MLD - MACA Limited

[McCoy Pauley]

S & P announces that MLD will be added to the All Ordinaries (along with a bunch of other companies) at the next re-balance. This seems to be the impetus for a 4.5% gain this morning (together with a rising market), notwithstanding the company has gone ex-dividend today.

 

[McCoy Pauley]

Hmm, interesting market reaction to an announcement made this morning that Regis Resources Ltd has given a letter of intent to MLD that MLD will be contracted to provide mining services to RRL for the proposed Garden Well Gold Project.

The share price rose strongly in the morning but by the close, the shares had fallen 6c/share.

I guess the announcement, on closer reading, is a bit all "pie in the sky" stuff and having a letter of intent is different to actually having dry ink on a contract.

Still holding, so DYOR.

 

[Country Lad]

The share price rose strongly in the morning but by the close, the shares had fallen 6c/share.

I guess the announcement, on closer reading, is a bit all "pie in the sky" stuff and having a letter of intent is different to actually having dry ink on a contract.

Yes you are spot on, I reckon the red cordial brigade saw the headline and reckoned there was an opportunity and the more rational actually read the letter, particularly the part that said..

.....subject to a number of factors including satisfactory completion of the Garden Well Gold Project definitive feasibility study (DFS) by Regis, statutory approvals, Regis Board approval of the development, and final negotiation of mutually acceptable contract terms.

.. and by midday decided the letter was not saying much more than "you are lowest and we will talk to you later" so it was a good time to sell.

Cheers
CL

 

[tinhat]

What's the trading halt all about? Does anyone know what the weather has been at Duketon, WA? What is this "weather event" that has effected their construction project at the Regis mine?

 

[skc]

What's the trading halt all about? Does anyone know what the weather has been at Duketon, WA? What is this "weather event" that has effected their construction project at the Regis mine?

Not sure exactly what weather event it was, but RRL is also suspended on the same notion.

 

[skyQuake]

Not sure exactly what weather event it was, but RRL is also suspended on the same notion.

Doesn't look good for either party.

RED anyone?

According to Bloomberg it was heavy rainfall:


By David Stringer
Feb. 13 (Bloomberg) -- Tropical low has brought about 35mm
of rainfall in past 48 hours to the Northern Goldfields region
of Western Australia state, forecaster Karl Brunckhorst says
today by phone from Perth.
• A “fairly well defined tropical low” is bringing an unusual amount of rainfall to the mining region in a once-a-year type event: Brunckhorst
• Laverton area has received about 33mm rainfall in past 48 hours, Brunckhorst says
• NOTE: Regis Resources earlier halted trading in its shares ahead of announcement on weather impact at Duketon operations near Laverton: {NSN N0WTH06TTDSP <GO>}
Link to Company News:{MLD AU <Equity> CN <GO>}
Link to Company News:{RRL AU <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the reporter on this story:
David Stringer in Melbourne at +61-3-9228-8737 or
dstringer3@bloomberg.net

To contact the editor responsible for this story:
Soraya Permatasari at +61-3-92288720 or
soraya@bloomberg.net

 

[skc]

Doesn't look good for either party.

RED anyone?

By David Stringer
Feb. 13 (Bloomberg) -- Tropical low has brought about 35mm
of rainfall in past 48 hours to the Northern Goldfields region
of Western Australia state, forecaster Karl Brunckhorst says
today by phone from Perth.

35mm over 48 hours sounds like bugger all?!

Too bad for RRL missing out on a pretty strong POG rally.

 

[tinhat]

Good half year results report out this morning. Revenue up 47%, EPS up 25%, interim dividend up 44% to 6.5cps.

Regis Resources mine construction weather event (flooding) will mean results for the second half won't be as impressive as first half which will put a dint in the final results for the year with the guidance being that FY14 profit will be above Y13. That's a pity. But this company seems to be well on track.

Wish I had bought down at 1.70-1.80 :

 

[tinhat]

This is the sort of thing that drives shareholders mad:

"MACA Capital Management Initiative"

• 30c per share special dividend fully franked (on top of 6.5c interim)
• Private share placement to insto clients of Hartleys at 5% discount to raise $59m
• New shares will receive the special dividend representing a massive immediate windfall return of 19% gross on the issue price of $2.25 per share

The special dividend will cost $60.8m so the capital raising doesn't quite cover the cost but will dilute my equity in future cash flows by 15%. I'm being compensated with a special dividend that only yields 12.3% and the sweetener is the franking credits which grosses that yield up to 17.6%. That is not an an adequate compensation for reducing my equity by 15%. I'm being ripped off so that a few private clients of Hartleys can make a windfall profit from my equity in this company.

 

[ROE]

The sort of thing that made me got out of FGE when they did the same thing and place
a discount placement for Clouch, technically give them large holding in the business without a premium and lock out retail shareholder ..this was when FGE was going strong, don't care I got rid of it at a healthy profit but forgo a bit more but that the decision I made when I question management integrity

You can be sure if management has this line of thinking it is not all share holder interest they look after.
only the cosy relationship.

My uncle Phil Fisher

Does the management have unquestionable integrity? "The management of a company is always far closer to its assets than is the stockholder," Fisher states. And managers can benefit themselves at the expense of shareholders in an "infinite" number of ways, including salaries and perks high above the norm. The only protection shareholders have against management abuses of position is to invest in companies whose managers have unquestioned integrity.

This is from AFR
Mining services contractor MACA Limited has made the bizarre move of declaring a 30 ¢ a share special dividend, while raising equity to prop up the company’s balance sheet.

Bizarre I agree...

 

[robusta]

Yep not good for the shareholders and yet another Roger Montgomery tip that worked out ok in the short term but failed to stand the test of time.
But naturally he would have bailed long ago.

 

[tinhat]

Yep not good for the shareholders and yet another Roger Montgomery tip that worked out ok in the short term but failed to stand the test of time.
But naturally he would have bailed long ago.

They were a Lincoln Indicators star stock until they released the last half year report. They have been dropped because return on assets has dropped below 20% which is one of their criteria. The outlook is positive, especially relative to peers. It's just disappointing that the management have decided not to look after the shareholders.

 

[ROE]

They were a Lincoln Indicators star stock until they released the last half year report. They have been dropped because return on assets has dropped below 20% which is one of their criteria. The outlook is positive, especially relative to peers. It's just disappointing that the management have decided not to look after the shareholders.

Management look after themselves on this one, come to think of it, it is a sneaky way for them to cash out while blow smoke and mirror about unlocking franking credit

large holding, hmm cant sell out that panic the market, let pay ourselves 30c special dividend and at the same time get someone else to chip in for the cash.

cheap way to sell 15% holding, brilliant strategy...you know what I would do if I hold this stock when integrity is in question...

Maybe corporate law should be amended, company cant raise equity at the same time pay a special dividend

 

[joeno]

What is wrong with this stock? it's been going down every single day for a few weeks now.

 

[luutzu]

What is wrong with this stock? it's been going down every single day for a few weeks now.

The couple of contracts they have with the minor mines were closed; got some breathing back when IO prices were up a bit and they agreed to help fund the mines I think. That and a couple small infrastructure job they got ended.

But it could be the ponzi scheme they're running is catching up to them. Where dividends were paid but they went and raised money... pretty smart way to show those who didn't read the notes that the yield is awesome and business will recover.

 

[joeno]

The couple of contracts they have with the minor mines were closed; got some breathing back when IO prices were up a bit and they agreed to help fund the mines I think. That and a couple small infrastructure job they got ended.

But it could be the ponzi scheme they're running is catching up to them. Where dividends were paid but they went and raised money... pretty smart way to show those who didn't read the notes that the yield is awesome and business will recover.

Thanks for the explanation. I'm looking at the FY15 half yearly and in the income statement it states the EPS as 15.7, which is a decrease due to the placement of new shares as you have mentioned. Am i missing something here? That's still a mighty fine return. What is the "real" earnings that you are saying it really is?

I bought a little into this stock and am alarmed this one's going down the pipes.

 

[luutzu]

Thanks for the explanation. I'm looking at the FY15 half yearly and in the income statement it states the EPS as 15.7, which is a decrease due to the placement of new shares as you have mentioned. Am i missing something here? That's still a mighty fine return. What is the "real" earnings that you are saying it really is?

I bought a little into this stock and am alarmed this one's going down the pipes.

I don't know what it will earn.

The ratio and yield all looks great when I look at the presentation and reports. BUT...

One, i didn't expect or even thought about it at the time, IO prices are in decline, its civil projects are ending about now and it really only has something like 4 clients so that's too risky even if we assume, as I did, that the project won't be cancel. A couple did since and from memory it "partner" with Atlas Iron to reopen the mine - to create jobs and keep revenue being booked or something.

So in terms of earnings they are to receive in the bank... I don't know.


---

What you might be missing, and here I am about to gloat on your possible pain, could be management playing games to keep the stock up - they're doing it with dividend yield.

In general, companies do try to to keep paying dividends so shareholders are happy and the CEO won't get replaced due to the share price crashing and change in sentiment. So in difficult circumstances, they generally try to keep dividends - somewhat understandable. BUT...

What good management do is they try to balance corporate need for cash and shareholder/fund managers need to say "yield is great" is they introduce dividend reinvestment plan, and if it gets too tough they reduce dividend slight and give higher discount to choosing the DRP. This would keep the cash in the company and they just add a few zeros to the sharenumbers.

With Macca, not only are they a small player in a tough environment... with projects ending and the boom is busting... Good and honest management would do the above and preserve cash... They didn't do that but actually reverse it.

They increase dividends, then pay two special dividends... and then go on the sell shares to "sophisticated investors" to raise money to help pay for those dividends they just paid out.

You see that, best to run away.


Just looking over the 2014 report... It actually report profit of $55m but the cash collected from operation was only $46m. Read the Chairman's intro and they actually help fund some client... anyway... Companies tend to report less profit and have higher operating cash because by whatever mean the ATO tax the profit and cash is just for show or something.

The only time you want to report higher profit than your cash is to impress shareholders and your boss, and make the ATO happy.

That and it raises $61m in new issue, and pay dividends of $82m.

Dividends should only be paid from profit you don't know what to do with. So it must always be less than the earnings, and shouldn't be paid when you have to raise new money.

When you raise new money to pay existing shareholders, it's call a ponzi.


disclaimer... I am no expert, it's just my opinion. I haven't been following MLD and who knows they might get a new contract and I am just completely wrong.

 

[joeno]

They increase dividends, then pay two special dividends... and then go on the sell shares to "sophisticated investors" to raise money to help pay for those dividends they just paid out.

You see that, best to run away.

The fact that they did this should have been reflected in the decrease in share price pretty quickly. So the current trend downwards is based on... shareholders who are late on the news? The stock price is slowly but consistently decaying day after day.

The only time you want to report higher profit than your cash is to impress shareholders and your boss, and make the ATO happy.

That and it raises $61m in new issue, and pay dividends of $82m.

When you raise new money to pay existing shareholders, it's call a ponzi.

Suppose the problem is proving that they did it intentionally. And if they did, still doesn't explain how their profit is still so high up - unless they profited due to a ponzi as well. There are mining and construction stocks these days with horrendous FY14 performance but are making a steady recovery. Guess you can't take anything at face value.

 

[luutzu]

The fact that they did this should have been reflected in the decrease in share price pretty quickly. So the current trend downwards is based on... shareholders who are late on the news? The stock price is slowly but consistently decaying day after day.



Suppose the problem is proving that they did it intentionally. And if they did, still doesn't explain how their profit is still so high up - unless they profited due to a ponzi as well. There are mining and construction stocks these days with horrendous FY14 performance but are making a steady recovery. Guess you can't take anything at face value.

Maybe it did slowed down the drop when announced last August, who knows.
Maybe investors were informed and sell out of it but as ROE said above, mgt just do it and cash out anyway. And with the dividends in the pocket, new investors buy at cheaper prices, and "sophisticated" ones buy in at a bargain or something.

ABC Learning centre did a similar thing... I didn't read much into it and bought, so yea. You increase dividend payout, you attract smart money, and dumb money like myself read the headlines and top line items and thought, wow, it's complicated but good yield and smart money are with them... Or maybe that's just me.



I think the recent decline is due to Iron Ore and commodity price slump... with IO being low, the high-cost miners will lose money... and even if MLD partner up and take equity or defer payment, there's only so much that could help for so long. So maybe the market see the potential for mine closure and contract ending, lost of revenue etc... and reflect this in the price declines.

It recently have a project cancel with some SinoSteel right? If Atlas is canned too it'll be stuffed.

It already have its cash flow more than halved last year before these closures... At that level it still couldn't pay its dividends. With current condition, may very well cancel dividends and raise capital to stay afloat.

I'm just guessing that's why the market react as they do. Could be an over-reaction but I really don't know beyond what've said.

Hope it works out well, but if it doesn't... tuition fee.

 

[ROE]

What is wrong with this stock? it's been going down every single day for a few weeks now.

watch what the guys in charge do and that would be your cue to move back in 2014, like I mentioned above if
I have any holding I would have offload it all and would stay out.

action speaks more than words, watch what they do not what they say... you can twist and turn with word but you cant with action words is like profit and action is like cash flow, cash flow usually don't lies.

decline also due to iron ore price etc... but the above general rule works well for any business.