SRL - Straits Resources

[skc]

I have been playing around with some dividend stripping recently. I found that in general, the fall in share price is less than the dividend drop off. Any franking credits will be cream on top.

This is particularly true for stocks that are in prominent uptrends. It is also true for many stocks that have relatively low liquidity. My suspicion is that some retail investors forgot to pull / adjust their bid price on ex-div dates.

This observation however is based only on this most recent dividend season, and the overall market has been strong throughout the last month or so.

Will be interesting to see how SRL go tomorrow.

Fundamentally SRL is still trading well below NTA, most of which is holding in the Singaporian listed Straits Asia - but that may not have any bearing on how it fare tomorrow.

Free 5c dividend as the stock opened at $1.78 - unchanged from yesterday.

Price now fallen back to $1.74 which is probably the fair ex-div price.

 

[Boggo]

skc, did you buy or do you hold SRL.
It's looking ok at the moment, I placed the funds in SMX as its had a clean break above $6.50 this morning.

 

[skc]

skc, did you buy or do you hold SRL.
It's looking ok at the moment, I placed the funds in SMX as its had a clean break above $6.50 this morning.

I hold some from a few months back. I bought some yesterday and sold that parcel this morning and essentially stripped the dividend. Wanted to buy it back today but my buy order is not likely to get filled. I will prob just hold onto my original parcel and see enter on further pull back.

SMX is looking decent. Although on a down day its liquidity can be quite low. I was tempted to short SMX (as part of a pairs trade) but since you are long I will probably not pull the trigger . The long leg would have been OKN or DWS.

 

[Boggo]

SMX is looking decent. Although on a down day its liquidity can be quite low. I was tempted to short SMX (as part of a pairs trade) but since you are long I will probably not pull the trigger . The long leg would have been OKN or DWS.

On testing my Metastock signals only 37.72% of them are successful, the "eyeball the results" procedure improves that enormously.

So, because I am long, in theory there is a 62% chance of a short working

 

[skc]

On testing my Metastock signals only 37.72% of them are successful, the "eyeball the results" procedure improves that enormously.

So, because I am long, in theory there is a 62% chance of a short working

Haha. SMX can easily pull back to retest $6.5 before sprinting ahead. And that's a 3% move - the sort of margin I am playing with. So as long as it doesn't hit your stop we could both make profit. So some poor 3rd person can be the loser

Back to SRL.

I am quite happy to hold while keeping watch on Straits Asia chart instead - the buffer between current price and SRL's asset is still very large.

 

[takestock]

I've just sold my SRL shares and I am happy.I had been sitting or rather sweating on this company to move up!
I've had a terrible time trying to decide what to do.Sell and take the loss or wait?It seemed that the company was not only taking a pummelling from within but also from outside economic events.
I had also tried averaging and it did help but I considered it more luck rather than skill.
I managed to "getaway" with a couple of hundred dollars profit.
I'm now going to take a little rest from the market

 

[breaker]

SRL
went up today on good volumes
weekly and monthly charts all heading north
EMAs look pretty sweet
me thinks you may kick yourself in the near future

 

[Boggo]

I've just sold my SRL shares and I am happy.

I had also tried averaging and it did help but I considered it more luck rather than skill.

In my opinion averaging only works when the stock is continuing in the direction you want it to go.
Sounds like you got out of sync with this stock but you are out and happy, don't forget there is a dividend coming your way too.

SRL
went up today on good volumes
weekly and monthly charts all heading north
EMAs look pretty sweet

I sold on Monday, expected a bigger drop after it went ex dividend, in hindsight I should have stayed in as I had bought in on the break above 1.50, it does look strong at the moment.

 

[takestock]

SRL
went up today on good volumes
weekly and monthly charts all heading north
EMAs look pretty sweet
me thinks you may kick yourself in the near future

You may well be right however I just had enough of this company.I felt like I was stuck behind a slow driver on the right-hand lane and staring at the same tail lights,waiting for the person to increase speed(or me to overtake).
The EMAs do look good but at this present time I'm not going chance a mudslide or something else to happen to one of it's mines and kick the company in the guts....again!
If people decide to buy SRL ....go for it ,the charts appear favourable.

 

[Sean K]

From their quarterly:

● At the end of September 2010, the Straits Group cash and investments (excluding SARL) totalled A$218 million.

● At the end of September 2010, SRL’s indirect holding in Straits Asia had a market value of A$356 million.


Total cash and investments: $574m

Shares on issue 255m @ $1.87 = $476m MC.

Then, throw in an operating copper mine and a gold mine....

 

[mgm1a]

Kennas - book value maybe but what about net profits were losses 2007, 2008, 2009 and 2010

Heres a shares that is mining all the hot stuff - gold, coal, copper silver but it doesn't make a buck (op losses 24m) but two directors still get $6m additional for the year in loans for shares under an exec share scheme?????!!!!

These 2 directors loan balances total $21m! - they must be hanging out for a t/o bid so they can clear them at a profit as they don't seem to manage profits operationally

I trawled through the 2009 ann report, hard going and couldn't get my head around valuing it, so your're probably as close as anyone

 

[skc]

Kennas - book value maybe but what about net profits were losses 2007, 2008, 2009 and 2010

Heres a shares that is mining all the hot stuff - gold, coal, copper silver but it doesn't make a buck (op losses 24m) but two directors still get $6m additional for the year in loans for shares under an exec share scheme?????!!!!

These 2 directors loan balances total $21m! - they must be hanging out for a t/o bid so they can clear them at a profit as they don't seem to manage profits operationally

I trawled through the 2009 ann report, hard going and couldn't get my head around valuing it, so your're probably as close as anyone

I think the play on SRL is completely different...

The truth is, SRL Asia is a listed company on Singapore and can be readily valued. Same with cash (for obvious reasons).

According to Kennas' numbers there is 38c upside in the share price on those two assets alone. You don't need any valuation on the other assets (as long as they are not negative value) to realise that SRL is for some reason trading at a large discount to something very tangible...

I hold and will continue to do so until that gap is closed (via SRL going up or SRL Asia going down).

 

[Sean K]

I think the play on SRL is completely different...

The truth is, SRL Asia is a listed company on Singapore and can be readily valued. Same with cash (for obvious reasons).

According to Kennas' numbers there is 38c upside in the share price on those two assets alone. You don't need any valuation on the other assets (as long as they are not negative value) to realise that SRL is for some reason trading at a large discount to something very tangible...

I hold and will continue to do so until that gap is closed (via SRL going up or SRL Asia going down).

I put no value whatsoever on Triton and Mt Muro, they are crap. As soon as it's close to it's NTA it's probably not worth holding imo. Management haven't got a clue on this one, how they ever turned it into such a big company is beyond me.

 

[Sean K]

I put no value whatsoever on Triton and Mt Muro, they are crap..

Looks like SRL are going to sell their only real assets in the coal to Asia and rename themselves as a metal explorer/miner.

Initially this is a very good idea as it will definately unlock the cash and investment value to shareholders.

However, what you're left with is a down right turkey with the key assets being Mt Muro and Tritton. While they are trying to realise the value of the non coal assets to shareholders, I think what they'll be left with is what they are currently rated as. Dirt.

 

[skc]

Looks like SRL are going to sell their only real assets in the coal to Asia and rename themselves as a metal explorer/miner.

Initially this is a very good idea as it will definately unlock the cash and investment value to shareholders.

However, what you're left with is a down right turkey with the key assets being Mt Muro and Tritton. While they are trying to realise the value of the non coal assets to shareholders, I think what they'll be left with is what they are currently rated as. Dirt.

When the announcement came out I didn't have time to read in detail, but glanced that the full value of coal investments are realised...with slight premium to share price of SAR. So sold half my holding at the close.

$1.72 for the coal co implying a value of 49c for the metals co based on today's close at $2.21. Whereas the metal assets have been valued at some minus 20c few months ago. Copper and gold are both sexy at the moment so may be metal co will have some value... if only perceived value.

Will see what happens tomorrow but probably trail a very tight stop. The original reason for holding is no longer there.

Entry was $1.355 on 9 July + 10c dividend along the way... so not a bad trade (a fundamental trade that worked!). Thanks Kennas for the alert back on 4 July.

My shout if you are ever in Brisbane. :bier:

 

[Sean K]

My shout if you are ever in Brisbane. :bier:

I'll do that!

I'm probably being a bit negative on their non coal stuff. They are actually producing, they just need to get the opex fully under control and the commodities to keep running.

 

[ParleVouFrancois]

It looks to be an alright deal for SRL holders, there's nothing worse than sitting in an undervalued company with management not bothering to eliminate the disconnect between value and price. With the difference between the value and price slowly decreasing it shows that progress hsa been made, and this demerger is part of that progress to value their assets properly, I don't hold shares but it's nice to see that some companies out there still look after shareholders when the NTA is so high compared to price.