & Pacific company can reverse the declining in its RoA & RoE.

In the next year, there are 3 things I wish to see in its report. 1) It will not acquire any more company. Just focus on Regal & Pacific please. 2) Very good positive cash flow and use it for stock buyback and 3) an improvement in RoA & RoE.

 

[tigerboi]

I think KSC will see sub $1 again as the steel contracts they have been losing for them,
also DTM has poor management so dont be surprised if they off load DTM.

 

[nulla nulla]

Maybe they should consider approaching Korda Mentha and make a low ball bid for the assets of "Air Australia (Administrator Appointed)". They could expand into airfreight.

 

[So_Cynical]

In the next year, there are 3 things I wish to see in its report. 1) It will not acquire any more company. Just focus on Regal & Pacific please. 2) Very good positive cash flow and use it for stock buyback and 3) an improvement in RoA & RoE.

I concur with your comment.

-------------------------------

Transport is super competitive for sure, margins are slim but barriers to entry substantial, at some point in time the K&S share price will head back towards $2 and beyond, its just that that point in time seems a way off...we really need the growth and spending train to get moving again.

 

[Pioupiou]

Greg buys again

My recollection of the last performance announcement was that its prognosis was rather muted. It gave the usual negative news of tough going in the eastern states, but it remained silent in respect to WA, which should be doing well.

Anyhow, Greg Boulton, who should know what KSC is worth, invested $26K in KSC, so that gives heart to we poor mushrooms.

Date of change - 28th February 2012
No. of securities held prior to change - 208,429
Number acquired - 20,000
Value/Consideration - $1.30 per share - total $26,000.00
No. of securities held after change - 228,429

I have almost 30,000 KSC that I bought years ago at an average of $2.88, so I am behind big time. I expect the SP will improve when KSC either winds back unprofitable business, or that business improves, plus, the WA business should do well.