NMS - Neptune Marine Services

Great announcements by Neptune.
EPS must be updated soon 7.5 cents is looking ancient, any ideas, looks very low to me.
I agree with SOB, unless the SP gets going, a takeover cannot be overlooked.
I would be very disappointed as NMS is my super fund and I"m looking forward to the SP in five years time.

JackC said:

A couple of good announcements released this last week or so.

Perth, Western Australia: Leading engineering services company, Neptune Marine Services Limited (ASX: NMS) has been recognised at the 2008 WA Industry and Export Awards, winning the Innovation Excellence category for its NEPSYS ® dry underwater welding technology. Neptune was one of three finalists vying for the Innovation Excellence Award that was presented at a gala evening hosted by the WA Department of Industry and Resources and attended by the Premier of Western Australia, Colin Barnett MLA.

Also just released today:
Perth, Western Australia: Leading engineering services company, Neptune Marine Services Limited (ASX:NMS) announces that its wholly owned subsidiary, US UnderwaterServices LP, has been awarded two NEPSYS ® repair projects in the Gulf of Mexico worth US$10 million (AUD$14.65m).

Also just noticed that the book value of NMS seems to trading at a significant discount atm. Not quite sure if this is a true reflection of a 'good buy' but will look into it some more. If anyone can share some light on this i'd appreciate it.

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I would say the book value of NMS is approx 45/46c

Total Assets $183.3m
Total Liabilities $ 49.7m
Shareholder Equity $133.6m
No. shares outstanding 292.3m

Book value = shareholder equity/ No. shares outstanding =45.7c

Trading at a 33% discount

The book (net asset) value of companies isn't the most important factor to consider at present, IMO.
What's important is the earning capacity which in NMS's case looks to be increasingly promising.

Thanks Maungatapu & Oldblue for your replies. Oldblue - I totally agree that it's not the most important factor to be looking at, but as someone who appreciates value this just makes it all the better to me. I sometimes think I have too much faith in these guys but I am sure I & the many others who follow this stock so closely will be rewarded for patience in the future. Cheers

from my position, the issue isnt whether you have too much faith in them, but who else DO you have faith in ??
damn nice announcement today - all nepsys work, and considering nepsys work runs on a profit margin of about 50%, the NPAT is surely around $30m now.

some brokers have described the nepsys work as too volatile (earnings wise), which in parts is true, but as it becomes more mainstream in the O&G industry, these margins are gonna become the cream.

Yeah....it may well be cream however, it's gonna take some time for the cream to rise to the top.
Meanwhile, everyones treading yogurt.

I don't see any reason for NMS to be trading at a 52 week low except that that's the way the market is at present.
NMS remains on my watchlist for a re-entry when the trend turns!

The latest BRR is very well worth a listen, you even get the AGM slideshow on BRR now, but you don't get the crownies. It sounded excellent, particularly the Nepsys part, slide 11/22. They have in excess of 35million dollars in tenders out at the moment, just for nepsys. Apparently enquiries have gone from a steady drip to a flow of them. Also they have already booked in or completed, i think around 24million of nepsys. Given the latest job in GOM is around 14million, then there was the backlog from last year that has been completed now. Wasn't that around 10million? Yes they don't expect to get all of the 35million in tenders, but as Lange stated, they are getting jobs over long established companies now. Like they did in the North Sea. And also they are apparently getting noticed for the quality and safety of their work. Actually all of their sectors sounded excellent. It felt very reassuring hearing the BRR, i thought it had bottomed a few weeks back, based only intuition, but maybe others think it has now. Someone is accumulating now, as shown by the automatic trades going through. The quarterly in january should be very interesting and I wouldn't be suprised to see most of the forecast 24million in profit for yr09 to be achieved. I think we are in very good hands with Ross and Christian.

ps- you'd have to think there would be companies looking at taking them over. They aren't even valued at 100million at the moment and imagine what a large established company like schlumberger, caldive, kbr or Worley could do with Nepsys?? They'd probably have tenders out into the 100's of millions. And the markup on nepsys being around 50%, would have to make it very tempting for takeover.

i hope you aint ramping them up for a takeover sophie lol.

as i said back on nov 10, "from my position, the issue isnt whether you have too much faith in them, but who else DO you have faith in ??"

i do wonder how many other companies on the asx are currently in such a sweet position as NMS right now.

very manageable debt, all segments growing revenues, profits, synergies thru cross promotion, all as a result of a strategy born in early 2006 and now really coming thru.

i speak to so many people regularly who regretably are very frightened of their current portfolio situation, as they have seen bad media reports on probably every stock they hold, thru issues of debt refinancing, loss of contracts, earnings uncertainty, deflationary pressures etc etc.

i dont have any of these issues currently. i see NMS as a business that knows its market, isnt trying too hard to be number 1 now, but simply relying on whats achievable at present, proving its strategy works and increasing their client base and workload thru doing it right.

yeah the SP is the pits right now compared to where it was, but that is no fault of their own or in any way showing in the business. no doubt the SP is due to too many investing thru margin loans, not fully understanding who it was they were investing in, and then exiting that position just because they had to sell something. as lange has stated many times in presentations, NMS are not mining services, but due to the lack of similar companies on the asx, and ignorance from those wonderful analysts so many folk rely on to do their thinking for them, they are lumbered with those same mining services companies and the current depressed assumptions for commodities reliant companies.
the oil price is irrelevant to NMS fortunes at present. yeah sure if oil falls back to sub $30 things might get different, but it would have to hold there for years (due to the long term averages that the oil majors use for determining spending), and with oil around that price for a long period, clearly the producers wont be producing, and the world would have more important issues than my share portfolio.

someone said to me a while ago that NMS needs some form of large scale market fall to sweep out those resources bandwagon companies, leaving simply those whose fundamentals are sound, before NMS true value comes to light.
the next 12 months will prove that correct it seems.

Three things lead me to believe a takeover is unlikely in the current circumstances (i.e. for the next six months or so):

1.) 15% of the stock is held by employees/directors (per Lange - AGM - BRR)
2.) In Dec 2007 65 million shares were issued at 0.95c per share. Those shareholders would want at least 0.90 cents per share to encourage them to sell. I don't think anybody looking to buy could justify buying at 0.90 cents or more per share.
3.) This isn't the right market to be buying strong stable growing companies. Picking up distressed companies seems to be the type of transaction which is going on at the minute.

Ultimately, if anyone wants to buy NMS they would probably have to pay somewhere between 0.75 to $1 per share which I (a) can't see happening and (b) would be happy enough with as I would make a reasonable profit (I expect most of the posters on this forum would too).

I am looking forward to finding out what the half year revenue and profit figures are.

Yes, the 15% held by management/employees might be a sticking point unless some other sweetener was offered by an acquirer.
But I wouldn't rule anything out in this market.
A cash offer at, say, 100% above current market price could look mighty attractive to a lot of shareholders, regardless of the price they paid for their shares.

and anyone who has bought them as a long term growth AND dividend holding, especially if its the only thing they held onto when they realised things were gonna turn bad (but not this bad admittedly), the last thing they would want right now is a cash or scrip takeover.

cash - what then ? there certainly isnt anything in the market i would want to pour money into and have TOTAL confidence that at the end of the holding period (5-10 years) will be worth what i expect NMS to be worth.

scrip - what then ? bundled up with other areas of oil services (drilling etc) which in some respect is influenced by unstable oil prices, or put under the umbrella of a mining services company, and then stuck with fluctuating commodities.

no thanks. leave me with my NMS holding, and the chance right now to just keep accumulating, and having total confidence its the right place to be.

sure it is a risk that someone will come along with an offer to swallow them up, but i also have a feeling that those in charge know where NMS are heading, and will do whatever in their power to avoid a takeover, certainly til the price reflects the potential that is coming thru now.

Don't forget Macquarie has a 15% stake in nms. Will need to watch any change to their holding. Probably more critical than the 15% held by management.

Acorn Capital Ltd has become a substantial holder. Now has 17.1m shares for a 5.74% holding. Now 3rd biggest shareholder behind Macquarie and National Nominees. Good to see another substantial holder.

although you might find national dropping out as acorns holdings appear to be integrated into nationals as per ann.

It looks like Acorn bought on behalf of several super funds (including the one I am in

Military Superannuation & Benefits Board
Queensland Local Government Superannuation
Catholic Superannuation Fund
Auscoal Superannuation Fund
Qantas Superannuation
Health Super
Sunsuper Fund
Commonwealth Bank Officers' Superannuation Fund
UniSuper

We could be in for a nice steady rise now, all the way through to the qtrly report 31jan09. Anyone that has researched this stock should see that the company has the potential to meet the yearly profit forecast in the first 6months. Surely that report should see NMS rise considerably, also plenty of time for more good news between now and then. There couldn't be to many companies showing NMS's growth and profit potential in this very negative market, could there? What a shame that the longest bear market since ww2 hits as I make my first decent $$$, should be a valuable lesson anyway. Do any people out there expert in charts, care to offer an opinion??

Acorn Capital has bought a 6.09% stake in Mermaid Marine where National Nominees has the largest holding. Will be interesting to see whether they will decrease their shareholding. Acorn must think that the NW shelf is an area worth investing in.

Also Mermaid has purchased another vessel that is capable of doing rov work.
Anybody think that nms and mermaid would make a good merger. Would one compliment the other?

Sophie I'm no expert on charting but my guess is that in this volatile trading period that NMS shareprice will yoyo up and down between 28c & 32c. My theory for what it is worth punters will buy in the late 20's and sell in the early the early 30's thus keeping the SP inthat range. When I last looked at the depth chart for NMS 30c-35c 25sellers 489179 shares 25c-29.5c 60 bidders 1,436,123 shares. Alot of shares were sold on market around 30c today

I would say that it would be like this till the next quarterly comes out.

Acorn Capital has bought a 6.09% stake in Mermaid Marine where National Nominees is the largest shareholder. Will be interesting to see whether National decreases its shareholding.

Mermaid has also purchased another vessel capable of doing rov work which must auger well for Neptune's share price as they must be expecting an increase in work load in the NW shelf area.

maungatapu said:

Anybody think that nms and mermaid would make a good merger. Would one compliment the other?

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on another forum (and yes i wont mention them prawn) a poster mentioned he posed this question to lange - the answer came back that he could not see any future in such a tie up, as NMS are into servicing, whereas MRM are into logistics. sure the boats would come in handy, but it appears lange doesnt see sense in owning that many assets.