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PRN - Perenti Limited

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Re: ASL - Ausdrill

ASL has dropped significantly and for good reason.

Howerver;

1. What would be fair value given new circumstances?
2. Whats everyones opinion on where a bottom would be reached?
3. Whats the expected time line your considering a turnaround (however small would be?)
4. Is ASL in a position to buy out smaller competitors?
 
Re: ASL - Ausdrill



My answer to these questions is why bother asking them - there are no definitive answers. The market has spoken, market sentiment is negative, outlook is negative so why waste time on this one with its risk when there are many other companies with positive market sentiment?

Cheers
Country Lad
 
Re: ASL - Ausdrill

I'd be looking at the 5 year charts of all the mining services cpys. They were (almost?) all a lot lower 5 yrs ago. I'd say that's an indication of where the bottom might be.

The last half of 2008 looks remarkably similar to today.... back then ASL went from 265c to 77c in 3 months, and then went lower.

I'd say revisit this sector in 3-6 months.
 

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Re: ASL - Ausdrill

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



All those concerns have merit - and that's why the Market continues to move.
If my chart interpretation is correct and the volume of recent days and weeks signals "A"ccumulation, this may be a reasonable time to buy in expectation of a trend reversal. And I've put my money on it, starting to buy a small parcel, which I can -
  • average up to a bigger one, or
  • stop out of at minimal cost.
Daily chart



is supported by the 30-minute Intraday one



Today's entry is following the Intraday envelope: Buy above $1.13, stop below $1.15. Then wait for the falling trendline on the Daily to be broken, from which point on it'll be the Daily chart (and trailing stop/add envelope) that determines further action.
 
Re: ASL - Ausdrill

pixel said:
..............this may be a reasonable time to buy in expectation of a trend reversal.
Click to expand...

The market sentiment has been very strong all morning, so you may have picked the right timing. Whether longer than just today remains to be seen.

Cheers
Country Lad
 
Re: ASL - Ausdrill

Yeah the mining services speculative haemorrhaging has certainly slowed over the last couple of days and reversed today.
The media are starting to talk more sensibly about the 'disappointing' China figures.
They are starting to say 'well it's still 7% and something growth. Hardly an issue that will create less resource consumption!!'
There will be a savage reversal to the upside for resources at some point and I notieced on CNBC something about no signs of slowdown in demand for property in China despite the oddness of the ghost cities and so on.
China has plenty to peddle with!
Eventually it will have a collapse but they can stem that off for a considerable time as they choose to. Could be after another 3,4,5 years of 7% ish growth! How dissapointing!
 
Re: ASL - Ausdrill

Country Lad said:
The market sentiment has been very strong all morning, so you may have picked the right timing. Whether longer than just today remains to be seen.

Cheers
Country Lad
Click to expand...

ALQ's report was quite decent so the drillers are spared for the moment...
 
Re: ASL - Ausdrill

No real news and a (as of now, ~13% jump today) Results last week gave a small kick up, but can't see any particular reason for today's move.

Reversal tomorrow, or continue on?
 
Re: ASL - Ausdrill

Good points:
* Good operating margins compared to other mining services.
* Low P/E and Higher Dividend ratio compared to other mining services and market.
* 75-80% of their business is in production, not in exploration like other mining services.
* Finance at ASL appears competent at forecasts and tend to be on the conservative end in last few years (from earning surprise graph on comsec).
Things to look out for:
* Higher debt/equity ratio than market, and lower income coverage and debt denominated in USD.
* Large percentage of business revolves around production of gold.

Management appears competent in managing the business IMO. I bought in relatively low 2 months back on points above, but will be holding my position and not adding. I really also like FGE (and it appears a lot of fund managers do too), and believe FGE would have a lower risk profile but as per usual do your research.
 
Re: ASL - Ausdrill

Muschu said:
Any thoughts on the current trading halt?
Click to expand...

I'd rather be short ASL. The writing has been on the wall (chart) for quite some time.
... both on the Daily:



... and Weekly:

 
Re: ASL - Ausdrill

McLovin said:
Down 28%. Ouch.
Click to expand...

Ouch! Jab – cross - hook - uppercut combination. I sold today at a hefty loss (bought in May @ 1.55). The announcement was not good news for the medium term. Time to pick myself off the floor…and select an easier opponent
 
Re: ASL - Ausdrill

odds-on said:
Ouch! Jab – cross - hook - uppercut combination. I sold today at a hefty loss (bought in May @ 1.55). The announcement was not good news for the medium term. Time to pick myself off the floor…and select an easier opponent
Click to expand...

Ouch indeed!!!

Not good news at all for medium term. By my calculations current price is about right for profit downgrade to $35 to $45M so got out for a loss (bought in @1.15) but not too bad overall.

Shame as they were trading undervalued and had faith in management to at least come close to last years performance, obviously I was wrong.
 
Re: ASL - Ausdrill


Net debt ~$420m. EBITDA, by my guesstimate, may end up being as low as $80m, which would have to put the company in breach of its debt covenants. Even an optimistic EBITDA of $120m wouldn't make the 3:1 rule. And if they can't win those contracts they're tendering for then look out below.
 
Re: ASL - Ausdrill

You'd think, if there was any real danger of breaching debt covenants, they would have done a capital raising there and then, or even better at the top of the recent bounce during mid September where they would have had a fair idea of what was coming.
You'd think.
 
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