Monday 30th of August
No news from portfolio companies.
Tuesday 31st of August
Emblaze (BLZ) announced half year results which were generally good due to the good performance of Formula Systems, however the discontinuation of the Else mobile impacted on results.
Goldenport (GPRT) announced results which were lower than the previous year. However the management expect things to pick up and revenues to increase as newly built ships are brought into service.
Capital Group
Saturday 4 September 2010
Luba Freeport potentially the jewel in Lonrho’s crown
Lonrho today announced that TENARIS, a world leader in tubular products and related services for the world's energy industry has agreed to establish a logistics facility at Luba Freeport. Initially they will occupy a temporary facility with a permanent 10,000m2 storage and wash bay facility should be operational by December. The design of the facility has been engineered so that it could easily be expanded up to 60,000m2 as new contract are won.
With the opening of this logistics facility
With the opening of this logistics facility
Emblaze group interim results and potential sale of stake in Formula Systems
Update 03/09/10 just a day after posting the below it has now been confirmed that a sale has been agreed for just under $140million. This equates to about 81p a share and it needs to be ratified by the shareholders. I'm hoping we see a large chunk of this cash via a special dividend.
It’s been a strange few days for Emblaze, on Tuesday they announced their interim results in which they mentioned that they were evaluating several strategic options for the group. The very next day they
It’s been a strange few days for Emblaze, on Tuesday they announced their interim results in which they mentioned that they were evaluating several strategic options for the group. The very next day they
Tuesday 10 August 2010
Sunday 8 August 2010
Fiberweb bought at 54p
The name Fiberweb came up various times when doing my research, but I never really looked past the name. I assumed it was a company involved in fibre optic solutions for the internet and that was not a sector I am interested in. Then one day after seeing it show up on my screener so many times I decided to have a look at the company. Much to my surprise it wasn’t a technology company at all, but an industrial company which manufactures non-woven fibres, whatever they were.
Having done more research I realised that the company was in the final stages of a turnaround and could therefore be an interesting proposition as it is high yielding, roughly 7%. And there was potential for growth over the longer term. The net asset value without intangibles was also about £140million. The current market cap is around £77 million so there is a significant discount to the asset value.
The business itself is split into 2 divisions, which are the hygiene division and the industrial division.
The hygiene division is a relatively defensive division it is mainly focussed on the sale of fabric to the nappy and feminine hygiene market as well as some sales in fabric softeners and some medical application such as face masks. This division generally grows with the market and its main customer is Proctor and Gamble. The problem with having one main customer is obviously the uncertainty and risk to the business if you lose that customer. However Fiberweb have had a long term relationship with Proctor and Gamble so hopefully that will continue. There is also an advantage with working with one of the biggest consumer product groups in the world. They are going to want to grow and have the marketing budget to make that happen. So hopefully this means that Fiberweb will grow with it. Generally however this is a division of the company where sales are relatively stable.
The Industrial division has division related to automotive, construction, graphic art, filtration, industrial wipes and landscape and gardening. At the moment the biggest divisions are the construction division, which mainly sells underlay for roofing and insulation wrapping. And the filtration markets, which include filters for swimming pools and air filters as well. These markets are highly cyclical and suffered during the downturn. However hopefully they have turned the corner and the sales and profits will increase as the market picks up again. In the latest interim reports, it seems to suggest that the worst could be over. Total sales increased 9% with an especially high increase in North America at 17%, they also saw margins increase by 4.2% which resulted in a operating profit for this division of £10.4 million.
The operating profit for the hygiene division was £4.7 million, this was partially impacted by higher raw material cost, which they can pass on to the customers, but only with a 3 month time lag, so we should see some benefits of this in the next set of results. The underlying profit before tax is £6.9 million which equates to 3.8p per share, although they also have a deferred tax benefit, built up from previous losses in their US business. If you include these then the EPS are 5.6p. They are also paying a 1.7p interim dividend.
I believe the discount to net asset value, the relatively low price earnings ratio, especially considering the cyclical growth potential of the industrial side of the business and the high dividend yield of just over 7% make this a very attractive buy.
Having done more research I realised that the company was in the final stages of a turnaround and could therefore be an interesting proposition as it is high yielding, roughly 7%. And there was potential for growth over the longer term. The net asset value without intangibles was also about £140million. The current market cap is around £77 million so there is a significant discount to the asset value.
The business itself is split into 2 divisions, which are the hygiene division and the industrial division.
The hygiene division is a relatively defensive division it is mainly focussed on the sale of fabric to the nappy and feminine hygiene market as well as some sales in fabric softeners and some medical application such as face masks. This division generally grows with the market and its main customer is Proctor and Gamble. The problem with having one main customer is obviously the uncertainty and risk to the business if you lose that customer. However Fiberweb have had a long term relationship with Proctor and Gamble so hopefully that will continue. There is also an advantage with working with one of the biggest consumer product groups in the world. They are going to want to grow and have the marketing budget to make that happen. So hopefully this means that Fiberweb will grow with it. Generally however this is a division of the company where sales are relatively stable.
The Industrial division has division related to automotive, construction, graphic art, filtration, industrial wipes and landscape and gardening. At the moment the biggest divisions are the construction division, which mainly sells underlay for roofing and insulation wrapping. And the filtration markets, which include filters for swimming pools and air filters as well. These markets are highly cyclical and suffered during the downturn. However hopefully they have turned the corner and the sales and profits will increase as the market picks up again. In the latest interim reports, it seems to suggest that the worst could be over. Total sales increased 9% with an especially high increase in North America at 17%, they also saw margins increase by 4.2% which resulted in a operating profit for this division of £10.4 million.
The operating profit for the hygiene division was £4.7 million, this was partially impacted by higher raw material cost, which they can pass on to the customers, but only with a 3 month time lag, so we should see some benefits of this in the next set of results. The underlying profit before tax is £6.9 million which equates to 3.8p per share, although they also have a deferred tax benefit, built up from previous losses in their US business. If you include these then the EPS are 5.6p. They are also paying a 1.7p interim dividend.
I believe the discount to net asset value, the relatively low price earnings ratio, especially considering the cyclical growth potential of the industrial side of the business and the high dividend yield of just over 7% make this a very attractive buy.
Saturday 7 August 2010
Rationale for buying Nighthawk Energy (HAWK) bought at 36.5p
Nighthawk is an AIM listed Oil exploration and production company, with all their projects in the USA. It’s main asset and the reason why I bought into it is their Jolly Ranch project. This is a 370,000 acre shale oil project in Colorado, in which Jolly Ranch hold a 50% interest. According to a recent Schlumberger report undertaken over 246,000 acres of the project, there is an estimated 1.426billion barrels of gross oil. Schlumberger have also said that they expect that similar resources are expected to be in place across the rest of the acreage. If this were the case then this would equate to roughly 2.19billion barrels of oil. At the moment they are in the process of trying to sell a 75% working interest in this project and they say they have had numerous parties who are showing an interest.
A rough estimate of recent oil shale sales suggests that the company should expect something between $5000 and $12,000 an acre. If we conservatively take the lower estimate then the Jolly stake could be valued at $925million, which is roughly £560million. This compares to the current market capitalisation of approximately £85million. As the company is debt free the potential for a big rise in the share price is therefore enormous although somewhat speculative as Nighthawk do not have the funds to fully develop Jolly Ranch themselves and are therefore depending on a sale.
Nighthawk is not all about Jolly though as they also have other assets which are producing cash flow.
These are;
The Revere project in Kansas is a 40,000 acre project in which Nighthawk hold a 50% stake. The estimated oil in place is 210.51 million barrels. Which the company expect will prove to be bigger once all the outlying acreage is assessed. Revere currently has a gross production of approximately 150 barrels of oil a day, which is set to increase in the future.
Cisco Springs in Utah is mainly a gas play in which Nighthawk have a 50% stake on 24,000 acres. This project contains roughly 121 billion cubic feet of gas and 3.8 million barrels of oil. Due to current low gas prices in the area and the potential of Jolly Ranch and Revere not many resources are being pt into Cisco Springs at this specific time.
Cliffs in Illinois is a shale gas play Nighthawk own 80% of the 15,591 acres and the estimated gas in place is 150 billion cubic feet. I believe the company now see this as a non core asset.
I would conservatively say Revere, Cisco Springs and Cliffs would cover the current market capitalisation of £85million. This would mean that the Jolly Ranch project is thrown in for free. Seeing as a large stake of this has now formally been put up for sale it will hopefully not take too long for the true value in this company to show itself.
A rough estimate of recent oil shale sales suggests that the company should expect something between $5000 and $12,000 an acre. If we conservatively take the lower estimate then the Jolly stake could be valued at $925million, which is roughly £560million. This compares to the current market capitalisation of approximately £85million. As the company is debt free the potential for a big rise in the share price is therefore enormous although somewhat speculative as Nighthawk do not have the funds to fully develop Jolly Ranch themselves and are therefore depending on a sale.
Nighthawk is not all about Jolly though as they also have other assets which are producing cash flow.
These are;
The Revere project in Kansas is a 40,000 acre project in which Nighthawk hold a 50% stake. The estimated oil in place is 210.51 million barrels. Which the company expect will prove to be bigger once all the outlying acreage is assessed. Revere currently has a gross production of approximately 150 barrels of oil a day, which is set to increase in the future.
Cisco Springs in Utah is mainly a gas play in which Nighthawk have a 50% stake on 24,000 acres. This project contains roughly 121 billion cubic feet of gas and 3.8 million barrels of oil. Due to current low gas prices in the area and the potential of Jolly Ranch and Revere not many resources are being pt into Cisco Springs at this specific time.
Cliffs in Illinois is a shale gas play Nighthawk own 80% of the 15,591 acres and the estimated gas in place is 150 billion cubic feet. I believe the company now see this as a non core asset.
I would conservatively say Revere, Cisco Springs and Cliffs would cover the current market capitalisation of £85million. This would mean that the Jolly Ranch project is thrown in for free. Seeing as a large stake of this has now formally been put up for sale it will hopefully not take too long for the true value in this company to show itself.
Rationale for buying Speedy Hire (SDY) bought at 28p
Speedy Hire (SDY) is the UK’s largest provider of hire equipment to the construction and infrastructure market. They have 10% of the highly fragmented UK market and have also recently moved into the Middle-East market and into training and advisory services in the UK. Both of these businesses are fledgling businesses and have growth potential. However the vast majority of the business is still made up by their UK hire business.
This business has had some major problems with the economic crisis and the subsequent downturn in the construction industry. The company has however responded to this by having a rights issue to restore the balance sheet as well as streamlining the business with the closure of some overlapping branches. The result is that the current market cap(at 23p) is £117.2 million whilst the current tangible assets are £180.9 million. So there is a significant discount to the asset value of around 35%. It has to be said that the company was loss making last year due to the restructuring costs and the drop in construction industry. However I do feel they have made the steps necessary to profit from the upturn in the industry. Whilst there will be significant public sector cuts the private construction industry is expected to take over some of this demand. There needs to be significant investment in infrastructure spending especially in the power segment as current nuclear stations are closed down and green alternatives are sought for coal fired stations. The railway sector is also expected to pick up with Crossrail and new high speed lines being planned. Speedy have an exclusive deal with Network Rail for the provision of hire equipment.
In 2008 the company made over £30 in profits and if they can get back to those figures then that would be a price earnings ratio of less than 4. It is expected however that it will take a few years to get back to anywhere near this level. However I think the worst is behind the company and this is definitely a share that should come good over the long term.
If this post has wetted your appetite for doing more research then I recommend reading the following investor presentation from the Speedy Website http://www.speedyhire.plc.uk/download/Analyst_Investor_Presentation_2009_tcm6-1970.pdf
This business has had some major problems with the economic crisis and the subsequent downturn in the construction industry. The company has however responded to this by having a rights issue to restore the balance sheet as well as streamlining the business with the closure of some overlapping branches. The result is that the current market cap(at 23p) is £117.2 million whilst the current tangible assets are £180.9 million. So there is a significant discount to the asset value of around 35%. It has to be said that the company was loss making last year due to the restructuring costs and the drop in construction industry. However I do feel they have made the steps necessary to profit from the upturn in the industry. Whilst there will be significant public sector cuts the private construction industry is expected to take over some of this demand. There needs to be significant investment in infrastructure spending especially in the power segment as current nuclear stations are closed down and green alternatives are sought for coal fired stations. The railway sector is also expected to pick up with Crossrail and new high speed lines being planned. Speedy have an exclusive deal with Network Rail for the provision of hire equipment.
In 2008 the company made over £30 in profits and if they can get back to those figures then that would be a price earnings ratio of less than 4. It is expected however that it will take a few years to get back to anywhere near this level. However I think the worst is behind the company and this is definitely a share that should come good over the long term.
If this post has wetted your appetite for doing more research then I recommend reading the following investor presentation from the Speedy Website http://www.speedyhire.plc.uk/download/Analyst_Investor_Presentation_2009_tcm6-1970.pdf
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