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Companies I didnt buy

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galumay:
MYE, Mastermyne Group Limited, a mining services business, metrics looked really good, cheap, good ROE, ROIIC, FCF, EV/EBIDTA, low debt, revenue growth, dividend yield - everything i looked at was great! BUT, the killer is, its clients are nearly all in coal. When I ask myself, "what will this business look like in 10 years?" I cant help but think, maybe it doesnt even exist. 78c 16/2/21

Released their H1 results while i was writing this, big drop in revenue, profit & divvy. Market dumped it hard, down 12% to under 70c. If they get punished some more there is a point where its just too cheap to ignore, business will recover and its getting close to its NTA of 55c. Its priced like it made a loss rather than a drop in porfit.

This paper outlines a range of possible cases for met coal in the next 20 years,

https://s3.treasury.qld.gov.au/files/A-Study-of-Long-Term-Global-Coal-Demand.pdf

BHP's slide from their H1 2021 presso shows how badly coal is going for them as a producer,



Passed again at 61c

25/10/22 now at 25c!

galumay:
AMO - this was one i discussed with Claude on twitter via DM, this was the conversation, (read from bottom up)





This is one Claude nailed, FY 2021 results,



Divvy up to 3.1c  - about 11% on current price!

galumay:
Just had a squiz at CLX, it seems to have had a very good couple of years, largely due to Covid, has worked the debt down a fair bit, has an undervalued property PF, reasonable cash flow, (after adjusting for rent shown as lease repayments thanks to AASB-16 madness.)

Founder has 25% of shares and all directors have decent skin in the game, small float on a tight registry - just like I like!

Question is what happens after Covid, does it just revert to historical numbers or has there been structural change in the business?

Probably a month late to this one, at current price its basically round my range of calculated value - $1.30.  21/08/2022

galumay:
Claude asked if I had looked at DUR. I hadnt.

My rolling commentary on twitter with Claude.

I have never looked at it! First glance, too new for me, too much debt. Interesting that 3 families hold exactly 11.04% each, assume they were the founding partners from 2010. Only 2 seem to be directors still. I like the business, its very unattractive boring work!!

Might go back and read the prospectus and earlier ARs from pre IPO to get more of a feel for why it went public and a bit of history.

Ok so 3 founders still involved, all with 11.04%, the IPO basically got them a $5.5m payday each! Nice work if you can get it.

The margins have been very compressed when you compare their FY 18, 19 & 20 numbers to the ones since listing. How much of that is Covid/supply/inflation/labour market and how much is structural?? Too hard basket.

42c 22/08/22

galumay:
Chris had previously talked to me about ATP, Atlas Pearls and I had dismissed them as unprofitable with significant debt. He mentioned they had now turned a profit and also just paid out the rest of the debt. So I thought I would run the ruler over it again, no question its cheap by any metric, a P/E of about 4x, a range of value based on FCF of 10c compared to a current price of 4c.

The problem for me is the risks inherent in a agri(aqua)culture/commodity play, they spend pages in the annual report detailing the complexity of the risks and their potential impacts on bottom line - oyster value/life/disease risk, FX risx, size of pearls, production rates, price of pearl, margins, etc. . Also a question mark over capital allocation now debt gone, divvies? buybacks? consolidation? Also all of the operations are based in Indonesia so there is also sovereign risk to consider.

I think its a potential position for someone with a higher appetite for risk than me, there is quite a lot of upside if they continue to execute and it re-rates to reflect the turnaround in the business. I just found the downside risks too hard to quantify and qualify, so I assume its somewhat symmetric. Probabilistically i think maybe 30% chance it stays around the current price in the medium term, 30% some of that risk comes home to roost and earnings revert such that price drops back to the 1c range, and a 40% chance it continues to grow, no problems with the oysters and pearls, and it rerates to round 10c - so price expectancy of 1.2c+0.3c +4c = 5.5c which is not enough upside for me.

Lets see where it is in 3 years!

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