Mining Services Stocks

[craft]

UGL is an interesting one as it was only 2 months ago when its property services unit was supposed to worth $1b. Today the market cap is only $1.3b.

In addition, over 40 percent of Group earnings are now generated offshore.

Expected to deliver its eleventh consecutive year of earnings growth, we anticipate Property will continue to deliver long term growth as it expands to nearly 50 percent of Group earnings in the next few years. Internationally, we are encouraged by the growth potential in both the USA and Asian markets, particularly China where we anticipate growth of nearly 20 percent in FY2013.

Baby out with the bath water?

 

[Ves]

UGL is an interesting one as it was only 2 months ago when its property services unit was supposed to worth $1b. Today the market cap is only $1.3b.

The property services unit (DTZ) is where all the future growth will be. The demerger will probably happen now, and will probably unlock some value. I think there's a good risk / reward play at these prices long-term. My average is about $9. Underwater for now, nothing new there, I usually begin that way!

 

[McLovin]

Same with me...

+2.

For the same reasons mentioned. I particularly like the offshore earnings bit.

 

[skc]

This from last night's budget paper...



Mean reversion would means the pie is about 1/3 of where we are now.

 

[So_Cynical]

(4th-April-2013) There is a big bottom coming for the mining services stocks, when the resource boom development spend actually starts to fall, that's when it will get interesting...i hope to restrain myself until then.

I continue to restrain myself...the spend wont actually peak for another 6 to 8 months.

 

[Intrinsic Value]

Just my two cents worth, it could be beneficial to look on that list for no debt and lots of cash on hand, I still hold FGE and while I won't be buying more at the moment selling is not on the agenda either. There should be some consolidation in this sector in the future.

I sold out all my FGE a couple of months back near its high but if it goes way back down to 4 dollars or under again I think I will load up again.

Good managed businesses with plenty of cash will always do well in the long run. In fact a period of consolidation could work very nicely in FGEs favour.

It is a shame that they didn't pay higher dividends as that would have boosted the share price. I mean I think they had 200 million cash or thereabouts. The could well have paid a large dividend and still had plenty in the coffers.

 

[tinhat]

I sold out all my FGE a couple of months back near its high but if it goes way back down to 4 dollars or under again I think I will load up again.

Good managed businesses with plenty of cash will always do well in the long run. In fact a period of consolidation could work very nicely in FGEs favour.

It is a shame that they didn't pay higher dividends as that would have boosted the share price. I mean I think they had 200 million cash or thereabouts. The could well have paid a large dividend and still had plenty in the coffers.

I believe that management have stated a desire to acquire businesses at the right price. I think a lot of people have viewed them in the recent past as an inspiring Monodelphous.

 

[VSntchr]

Same with me... I have been buying under $10.00, added even more today. Still think it's cheap if you value all of the segments separately and apply reasonable assumptions to each for the long-term.

I have been working on doing divisonal valuations this week - and even before I've finished I can safely assume this ones cheap. I'm glad I've been so busy as its been getting cheaper and I don't have much capital left to average down at the moment!

 

[Huskar]

I have been working on doing divisonal valuations this week - and even before I've finished I can safely assume this ones cheap. I'm glad I've been so busy as its been getting cheaper and I don't have much capital left to average down at the moment!

I don't know. It could also be a classic value trap where hindsight is driving expectations - I think shorter term there is more money to be made on the short side vs the long. But I suppose that is the beauty of the market - you can take completely opposite sides of a trade and both make money if your time frames are different..

 

[Mutasim]

These companies all look pretty cheap, but is it possible to predict where they'll bottom out? ASL trading on 3.85 P/E...

 

[skc]

These companies all look pretty cheap, but is it possible to predict where they'll bottom out? ASL trading on 3.85 P/E...

Trailing PE... you need to throw that in the bin and focus on estimating forward PE 2-3 years out (which is really quite difficult and will no doubt be wrong).

BLY AGM on 21 May and everyone is expecting further profit downgrade... whatever BLY says will be read-through to ASL.

 

[Intrinsic Value]

I believe that management have stated a desire to acquire businesses at the right price. I think a lot of people have viewed them in the recent past as an inspiring Monodelphous.

FGE nice contract win 290 million.


Share price down to 4.60 circa tempted to buy in again but there is so much momentum against the sector I am going to wait and try and get them at around 4.00

 

[odds-on]

Trailing PE... you need to throw that in the bin and focus on estimating forward PE 2-3 years out (which is really quite difficult and will no doubt be wrong).

BLY AGM on 21 May and everyone is expecting further profit downgrade... whatever BLY says will be read-through to ASL.

At current price (~$1.30), ASL is trading at a Price to 10 Year Average EPS of ~6. They have paid a dividend every year for the last 10 years.

Cheap.

 

[craft]

At current price (~$1.30), ASL is trading at a Price to 10 Year Average EPS of ~6. They have paid a dividend every year for the last 10 years.

Cheap.

Probably need to look back a little further then 10 years to get a full cycle.

 

[chops_a_must]

A serious question.

Which of these stocks do people think have a chance of going bust?

 

[VSntchr]

A serious question.

Which of these stocks do people think have a chance of going bust?

AZG

 

[skc]

AZG

DTQ comes to mind.

COF might need some capital at some stage.

NFK was on the brink before RCR took them over with a "negative premium".

But this list is pretty pointless as most people probably have a slightly higher investment criteria than just not going bust...

 

[odds-on]

Probably need to look back a little further then 10 years to get a full cycle.

View attachment 52248

Hi Craft,

Good point, thanks for the chart - do you keep ~20 years worth of historical data on all ASX stocks?

Cheers

 

[odds-on]

But this list is pretty pointless as most people probably have a slightly higher investment criteria than just not going bust...

Ha ha ha.......my investment criteria is based on looking for companies that are not going bust (and are cheap), simply because it is easier to predict bankruptcy than earnings. If a company does not go bankrupt, what is going to happen? It is going to stay in business!

If some of the mining service companies do go bust, does this not leave more of the (reduced) pie to share?

Cheers

 

[chops_a_must]

If some of the mining service companies do go bust, does this not leave more of the (reduced) pie to share?

Cheers

It'll probably be the time to buy...