MND - Monadelphous Group

[KnowThePast]

C# and SQL... you don't muck around ey? Good stuff. Web or Windows based?

Windows, but I've built it so that it can be ported to Web relatively easily.

 

[luutzu]

Windows, but I've built it so that it can be ported to Web relatively easily.

Big plans I see

 

[skc]

Article from SMH today.

http://www.smh.com.au/business/mini...g-projects-at-10year-low-20141126-11u8yl.html

This is not good.

In the six months to October, just three new projects worth $597 million reached the committed stage, the lowest number and value of projects in a decade, the Bureau of Resources and Energy Economics (BREE) said

This is frightening.

Liquefied natural gas (LNG), oil and other gas projects accounted for around 87 per cent of the value of Australian projects at the committed stage, according to BREE.

Seven LNG projects, worth an estimated $200 billion, are under construction in Australia, enough to make the nation the world's largest producer of the super-chilled fuel by the time the last is commissioned around 2018.

FWIW, Santos provided a market update today, stating that sustaining capex for the LNG plant is ~$1B for 2016-20, then $0.5B post 2020 (page 23). This compares to the US$18.5B build cost. So the additional work from maintenance is about 2.5% of the capital cost.

 

[McLovin]

I just read that in the AFR, you beat me to posting it! It's prognosis negative.

FWIW, Santos provided a market update today, stating that sustaining capex for the LNG plant is ~$1B for 2016-20, then $0.5B post 2020 (page 23). This compares to the US$18.5B build cost. So the additional work from maintenance is about 2.5% of the capital cost.

That's less than I thought and I thought I was being pessimistic. I thought capex for this sort of stuff would be around 5%/year.

 

[galumay]

I just read that in the AFR, you beat me to posting it! It's prognosis negative.

That's less than I thought and I thought I was being pessimistic. I thought capex for this sort of stuff would be around 5%/year.

Not sure what the numbers would be, but capex is not maintenance, they are separate items. Plant will have a capex budget for increased production, replacement of major items that fail and so on, they also have a maintenance budget for the plant which covers the cost of keeping the plant running, routine shutdowns, planned maintenance and breakdowns etc.

 

[luutzu]

Not sure what the numbers would be, but capex is not maintenance, they are separate items. Plant will have a capex budget for increased production, replacement of major items that fail and so on, they also have a maintenance budget for the plant which covers the cost of keeping the plant running, routine shutdowns, planned maintenance and breakdowns etc.

I think maintenance would fall under Operational Expense (Opex).

Sometimes, the same work done could be under Opex or Capex, depending on the stage of the project.

Smaller budget/projects within the major project to improve operations and efficiencies etc. could fall either as well, depends in stage but could just depends on where managers can get the money from.

 

[galumay]

I think maintenance would fall under Operational Expense (Opex).

Sometimes, the same work done could be under Opex or Capex, depending on the stage of the project.

Smaller budget/projects within the major project to improve operations and efficiencies etc. could fall either as well, depends in stage but could just depends on where managers can get the money from.

good points, in my experience in the industry though, its much easier to get maintenance budget (Opex) funds than to access Capex! The prequalification with RIO for instance to get your hands on any Capex is years of work and extremely high bars to jump.

 

[McCoy Pauley]

I generally assume that maintenance falls under the operating expenditure part of the budget and construction on the capital expenditure part of the budget, though I think luutzu has a good point.

Another thing to toss into the mixer is that one of MND's big contracts is that it won a large construction contract (as part of a joint venture with a couple of Japanese companies) back in February for works related to the Icthsys LNG project in Darwin. Given the issues that another mining services company has run into recently, that won't help sentiment, particularly if it results in delays to MND carrying out the works for the operators.

 

[McCoy Pauley]

Dropping commodity prices = dropping MND share price. Down another 6% today, to $8.55/share (last time I checked).

 

[needsajet]

MND is looking worthwhile to me (5-year horizon), and I'm interested to hear other perspectives.

Pros - good long-term record, lots of work as the resource flywheel maintains a decent % of their work going.

Cons - could be catching a knife; share price may drop more (e.g. a dividend change or contract surprise might create a better buy)

If div were to be cut in half to $0.60, I would get a yield of 7% on $8.67 share price while I wait.

 

[Wysiwyg]

MND is looking worthwhile to me (5-year horizon), and I'm interested to hear other perspectives.

70% of their contract wins ($1.8 billion) were oil and gas and those commodities are down big time. You could be right though, buy in gloom. Nothing has changed since the last wave of posts (see below) on this company came through. Also at this link but please ignore my delusional raving there.

https://www.aussiestockforums.com/forums/showthread.php?t=28781&highlight=dividends

 

[notting]

Cons - could be catching a knife; share price may drop more (e.g. a dividend change or contract surprise might create a better buy)

If div were to be cut in half to $0.60, I would get a yield of 7% on $8.67 share price while I wait.

Sounds like a good definition of a value trap.
There is likely to be a run toward March dividend ex date into which many still stuck in it and in pain will be looking to sell into. You may find some joy in that small time frame.

After the div payment, however, if conditions have not substantially changed, what do you think will happen then?

As that collapse unfolds, what then, buy even cheaper than now 2 months before the next dividend hopefully with no further cuts and a turn around to the end of 30 year commodity boom?

If it still looks like a falling knife, it probably is.

For me if it rallies up for the div, I'll be shorting it more along with all the others in the sector.
Unless China starts building more ghost cities. If it goes against me too hard i'll stop out and wait till it turns and short from there. Simples.

 

[tinhat]

Sounds like a good definition of a value trap.

Been there, done that; BCI, NWH. Came home with the free mouse pad and stress ball.

 

[needsajet]

Thanks for your feedback. I'm intending to invest in the resource services area at some point, and looking at MND, MRM, WOR and DCG. So far, I like the looks of MND's balance sheet, given the factors you mention.

 

[notting]

Had another crack at being one of the best performers and traders jumped on as it flew through 10. Only to be smashed again back down below.
Guess they were betting on a China stimulus to help mining.
I don't think it will be that kind of stimulus.

 

[peter2]

I hope the shorters have been scared off. If the price rise is due to stimulus then I want some of the same. Actually this price rise is stimulating enough and the div a bonus.

The ASX was given the Schultz defense, "I know nothing." in their response to the speeding ticket.

Probable resistance levels are 13.00 then the gap above 15.00.

Longer term investors have got it easy. their TS should be at BE and they can continue their round the world cruise without any concerns.

 

[galumay]

Longer term investors have got it easy. their TS should be at BE and they can continue their round the world cruise without any concerns.

I think most investors would not consider a TS to be an appropriate part of their strategy!

It is noce to see the shorters drying up, I suspect there will be continued volatility in the price until and if MND can actually turn the business around. As we know its a troubled sector, but there will be survivors and it remains a good contrarian investment IMHO, but you need patience and big hairy cohones to dabble in this sector!

 

[Wysiwyg]

Unreal bonus after the divvy and looking good for an extra bonus of the 45 day franking credits.

 

[peter2]

I think most investors would not consider a TS to be an appropriate part of their strategy!

Pardon me galumay, but I'd like to think you are incorrect in that opinion. Although it may be a matter of the definition of the trailing stop (TS) strategy.

I use a price based TS to prevent >1% losses of capital. Some investors use a percentage of price based TS, commonly 20-25% of share price. Other investors use fundamental/commonsense based approach (referring to skc's excellent old thread) as triggers to sell an investment position.

Even Warren Buffett has sell stops (triggers that would indicate time to sell to reduce loss of invested capital) and in his latest Berkshire Hathaway letter (2014 - A must read for everyone interested in businesses and investments) he mentions that in 2013 he "soured" on the then Tesco management team and sold 114M of 444M shares that BRK held. Tesco's problems worsened and he (WB) sold the remaining shares during 2014. The after-tax loss from this investment was $444M, which was only 0.2% of Berkshire's net worth. He then mentions in the past 50 years, BRK have only once realized an investment loss of 2% net worth and only twice experienced 1% losses.

WB keeps his investment (trading) losses small by actively monitoring his positions. His TS strategy was triggered by a change in his opinion of the mgt team.

ps: I won't mention to Mr Buffett, that he might have saved some money if he used a chart based break down of support as his sell signal. His selling probably caused the chart based sell signal.

 

[galumay]

Pardon me galumay, but I'd like to think you are incorrect in that opinion. Although it may be a matter of the definition of the trailing stop (TS) strategy.

I hope not, plenty of evidence of the damage TS's do to portfolios. There is actually a good thread on here somewhere that comes to the conclusion that even for traders they are damaging - let alone investors.

Even Warren Buffett has sell stops

I reckon that requires and extremley broad definition of a TS, to suggest that Buffett uses them because he sells a company if the fundamentals change sufficiently is a very, very long bow!!

ps: I won't mention to Mr Buffett, that he might have saved some money if he used a chart based break down of support as his sell signal. His selling probably caused the chart based sell signal.

The day you can make more money than the most successful investor in history you will be well entitled to suggest he totally drops his strategy and adopts one that is the opposite of everything he believes!

Its all good though, if we were all trying to do the same thing then no one would consistently make money, so "vive la différence"