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PRN - Perenti Limited

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imajica

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Hey all! just thought I'd start a thread for Ausdrill. I still can't believe there isn't one already!
Ausdrill Limited (ASL) is an international drilling, contract mining, supply and logistics, and telecommunications services group with operations currently in Australia, Africa and the United Kingdom


Market cap - 323 million

P/E ratio - 8.76 (sector average - 13.83)

dividend 11 c fully franked for the year (note: they go ex-dividend on the 19th October - 6c fully franked)

during the GFC they maintained solid earnings and their dividend. With miners kicking into full gear again, larger mining services companies are positioned nicely to benefit from the upswing.

what are people's thoughts on ASL?
 
Re: ASL - Ausdrill

I bought into ASL in mid-june on the basis of their excellent P/E, the discount on the NTA per share and the decent dividend yield at the time. Since then they've done very well, and their profits went up, rather than the slight decline I was expecting. I might be a bit bias, but I think they're still good value.

Their annual results presentation slide 6 spells out their current undervaluation, and I think it's good that they're trying to push a positive revaluation by pointing this out. As always, DYOR, but I will be holding onto my shares for now - I'm hoping for further rises, and I'd like to get past the one year mark to minimize tax.

On the devil's advocate side:

1. They aren't as highly diversified as they might appear: while they are in alot of fields, most of the money comes from contract mining services, and there are only two major locations: Aus and Africa.

2. They had a sizable negative cash flow of $46M this year, due to investing activities. Given their low level of debt I'm ok with that, it's a good time to be buying, but more conservative investors might prefer a positive cash flow.
 
Re: ASL - Ausdrill

Interesting development with this fundraising about to come out. I'm curious to hear people's opinions on what the money might be for. I'm betting modest debt reduction and organic expansion.
 
Re: ASL - Ausdrill

Pretty brutal day today, down 6.6%

I don't mind the capital raising since it is being used to fund expansion in a very direct manner. I'll be participating fully, for as much as that is worth with a 1 for 10 offer. The timing is much better than most companies, coming immediately after a good half year and contract announcements, when the share price is relatively strong. Compare that to other companies who raised capital at the height of the crisis, when their share prices were scraping the bottom. Investors caught without cash, or unwilling to dig in further, were really punished by 1 to 1 or 1 to 2 offers...

Also heartening to see that "Ausdrill is confident of securing additional work in the short term". So expect more contract announcements.

Does anyone else have any thoughts?
 
Re: ASL - Ausdrill

Ozymandias

Considering the 11 or 12 cent increase before the T/H yesterdays drop was not that bad.
I will also take up full entitlement and totally agree the timing of this CR and the $ amounts are fairly impressive.
I thought debt reduction was the reason but even happier some funds are for expansion.
 
Re: ASL - Ausdrill

Closed at 2.03 today, dangerously close to the 2.00 that the capital raising is taking place at. This could be trouble if it becomes cheaper to buy on the market than from the share offering...
 
Re: ASL - Ausdrill

no one has anything to say? this stock is great for yield and capital? I am happy with what i see. anyone hold?
 
Re: ASL - Ausdrill

rivkinslovechild said:
no one has anything to say? this stock is great for yield and capital? I am happy with what i see. anyone hold?
Click to expand...

I held but got out of them earlier this year after a small capital gain and very little movement in their share price.
I haven't looked any further into them, but for some reason they are not attractive to any of the big boys despite being reviewed regularly in the fin review and smart investor magazines etc....
I can't suggest why this is but there must be some fundamentals that aren't supportive. May be worth another look if the market is firming - on the surface they look very attractive and are still a growth stock.

?
 
Re: ASL - Ausdrill

Closed at $3.54 today ... were at a 200 day high on 18/02/11
 
Re: ASL - Ausdrill

ASL is supposed to deliver a glowing report soon, yet it's one of the worst performers today whilst market had the best day for ages. ASL is sitting on a support line at 3.30. Did a capital raising at 3.50. Could be a nice bouncer but I don't feel confident about it. Thoughts?
 
Re: ASL - Ausdrill

Nice bounce today with great volume in part due to FMG contract. Interesting that it all seemed like a good prospect but I felt bad about it. Hard to tell the difference between gut intuition and fear. Wish I could master that. Did buy a little though on the 21st.
 
Re: ASL - Ausdrill

Was amused to see this little gap being left on the up as it gapped over the same spot on the down.

Feels bullish, but I guess a retracement back to around 2.20 should be expected?

 
Re: ASL - Ausdrill

i hope your right Notting,i wanted to buy into ASL at the start of the month but hesitated,now its some
20% clear of that price .
One of many beaten down mining service companies that have taken off this fortnight.
 
Re: ASL - Ausdrill

trillionaire#1 said:
i hope your right Notting,i wanted to buy into ASL at the start of the month but hesitated,now its some
20% clear of that price .
One of many beaten down mining service companies that have taken off this fortnight.
Click to expand...

Thought it was a nice touch to send shareholders a momento of their 25th Birthday. Hard stock to read and constantly swimming against the tide....
 
Re: ASL - Ausdrill

I held this stock some 2 years back and sold out at 3.30 have been buying back in over the last couple of weeks. Am I missing something? Its underlying fundamentals look pretty sound. Paying 14c dividend out of 37c EPS. Obviously thats going to come down a little with the earnings down grade but probably 10 to 20%. Most of it's work is done in existing mines rather than wrapped up in exploration. Debt under control, book value around 2.40. looks undervalued or over sold to me but am I missing anything major? Thoughts?
 
Re: ASL - Ausdrill

Tezzad said:
Am I missing something?
Click to expand...

Have you considered that it has been in downtrend for about 7 weeks, that it has announced a downgrade with comments such as:

However, the Group’s profits are expected to be impacted by the general slowdown in activity in the Australian mining sector that has occurred from September 2012 onwards, and which has not recovered as previously expected.

Weakness in prices of coal, iron ore and more recently gold – leading to a slowdown in other services provided by Ausdrill in Australia;

This has resulted in surplus mining equipment in the sector, with trading conditions in the equipment rental market remaining below expected levels. We expect these trading conditions to persist in the near term. Equipment hire revenue accounted for approximately 8% of Ausdrill’s revenue in the half year to December 2012;

Weakness in prices of coal, iron ore and more recently gold – leading to a slowdown in other services provided by Ausdrill in Australia

In addition, Ausdrill has been developing two new businesses in the mineral assaying and coal seam gas drilling sectors which have been impacted as described above. Ausdrill continues to expense all development costs associated with those businesses.​

These factors combined will drive the share price of any company down. They are essentially saying their business is in downturn so you should expect people to continue to exit in favour of something else with a more positive potential. The market sentiment to ASL continues to be negative.

Cheers
Country Lad

 
Re: ASL - Ausdrill

I've never looked into ASL. They seem very diversified in mining services from the company description. The weekly chart looks very bearish. Huge volumes over the last two weeks and last week's candle is a bearish engulfing.

 
Re: ASL - Ausdrill

ASL has an ongoing P/E of 3.74, which indicates that it is highly undervalued.
 
Re: ASL - Ausdrill

rbgmauq said:
ASL has an ongoing P/E of 3.74, which indicates that it is highly undervalued.
Click to expand...

Actually it is 4.28 based on current share price and the company's updated forecast earnings. The market appears to assume a further drop as the company has indicated will happen which probably makes the the P/E not only a moving feast but likely a lot higher based on next year's earnings. The market looks a year or 2 ahead so it is assuming the company's warnings are even on the optimistic side.

Undervalued? Not when you price in the risk of the likely further profit downgrades.

Cheers
Country Lad
 
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