Weekly Informer - Saracen Mineral Holdings

Transcription

AUSTRALIAN EQUITIES RESEARCH
Weekly Informer Thursday, 5th March 2015
In this edition
CodePriceRec.
Best Buys March 2015
NA
NA
LNR
PAN
SFR
SAR
SEH
STX
TAP
TRY
$0.20Buy
$0.55Buy
$4.47 Hold, dB
$0.41Buy
$0.205 Buy
$0.11 Spec. Buy
$0.28 Sell, dSB
$0.56 Buy
Resources
Lonestar Resources Panoramic Resources Sandfire Resources
Saracen Mineral Holdings Sino Gas & Energy Holdings
Strike Energy
Tap Oil
Troy Resources
Event
Analyst
NA
Various
Preliminary Full Year Results Half Year Results
Dec H’14 Financial Result
Half Year Results
Reserve Upgrade
Half Year Results
Company Update
Half Year Results
Michael Skinner
Andrew Clayton
Greg Chessell
Andrew Clayton
Michael Skinner
Michael Skinner
Michael Skinner
Jon Bishop
Page
2
6
9
11
14
17
23
25
29
Industrials
Austal
Cedar Woods Properties Empired Fleetwood Corporation Matrix Composites and Eng. Ltd NRW Holdings Peet
ASB
CWP
EPD
FWD
MCE
NWH
PPC
$1.56Buy
$6.00Buy
$0.70 Buy
$1.35 Spec. Buy, uH
$0.77 Hold
$0.28 Spec. Buy
$1.15Buy
Half Year Results
Half Year Results
Half Year Results
Half Year Results
Half Year Results
Half Year Results
Half Year Results
Richard Hamersley
32
Gavin Allen
37
Richard Hamersley40
Gavin Allen43
Gavin Allen47
Gavin Allen50
Gavin Allen54
EPD
HRR
MDL
SIR
$0.73Buy
$0.135 Spec. Buy
$0.79 Buy
$3.00 Buy
Contract win
Company Update
Company Update
Company Update
Richard Hamersley
Jon Bishop
Andrew Clayton
Greg Chessell
Quick Comments
Empired
Heron Resources
Mineral Deposits
Sirius Resources
57
58
59
60
In every edition
Weekly Share Price Performance of Companies covered
Weekly Price and Liquidity Charts of Companies covered
Commodity Price Charts
61
62
63
The Weekly Informer is Euroz Securities’ weekly research clearing document. It includes research notes on stocks within the coverage
universe published during the preceding week. The Weekly Informer is published mid-week.
Research Analysts
Resources
Greg Chessell Andrew Clayton
Jon Bishop
[email protected]@euroz.com [email protected]
Ph: +61 8 9488 1409
Ph: +61 8 9488 1427
Ph: +61 8 9488 1481
Michael Skinner
Julian Lake (Assoc. Analyst)
[email protected]@euroz.com
Ph: +61 8 9488 1431
Ph: +61 8 9488 1470
Industrials
Gavin Allen
Richard Hamersley
+61 8 9488 1413
+61 8 9488 1414
[email protected]@euroz.com
Level 18, Alluvion
Euroz Securities Limited
All 089
information
Mounts on
Bayany
Road
ACN
314 983 and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility or58liability
whatsoever on the part of Euroz Securities Limited or any member
or employee thereof. Refer to full disclaimer at the end of this
document.
www.euroz.com
Perth
Western Australia 6000
Participant of account
the ASX Group
Telephone: +61 8 9488 1400
Authorised to provide financial services
Facsimile: +61 8 9488 1477
AFSL 243302
Best Buys - March 2015
Analyst: Various
Date: 2nd March 2015
$/sh
$0.25
Euroz Securities Best Buys note highlights the best trading ideas as recommended
by the research analysts from our coverage universe at the beginning of each month.
Best Buys recognises the catalysts and fundamental value that are expected to drive
outperformance in the SHORT TERM.
The following points for each selected stock in the Best Buys portfolio highlight
the key drivers. These points are meant to be read in conjunction with the already
published full research notes on these companies. These full research notes are
available on request or from the Research section of our website.
HRR 12 Month Price History
$0.20
$0.15
$0.10
$0.05
Mar-14
$/sh
$9.00
Jun-14
Sep-14
Dec-14
IIN 12 Month Price History
Our Best Buys for March 2015 are:
•
Heron Resources Ltd
•
iiNet Ltd
•
Mt Gibson Iron Ltd
•
Saracen Mineral Holdings Ltd
•
Sino Gas and Energy Holdings Ltd
$8.00
$7.00
$6.00
Mar-14
$/sh
$1.20
Heron Resources Ltd (HRR $0.135) Speculative Buy
Analyst: Jon Bishop
•
•
•
Remaining assays are pending from the recently completed 12,000m drilling
program: with recent results providing encouragement for further material, high
grade assay results in the near term.
The programme has proven successful, with 20 of the 28 holes drilled have
intercepted high grade, mineable widths of mineralisation (2-15m true widths
grading 2-20% Zn; 1-4% Cu; and 1-7.5% Pb) serving to extend known resource
lenses up-dip at the E and G lenses; increase the potential of the new Kate Lens;
extend the I, I2 and D Lenses down-dip; and discover a potential new lens at the
‘Lisa’ location.
Sep-14
Dec-14
MGX 12 Month Price History
$0.80
$0.40
$0.00
Mar-14
$/sh
$0.60
The existing resource grading Zn (~10%), Cu (1.6%), Pb (4.0%) is likely to be redetermined for release towards mid Jun H’15, incorporating the newly discovered
Kate and I2 Lenses from the 2012 & 2013 drilling campaigns and the results to
Dec ’14 of the current campaign.
$0.45
•
Scoping Study / Preliminary Economic Assessment work has commenced on the
Underground Project and is due for mid Jun H’15.
$0.15
Mar-14
•
An optimisation study has commenced for the Tailings Retreatment Project
flowsheet; to date metallurgical testwork has shown enhanced recoveries of
Zn, Cu and Pb via floatation (vs historical operations) after applying modern
processing techniques, implying mine capacity to produce +60kTpa Zn, 20kTpa
PB and 10kTpa Cu.
•
Jun-14
Jun-14
Sep-14
Dec-14
SAR 12 Month Price History
$0.30
$/sh
$0.30
Jun-14
Sep-14
Dec-14
SEH 12 Month Price History
$0.25
$0.20
HRR remains cheap and well capitalised with EV of $15m and cash & equities of
$30m (8cps). This is particularly notable given:
$0.15
1.
The advanced nature of the Woodlawn asset;
$0.10
Mar-14
2.
the high grade underground resource grading +14% Zn+Pb and 1.8% Cu;
3.
Existing resource tonnage totalling some 24Mt @ +5% Zn & 1.3% Cu;
4.
The context of an impending supply constrained Zn macro with the
imminent closure of the Century Mine.
5.
Price Target $0.40/sh
Jun-14
Sep-14
Dec-14
Euroz Securities declares that it has acted as underwriter
to and/or arranged an equity issue in and/or provided
corporate advice to Sino Gas & Energy Holdings Ltd during
the last year. Euroz Securities has received a fee for these
services.
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
2 of 66
Analyst: Various
iiNet Ltd (IIN $6.43) Buy
Analyst: Gavin Allen
•
IIN disappointed the market at the half with higher operating costs than some
expected and a new IRU arrangement resulting in an unexpected increase to
cash outflow in 2016 through 2019.
•
In addition, operating cash flows were impacted by increased inventory and
high tax payments.
•
The stock has been sold off 70c since just prior to result.
•
We believe both earnings and operating cash flows will improve over the second
half resulting in meaningful reductions in debt by the full year.
•
While there is a clear renewed focus by investors on competition, IIN has
continued to grow the subscriber base and to date has maintained ARPU.
•
We expect many of the issues raised by the half year result to be explained by
the company (on the road this week) and look for a share price recovery as a
consequence.
Mount Gibson Iron Ltd (MGX $0.24) Buy
Analyst: Greg Chessell
•
We believe the market is overly discounting MGX and envisage it recovering to
trade at circa 25% discount to our assessed fair value of $0.36c in time.
•
MGX has cash on hand of $354m or $0.32c/sh, cash is a strategic asset in the
current capital constrained environment and provides MGX good optionality.
•
Extension Hill will continue to generate modest cash but lacks the scale (life,
volume and margin) to drive the valuation. MGX are focussed on improving the
mine life and operating margin at this operation in the near term.
•
An insurance claim over the Koolan Island seawall failure is probable, but MGX
cannot provide clarity on quantum, timing and certainty. Discussions with
insurers are ongoing. We have ascribed a nominal value of $10m to this potential,
while we suspect the quantum of a claim would be materially higher, and could
be a future driver of value.
•
A technical and economic evaluation of potential remediation of the Koolan Is
seawall will be concluded in the June H’15. We believe it unlikely that MGX will
commit to a material re-investment in this asset.
•
Growth by acquisition has been mooted for some time however we sense this is
less likely in the short term.
•
We believe cash on hand limits the downside and we have upgraded the stock
to Buy.
3 of 66
Analyst: Various
Saracen Mineral Holdings Ltd (SAR $0.45) Buy
Analyst: Andrew Clayton
•
SAR should deliver Q on Q improvements with increased production and ASIC
falling to <$900/oz and a doubling of EBITDA in the 2nd H FY’15 vs 1st H.
•
At current A$ gold prices (A$1,550/oz) Thunderbox is likely to be developed and
with the feasibility due in March – potential reserves of +1moz @ ASIC of $1,000$1,100/oz should be well received.
•
Thunderbox should double production to ~300koz pa and the initial capex of
~$50m can be funded from current cash and CF.
•
We see a number of short – medium term catalysts including exceeding
production guidance, Red October and Karari exploration results and TB
feasibility.
•
We forecast operating CF to triple over the next two yrs (EV/EBITDA of <2x). Our
valuation has increased to $0.53/sh and our Buy is maintained.
Sino Gas and Energy Holdings Ltd (SEH $0.19) Buy
Analyst: Michael Skinner
•
Reserves - A 3rd party reserves review (likely upgrade) is expected in March.
We anticipate a material uplift underpinned by testing, horizontals, offset well
success and the highly positive northern LXG results.
•
Production - SJB (Sanjiaobei) production has stabilised at 4.1mmscf/d (gross) in
December. Production is expect to further increase in March to 8mmscf/d then
to circa 24mmscf/d (when LXG begins production) by Q3 of CY’15.
•
Capacity Increases - We expect the JV to guide future capacity increases within
the year, our expectation is that these increases will be large (possibly targeting
up to 200mmscf/d by 2018/19), such in our opinion will command significant
market interest.
Gross Prod (LHS)
Net Rev (RHS)
SEH Production + Capacity Forecast
200
Net Production (LHS)
Cum Net Rev (RHS)
200
Potential Phase 4
Capacity - 200mmscf/d
250,000,000
180
200,000,000
140
150,000,000
120
Potential Phase 3
100
100
100,000,000
80
LXG Production Start
60
SJB Production Increase
Potential Phase 2
40
20
4
4
Jan
Feb
7
8
8
8
Mar
Apr
May
Jun
20
22
22
22
24
24
Jul
Aug
Sep
Oct
Nov
Dec
Revenue (US$)
Production (mmscf/d)
160
50
50,000,000
0
CY'15
CY'16
CY'17
CY'18
•
Drilling - Drilling for CY’15 will begin in March as Chinese new year concludes,
the program will include ~30 vertical wells and at least 3 horizontal wells; results
are expected over the course of the year.
•
Funding - Funding remains robust, SEH holds US$35m in cash (prev. US$53m)
and US$40m of debt availability.
4 of 66
Analyst: Various
Best Buys Historical Performance
Since inception, the rolling Euroz Best Buys portfolio is up 328% - outperforming the
benchmark ASX Small Ordinaries Accumulation Index by 336%.
Best Buys Monthly Return (LHS)
Small Ords Monthly Return (LHS)
Best Buys Accum. Return (RHS)
Small Ords Accum. Return (RHS)
350%
25%
20%
250%
15%
150%
10%
5%
50%
0%
-50%
-5%
-10%
-150%
-15%
-250%
-20%
Feb'15
Dec'14
Oct'14
Aug'14
Jun'14
Apr'14
Feb'14
Oct'13
Dec'13
Jun'13
Aug'13
Apr'13
Feb'13
Oct'12
Dec'12
Aug'12
Jun'12
Apr'12
Feb'12
Dec'11
Oct'11
Aug'11
-350%
Jun'11
-25%
Euroz Best Buys – February 2015
25%
23%
22%
20%
15%
15%
14%
9%
10%
8%
6%
5%
0%
ASZ
EPD
HRR
MLX
SIR
Best Buys Avg. XSO Accum. Index
5 of 66
Lonestar Resources Ltd
(LNR $0.20) Buy
Lonestar Resources
Share Price
Preliminary Full Year Results
Price Target: $0.30/sh
Investment Case:
Despite the ~60% pullback in WTI oil across 2014, LNR has delivered impressive
preliminary Full Year results. Importantly, production is set to further increase in 2015
and the hedging secured is expected to deliver robust margins over the course of the
year; LNR remains in a robust position.
We do however highlight that given the current oil price environment the rate of
production growth will be reduced. Stability and improvement in the greater oil
macro will be (in our view) required for material value appreciation in the near-term.
Buy, our Price Target stands $0.30/sh
Key Points:
•
LNR has materially grown its acreage position, production, revenue and cash
generation in 2014.
Moreover these levels are viewed as maintainable (at minimum) in CY’15, even
in the context of the depressed oil price environment.
•
•
FY Production - Up 48% Yr-on-Yr to an average of 4,480boepd (prev.
~3,020boepd).
CY/FY’15 Guidance - As anticipated, LNR has scaled back operations for CY’15
whilst prices remain suppressed.
15 wells will be drilled compared to previous guidance of ~22 wells.
Positively LNR expects to maintain production at ~5,700-6,100boepd over the
yr (our EZL est 5,300-6,000boepd), EBITDAX guidance = $84-95m.
•
Hedging - Critically LNRs hedging (~850k bbls in CY’15 at ~US$88/bbl) is set to
provide a material revenue uplift vs current oil pricing (~US$50/bbl).
•
Reserves - LNR has increased 1P, 2P and 3P reserves by ~20% net of production
depletion. 2P reserves now stand an impressive 43.2mmboe.
Analysis:
Results - LNR has materially grown its acreage position, production, revenue
generation and cash generation in 2014. Moreover these levels are viewed as
maintainable (at minimum) in CY’15, even in the context of the depressed oil price
environment.
•
FY’14 Production - Up 48% Yr-on-Yr to an average of 4,480boepd (prev.
~3,020boepd).
•
FY’14 Revenue - Up 48% Yr-on-Yr to $118m (prev. ~$79m).
•
FY’14 EBITDAX - Up 59% Yr-on-Yr to $86m (prev. ~$53m).
•
FY’14 NPAT - Up 16% Yr-on-Yr to $36m (prev. ~$31m).
Year end 30 June
0.20
A$/sh
Price Target
0.30
A$/sh
Valuation
0.30A$/sh
Shares on issue
752
m, diluted
Market Capitalisation
150
A$m
Enterprise Value
412
A$m
Debt
-272A$m
Cash
10A$m
Largest Shareholder
EWPO - 58.9%
Production F’cast
2014f
2015f
2016f
1.8
2.1
2.5
2014f
2015f
2016f
Total Prod (mmbboe)
Assumptions
Avg Oil Price (US$/bbl)*
Avg Gas Price (US$/mcf )
AUDUSD
Key Financials
Revenue (US$m)
EBITDA (US$m)
NPAT (US$m)
Cashflow (US$m)
CFPS (Ac)
P/CFPS (x)
EPS (Ac)
EPS growth (%)
PER (x)
EV:EBITDA (x)
EV:EBIT (x)
DPS (Ac)
Dividend Yield (%)
ND:Net Debt+Equity (%)
Interest Cover (x)
90
50
65
4
4
4
0.90 0.800.80
2014f
2015f
2016f
118
87
43
-38
132
94
22
-6
171
124
37
-13
-6
na
6
41%
2.7
4.3
4.7
0.0
0%
54%
na
-1
na
4
-44%
5.6
4.0
7.6
0.0
0%
48%
na
-2
na
6
70%
3.3
3.2
5.9
0.0
0%
45%
na
Share Price Chart
$/sh
$0.90
LNR 12 Month Price History
$0.60
$0.30
$0.00
Mar-14
Jun-14
Sep-14
Dec-14
Hedging - LNR continues the prudent strategy of hedging production volumes.
The company has now hedged production 2 years in advance providing insulation
6 of 66
(LNR $0.20) Buy
against oil price volatility and suppression.
At present LNRs hedge book is secured at a significant premium to the current WTI
oil price (~US$50/bbl); specifically 850kboe at a material +$40/boe over WTI in CY’15.
LNR’s Current Oil Hedge Book (27 Feb)
CY’15
CY’16
Volume
Average Price
H1
722,602
$87.2
H2
157,208
$91.1
H1 + H2
514,000
$79.9
Source: LNR + Euroz
We estimate that this hedge book (mark to market) is worth in excess of $40m to LNR
within the current oil price environment.
Operational Scale-back - As anticipated, LNR has scaled back operations in CY’15
whilst oil prices remain suppressed.
15 wells will be drilled in CY’15 compared to previous expectations in late CY’14 of
~22 wells.
LNR will focus on optimal IRR well performance for the coming 12 month period, the
company is targeting a >35% return on each well drilled and completed.
Critically the company has a very limited HBP (Hold By Production) drilling
requirement to hold the current permits under tenure. We do not sight permit tenure
(short or long term) as a major downside risk.
Capital Costs - Capital expenditure for CY’15 have been revised to $85-101m (prev
$130-140m).
Based on our EZL estimates and company guidance, LNR will have capacity to fund
CY’15 operations primarily from production cash flow whilst maintaining production
at 5,300-6,000boepd; a yr-on-yr increase.
Cost of Production - LNR’s cost of production (operating expenses, production
taxes, G&A, and interest) stands as low as $30/boe.
Moreover if we include capital costs, our estimated “all in cost” for LNR stands ~$4550/boe, some $40/boe below current hedging.
Eastern Position - The early stage Eastern results appear to the highest in the
company’s history. Results over the initial production period are estimated at
>750boepd.
Moreover we would not be surprised if LNR was able to produce wells at near
1,000boepd in the near term.
We highlight that >80 additional well locations remain.
Financial + Funding - LNR’s cash position stands ~US$10m and debt at ~US$264m.
Funding capacity (available cash and debt) stands at an est. $105m.
In our view coupon repayments (US$210m @ 8.75%) are manageable given LNRs
hedge book and production strength.
We view the unsecured note offering as a prudent risk mitigation measure, minimal
terms, conditions and maintenance tests are associated. Default may only occur via
non-payment of interest. Repayment is not due until 2019.
7 of 66
(LNR $0.20) Buy
MARKET STATISTICS
Share Price
$0.20 A$/sh
Issued Capital
FP Ord*
752.2m
Opt (@$var/sh)
92.9m
Total Dil. FPOrd
752.2m
$150 m
Enterprise Value
$476 m
Debt
$(338)m
Cash
$13 m
YEAR END 31 DEC
Directors
B Lambilliotte F D.Bracken III R Scott C Rowland Chair
MD
NE Dir
NE Dir
Shareholders
EWPO 58.9%
ASSET VALUATION
A$m
A$/sh
Conventional Assets
Eagleford - West
Eagleford - Central
Eagleford - East
Bakken
Corporate (inc tax credits)
Unpaid Capital
Debt
Cash
Total 71 173 166 145 19 (19)
- (338)
13 - 228 0.09
0.23
0.22
0.19
0.03
(0.03)
(0.45)
0.02
0.30
F/CAST PRODUCTION (A$m)
2014a2015f2016f2017f
Conventional Assets
0.2 0.2 0.2 0.2
Eagleford - West
0.6 0.7 0.8 0.9
Eagleford - Central
0.3 0.3 0.4 0.5
Eagleford - East
0.4 0.7 0.9 1.0
Total Prod (mmbboe)
1.6 1.9 2.3 2.6
Total Prod (boepd)
4,480 5,329 6,270 7,018
Assumptions
Avg Oil Price (US$/bbl)*
93 50 75 85
3.5 4.2 4.2 4.5
AUDUSD
0.9 0.8 0.8 0.8
* Noting that hedging is in-place through to 2016 end
RATIO ANALYSIS (A$m)
2014a2015f2016f2017f
CF (US$m) (38)
(10)
(12)
(2)
CF / Sh (Ac/sh) (6)
(2)
(2)
(0)
CF Ratio (x) na na na na
Earnings (US$m) 36 22 36 42
EPS (Ac/sh) 5
4
6
7
EPS Growth (%) 18%
-29%
57%
16%
Earnings Ratio (x) 3
5
3
3
E’prise Val. (A$m) 414 495 499 497
EV : EBITDA (x) 4.5 4.2 3.4 2.8
EV : EBIT (x) 4.7 7.5 6.1 4.7
Net Debt / ND+Eq (%) 1
0
0
0
Net Debt / Eq (%) 1
1
1
1
NTA / sh (A$/sh) - - - Interest Cover (x) na na na na
EBIT Margin (%) 1
0
0
0
ROE (%) 0
0
0
0
ROA (%) 0
0
0
0
PROFIT AND LOSS (A$m)
2014a
2015f
2016f
2017f
Sales Revenue
117 48 116 190
Hedging Revenue
1
79 41 Deferred Revenue
- - - Interest Income
- - - Other Income
(0)
- - Total Revenue
118 127 157 190
Operating Costs
25 27 34 39
Dep/Amort
41 40 50 56
Writeoffs (explor)
5
- - Corp O/H
11 9
9
9
Provisions
(43)
- - EBITDA
82 90 114 141
EBIT
79 50 65 85
Interest Expense
20 20 20 20
NPBT
59 30 45 65
Tax
22 8
9
23
NPAT
36 22 36 42
Minority Interest
- - - NET PROFIT
36 22 36 42
Net Abnormal Loss after Tax
- - - Net Profit After Abnormal
36 22 36 42
CASH FLOW (A$m)
2014a2015f2016f2017f
Net Profit
36 22 36 42
+ Working Capital Adjustment
47 8
- + Dep/Amort
41 40 50 56
+ Provisions, W/O
(37)
- - + Tax Expense
18 8
9
23
- Tax Paid
(23)
- - 18
- Deferred Revenue
- - - = Operating Cashflow
128 78 94 103
-Capex + Development
165 88 106 105
-Exploration
- - - -Assets Purchased
71 - - +Asset Sales
3
- - +Other
(46)
- - = Investing Cashflow
(279)
(88) (106) (105)
+ Equity Issues (Rts,plc,opts)
- - - +Loan Drawdown/Receivable
215 10 5
+Other
(60)
- - -Loan Repayment
- - - -Dividends
- - - = Financing Cashflow
154 10 5
Period Surplus
3
0
(7)
(2)
Adj/FX effects
- - - CASH
10 10 4
2
BALANCE SHEET (A$m)
2014a2015f2016f2017f
Assets Cash 10 10 4
2
Current Receivables 17 17 17 17
Other Current Assets 32 32 32 32
Non-Current Assets 500 548 604 652
Total Assets 559 607 657 703
Liabilities Borrowings 265 274 279 279
Current Accounts Payable 47 47 47 47
Non-Current Liabilities 39 - - Other Liabilities - - - Total Liabilities 351 321 326 326
Net Assets 208 286 330 377
RESERVES AND RESOURCES
1P2P3P
Reserves (mmboe) 31.0 43.2 48.1
EV / 1P boe (A$) 15.4
EV / 2P boe (A$) 11.0
8 of 66
Panoramic Resources Ltd
(PAN $0.55) Buy
Date: 26th February 2015
Panoramic Resources
Share Price
1st H result
Investment Case:
Whilst the result was lower than our forecast, the operations still generated solid CF
enabling PAN to explore aggressively. This was successful with a potentially game
changing discovery at Lanfranchi with high grade, good widths (>6m @ +5% Ni)
mineralisation intersected down dip at Schmitz. In addition, drilling of the Savannah
Nth discovery from the drill drive will commence in this Q culminating in a maiden
resource by yr end. Both exploration programmes have potential to add significant
life, transforming PAN from a limited life operation to +5yrs. A current EV/EBITDA
multiple of <1.5x reflect this lack of mine life. Our valuation is $0.73/sh and PAN
represents excellent leverage to both a higher A$ Ni price and exploration success,
both which we believe are possible over the short-medium term.
Key Points:
•
1st H EBITDA of $21.7m was below our $32m forecast and due to further negative
QP revenue adj (post qtrly) lower payability at Lanfranchi than pcp and lower
realised Ni price than forecast.
•
A $14.5m reversal on the impairment of the Copernicus open pit (now that is
being mined) and exploration expense of $5m saw a loss of $4.7m for the 1st H.
We had forecast a modest profit.
•
Operating CF of $30m was slightly below our $34m forecast.
•
An interim dividend of 1cps fully franked has been declared.
•
Cash is $61m with a net working capital position of $52m.
•
Av Ni price for the H was A$8.74/lb vs $8.19/lb in the June H generating. However,
we estimate av Ni price rec’d was ~A$8.00/lb for a margin of ~$2/lb vs ~A$2.90/
lb in the pcp.
•
The real key/catalyst for PAN is to extend mine lives at both operations. A
25,000m drill out of the Savannah Nth deposit should commence by the end
of this Q with a resource by year end and drilling of the Lower Schmitz target is
underway.
•
•
Both of these programs have potential to add multiple years to PAN. Whilst
Savannah Nth was discovered last year, it has taken a while for the drill drive to
push out in a position for the drilling to commence.
The lower Schmitz discovery looks excellent – a large EM anomaly with three
zones of >5m @ 5% Ni. The rig has now moved to the Schmitz decline and a
parent hole, followed by multiple wedges (daughter holes) has commenced. We
would expect initial results in the next month.
•
A target of 20kt of Ni appears reasonable based on the size of the EM anomaly,
results to date and geological setting. This could add 2- 3yrs mine life to the
Lanfranchi operations.
•
We maintain our Buy. PAN is a highly leveraged Ni producer on the cusp of two
exciting drill programs which could transform the company and more than
double current modest mine life. Our valuation has reduced slightly to $0.73/
sh but our Buy is maintained. There will be plenty of newsflow over the next
6-12months
Year end 30 June
0.55 A$/sh
Price Target
0.75 A$/sh
Methodologynpv
Valuation
0.73A$/sh
(npv 10% nom)
Shares on issue
322
m, diluted *
177 A$m
Enterprise Value
124 A$m
Debt
8A$m
Cash
61A$m
Largest Shareholder
Zeta Resources - 16.3%
Production F’cast
2014a
2015f
2016f
22.3
5.5
5.5
20.1
5.0
5.7
14.9
4.6
6.4
2014a
2015f
2016f
Ni in conc. (kt)
Copper in conc. (kt)
Op cost (A$/lb)
Assumptions
Ni Price assumed US$/lb
Ni Price achieved US$/lb
AUDUSD
6.93
7.08
7.75
6.95
7.08
7.75
0.92 0.830.77
Key Financials
2014a
2015f 2016f
Revenue (A$m)
239
233
229
EBITDA (A$m)
54
56
68
NPAT (A$m)
-14
-4
7
Cashflow (A$m)
42
36
48
CFPS (Ac)
13
11
15
P/CFPS (x)
4.9
4.9
3.7
EPS (Ac)
-6
-1
2
EPS growth (%)
na
na
na
PER (x)
na
na
26.0
EV:EBITDA (x)
3.0
2.1
1.2
EV:EBIT (x)
na
na
13.2
DPS (Ac)
2.0
2.0
4.0
Dividend Yield (%)
3%
4%
7%
na
na
0%
Interest Cover (x)
na
na
0.0
Share Price Chart
$/sh
$1.20
PAN 12 Month Price History
$0.90
$0.60
$0.30
Feb-14
May-14
Aug-14
Nov-14
9 of 66
Panoramic Resources Ltd
(PAN $0.55) Buy
MARKET STATISTICS
Share Price
$0.55 A$/sh
Issued Capital
FP Ord
322.0 m
Opts (var)
3.0 m
Total Dil. FPOrd 322.0 m
$177 m
Enterprise Value
$124 m
Debt
$8 m
Cash
$61 m
Hedging
1,600kt put options @ US$6.24/lb Bought puts US$30m @ US$0.95
Sold call opts US$30m @ US$0.888
ASSET VALUATION
YEAR END 30 JUNE
Directors
B.Phillips P.Harold J.Rowe C.Langdon Chair
MD
NE Dir
NE Dir
Shareholders
Zeta Resources 16.3%
A$m
A$/sh
2014a J H’15
2015f
2016f 2017f
Ni Conc. Sales
222 115 222 200 192
By Product Revenue
26 12 24 26 25
Hedging Revenue
(0)
- (0)
(0)
(0)
Revenue Adjustment
(10)
(2)
(17)
- Interest Revenue
1
2
3
4
6
Other Revenue
- - - - TOTAL REVENUE
239 127 233 229 223
Operating Costs
173 87 171 150 139
Dep/Amort
58 36 66 61 55
O/H + Bus Dev
11 4
8
8
8
W/O & Provisions
13 0
(7)
0
0
EBITDA
54 34 56 68 70
EBIT
(17)
(1)
(9)
6
15
Interest Expense
0
0
0
0
0
Net Profit Before Tax
(16)
0
(6)
10 20
Tax
(3)
0
(1)
3
6
Minorities
- - - - NET PROFIT
(14)
0
(4)
7
14
Net Abnormal Gain/(Loss)
- - - - NET PROFIT After Abn’l
(14)
0
(4)
7
14
Savannah Nickel
128 0.40
Lanfranchi
41 0.13
Hedging
(0)
(0.00)
Corporate
(22)
(0.07)
Gold/PGM assets
20 0.06
Exploration
15 0.05
Debt
(8)
(0.02)
Unpaid Capital
2
0.01
CASH FLOW (A$m)
2014a J H’15 2015f 2016f 2017f
Cash
61 0.19
(14)
0
(4)
7
14
Net Profit
+ Working Capital Adj.
4
- 10 - Total @ 10% nom 237 0.73
+ Dep/Amort
58 36 66 61 55
2014a J H’15 2015f 2016f 2017f
+ Provisions
13 0
(7)
0
0
+ Tax Expense
(3)
0
(1)
3
6
Attributable production
- Tax Paid
- 0
(3)
3
6
Savanah Nickel (100%)
kt
8.5 4.3 8.4 8.5 8.0
Operating Cashflow
60 36 66 68 70
Lanfranchi (100%)
kt
13.7 5.8 11.7 6.4 5.6
Ni in con
kt
22.3 10.1 20.1 14.9 13.6
18 14 30 20 15
Copper in con
kt
5.5 2.5 5.0 4.6 4.4
-Exploration
11
8
13
10
6
Cobalt in con
kt
0.4 0.2 0.4 0.4 0.4
-Assets Purchased
- - - - +Asset Sales
- - - - Operating cost per payable A$/lb 5.54 5.65 5.72 6.35 6.36
Investing Cashflow
(29)
(22)
(43)
(30)
(21)
FX Rate assumed
US$:A$10.92 0.78 0.83 0.77 0.80
+Equity Issues
15 - - - Ni Price assumed
US$/lb 6.93 6.75 7.08 7.75 8.50
+Loan D’down/Receivable
- - - - -Loan Repayment
3
- 5
- Ni Price achieved
US$/lb 6.95 6.75 7.08 7.75 8.50
-Dividends
3
3
10 10 13
Ni Price achieved
A$/lb 7.57 8.65 8.53 10.13 10.62
Financing Cashflow
10 (3)
(15)
(10)
(13)
2014a J H’15 2015f 2016f 2017f
Period Sur (Def)
40 11 9
29 36
CF (A$m) 42 22 36 48 55
CF / Sh (Ac/sh) 13 7
11 15 17
Cash Balance
64 73 73 101 137
CF Ratio (x) 4.9 - 4.9 3.7 3.2
BALANCE
SHEET
(A$m)
2014a
J
H’15
2015f
2016f
2017f
Earnings (A$m) (14)
0
(4)
7
14
Assets EPS (Ac/sh) (6)
0
(1)
2
4
Cash 55 73 73 101 137
EPS Growth (%) na
0%
na
na 107%
Current Receivables 33 18 18 18 18
Earnings Ratio (x) na - na 26.0 12.6
Other Current Assets 20 18 18 18 18
Non-Current Assets 257 258 258 237 211
E’prise Val. (A$m) 163 108 108 79 43
Total Assets 365 367 367 374 384
EV : EBITDA (x) 3.0 - 2.1 1.2 0.6
EV : EBIT (x) na - na 13.2 2.9
Liabilities Borrowings 8
3
3
3
3
Net Debt / ND+Eq (%) na
0%
na
na
na
Current Accounts Payable 31 31 31 31 31
Interest Cover (x) na - na na na
Other Liabilities 59 63 63 63 63
EBIT Margin (%) na
0%
na
3%
7%
Total Liabilities 98 97 97 97 97
ROE (%) -5%
0%
-2%
2%
5%
ROA (%) -5%
0%
-2%
2%
4%
Net Assets 267 270 270 277 287
Div. (Ac/sh) 2
1
2
4
4
Div. payout ratio 28% 2587% 1258% 250% 280%
R
eservesResources
Div. Yield 3%
0%
4%
7%
7%
Div. Franking 100 100 100 100 100
mt
Ni%
Ni mtNi% (eq)Ni cont.
Savannah (100%)
2.6
1.9
34.9
3.60
1.55
56.0
Lanfranchi (100%)
1.20
2.2
26.3
6.3
2 122.0
Total Attibutable
61
178
EV/lb0.90.3
10 of 66
Sandfire Resources NL
(SFR $4.47) Hold, downgrade from Buy
Sandfire Resources
Share Price
Dec H’14 Financial Result
Investment Case:
Sandfire Resources’ DeGrussa Cu mine is high quality by virtue of its high grade and
production volume. The operation is expected to perform well in the June H’15 due
to good stope productivity, a recent mill upgrade and the benefit to costs of lower oil
price. Longer term the expected grade decline will lead to a declining Cu production
rate. Material extensions to mine life beyond the ~7 year plan are not obvious. Drilling
of the C5 zone over the next 8 months is the best prospect to drive value uplift. A
lift in dividend by spreading the onerous debt repayment burden beyond the 2015
schedule is probable. A lack of material short-medium term growth options will see
Sandfire remain rangebound despite the temporary lift in production. Our revised
$5.00/sh valuation is seen as the upper limit of this range given the lack of growth.
Key Points:
Sandfire has reported NPAT of $31m for Dec H’14.
The was below our earlier expectation, due to the expensing of inventory and the
water ingress remedy late in Dec Q (total $18m expense).
An unfranked interim dividend of 3cps has been declared, we had assumed nil.
Guidance has been maintained at FY’15 65-68kt Cu, at C1 Cash Costs of US$1.10/lb US$1.20/lb. This implies production of +4kt Cu more in the June H’15 than the 31.4kt
produced in the Dec H’14.
Cash and debt were already known, $46m and $130m respectively. Sandfire is
currently scheduled to retire the debt entirely in the next 12 months. It is flagged this
schedule will be extended following the increase in ore reserves announced in Jan.
SFR may even consider retaining a small LT debt facility.
A strong start to the March Q’15 is flagged, SFR is comfortable with the guidance as
head grade, throughput and metallurgical recovery all anecdotally performing well
period to date. Further, a 50kt stockpile of mined high grade ore has been built in the
2 months since mining recommenced following the water ingress issue late Dec’14 –
another indicator of good mine performance.
The process plant modifications costing $14m were completed in Dec H’14 and are
understood to now be performing well. A pebble crusher, column flotation cell and
SAG screens have improved throughput and recovery.
Year end 30 June
4.47 A$/sh
Price Target
4.75 A$/sh
Valuation
5.03A$/sh
(npv 10%)
Shares on issue
156
m, diluted *
696 A$m
Enterprise Value
780 A$m
Debt
130A$m
Cash
46A$m
Largest Shareholder
OZ Minerals - 18.9%
Production F’cast
2015f
2016f
2017f
Attrib. Prod’n (kt)
Cash Cost (US$/lb)
Total Cost (US$/lb)
66
1.41
1.92
65
1.33
1.78
62
1.42
1.99
2015f
2016f
2017f
Assumptions
Cu Price US$/lb
AUDUSD
2.85
2.90
3.15
0.83 0.770.80
Key Financials
2015f
2016f 2017f
Revenue (A$m)
522
579
576
EBITDA (A$m)
202
257
260
NPAT (A$m)
71
119
114
Cashflow (A$m)
214
225
232
CFPS (Ac)
137
144
149
P/CFPS (x)
3.3
3.1
3.0
EPS (Ac)
45
77
73
EPS growth (%)
-9%
69%
-4%
PER (x)
9.9
5.8
6.1
EV:EBITDA (x)
3.9
3.0
3.0
EV:EBIT (x)
7.0
4.5
4.8
DPS (Ac)
13.0
23.0
50.0
Dividend Yield (%)
3%
5%
11%
11%
-17%
-55%
Interest Cover (x)
na
na
na
Share Price Chart
$/sh
$7.00
SFR 12 Month Price History
$6.00
$5.00
$4.00
$3.00
Feb-14
May-14
Aug-14
Nov-14
Mining of the C4 orebody will commence in FY’16 and development to date is on
schedule. Underground drilling of the C5 orebody is in progress with 2 rigs. It is
hoped that some extensions may be identified in the drilling to grow mine life at the
margin.
The mine plan schedule (released Jan’15) calls for 9.6mt grading 4.4% Cu and 1.6g/t
Au to be mined over the 6.5 years to end FY’21. The lower average grade implies
lower Cu production over the long run. Copper production in the next six months will
be SFR’s strongest for the remainder of DeGrussa’s life. Mine development continues
at the 7,000m pa rate for another ~18mths and drops to 1,000m pa thereafter. This
will result in less cashflow being re-invested, mitigating the decline due to lower
production.
11 of 66
SFR’s carried forward tax losses are almost depleted and tax payment will begin
during the June H’15, as per expectation.
A negative QP adjustment in the coming period is probable as SFR had 13kt Cu
provisionally priced at Dec 31st at US$6,300/t, and the price since has fallen by
~US$700/t. The impact is partially mitigated by a limited hedge of QP sales. We
assume a $5m negative adjustment.
The A$ copper price fell from A$7,800/t to A$6,900t in early Jan’15, and has since
recovered to A$7,350/t.
There has been no new material update on exploration and investments since the
quarterly result last month.
12 of 66
MARKET STATISTICS
YEAR END 30 JUNE
Share Price
$4.47 A$/sh
Issued Capital
Fully Paid Ord 155.6 m
Options (var. prices)
6.4 m
Market Capitalisation (dil)
$696 m
Enterprise Value
$780 m
Cash
$46 m
Debt
$(130)m
Directors
D La Ferla K Simich
WJ Evans R Scott P Hallam S Shin Chair
CEO
NE Dir
NE Dir
NE Dir
NE Dir
Shareholders
OZ Minerals POSCO Directors 18.9%
15.5%
4.7%
ASSET VALUATION
A$m
A$/sh
Cu Concentrate
791 5.08
Cu Chalcocite
- Hedging
- Corporate
(22)
(0.14)
Exploration
75 0.48
Oxide SX-EW
5
0.03
Working Cap
- Investments
14 0.09
Unpaid Capital
4
0.03
Cash
46 0.30
Debt
(130)
(0.83)
Total 783 5.03
DH’14a
2015f DH’15
2016f 2017f
Cu Concentrate
Cu in Concentrate
kt 31.4 65.8 32.8 64.8 62.1
Cash Costs
US$/lb 1.58 1.41 1.30 1.33 1.42
Total Costs
US$/lb 2.12 1.92 1.72 1.78 1.99
Assumptions
Spot Cu Price
US$/lb 3.09 2.85 2.80 2.90 3.15
FX Rate ass’d
A$/US$ 0.89 0.83 0.75 0.77 0.80
DH’14a
2015f DH’15
2016f 2017f
Cashflow 109 214 110 225 232
Cashflow per Share 70 137 71 144 149
Cashflow Ratio (x) 0.0
3.3 - 3.1 3.0
Earnings 31 71 59 119 114
Earnings per Share 20 45 38 77 73
EPS Growth (%) 0%
-9%
0%
69%
-4%
Earnings Ratio (x) - 9.9 - 5.8 6.1
Enterprise Value 0
739 - 629 503
EV : EBITDA 0
3.9 6.1 3.0 3.0
EV : EBIT 0
7.0 9.1 4.5 4.8
NDebt:NDebt+Equity(%) 0%
11%
0%
-17% -55%
Interest Cover (x) 0
na - na na
EBIT Margin (%) 0%
21%
0%
30%
28%
Return on Equity (%) 0%
20%
0%
26%
21%
Return on Assets (%) 0%
21%
0%
31%
25%
Dividend (c/sh) 3
13
3
23
50
Dividend payout ratio 0%
29%
0%
30%
68%
Dividend Yield 0%
3%
0%
5%
11%
Dividend Franking 0% 100%
0% 100% 100%
DH’14a 2015f
DH’15
2016f 2017f
Cu Revenue 251 517 289 578 575
Hedging Revenue - - - - Deferred Revenue - - - - Interest Income - 0
0
0
2
Other Income 4
4
- - Total Revenue 255 522 289 579 576
Operating Costs 150 296 149 295 289
Dep/Amort 42 87 39 82 94
WriteOff (expl’n) 9
19 10 20 20
O/H + New Bus Dev 2
5
3
6
6
Provisions 2
4
2
4
4
EBITDA 94 202 127 257 260
EBIT 50 111 86 172 161
Interest Expense 5
10 2
2
NPBT 45 102 85 170 163
Tax 14 31 25 51 49
Minority Interest - - - - NET PROFIT 31 71 59 119 114
Net Abnormal Gain - - - - Net Profit After Abnormal 31 71 59 119 114
CASH FLOW (A$m)
DH’14a 2015f
DH’15
2016f 2017f
Net Profit 31 71 59 119 114
+ Working Capital Adjustment 11 11 - - + Dep/Amort 42 87 39 82 94
+ Provisions & W/O 11 23 12 24 24
+ Tax Expense 14 31 25 51 49
- Deferred Revenue - - - - - Tax Paid - 9
25 51 49
= Operating Cashflow 109 214 110 225 232
-Capex + Development 48 93 40 75 55
-Exploration 12 27 10 20 20
-Assets Purchased 16 16 - - +Asset Sales - - - - +Other - - - - = Investing Cashflow (76) (136)
(50)
(95)
(75)
+ Equity Issues (Rts,plc,opts) 1
1
- - +Loan Drawdown/Receivable - - - - +Loans from(to) other entities - - - - -Loan Repayment 31 76 85 85 -Dividends 15 20 16 20 31
= Financing Cashflow (45)
(94)
(101)
(105)
(31)
Period Surplus (12)
(16)
(40)
25 126
FX Adjustments - - - - CASH 46 42 2
67 193
BALANCE SHEET (A$m)
DH’14a 2015f
DH’15
2016f 2017f
Assets Cash 46 42 2
67 193
Current Receivables 13 13 13 13 13
Other Current Assets 29 29 29 29 29
Non-Current Assets 457 457 458 451 412
Total Assets 545 541 501 559 646
Liabilities Borrowings 130 85 - - Current Accounts Payable 33 33 33 33 33
Other Liabilities 72 72 72 72 72
Total Liabilities 235 190 105 105 105
Net Assets 310 351 397 454 541
Ore Reserves
Resources
ore grade metal
ore grademetal
mt % kt mt %kt
DeGrussa
7.8 4.4% 343 9.5 5.7546
Total contained Cu
343
546
13 of 66
(SAR $0.41) Buy
Saracen Mineral Holdings
1st H Result
Investment Case:
SAR should deliver Q on Q improvements with increased production and ASIC falling
to <$900/oz and a doubling of EBITDA in the 2nd H FY’15 vs 1st H. At current A$ gold
prices (A$1,550/oz) Thunderbox is likely to be developed and with the feasibility due
in March – potential reserves of +1moz @ ASIC of $1,000-$1,100/oz should be well
received.
We see a number of short – medium term catalysts including exceeding production
guidance, Red October and Karari exploration results and TB feasibility.
We forecast operating CF to triple over the next two yrs (EV/EBITDA of <2x). Our
valuation has increased to $0.53/sh and our Buy is maintained.
Key Points:
•
1st H EBITDA of $29.6m in line with our $31m forecast and the pcp. NPAT of
$3.8m was below our $10m forecast due to a higher D&A charge $23.5m vs $16m
forecast.
•
We understand this higher D&A charge relates to the carrying value of Whirling
Dervish post the Stage 2 cut back and will continue to impact in the 2nd H FY’15.
Our D&A charge for the this period is $30m.
•
Operating CF of $22m was below our $31m forecast. Investing CF of $23.3m was
lower than our $31m forecast with lower exploration expenditure ($5m vs $8m
forecast) and capex of $18.3m vs $21m forecast.
•
In Feb’15 SAR repaid remaining $12m debt to be debt free. Cash has increased by
~$5.3m since end of CY’14 and is currently $27.2m (post debt repayment).
•
A$25m working capital facility remains undrawn and expires at end of CY’15.
•
We forecast a stronger 2nd H with AISC falling by ~$300/oz to $1,009/oz and
production increasing from 79koz to 82koz. This is driven by higher grade ore
from Whirling Dervish as it completes the Stage 3 pit by the end of FY’15.
•
This should translate to a doubling of EBITDA to $68m and a significant lift in
NPAT from $3.8m to $22m.
•
Karrari underground has also started and may contribute some development
ore in the 2nd H. An underground drill program is underway and first results are
expected shortly.
•
At current A$ gold price of $1,550/oz, Thunderbox is likely to be developed.
Whilst the final plan is unknown the current LOM plan indicates an open pit
followed by a large scale underground mine. We would not be surprised that
final reserves may well by +1moz based on this scenario – indicating a mine life
of ~7-8yrs @ 140-150koz pa. Capex could be in the order of $50-100m depending
on the scheduling of the underground in relation to the open pit.
•
Our current Thunderbox valuation has increased to $171m risk adj by 80% as we
model in the above scenario. Our total valuation is $0.53/sh.
Year end 30 June
Share Price
0.41
Price Target
Valuation
Shares on issue
Enterprise Value
Debt
Cash
Largest Shareholder
0.52
A$/sh
0.53A$/sh
(npv 10%)
793
m, diluted *
325
A$m
300
A$m
0A$m
37A$m
Wroxby 8%
Production F’cast
2014a
2015f
2016f
Attrib. Prod’n (koz)
Cash Cost (A$/oz)
Total Cost (A$/oz)
135
859
1543
159
848
1185
202
700
864
2014a
2015f
2016f
Assumptions
Spot Gold Price US$oz
AUDUSD
Key Financials
Revenue (A$m)
EBITDA (A$m)
NPAT (A$m)
Cashflow (A$m)
CFPS (Ac)
P/CFPS (x)
EPS (Ac)
EPS growth (%)
PER (x)
EV:EBITDA (x)
EV:EBIT (x)
DPS (Ac)
Dividend Yield (%)
A$/sh
1301
1292
1296
0.92 0.920.92
2014a
2015f
2016f
206
44
6
49
255
96
26
84
335
179
93
157
6
5.5
1
na
46.7
6.8
30.2
0.0
0%
na
11
3.9
3
348%
12.6
3.1
8.2
0.0
0%
na
20
2.1
12
261%
3.5
1.7
2.3
0.0
0%
na
Share Price Chart
$/sh
$0.60
SAR 12 Month Price History
$0.45
$0.30
$0.15
Feb-14
May-14
Aug-14
Nov-14
14 of 66
(SAR $0.41) Buy
•
SAR offers internally funded growth through the development of Thunderbox
which could see production increase to ~300koz in FY’17. Carouse Dam is in the
best shape of its life with good visibility on future ore sources – Red October,
Karari, Deep Sth and some satellite open pits.
•
We are increasingly confident that SAR has potential to outperform over the next
yr with a number of catalysts identified including;
Beating FY’15 guidance,
Positive Thunderbox feasibility,
Drill results from Thunderbox and Red October ,
Karrari drill results and production.
15 of 66
(SAR $0.41) Buy
MARKET STATISTICS
YEAR END 30 JUNE
Share Price
$0.41 A$/sh
Issued Capital
FP Ord
792.5 m
Opts (@0.235/sh June’13)
- m
$325 m
Enterprise Value
$300 m
Debt (est)
$12 m
Cash (est)
$37 m
Hedging
185.7koz @ A$1,539/oz Directors
G. Clifford R.Finlayson B.Parker M.Reed S.Tough Chair’n
Mgr Dir
Dir
Dir
Dir
Shareholders
Wroxby
8%
Paradice 7%
Van Eck
6.5%
EGG
5%
Karrara5%
ASSET VALUATION
A$m
A$/sh
Carouse Dam/Karrari
138 0.17
Red October/Deep Sth
79 0.10
Thunderbox (risk adj 70%)
171 0.22
Hedging
4
0.01
Corporate
(31)
(0.04)
Expl’n 30 0.04
Unpaid Capital - Debt
- Cash 27 0.03
Total 418 0.53
2014a
J H’15
2015f
2016f 2017f
Attrib. Prod’n (koz)
Carosue Dam
135 82 160 166 161
Thundebox
36 136
Total Attrib (koz)
135 81 159 202 297
Prices (A$/oz)
Avg Spot Gold Price
1,412 1,603 1,499 1,635 1,594
Avg Gold Price Rec’d
1,523 1,636 1,569 1,645 1,598
Cash Cost (A$/oz)
Carosue Dam
859 701 848 700 836
Avg Cash Cost (A$/oz)
859 701 848 700 841
All in Costs (A$/oz)
1,543 1,068 1,185 864 999
2014a
J H’15
2015f
2016f 2017f
CF (A$m) 49 60 84 157 172
CF / Sh (Ac/sh) 6
8
11 20 22
CF Ratio (x) 5.5 - 3.9 2.1 1.9
Earnings (A$m) 6
22 26 93 114
EPS (Ac/sh) 0.7 2.8 3.3 11.8 14.4
EPS Growth (%) na
0% 348% 261%
22%
Earnings Ratio (x) 46.7 - 12.6 3.5 2.9
E’prise Val. (A$m) 246 272 272 197 70
EV : EBITDA (x) 6.8 4.5 3.1 1.7 1.4
EV : EBIT (x) 30.2 9.6 8.2 2.3 1.9
0%
na
na
na
Interest Cover (x) 29 - na na na
EBIT Margin (%) 5%
0%
15%
39%
33%
ROE (%) 2%
0%
10%
26%
25%
ROA (%) 3%
0%
11%
31%
30%
Div. (Ac/sh) - - - - Div. payout ratio 0%
0%
0%
0%
0%
Div. Yield 0%
0%
0%
0%
0%
Div. Franking 0%
0%
0%
0%
0%
2014a J H’15
2015f
2016f 2017f
Gold Sales
191131245328473
Hedging Revenue
153940
Deferred Revenue
00000
Interest Revenue
11136
Other Revenue
00000
TOTAL REVENUE
206135255335480
Operating Costs
151 63149147253
Dep/Amort
3335584756
W/O & Provisions
1
1
1
1
1
Corp O/H
104877
EBITDA
44 67 96 179214
EBIT
10 31 37 131156
Interest Expense
21100
NPBT
8 31 37 133163
Tax
2 9114049
Minorities
00000
NET PROFIT
6222693
114
0
0
0
0
0
NET PROFIT After Abn’l
6
22
26
93
114
CASH FLOW (A$m)
2014a J H’15
2015f
2016f 2017f
Net Profit
6222693
114
6
0
0
0
0
+ Dep/Amort
3335524756
+ Provisions
11111
+ Tax Expense
2 9114049
- Tax Paid
0
7
7
24
48
- Deferred Revenue
0
0
0
0
0
Operating Cashflow
49
60
84
157
172
64
22
39
71
34
-Exploration
10 8131012
-Assets Purchased
220200
+Asset Sales
00000
+ Other
70000
Investing Cashflow
-69-30-54-81-46
+Equity Issues
580000
00000
-Loan Repayment
11
12
13
0
0
-Dividends
00000
Financing Cashflow
47
-12
-13
0
0
Period Sur (Def)
27
19
17
76
126
Cash Balance
36
53
53
128
255
BALANCE SHEET (A$m)
2014a J H’15
2015f
2016f 2017f
Assets Cash 36
53
53
128
255
Current Receivables 3
3
3
3
3
Other Current Assets 35
48
48
48
48
Non-Current Assets 239
219
219
244
221
Total Assets 313
323
323
423
527
Liabilities Borrowings 120000
Current Accounts Payable 16
18
18
18
18
Other Liabilities 54
53
53
53
53
Total Liabilities 82
71
71
71
71
Net Assets 231
252
252
352
457
Sth Laverton
Thunderbox
Reserves
Resources
mt g/t koz mt g/tkoz
15.8
1.7
860
84.4
1.4 3,923
12.70 1.80 728 40.40 1.602088
Equity Share Gold
Enterprise Value / oz (A$)
1,588
189
6,011
50
16 of 66
Sino Gas & Energy Holdings Ltd
(SEH $0.205) Buy
Date: 3rd March 2015
Sino Gas & Energy Holdings
Share Price
Reserve Upgrade
Investment Case:
SEH has delivered an impressive and material reserve upgrade. Net 1P reserves have
increased to 350Bcf (or ~60mmboe) and net 2P reserves to 448bcf (or ~77mmboe), a
166% and 51% increase respectively.
More critically in our opinion, production growth (in the months to come) remains
key, such will (a) unlock the value of these large in-ground reserves (b) increase
operating cash flow (c) provide confidence to the market, and (d) likely augur share
price appreciation.
Key Points:
•Reserves
•
0.205
oo
Net 1P reserves have increased to 350bcf (60mmboe), up 166%.
oo
Net 2P reserves have increased to 480bcf (77mmboe) up 51%.
Expected Monetary Value (EMV)
oo
3rd party net Reserve EMV has increased to US$1.5bn.
oo
3rd party net Total Project EMV has increased to US$3.1bn.
•
Costs - Cost estimates (P50) have been reduced to an all-in Capex + Opex cost
of US$1.10/mscf (vs pricing received of $9.5/mscf).
•
Production - SJB (Sanjiaobei) production has stabilised at 4.1mmscf/d (gross)
over December.
•
Production Increases - Production is now set to increase from 4mmscf/d to
circa 24mmscf/d by Q3 of CY’15.
•
Funding - Funding remains robust, SEH holds US$35m in cash (prev. US$53m)
and US$40m of debt availability.
Analysis:
A$/sh
Price Target
Valuation
Shares on issue
Market Cap
Enterprise Value
Debt
Cash
Largest Shareholder
0.39
A$/sh
0.39A$/sh
1599
m, diluted
328
A$m
301
A$m
-11A$m
38A$m
FIL Inv Mgt 9.9%
Production F’cast
2014a
2015f
2016f
0.00
0.00
0.00
0.07
0.03
0.10
1.67
0.76
2.44
2014a
2015f
2016f
Linxing PSC West
Sanjiaobei PSC
Total Attrib (Bcf )
Assumptions
AUDUSD
Buy our PT stands $0.39/sh.
Year end 31 Dec
Key Financials
Revenue (US$m)
EBITDA (US$m)
NPAT (US$m)
Cashflow (US$m)
CFPS (Ac)
P/CFPS (x)
EPS (Ac)
EPS growth (%)
PER (x)
EV:EBITDA (x)
EV:EBIT (x)
DPS (Ac)
Dividend Yield (%)
Interest Cover (x)
7.0
7.0
8.5
0.98 0.900.85
2014a
2015f
2016f
8
4
1
-4
9
6
8
-2
21
18
11
15
0
na
0
na
209.8
55.7
159.9
0.0
0%
na
na
-2
na
1
461%
35.4
47.6
35.7
0.0
0%
na
na
-1
na
1
34%
30.1
16.9
19.1
0.0
0%
0%
na
Share Price Chart
$/sh
$0.26
SEH 12 Month Price History
$0.22
Reserves - SEH has delivered an impressive and material upgrade to 1P, 2P and 3P
reserves. Gross project (2P) reserves have now increased to 1,608bcf or ~177mmboe.
•
Net 1P reserves have increased to 350bcf (60mmboe), up 166%.
•
Net 2P reserves have increased to 480bcf (77mmboe) up 51%.
Increases have been predicated by both infill and outstep drilling (36 new wells),
production tests (an additional 40) and the identification of additional productive
zones within the play.
$0.18
$0.14
$0.10
Mar-14
Jun-14
Sep-14
Dec-14
Disclosure
corporate advice to Sino Gas and Energy Holdings Ltd
during the last year. Euroz Securities has received a fee
for these services.
Source: SEH
17 of 66
(SEH $0.205) Buy
We highlight that prospective and contingent resources have decreased (as
expected) as these resources were converted to reserve classifications. This process
is the natural conversion that occurs within all successful unconventional plays.
Expected Monetary Value (EMV) - The EMV attributed to the project by 3rd party
auditors (RISC) has increased by 36%.
•
3rd party net Reserve EMV has increased to US$1.5bn.
•
3rd party net Total Project (Reserves + Resources) EMV has increased to US$3.1bn.
Future Reserve Increases - There remains under-explored areas within the permits
with resources currently classified as only prospective. These areas shaded yellow
(below) will likely (upon expected reservoir intercept) be converted to reserves in the
coming years.
Early results in the northern part of the Linxing East (LXGE) permit are particularly
encouraging in this regard, this location will be a focus of SEHs exploration program
in CY’15.
Source: SEH
18 of 66
(SEH $0.205) Buy
Costs - Cost estimates (P50) have been reduced to an all-in Capex + Opex cost
of US$1.10/mscf (vs pricing received of $9.5/mscf). The extremely low costs of
development and operation are achieved as •
Drilling is shallow,
•
Completions are simple,
•
The gas is dry (no water) and little impurity,
•
Pipeline infrastructure is within close proximity,
•
Transportation costs (~US$1/mscf) are hidden within the price received ($9.5/
mscf = a US$1/mscf discount to mandated pricing).
•
Access to services and personal is wide spread, and
•
As a highly attractive cost recovery mechanism is included within the PSC.
Production - SJB (Sanjiaobei PSC) production has stabilised at 4.1mmscf/d (gross).
Stabilisation is a testament to the ‘good oil field practices’ incorporated by the JV,
namely the practice of choking back wells during production to maximise EURs
(Expected Ultimate Recovery) rather than achieve ‘headline’ IP (Initial Production)
rates. Pad drilling has also commenced for great efficiency and spacing optimisation.
The start-up rate of SJB (4mmscf/d) is set to ramp up to ~8mmscf/d in March.
Moreover this is expected to increase again towards 24mmscf/d by Q3 when the LXG
production system comes online (see chart below).
Gross Prod (LHS)
Net Rev (RHS)
SEH Production + Capacity Forecast
Net Production (LHS)
Cum Net Rev (RHS)
200
Potential Phase 4
200
250,000,000
180
200,000,000
140
150,000,000
120
Potential Phase 3
100
100
100,000,000
80
LXG Production Start
60
SJB Production Increase
Potential Phase 2
40
20
4
4
Jan
Feb
7
8
8
8
Mar
Apr
May
Jun
20
22
22
22
24
24
Jul
Aug
Sep
Oct
Nov
Dec
Revenue (US$)
Production (mmscf/d)
160
50
50,000,000
0
CY'15
CY'16
CY'17
CY'18
Source: Euroz (See PDF attachment for greater detail)
LXG - Facilities and pipeline’s are currently under construction. We highlight that
two gathering lines will now feed the facilities for increase flow capacity.
The major spur line connecting the facilities to the pipeline grid has also begun
construction, this line (solely for the SEH JV) is 50cm in diameter with a material
capacity of 95mmscf/d.
19 of 66
(SEH $0.205) Buy
We estimate that start-up rate will be approx. 12mmscf/d (gross) from mid CY’15
ramping to ~16mmscf/d over the subsequent months.
•
Phase 1 total capacity = ~16msmcf/d
•
Phase 2 capacity is expected to reach ~30msmcf/d for an additional ~US$4-8m;
potentially in CY’16.
•
Phase 3 capacity is expected to reach ~60msmcf/d for an additional ~US$10m;
expected beyond CY’16.
Value Comparison - To highlight the value of the in-ground reserves we have
included a comparative to similar wells within the Cooper Basin, Australia. Both
verticals and horizontals will be (in most cases) cheaper with better economics than
typical wells within the Cooper Basins.
Chinese gas prices lie some +$5-7/mscf above east coast Australia prices. Furthermore,
Ordos basin gas is clean, dry and with little impurity, as such cheap processing and
transportation options are available.
Horizontal Cost
Cooper Basin
Ordos Basin (China)
$12 - 20m
$4 - 5m
Initial IP rates
1 - 3mmscf/d
4 - 6mmscf/d
Infrastructure
Limited
Prolific + Increasing
Pricing
$4 - 7/mscf
$7 - 10/mscf
Liquids
Possibly
None
Impurities
Yes, CO2
None, Dry & Clean Gas
Approvals - CRRs for LXGW and SJB have been submitted to the national JV partners
(CNOOC and CNPC), we anticipate the approval of these documents in H2 of CY’15.
Work Program - We highlight that CY’15 will be a year of production system
optimisation and major pipeline completion. CY’16 will see drilling scale up and the
project move towards full field development.
We anticipate a ~$100m (gross) total work program in CY’15, SEHs net share being
~$45-50m.
The program will likely include ~30 vertical wells and at least 3 horizontal wells; 4 to
6 rigs will likely be utilised in CY’15.
Funding - Funding remains robust, SEH holds US$35m in cash and US$40m of debt
availability.
Cash has decreased from US$53m to US$35m as expected, in-line with operation
activity expenditure.
Looking forward, SEHs capital position remains adequate to fund all expected
operational activity.
Funding CY’15 (US$m)
Cash
$40.0
Expected Cash Flow
$17.5
Debt Availability
$40.0
Total Funding Capacity
$97.5
G&A
$5.0
Capex CY15
$45.0
Remaining Capital Available
$47.5
20 of 66
(SEH $0.205) Buy
We highlight that based on SEHs forward production guidance, $15-25m in net
production cash flow generation is likely in the CY.
We anticipate that SEH will look to secure a RBL (reserve based lending facility) to
fund full field development (increased drilling scale and pace) in CY16 and beyond.
A RBL will provide SEH with greater funding capacity at a lower interest rate with
preferable conditions. Our estimation is that a RBL size of US$100-150m would be
sought/required.
Buy, our PT stands $0.39/sh.
21 of 66
(SEH $0.205) Buy
MARKET STATISTICS
Share Price
$0.205 A$/sh
Issued Capital
FP Ord
1,544.2 m
Options
55.0
Total Dil. FPOrd 1,599.2 m
$328 m
Enterprise Value
$301 m
Debt
$(11)m
Cash
$38 m
ASSET VALUATION
YEAR END 31 DEC
Directors
P Bainbridge G Harper B Ridgeway C Heseltine G Corrie Chair
NE Dir
NE Dir
NE Dir
CEO
Shareholders
FIL Inv Mgt
9.9%
A$m
A$/sh
Linxing PSC West (31.7%)
328 0.20
Linxing PSC East (31.7%)
83 0.05
Sanjiaobei PSC (24.0%)
221 0.14
Corporate (28)
(0.02)
Unpaid Capital
- Debt
(11)
(0.01)
Cash
38 0.02
Total
630 0.39
2014a2015f2016f2017f
Linxing PSC West (31.7%)
- 0.1 1.7 3.2
Sanjiaobei PSC (24.0%)
- 0.0 0.8 2.0
Net Attrib (bcf )
- 0.1 2.4 5.3
Net Attrib (mmboe)
- 0.0 0.4 0.9
Net Rate (mmscf/d)
- 0.3 6.7 14.4
Assumptions
7.0 7.0 8.5 10.0
US$:A$
0.98 0.90 0.85 0.85
2014a2015f2016f2017f
CF (US$m) (4)
(26)
(22)
(27)
CF / Sh (Ac/sh) (0)
(2)
(1)
(2)
CF Ratio (x) na na na na
Earnings (AU$m) 1
8
11 26
EPS (Ac/sh) 0
1
1
2
EPS Growth (%) na 461%
34% 137%
Earnings Ratio (x) 209.8 35.4 30.1 12.7
E’prise Val. (A$m) 229 253 328 375
EV : EBITDA (x) 56 47.6 16.9 6.9
EV : EBIT (x) 160 35.7 19.1 7.7
na
0%
23%
Interest Cover (x) na
na
na
na
EBIT Margin (%) 7%
7%
76%
79%
ROE (%) na
na
9%
17%
ROA (%) na 2171%
11%
17%
PROFIT AND LOSS (US$m)
2014a
2015f
2016f
2017f
Oil Equivalent Sales
- 1
21 50
Hedging Revenue
- - - Deferred Revenue
- - - Interest Revenue
- - - Other Revenue
8
8
- TOTAL REVENUE
8
9
21 50
Operating Costs
- 0
3
6
Dep/Amort
0
0
2
5
O/H + New Bus Dev
4
6
8
10
W/O & Provisions
3
(2)
- EBITDA
4
6
18 44
EBIT
1
8
16 39
Interest Expense
- 0
1
5
NPBT
1
8
15 34
Tax
- (0)
4
9
Minorities
- - - NET PROFIT
1
8
11 26
- - - NET PROFIT After Abn’l
1
8
11 26
CASH FLOW (US$m)
2014a2015f2016f2017f
Net Profit
1
8
11 26
(8)
(8)
- + Dep/Amort
0
0
2
5
+ Provisions
3
(2)
- + Tax Expense
- (0)
4
9
- Tax Paid
- - 2
6
Operating Cashflow
(4)
(2)
15 33
- Capex + Development
(0)
24 37 60
- Exploration
- 5
13 20
- Assets Purchased
- - - + Asset Sales
(2)
- - + Other
- (1)
- Investing Cashflow
(2)
(30)
(49)
(80)
+ Equity Issues
65 - - + Loan D’down/Receivable
- 10 10 50
+Other
(3)
(0)
- - Loan Repayment
0
- - - Dividends
- - - Financing Cashflow
62 10 10 50
Period Sur (Def)
56 (22)
(24)
3
Adj. FX effects
- 2
- Cash Balance
64 44 20 23
BALANCE SHEET (US$m)
2014a2015f2016f2017f
Assets Cash 64 44 20 23
Current Receivables 0
1
1
1
Other Current Assets - - - Non-Current Assets 47 79 126 202
Total Assets 111 124 147 225
Liabilities Borrowings - 10 20 70
Current Accounts Payable 0
0
0
0
Non Current Liabilities - - - Other Liabilities 0
- - Total Liabilities 1
10 20 70
Net Assets 111 107 127 155
2P Gas 2C Gas Total
Total (Bcf ) 350 739 1,089 Bcf
Total (mmboe) 60 127 188 mmboe
EV / 2P boe 5.0 (A$/boe)
EV / 2P+ 2C boe 1.6 (A$/boe)
22 of 66
Strike Energy Ltd
(STX $0.11) Spec. Buy
Strike Energy
Share Price
Half Year Results
Investment Case:
STX has guided reservoir gas saturation (relating to gas quantity) of 60% to 80%,
this is 2 to 3 times above our expectations and notably positive. These results are an
important step towards the determination of economic viability of the Patchawarra
coals (in our opinion the key value driver for STX).
Ultimately however multiple extended flow tests are required to provide a true
indication of the assets potential. STX has started this process currently conducting
testing at the locations of Le-Chffre and Klebb.
Spec. Buy, our Price Target stands $0.17/sh.
0.11
A$/sh
Price Target
0.17
A$/sh
Valuation
0.17A$/sh
Shares on issue
833
m, diluted
92
A$m
Enterprise Value
89
A$m
Debt
-6A$m
Cash
8A$m
Largest Shareholder
MHC 7.8%
Share Price Chart
$/sh
$0.17
STX 12 Month Price History
$0.13
$0.09
Key Points:
•
Year end 30 June
In the later part of 2014 STX commenced production testing at Klebb-1 and Le
Chiffre-1, critically gas has been recovered to surface.
$0.05
Feb-14
May-14
Aug-14
Nov-14
Le Chiffre
•
At Le Chiffre “volumes increased sufficiently to commission a separator and
ignite a flare”.
•
STX is adopting a conservative (and our opinion prudent) approach to the well
testing to prevent well bore (permeability) damage.
•
The company will allow the well’s production rate to build slowly over time
rather than induce an earlier (and possible larger) peak rate.
•
Thus we anticipate results in the 2nd Q.
Klebb
•
Positively at Klebb water production has “reduced relatively quickly and a
sustained gas flow has been established at surface”.
•
Moreover the Klebb 2 and Klebb 3 wells were drilled within the final Q of 2015;
these wells have not been fracture stimulated as unstimulated flow will provide
the JV with valuable reservoir information (both wells can be fracture stimulated
at a later date, if required).
•
Again, we anticipate results in the 2nd Q.
Analysis:
Overview - STX holds one of the largest exploration acreage positions within the
South Australian portion of the Cooper Basin, over 18,000km2 net.
The company has begun the systematic appraisal of the Patchawarra coals within
permits PEL96 and PEL94, the primary JV partner is Beach Energy Ltd.
The demonstration of economic viability of these Patchawarra coals is the key
value driver for STX going forward. Specifically the determination of the drill and
completion design (including fracture stimulation) that will enable these wells to
flow at economic rates, successful demonstration will be highly value accretive as
the permits are both large and likely scalable.
23 of 66
Strike Energy Ltd
(STX $0.11) Spec. Buy
STX estimates that on a mean case scenario up to 4.4Tcf net prospective resource is
attributable to the PEL 96 permit alone.
Operations - In the later part of 2014 STX commenced production testing at
Klebb-1 and Le Chiffre-1, critically gas was recovered to surface. STX is adopting a
conservative (and our opinion prudent) approach to the well testing to prevent well
bore (permeability) damage.
At Le Chiffre “volumes increased sufficiently to commission a separator and ignite
a flare”. The company will allow the well’s production rate to build slowly over time
rather than induce an earlier (and possible larger) peak rate; we anticipate results in
Q2.
At Klebb water production has “reduced relatively quickly and a sustained gas flow
has been established at surface”. Moreover the Klebb 2 and Klebb 3 wells were drilled
within the final Q of 2015; these wells have not been fracture stimulated as unstimulated
flow will provide the JV with valuable reservoir information (both wells can be fracture
stimulated at a later date, if required). Again, we anticipate results in Q2.
At this early stage the demonstration of gas to surface is promising, however
sustained production remains key providing insight into each wells potential and
ultimately field profitability.
Flow Testing - Moreover flow testing of individual reservoir zones is of importance.
This data will enable the quantification of commerciality and provide an early stage
understanding of field value.
The coming months are key for STX, the company is expected to have 5 wells on
production by Q2 of CY’15 (with comprehensive data collected) and will seek to
deliver (positive) longer-term flow results to surface, we remain hopeful.
Findings To-date - To date STX has delivered a number of key appraisal observations,
these include:
•
Identification of reservoir (coal seam) presence; >100m of net pay observed.
•
Identification of gas; saturation levels range 60-80%.
•
Permeability and porosity measurements; ~25mD recorded.
•
Water volumetrics; formation water volumes appear to be smaller (and more
manageable) than expected.
Reserves - STX is targeting a maiden reserve certification late in 2015, such will
provide insight into the initial development size and scale.
Financial - Cash stands $8.1m and borrowings $5.5m (noting that the $2.5m loan from
Orica is interest free).
The next early offtake payment ($12m) from Orica is due in March, however this stands
dependant on Orica’s funding availability and discretion, and thus is not guaranteed.
There may however be other east coast parties interested in the gas that STX is
attempting to unlock, as such additional early offtake agreements may be secured.
Valuation - Underpinned by positive early stage results we have altered our Chance
of Success from 4% to 7%, as such our valuation of STXs Cooper Basin assets alone
now stands $118m or $0.14/sh.
If STX can further build on the positive results seen to-date, the value attributable to
the assets (and in-turn the company) should increase dramatically. On a 100% success
basis STX’s net share could be worth as much as $1.3Bn or $1.66/sh, we do however
highlight that these numbers are highly speculative requiring multiple appraisal
successes and significant capital.
24 of 66
Tap Oil Ltd
(TAP $0.28) Sell, Downgrade from Spec. Buy
Date: 3rd of March 2015
Tap Oil Ltd
Funding Concerns + Board Spill Attempt
Price Target: $0.25/sh (prev. $0.42/sh)
Investment Case:
We have downgraded TAP to a Sell as (a) the company faces a leadership challenge,
(b) costs have increased at the Manora development, and (c) funding concerns have
now emerged. In our opinion a large portion of the Manora’s value will be diminished
as peak production coincides with ~US$50/bbl oil and substantial debt repayments
are required.
Until these issues are addressed or great clarity is provided, we view downside risk
as too great to justify investment (even if a corporate takeover scenario exists). Sell,
PT $0.25/sh.
Key Points:
•
Attempted Board Removal - TAPs major shareholder (19.98%) is seeking to
remove the company’s board and appoint 4 new directors.
•
Cost Overrun - The Operator has guided a cost overrun at Manora of ~US$28m
(or ~ US$8.5m net to TAP). Total net expenditure is now est. to reach US$105m.
•
Funding - Predicated by cost increases, interest rate increases and decreased oil
pricing, we are concerned that a funding shortfall may occur in CY’15.
•
Valuation - Our valuation has decreased to $0.25/sh incorporating increased
debt, risk and higher development costs.
•
Corporate Activity - We do however highlight that there is a scenario where
Northern Gulf Petroleum launches a takeover bid for the company. The principle
with a 19.9% holding has recent form in this regard, see NDO.
Year end 31 Dec
Share Price
0.280 A$/sh
Price Target
0.25 A$/sh
Valuation
0.25A$/sh
Shares on issue
253m, diluted
71 A$m
Enterprise Value
159 A$m
Debt
-105A$m
Cash
17A$m
Largest Shareholder
NGP - 19.98%
Production F’cast
2014a
2015f
2016f
0.04
1.23
1.16
2014a
2015f
2016f
Manora Assumptions
Avg Brent Oil (US$/bbl)
AUDUSD
Key Financials
Revenue (A$m)
EBITDA (A$m)
NPAT (A$m)
Cashflow (A$m)
CFPS (Ac)
P/CFPS (x)
EPS (Ac)
EPS growth (%)
PER (x)
EV:EBITDA (x)
EV:EBIT (x)
DPS (Ac)
Dividend Yield (%)
Interest Cover (x)
95
48
53
0.90 0.770.79
2014a
2015f
2016f
27
7
-43
-81
97
49
8
19
92
45
9
36
-32
na
-17
na
na
23.8
na
0.0
0%
32%
na
8
3.6
3
na
9.4
3.3
8.7
0.0
0%
32%
na
14
2.0
4
18%
7.9
3.5
10.1
0.0
0%
18%
na
Share Price Chart
Analysis:
Attempted Board Removal - TAPs major shareholder (Mr Chatchai Yenbamroong
with 19.98%) is seeking to remove the company’s board and appoint 4 new directors.
$/sh
$0.80
Mr Yenbamroong is the executive director and controller of Northern Gulf Petroleum
Holdings Ltd a 10% JV partner in the Manora Asset.
$0.60
A meeting will be held within 2 months where shareholders will be able to vote to
(a) retain the current board or (b) remove the current board and thus appoint David
Whitby, Alan Stein, David Johnson and James Menzies.
TAP 12 Month Price History
$0.70
$0.50
$0.40
$0.30
$0.20
Mar-14
Jun-14
Sep-14
Dec-14
At this point in time, the long-term strategic intentions of Mr Yenbamroong remain
unclear, we are hopeful that these will come to light in the coming weeks.
Cost Overrun - The Operator has guided a cost overrun at Manora of ~US$28m (or ~
US$8.5m net to TAP). Total net project expenditure is now est. at US$105m.
These overruns have only coming to light within the last month, in January the
development appeared both on time and on budget. TAP is awaiting further clarity
from the operator in regards to the specific details of these cost increases.
Unfortunately the increases will further stretch TAPs balance sheet and funding
ability, and moreover diminish asset value that has already been impacted by
decreased oil pricing.
25 of 66
Tap Oil Ltd
Funding - TAP’s lender (BNP) has (yet again) altered the lending available, now to
US$78.9m (prev. ~US$68.5m). Positively this increase will provide TAP with the much
need capital to complete the development project.
However the modifications and waivers associated with the facility are potentially
cause for concern; specifically •
•
The waiver fee payable, and
A higher rate of interest.
The removal of typical debt terms and conditions, such as a minimum liquidity
requirement and a robust financial cover ratio, in our opinion also increases financial
risk.
Most concerning however (predicated by cost increases, interest rate increases and
decreased oil pricing) is that a funding shortfall may occur in CY’15.
Based on our estimations TAP may have insufficient capital available to meet
expenditure and debt repayments within the year.
CY'15 Capital Analysis (EZL Estimation)
Funding Requirements
Manora Remaining
Manora Overrun
Reserve Payment (Base case)
Reserve Payment (est. 2P increase)
G&A
Exploration
Debt Repayment
Interest
Total
$1.00
$8.50
$7.50
$3.00
$6.50
$10.00
$35.00
$4.00
$75.50
Funding Availability
Debt Availability
Cash
Forecast Operating Cashflow
Total
$10.00
$13.50
$40.00
$63.50
(US$m)
(US$m)
Source: Euroz Estimations
Hedging - Positively TAP has hedged 495kbbls at US$62.75/bbl through to the end of
2015. These volumes will provide some protection against further oil price retraction
and hoepfully enable the company to meet debt repayments required.
Valuation - Our valuation has decreased to $0.25/sh incorporating increased debt,
risk and higher development costs.
Moreover in our opinion, a large portion of the Manora’s value will be diminished as
peak production coincides with ~US$50/bbl oil and substantial debt repayments are
required.
The material free cash flow that may have been generated in 2015 through to 2017
will likely be eroded by US$50/bbl oil. Based on our estimations, the majority of the
operating cash flow generated will be used to repay the ~US$80m debt over the next
2-3 years.
Corporate Activity - We highlight that there is a scenario where by Northern Gulf
Petroleum launches a takeover bid for the company. The 19.9% holding provides a
solid starting point for such action.
Furthermore Mr Yenbamroong has recent form in this regard, many believe he was
the driving force behind the attempted takeover of NDO in CY’14.
A takeover will (likely) provide shareholders with an uplift to the current market
value, however such is purely speculation at this stage.
26 of 66
Tap Oil Ltd
Thailand (Manora) Background - Production has commenced at TAP’s Manora
asset (30% WI) and has increased to 15,000boepd (gross) the peak production target.
The Manora development is targeting a significant 31.1mmbbls (gross); net production
to TAP at peak will equate to >4,500bbls/d.
In a cruel twist of fate, the asset peak production is occurring within a significantly
depressed oil price environment (~$50/bbl). The company now forecasts cash flow of
US$30-40m (post opex, royalty and Thai taxation) per annum in the current oil price
environment of US$45-55/bbl.
We cite the potential for reserve uplift associated with water flood success at Manora,
the program is expected to enable conversion 3.2mmbbls of 2C resource to 2P
reserve (at this stage we assign no value to these resources).
27 of 66
Tap Oil Ltd
MARKET STATISTICS
Share Price
$0.28 A$/sh
Issued Capital
FP Ord
243.2 m
Opt (var prices)
9.9 m
$71 m
Enterprise Value
$159 m
Debt$(105)m
Cash
$17 m
ASSET VALUATION
YEAR END 31 DEC
Directors
D Bailey T Hayden D Schwebel M Sandy Shareholders
NGP M&G Invest
Non Exec. Chair
MD/CEO
Non Exec. Dir
Non Exec. Dir
19.98%
9.9%
A$m
A$/sh
3rd Party Gas
30 0.12
Thailand NGP (Manora)
122 0.48
Aust Assets (inc Zola, Tallaganda)
15 0.06
Corporate
(15)
(0.06)
Unpaid Capital
- Debt
(105)
(0.42)
Cash
17 0.07
Total 64 0.25
PROFIT AND LOSS (US$m)
2014a
2015f
2016f
2017f
Oil Equivalent Sales
27 66 92 71
Hedging Revenue
- 31 - Deferred Revenue
- - - Other Revenue
0
- - TOTAL REVENUE
27 97 92 71
Operating Costs 11 40 39 27
Dep/Amort
1
25 24 21
O/H + New Bus Dev
9
8
8
8
W/O & Provisions
80 5
5
5
PRRT
- - - EBITDA
7
49 45 36
EBIT
(75)
18 16 10
Interest Expense
- 7
2
0
NPBT
(75)
11 14 9
Tax
(32)
3
4
3
Minorities
- - - NET PROFIT
(43)
8
10 7
(43)
8
10 7
CASH FLOW (US$m)
2014a2015f2016f2017f
Net Profit
(1)
8
10 7
(6)
- - + Dep/Amort
3
25 24 21
+ Provisions
9
5
5
5
F/CAST PRODUCTION (US$m)
2014a2015f2016f2017f
+ Tax Expense
(2)
3
4
3
Attrib. Prod’n (mmboe)
- Tax Paid
(2)
2
4
3
3rd Party Gas
0.6 0.6 0.6 Operating Cashflow
6
40 39 33
Manora Thailand
0.0 1.2 1.2 1.0
Total Attrib (mmboe)
0.6 1.8 1.7 1.0
87 20 3
3
-Exploration
4
10 10 10
Assumptions
-Assets Purchased
- - - Avg Brent Oil Price (US$/bbl)
95.0 47.5 52.5 70.0
+Asset Sales
- - - US$:A$
0.90 0.77 0.79 0.80
+ Other
(0)
(8)
(91)
(38)
(13)
(13)
RATIO ANALYSIS (US$m)
2014a2015f2016f2017f
+Equity Issues
- - - CF (A$m) (81)
20 36 30
65 15 - CF / Sh (Ac/sh) (32)
8
14 12
+Other
(4)
- - CF Ratio (x) na 3.5 2.0 2.3 -Loan Repayment
- 35 25 25
-Dividends
- - - Earnings (A$m) (43)
8
10 7
Financing Cashflow
61 (20)
(25)
(25)
EPS (Ac/sh) (17)
3
4
3
EPS Growth (%) na
na
20%
-31%
Period Sur (Def)
(24)
(18)
1
(5)
Earnings Ratio (x) na 8.9 7.4 10.7
Cash Balance
14 (3)
(2)
(7)
E’prise Val. (A$m) 145 119 93 72
EV : EBITDA (x) 23.8 3.3 3.5 4.4
BALANCE
SHEET
(US$m)
2014a2015f2016f2017f
EV : EBIT (x) na 8.7 10.1 16.6
Assets Net Debt / ND+Eq (%) 32%
32%
17%
1%
Cash 14 (3)
(2)
(7)
Interest Cover (x) #DIV/0!
na na na
EBIT Margin (%) na
19%
17%
13%
Other Current Assets 3
3
3
3
ROE (%) -40%
8%
9%
6%
ROA (%) -33%
9%
9%
6%
Total Assets 225 202 183 160
Div. (Ac/sh) - - - Liabilities Div. payout ratio - - - Borrowings 64 45 20 (5)
Div. Yield - - - Current Accounts Payable 30 30 30 30
Div. Franking - - - Non Current Liabilities 23 23 23 23
Other Liabilities - - - Total Liabilities 117 98 73 48
Net Assets 108 105 110 112
OilGas Total
mmbbls
Bcf mmboe
2P Reserves Thailand 6.1 - 6.1
2C Resources Thailand 3.2 - 3.2
2C Resources Zola - 37.8 6.3
EV / 2P boe (A$) 26.0
EV / 2P+ 2C boe (A$) 10.2
28 of 66
Troy Resources Ltd
(TRY $0.56) Buy
Analyst: Jon Bishop
Troy Resources Ltd
Dec H FY’15
Investment Case:
The Dec H was impacted by a A$28m writedown of the Casposo asset. The
underlying profit of ~A$1.9m was in line with expectation. However, the key for
TRY remains development execution at Karouni. Excellent progress has been
achieved to date; this remains consistent with a track record of successful execution
of low cost highly profitable developments. As such, TRY is now within 6mnths of
becoming a 200kozpa_eq producer with AISC of circa US$800/oz which will generate
substantial cash flow and reinstate a reliable dividend stream. We retain our Buy
recommendation.
Key Points:
Share Price
0.56 A$/sh
Price Target
1.04 A$/sh
Valuation
1.04A$/sh
(npv 10%
nom)
Shares on issue
206m, diluted *
115 A$m
Enterprise Value
156 A$m
Debt
70A$m
Cash est.
29 A$m
Largest ShareholderWarrigal 5.8%
Production F’cast
Gold (koz)
Cash Cost (US$/oz)
AISC (US$/oz)
Assumptions
Spot Gold US$/oz
Spot Silver US$/oz
AUDUSD
Dec H FY’15 highlights:
•
Of key significance is that the Karouni development is on course for first pour in
the Jun Q’15;
•
TRY will transform into a 200kozpa producer @ US$800/oz Au_eq from FY’16;
•
Dec H production of 65.0koz Au_eq @ US$706/oz eq (C1) vs 60.3koz Au_eq @
US$861/oz eq (C1) for the pcp;
•
Underlying profit of A$1.9m in-line with expectation;
•
Loss of A$26.7m a result of a A$30m asset impairment largely relating to Casposo
(A$28m non-cash writedown);
•
We forecast a FY’15 loss of A$13m as a consequence (prev. A$17m gain);
•
Casposo otherwise running at +10koz Au_eq per month and AISC ~US$1,000/
oz;
•
Cash of A$29m at Dec 31; debt of A$70m; Tranche 2 of A$30m Investec facility
made available for the Karouni development;
•
Valuation of A$1.04/sh (from A$1.05/sh) after reducing the carrying-value for
Casposo.
Analysis:
We have recently upgraded our recommendation to Buy, highlighting the imminent
Company transformation in terms of production and cash flow profile.
Karouni is on course for first pour in the Jun Q’15, effectively transforming TRY into a
+200kozpa producer @ US$800/oz Au_eq from mid CY’15.
Year end 30 June
2015f
2016f
2017f
135
508
1180
207
626
770
191
718
839
2015f
2016f
2017f
1246
1250
1275
18.1
19.0
20.5
0.83 0.770.80
Key Financials
2015f
2016f 2017f
Revenue (A$m)
200
333
312
EBITDA (A$m)
86
161
133
NPAT (A$m)
-13
1
-3
Cashflow (A$m)
-55
130
119
CFPS (Ac)
-27
63
58
P/CFPS (x)
na
0.9
1.0
EPS (Ac)
-6
0
-2
EPS growth (%)
na
na
na
PER (x)
na
145.1
na
EV:EBITDA (x)
1.8
1.0
1.2
EV:EBIT (x)
na
20.2
-21.3
DPS (Ac)
0.0
4.0
4.0
Dividend Yield (%)
0%
7%
7%
26%
na
na
Interest Cover (x)
na
1.2
na
Share Price Chart
$/sh
$1.60
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
Feb-14
TRY 12 Month Price History
May-14
Aug-14
Nov-14
As a proven cash generating Company and dividend payer, the resulting FY’16 and
’17 CF multiples are a compelling <1x: We have seen NST, IGO, RRL, WSA trade at and
above consensus valuations as a consequence of cash build at the bottom line.
At +200kozpa for the next 3yrs and at a margin of +US$400/oz, free cashflow from
TRY will be far from immaterial @ US$80m/yr, particularly considering its <US$130m
EV.
29 of 66
Troy Resources Ltd
(TRY $0.56) Buy
Analyst: Jon Bishop
We continue to like the longer term potential of Guyana to add substantially to
LOM: Free cash generation from next FY will enable the Company to step-up strike
extension drilling and regional target testing providing for a number of catalysts.
At the Company’s other key operation – Casposo – the recent trend of improving
operational performance largely continued, save for the mis-fired stope at Q end.
Grades of both gold and silver continued to show an upward trend with the inc.
contribution of the higher grade material being developed from U/G.
Additionally, capital and G&A costs also declined.
The inc. in AISC and C1 costs was otherwise attributable to a misfired stope towards
late Dec. skeletal mine crews were unable to rectify the issue so as to avoid treating
low grade stockpiles at the mill in place of the high grade material otherwise being
developed.
The issue has since been rectified, with month production rates – as a function of
the high grade stopes – returning to the +10kozpa Au_eq @ US$1000/oz witnessed
in Oct and Nov.
Financially, TRY appears to be comfortable in terms of seeing the Karouni
development into steady-state production, with Investec recently granting access to
A$30m Tranche 2 Karouni development facility.
30 of 66
Troy Resources Ltd
(TRY $0.56) Buy
MARKET STATISTICS
Analyst: Jon Bishop
YEAR END 30 JUNE
Share Price
$0.56 A$/sh Directors
Issued Capital
D.Dix FP Ord
195.3 m M. Purvis Opts (@ var)
10.6 m K.Nilsson Rights
1.8 m J.Jones Total Dil. FPOrd 205.9 m R. Parish G.Chambers Market Capitalisation
$115 m R. Monti Enterprise Value
$156 m F Grimwade Debt
$70 m
Cash
$29 m Shareholders
Warrigal Hedging - 1.71moz Ag @ US$16.07Van Eyk 19.41/oz; 64koz Au @ US$1,1821,272/oz
ASSET VALUATION
A$m
Chair
MD
Exec Dir
NE Dir
NE Dir
NE Dir
NE Dir
NE Dir
5.8%
6.0%
A$/sh
Casposo
111 0.54
Andorinhas-Mamao
6
0.03
Andorinhas - Iron Ore
7
0.03
Karouni
124 0.60
Hedging
(1)
(0.00)
Corporate
(22)
(0.11)
Exploration & other assets
30 0.15
Unpaid Capital
- Cash & bullion est.
29 0.14
Debt
(70)
(0.34)
Total 214 1.04
2014a
2015f
2016f
2017f
Gold Sales
183 192 329 302
Iron Ore Sales
- 4
4
3
Hedging Revenue
(0)
1
(2)
Deferred Revenue
1
2
3
6
Other Revenue
(7)
1
- 1
TOTAL REVENUE
177 200 333 312
Operating Costs
149 112 169 172
Dep/Amort
14 45 139 127
O/H + New Bus Dev
19 8
8
8
W/O & Provisions
90 35 6
6
EBITDA
30 86 161 133
EBIT
(92)
(2)
8
(7)
Interest Expense
4
6
9
4
Net Profit Before Tax
(95)
(6)
1
(5)
Tax
(35)
8
1
(2)
Minorities
- - - NET PROFIT
(60)
(13)
1
(3)
(60)
(13)
1
(3)
CASH FLOW (A$m)
2014a2015f2016f2017f
Net Profit
(60)
(13)
1
(3)
5
(10)
- + Dep/Amort
14 45 139 127
+ Provisions
90 35 6
6
+ Tax Expense
(35)
8
1
(2)
2014a2015f2016f2017f
- Tax Paid
1
5
0
(2)
Operating Cashflow
13 59 146 129
Andorinhas
koz
29 21 - Casposo
koz Au-eq
102 113 110 77
58 114 16 10
Karouni
koz
98 -Exploration
12 6
15 10
115
-Assets Purchased
(6)
- - TOTAL (koz)
131 135 207 191
+Asset Sales
- 0
(64) (119)
(31)
(20)
Avg Cash cost
US$/oz Au Eq
760 508 626 718
+Equity Issues
32 - - Avg Total Cost
US$/oz Au Eq
1,093 850 1,195 1,247
40 60 - AISC
US$/oz Au Eq
1,330 1,180 770 839
-Loan Repayment
- - 40 60
-Dividends
- - 4
7
AUD:US
0.92 0.83 0.77 0.80
Financing Cashflow
69 57 (44)
(68)
Avg Au Spot Price
US$/oz
1,301 1,246 1,250 1,275
Avg Ag Spot Price
US$/oz
21 18 19 21
Period Sur (Def)
17 (4)
71 41
Hedging - 1.53moz Ag @ US$19.40/oz
Cash Balance
43 41 111 153
2014a2015f2016f2017f
CF (A$m) (45)
(55)
130 119
CF / Sh (Ac/sh) (23)
(27)
63 58
CF Ratio (x) na na 0.9 1.0
Earnings (A$m) (60)
(13)
1
(3)
EPS (Ac/sh) (30)
(6)
0
(2)
EPS Growth (%) na
na
na
na
Earnings Ratio (x) na na 145.1 na
E’prise Val. (A$m) 160 175 84 (8)
EV : EBITDA (x) 14.2 1.8 1.0 1.2
EV : EBIT (x) na na 20.2 (21.3)
26%
na
na
Interest Cover (x) na
na
1
na
EBIT Margin (%) na
na
2%
na
ROE (%) -30%
-8%
0%
-1%
ROA (%) -31%
-1%
18%
-2%
Div. (Ac/sh) - - 4
4
Div. payout ratio 0%
0% 1037% -252%
Div. Yield 0%0%7%7%
Div. Franking 100% 100% 100% 100%
BALANCE SHEET (A$m)
2014a2015f2016f2017f
Assets Cash 43 41 111 153
Other Current Assets 23 37 37 37
Total Assets 294 327 343 367
Liabilities Borrowings 41 100 80 30
Current Accounts Payable 23 26 26 26
Other Liabilities 34 32 32 32
Total Liabilities 99 158 138 88
Net Assets 196 169 205 279
Reserves
Resources
mt g/tmoz mt g/t moz
Casposo
1.98.6
0.5503.07.90.746
Andorinhas
0.47.3
0.0932.04.80.293
Karouni
2.6 3.80.323 11.8 2.9 1.077
Equity Share Gold (moz)
0.64
2.12
Enterprise Value / oz (A$)
243
74
31 of 66
Austal Ltd
(ASB $1.56) Buy
Analyst: Richard Hamersley
Austal
Half Year Result
Investment Case:
ASB is trading at a slight discount to our DCF valuation of $1.67/sh. ASB is trading
on normalised PER 12x FY15 and EV/EBIT 7.5x FY15, relatively fair multiples based
on our earnings growth forecasts. Key short term value driver is the anticipated
award of support services work for LCS although is priced in to ASB’s share price in
our view. Our DCF valuation includes a 50% risk adjusted valuation of $0.27/sh for
potential service support earnings for the LCS program. The real upside to our DCF
valuation could come through foreign military sales of the LCS in the medium term.
We maintain our Buy recommendation.
Key Points:
•
Operating EBIT was $34m for 1H15, up from $26m pcp and consistent with our
forecast.
•
Total net cash and working capital balance remained relatively unchanged at 31
Dec 2014 versus prior reporting date 30 Jun 2014.
•
Interim dividend of 1 cent per share fully franked was declared.
•
ASB has maintained revenue guidance of $1.2b for FY15; revenue was $680m in
1H15.
•
The order book supports our forecasts to FY17 for the Australian operations and
FY18 for the US operations.
•
ASB is well placed to provide through life service support for defence vessels.
LCS sustainment contract is anticipated to be awarded in 2H15.
Year end 30 June
Share Price
1.56 A$/sh
Price Target
1.70 A$/sh
Valuation (DCF)
1.67 A$/sh
WACC10.5%
Terminal Growth
3.0%
Shares on issue
346.0 m, diluted
539.8 A$m
Enterprise Value
549.8 A$m
Debt FY15f
105.5 A$m
Cash FY15f
95.5 A$m
Key Financials
2014a
2015f 2016f
Revenue (A$m)
1122.6 1210.7 1347.7
EBITDA (A$m)
88.2
94.8 102.3
EBIT (A$m)
64.4
72.0
80.5
Reported NPAT (A$m)
31.5
53.2
53.7
Normalised NPAT (A$m)
38.2
45.3
53.7
Gross Cashflow (A$m)
35.7
49.7
75.5
Capex (A$m)
-13.2
-16.0
-20.0
Op. Free Cashflow (A$m)
31.4
62.1
54.6
Revenue Growth (%)
25%
8%
11%
EBITDA Growth (%)
32%
8%
8%
Norm. NPAT Growth (%)
82%
18%
19%
Normalised EPS (Ac)
11.1
13.1
15.5
Norm. EPS growth (%)
83%
17%
19%
PER (x)
14.0
11.9
10.0
EV:EBITDA (x)
6.9
5.8
5.0
EV:EBIT (x)
9.5
7.6
6.3
DPS (Ac)
0.0
3.0
7.0
Dividend Yield (%)
0%
2%
4%
Net Debt (A$m)
68.7
10.0
-30.8
Net Debt:Equity (%)
16%
2% net cash
Interest Cover (x)
7.6
9.8
21.1
Share Price Chart
$/sh
$2.00
ASB 12 Month Price History
Analysis:
$1.50
Half Year Result
Revenue was $680m for 1H15, up 34% on pcp. ASB has maintained revenue guidance
of $1.2b for FY15, consistent with our forecast.
Operating EBIT was $34m for 1H15, excluding $11m foreign exchange benefit from
revaluation intercompany loans. The result was consistent with our forecast.
$1.00
$0.50
Feb-14
May-14
Aug-14
Nov-14
Operating EBIT for US operations was $27m for 1H15, consistent with pcp; EBIT margin
was only 5.5% in 1H15 for the US operations, down from 6.4% pcp and lower than
our expectation of 7%. Margin was impacted by 1) design changes and schedule
challenges for LCS 6, 2) slight loss for support services and 3) extra overhead costs
targeting growth opportunities. Improved margin is anticipated on subsequent LCS
builds (LCS 8, 10, 12, 14).
Operating EBIT for Australian operations was $14.5m for 1H15, up from $3m pcp; EBIT
margin was 13% in 1H15, a significant improvement on pcp of 4% and slightly higher
than our expectation of 10%. The Australian operations benefited from the mature
Cape Class patrol boat program which is scheduled to be completed by Aug 2015.
ASB expects EBIT margin for the Australian operations to moderate back to 10% in
the medium term (beyond FY15), consistent with our forecast.
32 of 66
Austal Ltd
(ASB $1.56) Buy
Operating EBIT for Philippines operations was $2m for 1H15, up from $0.3m pcp,
consistent with our forecast.
Our forecast EBIT of $72m for FY15 remains unchanged; we are forecasting a stronger
second half EBIT of $38m primarily due to 1) improvement in EBIT margin for the US
operations and 2) a more favourable AUDUSD exchange rate increasing translated
USD profit (average AUDUSD 0.87 1H15 versus 0.79 average to date for 2H15, albeit
early in the half).
Total net cash and working capital (excluding government grant liabilities) was $95m
at 31 Dec 14, relatively consistent to prior reporting date at 30 Jun 2014; operating
free cash flow in 1H15 was offset by an adverse impact of AUD USD exchange rate
on USD denominated debt. Whilst net cash showed $83m improvement to $15m
at 31 Dec 2014, up from net debt $68m at 30 Jun 2014, working capital decreased
by a similar amount in 1H15; the swing to cash from working capital was primarily
attributable to 1) proceeds from the stock boat in 1H15 and 2) advanced payments.
The order book supports our forecasts to FY17 for the Australian operations and FY18
for the US operations.
LCS and JHSV programs – expansion likely
Program expansion seems likely particularly given 1) the growing importance of
the LCS and JHSV’s to the US Navy’s requirements and 2) continuing support for
both vessels by the US Navy. The US Navy’s increasing focus on strategic ‘maritime
crossroads’ of the Asia Pacific region places high importance on the LCS and JHSV
programs.
The 10 ship LCS program valued at US$3.5b (8 fully funded, with at least 1 more
expected to be funded in Q1 CY15) is maturing in terms of production efficiency.
Over time the LCS program is expected to increase to 52 ships, from the existing 24
ship program (split 50/50 ASB and Lockheed Martin). The US Navy acquisition plan is
anticipated to become clearer in the medium term. Whilst the US Navy continues to
show support for expansion of the program, the quantum and speed of build is to
be decided by US Congress. In our model we have assumed ASB is awarded a further
14 LCS’s, beyond the existing 10 ship program, maintaining the existing production
rate to 2027.
The 10 ship JHSV program valued at US$1.6b is now in the mature stage of production
efficiency with the final JHSV scheduled for completion in CY17. The performance
of the JHSV is generating interest in the US and there is a likelihood that the JHSV
program will be expanded. We understand the US Navy has been directed to assess
the broadening of the mission scope for JHSV, which may ultimately lead to an
expanded fleet. We understand clarity on this is anticipated mid 2015. For the purpose
of our model, we have assumed ASB builds a further 10 JHSV’s to the existing 10 ship
program at a slightly lower production rate.
Support service opportunities
ASB is well placed to provide through life service support for defence vessels such as
LCS and JHSV, being the OEM and having strategically located ship yards. In support
of this view, ASB, in partnership with General Dynamics Bath Iron Works), was
awarded in 1H15 a planning yard design services contract for LCS with a potential
value of US$100m over 5 years for the JV. The contract involves engineering, planning,
ship configuration, material and logistics support to maintain and modernise both
Freedom (Lockheed Martin’s LCS 1) and Independence (ASB’s LCS 2) variants of the
LCS class. This contract is strategically important for further post delivery vessel
service work. In addition, ASB was awarded two LCS service contracts in 1H15
totalling US$15m.
33 of 66
Austal Ltd
(ASB $1.56) Buy
The timing of award for scheduled maintenance (sustainment) for LCS is anticipated
in 2H15. Scheduled maintenance could be worth up to US$200m pa, according to
industry reports, once the LCS fleet is in operation, with ASB’s market share approx
40% or potentially US$80m pa should the ASB team be awarded the contract.
Unscheduled maintenance will be awarded on an as needed basis. Unscheduled
maintenance could be worth at least US$100m pa, (at higher margins than scheduled
maintenance) once all ASB’s LCS’s are in operation (from 2019). ASB’s market share of
unscheduled maintenance for LCS largely depends on its capability geographically;
ASB is reasonably well placed for a decent market share of this work, having a global
footprint with strategically located shipyards and service facilities in Australia (Perth
& Darwin), Asia (Philippines), US (Alabama), Caribbean, Middle East, and Europe.
It is conceivable that over time, support service revenue for LCS could total approx
US$200m revenue per annum for ASB.
Australian operations – emerging defence vessel opportunities
ASB is well placed to build on capability proven in defence ship building for LCS,
HSSV, and patrol boats and win similar contracts in new markets such as the middle
east.
The HSSV US$125m contract award circa 12 months ago was a significant milestone
for the Henderson operations, validating ASB’s competitiveness and capability in the
defence sector, important in its evolution into defence vessel work and opens the
door to new Naval customers in the Middle East. This win demonstrated growing
recognition by international naval forces of the high speed support vessels built
for the US Navy. This places ASB in a strong position to win further defence vessel
contracts for its Henderson operations.
The HSSV contract ensures ongoing work at ASB’s Henderson operations until 2016,
partly in conjunction with the existing patrol boat contract for Australian Customs
which is scheduled to be completed by Aug 2015. The HSSV contract win provides
some comfort as to the long term viability for the Henderson shipyard as a defence
vessel contractor.
Contract opportunities for HSSV’s and patrol boats should ensure a continuing base
load of at least $200-$250m revenue per annum for the Australian operations.
Investment thesis:
Our DCF valuation has increased slightly to $1.67/sh, from $1.60/sh primarily due to
a revised AUD USD exchange rate assumption. Our DCF valuation includes a 50%
risk adjusted valuation of $0.27/sh for potential service support earnings for the LCS
program. Contract award for scheduled maintenance is anticipated in 2H15.
Key assumptions, which remain unchanged, are:
•
Long term support service revenue for LCS of US$100m revenue per annum, EBIT
margin circa 11%. This is risk adjusted 50% of potential support service revenue.
•
Steady LCS production rate of 1.4 equivalent per annum until FY27.
•
JHSV production rate dropping from 1.5 per annum currently to 1 in FY17 until
FY27.
•
EBIT margin for LCS and JHSV builds average 7.5% long term, down from 8%
forecast in FY15, due to slightly lower long term production rate forecast long
term.
•
Australian ship building long term revenue $250m per annum at 10% EBIT
margin.
•
WACC 10.5%
34 of 66
Austal Ltd
(ASB $1.56) Buy
Key short term catalyst is the anticipated award of scheduled maintenance for LCS
although is priced into the stock in our view. Key medium term catalyst is defence
vessel contract wins. The real upside to our DCF valuation could come through
foreign military sales of the LCS in the medium term.
Key risk is US Congress not approving funding for future LCS and JHSV’s beyond the
existing programs. Whilst pressures on defence budget perhaps will limit US Navy’s
desired expansion, some form of program expansion seems likely particularly given
1) the immaterial value of the LCS and JHSV programs compared to the overall US
Navy budget and 2) the growing importance of the LCS and JHSV’s to the US Navy’s
requirements
35 of 66
Austal Ltd
(ASB $1.56) Buy
FINANCIAL STATEMENTS
YEAR END 30 JUNE
PERFORMANCE RATIOS
13A14A15F16F17F
Income Statement
13A14A15F16F17F
Sales
881.81105.11193.31330.31288.7
Other 15.417.517.517.517.5
Revenue
897.21122.61210.71347.71306.2
COGS
-807.3-1018.7-1100.2-1229.7-1194.9
Other -23.1-15.7-15.7-15.7-15.7
EBITDA
66.888.294.8
102.395.6
Depreciation & amortisation
-24.5-23.8-22.8-21.8-22.3
Other non cash
0.00.00.00.00.0
EBIT 42.364.472.080.573.3
Net Interest income/(expense) -11.3-8.4-7.3-3.8-1.8
Associates
0.00.00.00.00.0
Other income/(expense)
0.00.00.00.00.0
Abnormal items (pretax)
-4.3
-8.9
11.3
0.0
0.0
EBT
26.747.076.076.771.5
Tax expense
9.0-15.3-22.8-23.0-21.5
Minority interest
0.1-0.30.00.00.0
Preference Dividends
0.00.00.00.00.0
Reported Earnings
35.831.553.253.750.1
Dividends
0.0 0.0-10.4-24.2-24.2
Adjustments (one off )
0.00.00.00.00.0
Retained earnings
35.831.542.829.525.9
Normalized Net Profit
21.038.245.353.750.1
Growth & Margins
Revenue Growth
EBITDA Growth
EBIT Growth
Normalized Net Profit Growth
EBITDA margin
EBIT margin
Normalized net profit margin
Effective tax rate
Cash flow (A$m)
Returns
Return on avg capital employed (%) 9%
13%
12%
14%
12%
WACC (%)
11%11%11%11%11%
Return on assets (%)
5%2%7%6%6%
Return on average equity (%)
10%
7%
11%
10%
9%
Company cost of equity (%)
13%
13%
13%
13%
13%
Pretax Profit
+ Depreciation
+ Foreign Exchange loss/(gain)
- Tax Paid
+ inc (- dec) in provisions
+/- writedowns/revals
+/- Other
- Profit/+ loss on disposal
Gross Cashflow
- Capital expenditure
+/- Changes in working capital
Operating Free Cashflow
+/- Acq of subs/other investments
- Dividends
+ Proceeds from equiy raised
+/- Proceeds from disp of subs/FAs
+/- Other
Net cashflow
Cash at beginning of period
Cash at end of period
Balance Sheet ($m)
Cash Receivables
Inventories
Other
Current Assets
Receivables
Other financial assets
Intangibles
Property/Plant/Equipment
Deferred tax assets
Other
Non Current Assets
Total Assets
Payables
Interest bearing liabilities
Provisions
Unearned revenue
Income tax payable
Other
Current Liabilities
Payables
Provisions
Government grants
Deferred Tax
Other
Non Current Liabilities
Total Liabilities
Net Assets
Contributed equity
Reserves
Retained profits
Minority Interests
Total equity
13A14A15F16F17F
26.747.076.076.771.5
24.523.822.821.822.3
0.0
0.0
-11.3
0.0
0.0
-10.6-15.9-37.8-23.0-21.5
7.1
7.4
0.0
0.0
0.0
14.7
13.40.00.00.0
-54.3
-35.50.00.00.0
0.0
-4.5
0.0
0.0
0.0
8.135.749.775.572.4
-24.7-13.2-16.0-20.0-20.0
-64.0
8.9
28.4
-0.8
10.3
-80.631.462.154.662.7
-2.9
4.1
0.0
0.0
0.0
0.0 0.0 -3.5-13.8-24.2
75.1
0.0
0.0
0.0
0.0
16.3
27.6
0.0
0.0
0.0
15.95.30.00.00.0
23.768.458.740.838.4
-160.8 -137.1
-68.7
-10.0
30.8
-137.1
-68.7
-10.0
30.8
69.2
13A14A15F16F17F
107.7
86.8
95.5
86.3
124.7
102.7 95.7114.5139.5133.9
277.9328.1274.2240.9231.2
15.46.86.86.86.8
503.7517.4490.9473.4496.6
0.01.01.01.01.0
4.10.00.00.00.0
12.59.59.59.59.5
400.0366.5371.7369.9367.6
22.69.09.09.09.0
1.77.87.87.87.8
441.0393.8398.9397.2394.9
944.7911.1889.9870.6891.5
-133.8-183.6-146.6-133.7-129.9
-243.6-13.2-13.2-13.2-13.2
-25.1-33.7-33.7-33.7-33.7
-21.8-29.1-32.9-36.6-35.5
-24.5-11.0-11.0-11.0-11.0
-16.4-5.5-5.5-5.5-5.5
-465.3-276.0-242.9-233.8-228.8
0.00.00.00.00.0
-1.2
-142.3-92.3-42.3-42.3
-2.2-1.0-1.0-1.0-1.0
-52.8-49.9-49.9-49.9-49.9
-11.1-6.6-6.6-6.6-6.6
-4.9-2.2-2.2-2.2-2.2
-72.1-202.0-152.0-102.0-102.0
-537.4-478.0-394.9-335.7-330.8
407.3433.1494.9534.8560.7
111.3111.6111.6111.6111.6
37.327.339.339.339.3
258.6294.0343.7383.6409.5
0.00.30.30.30.3
407.2433.2494.9534.8560.7
38%25% 8%11% -3%
104%
32%8%8%-7%
na52%12%12% -9%
na
82%
18%
19%
-7%
7.4%7.9%7.8%7.6%7.3%
4.7%5.7%5.9%6.0%5.6%
2.3%3.4%3.7%4.0%3.8%
-34%32%30%30%30%
Liquidity
Capex/depreciation (x)
Current ratio (x)
Quick ratio (x)
Receivable days
Inventory days
Payable days
1.00.60.70.90.9
1.11.92.02.02.2
1.61.01.41.72.0
4133323539
107109100 76 72
5957554240
Risk Measures
Dividend Cover (x)
Payout ratio (%)
Net interest cover (x)
Net debt/equity (%)
nanananana
0% 0%23%45%48%
3.7
7.6
9.8
21.1
41.4
34%
16%
2% net cash net cash
SHARE DATA/VALUATION
13A14A15F16F17F
Share Data
Issued shares (m)
Weighted ave shares (m)
Fully diluted shares (m)
Basic EPS (A$)
YoY change (%)
Fully diluted EPS (A$)
YoY change (%)
Fully diluted normalised EPS (A$)
YoY change (%)
Dividend/share (A$)
Franking (%)
Gross cashflow/share (A$)
NBV/share (A$)
NTA/Share (A$)
346346346346346
267343346346346
346343346346346
0.130.090.150.160.14
130%
-32%
67%
1%
-7%
0.100.090.150.160.14
79%
-11%
67%
1%
-7%
0.06
0.11
0.13
0.16
0.14
-8%83%17%19% -7%
0.000.000.030.070.07
100%100%100%100%100%
0.030.100.140.220.21
1.181.251.431.551.62
1.141.221.401.521.59
Valuation
PER (Basic) (x)
11.617.010.210.010.8
PER (Fully diluted) (x)
15.117.010.210.010.8
PER (Fully diluted, normalized) (x)
25.7
14.0
11.9
10.0
10.8
P/CFPS (x)
51.515.010.9 7.2 7.5
Price/NBV (x)
1.31.21.11.01.0
Price/NTA (x)
1.41.31.11.01.0
Dividend Yield (%)
0.0%0.0%1.9%4.5%4.5%
Fully dil normalized 3 yr EPS Cagr (%)36.3% 18.0%
9.0%
PEG ratio (x)
0.7
0.8
1.3
EV (A$m)
676.9608.5549.8509.0470.6
EV/EBITDA (x)
10.16.95.85.04.9
EV/EBIT (x)
16.09.57.66.36.4
EV/Revenue (x)
0.60.50.50.40.4
NPV/SOP (A$)
1.67
WACC (%)
10.5%
OTHER INFORMATION
Estimated free float
12-mth High/Low (A$/sh)
Average daily volume (A$m)
ASX Code
Next result
70%
1.72/0.75
1.2
ASB
Aug 2015 (FY’15)
COMPANY DESCRIPTION
Austal is a West Australian based aluminium shipbuilder. The company has
operations in Henderson, WA and Mobile, USA. Austal builds vessels for the
international ferry market and for the US Navy.
36 of 66
Cedar Woods Properties Ltd
(CWP $6.00) Buy
Cedar Woods Properties
Share Price
6.00 A$/sh
Price Target (PER)
7.77 A$/sh
Shares on issue
78.3 m, diluted
470.0 A$m
Enterprise Value
567.1 A$m
Debt (Dec 2014)
96.0 A$m
Cash (Dec 2014)
4.2 A$m
Half year result
Investment Case:
CWP has reported a first half NPAT of $9.1m. The result was well flagged as skewed
to the second half and CWP has issued guidance looking for $41m NPAT for 2015, a
modest upgrade on previous guidance which was for at least $40m. This is consistent
with our current 2015 forecast of $41.4m and we have no reason to change our
forecasts. Conditions are mixed, with weak general sentiment (an employment
question) offset by low interest rates. We continue to look for growth in 2016. CWP is
a quality business, with a quality land bank and yields an attractive 4.7% per annum.
Despite sector headwinds CWP remains well placed for consistent steady growth
through the cycle.
Key Points:
•
CWP has announced a 1H 2015 NPAT of $9.1m versus our $10m expectation
and updated guidance to $41m (from a flat $40m); now in line with our $41.4m
forecast.
•
A 12c interim dividend was declared, in line with last year.
•
$147m in presales are in place and we have a high conviction in CWP’s ability
to hit its guided numbers for 2015, which would prove a record result for the
company.
•
In 2016 we continue to look for earnings growth. For some time, our view of
the way existing projects lined up suggested that to support 2016 growth, CWP
would look to sell some aspect of the Williams Landing Town Centre.
•
•
•
Year end 30 June
CWP have now announced they will sell the Masters Store at Williams Landing.
Our own analysis of cost versus rental yield suggests CWP could generate in the
region of $10m in profit from this sale, shoring up our 2016 NPAT forecast.
Upper Kedron represents some risk; while approval from council has been
received, appeal or review by Government is possible and if this causes delays,
this may impact the projects carrying value.
From 2017 onwards new projects contribute and on balance we continue to
look for sustained growth from CWP over the long term.
•
This is notwithstanding the softening of demand conditions, particularly in WA
(seemingly a future employment question rather than current employment
reality). Long term drivers of population growth and interest rates remain
favourable.
•
That said, given some of this uncertainty, the security of earnings for 2016
provided by the proposed sale of the Masters Store in Williams Landing is a
considerable investment case plus.
Key Financials
2014a
2015f 2016f
Revenue (A$m)
214.3
214.6 222.6
EBITDA (A$m)
56.3
61.5
65.8
EBIT (A$m)
56.3
61.5
65.8
Reported NPAT (A$m)
40.1
41.3
44.3
40.3
41.3
44.3
37.0
41.3
44.3
Capex (A$m)
-25.1
-15.0
-15.0
-62.8
28.4
13.0
Revenue Growth (%)
22%
1%
4%
EBITDA Growth (%)
5%
9%
7%
12%
2%
7%
Normalised EPS (Ac)
54.7
52.7
56.6
12%
-4%
7%
PER (x)
11.0
11.4
10.6
EV:EBITDA (x)
10.1
9.2
8.6
EV:EBIT (x)
10.1
9.2
8.6
DPS (Ac)
28
28
30
Dividend Yield (%)
4.7%
4.7%
5.0%
Net Debt (A$m)
-32.6
-59.2
-66.9
Net Debt:Equity (%)
-12%
-21%
-22%
Share Price Chart
$/sh
$8.00
CWP 12 Month Price History
$7.00
$6.00
$5.00
Feb-14
May-14
Aug-14
Nov-14
Disclosure
corporate advice to CWP during the last year. Euroz
Securities has received a fee for these services.
Investment Thesis:
•
The CWP investment thesis is primarily predicated around sustained long term
growth around 10% per annum and this continues to be our expectation.
37 of 66
(CWP $6.00) Buy
•
CWP trades on a 2015 PE of 11.4x and 10.6x 2016, undemanding metrics assuming
our medium term earnings forecasts eventuate. Peers are more like 14x forward
earnings.
•
The stock currently yields 4.7% per annum and is broadly supported by market
value NTA in our view.
•
The Upper Kedron situation is providing some headwinds and this, together
with softening conditions in WA has seen the stock sold off.
•
While an early resolution at Upper Kedron would provide a catalyst, ultimately
share price traction will track earnings growth which we expect to continue. Buy
38 of 66
(CWP $6.00) Buy
PERFORMANCE RATIOS
13A14A15F16F17F
Income Statement
13A14A15F16F17F
Sales
173.8212.9214.6222.6260.8
Rent
0.01.54.15.36.5
Fees
0.00.00.00.00.0
Revenue
173.8214.3218.8227.9267.3
COGS
-95.6-132.5-131.8-136.6-169.5
Other -24.5-25.5-25.5-25.5-25.5
EBITDA
53.756.361.565.872.3
Depreciation & amortisation 0.00.00.00.00.0
Other non cash
0.00.00.00.00.0
EBIT 53.756.361.565.872.3
Associates
-0.70.00.00.00.0
0.00.00.00.00.0
0.00.00.00.00.0
EBT
51.455.759.063.369.7
Tax expense
-15.1-15.2-17.7-19.0-20.9
Minority interest
0.00.00.00.00.0
Reported Earnings
36.340.341.344.348.8
Dividends
-13.0-15.9-20.6-20.7-22.2
0.00.00.00.00.0
Retained earnings
23.324.420.723.726.7
36.040.341.344.348.8
Fully Diluted Net Profit
36.040.341.344.348.8
YEAR END 30 JUNE
Growth & Margins
Revenue Growth
EBITDA Growth
EBIT Growth
EBITDA margin
EBIT margin
Effective tax rate
2%22% 1% 4%17%
0%5%9%7%
10%
0%5%9%7%
10%
4%
12%
2%
7%
10%
31%26%28%29%27%
31%26%28%29%27%
21%19%19%19%18%
29%27%30%30%30%
Cash flow (A$m)
Returns
Return on average cap employed (%)25%
20%
20%
20%
20%
WACC (%)
12%10%10%10%10%
18%
17%
15%
15%
15%
13A14A15F16F17F
Pretax Profit
51.455.759.063.369.7
+ writedowns
0.00.00.00.00.0
-/+ associates profit/loss
0.70.00.00.00.0
Deferred development costs 0.00.00.00.00.0
- Tax Paid
-15.4-16.7-17.7-19.0-20.9
-3.7
-2.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Gross Cashflow
33.037.041.344.348.8
-11.5-25.1-15.0-15.0-15.0
-54.3
-74.7
2.1
-16.3
-13.0
-32.8-62.828.413.020.8
+/- Acq of subs/other investments 0.0
0.0
0.0
0.0
0.0
- Dividends
-13.0-15.9-20.6-20.7-22.2
0.0
29.0
0.0
0.0
0.0
+/- Proceeds from disp of subs/FAs 0.0
0.0
0.0
0.0
0.0
+/- Minority interests
0.41.90.00.00.0
+/- Other
0.00.00.00.00.0
Net cashflow
-45.4
-47.8 7.7-7.7-1.4
Net debt at beginning of period
-4.0
-49.4
-97.2
-89.4
-97.1
Net debt at end period (incl vendor)-49.4
-97.2
-89.4
-97.1
-98.5
Balance Sheet ($m)
13A14A15F16F17F
Cash
3.0
8.8
6.5
-1.2
-2.6
Receivables
3.410.110.110.110.1
Inventories
76.0 80.9 99.6104.5108.4
Other
11.00.10.10.10.1
Current Assets
93.4 99.9116.2113.5116.0
Receivables
6.74.64.64.64.6
Inventories
174.9249.7232.4243.8252.9
Equity accounted investments 1.92.92.92.92.9
12.536.651.666.681.6
Deferred tax assets
0.00.00.00.00.0
Other
11.616.216.216.216.2
Non Current Assets
207.6310.0307.6334.1358.2
Total Assets
301.0409.9423.9447.5474.2
Payables
-20.9-26.3-30.0-30.0-30.0
Interest bearing liabilties
0.0 0.0-28.2-28.2-28.2
Provisions
-6.6-7.4-7.4-7.4-7.4
Current tax liabilities
-8.0-6.0-6.0-6.0-6.0
Vendor of land borrowings
-11.6
-34.3
0.0
0.0
0.0
Current Liabilities
-47.1-74.0-71.6-71.6-71.6
Payables
0.00.00.00.00.0
Interest bearing liabilties
-40.8-41.4-37.5-37.5-37.5
Vendor of land borrowings
0.0-30.2-30.2-30.2-30.2
Other
-1.7-0.4-0.4-0.4-0.4
Deferred tax liabilities
-3.4-2.2-2.2-2.2-2.2
-45.9-74.2-70.3-70.3-70.3
Total Liabilities
-93.0-148.2-141.9-141.9-141.9
Net Assets
208.0261.7282.0305.6332.3
Contributed equity
83.8116.7116.7116.7116.7
Reserves
0.50.30.30.30.3
Retained profits
123.5144.7165.4189.0215.7
Minority Interests
0.00.00.00.00.0
Total equity
208.2261.7281.8305.4332.1
Liquidity
Current ratio (x)
2.01.41.61.61.6
Quick ratio (x)
0.30.70.60.30.2
Receivable days
712171714
Inventory days
266216250273229
Payable days
7165788065
Risk Measures
Dividend Cover (x)
Payout ratio (%)
Net debt (inc vend)/equity (%)
2.82.52.02.12.2
52%51%51%51%51%
33.693.925.026.728.0
24%
37%
32%
32%
30%
13A14A15F16F17F
Share Data
Issued shares (m)
Basic EPS (c)
YoY change (%)
Fully diluted EPS (c)
YoY change (%)
Fully diluted normalised EPS (c)
YoY change (%)
Dividend/share (c)
Franking (%)
Gross cashflow/share (c)
NBV/share (c)
NTA/Share (c)
73.773.778.378.378.3
73.773.778.378.378.3
73.773.778.378.378.3
49.354.752.756.662.3
-7%
11%
-4%
7%
10%
49.354.752.756.662.3
-7%
11%
-4%
7%
10%
48.8
54.7
52.7
56.6
62.3
-9%
12%
-4%
7%
10%
25
28.0283033
100%100%100%100%100%
4550535762
282355360390424
279351356386420
Valuation
PER (Basic) (x)
12.211.011.410.6 9.6
12.2
11.0
11.4
10.6
9.6
PER (Fully diluted, normalized) (x) 12.3
11.0
11.4
10.6
9.6
P/CFPS (x)
13.412.011.410.6 9.6
Price/NBV (x)
2.11.71.71.51.4
Price/NTA (x)
2.11.71.71.61.4
Dividend Yield (%)
4.2%4.7%4.7%5.0%5.5%
Fully diluted normalized 3 yr EPS Cagr (%)
PEG ratio (x)
EV/EBITDA (x)
10.6
10.19.28.67.8
EV/EBIT (x)
10.6
10.19.28.67.8
EV/Revenue (x)
3.32.62.62.52.1
OTHER INFORMATION
ASX Code
Next result
64.0%
7.96/5.35
0.25
CWP.ASX
FY2015
COMPANY DESCRIPTION
Cedar Woods is a residential property developer with large ongoing
developments is Western Australia and Victoria
39 of 66
Empired Ltd
(EPD $0.70) Buy
Empired
Half Year Result
Investment Case:
EPD is trading on a fair multiple EV/EBIT 7.5x for FY16 (the first full year contribution
from Intergen). The tendering pipeline is strong and could provide upside to our
earnings forecast for FY16. The added Microsoft capability through the acquisition
of Intergen places EPD in a stronger position to win larger contracts with new and
existing customers. EPD has a scaleable platform that supports higher activity levels.
EPD is trading at a moderate discount to our DCF valuation of $0.80/sh which remains
unchanged. We anticipate contract wins will provide upside to our DCF valuation
closer to our 12 month price target of $1.00/sh. We maintain our Buy recommendation.
Key Points:
•
Normalised EBITDA was $4.4m for 1H15, up from $1.7m pcp and slightly higher
than our forecast of $4m.
•
Revenue was $50m for 1H15 and EBITDA margin was 9%, consistent with our
expectation.
•
Operating cash flow was disappointing, impacted by a negative movement in
working capital.
•
Balance sheet is stretched but manageable.
•
EPD has guided revenue $110m - $120m for FY15, implying revenue of $60m $70m for 2H15. We view revenue guidance as conservative.
•
•
EPD has circa $100m (over average circa 5 years) pipeline of contract
opportunities to support revenue growth, the majority of which is anticipated
to be awarded in 2H15.
EPD has guided revenue $145m-$165m for FY16, consistent with our forecast
of $154m for FY16. We are forecasting organic revenue growth of only 6% for
FY16; in our view this is conservative given the strong pipeline of contract
opportunities.
Analysis:
Revenue was $50m for 1H15, up from $29m pcp, primarily due to acquisition growth.
We anticipate the combined group is well placed for contract wins that will drive
organic revenue growth in FY16.
Year end 30 June
Share Price
Price Target (PER)
Valuation (DCF)
WACC
Terminal Growth
Shares on issue
Enterprise Value
Debt Cash Key Financials
Revenue (A$m)
EBITDA (A$m)
EBIT (A$m)
Reported NPAT (A$m)
Capex (A$m)
Revenue Growth (%)
EBITDA Growth (%)
Normalised EPS (Ac)
PER (x)
EV:EBITDA (x)
EV:EBIT (x)
DPS (Ac)
Dividend Yield (%)
0.70 A$/sh
1.00 A$/sh
0.80 A$/sh
10.6%
3.0%
114.6 m, diluted
80.2 A$m
100.1 A$m
20.0 A$m
7.0 A$m
2014a
2015f
2016f
66.8
5.6
3.6
3.8
2.1
125.4
11.8
8.2
4.8
4.8
154.0
16.7
13.1
8.2
8.2
9.7
6.3
-1.0
44%
28%
-5%
2.30
-26%
30.4
17.8
27.5
1.00
1.4%
8.4
6.0
-4.1
88%
110%
131%
4.18
82%
16.8
8.5
12.2
1.00
1.4%
11.8
5.0
5.1
23%
41%
72%
7.17
72%
9.8
6.0
7.6
1.00
1.4%
Share Price Chart
$/sh
$1.00
EPD 12 Month Price History
$0.80
$0.60
$0.40
Feb-14
May-14
Aug-14
Nov-14
Disclosure
corporate advice to Empired Ltd during the last year.
Euroz Securities has received a fee for these services.
Gross profit margin was strong at 35% for 1H15, up from 29% pcp. EPD are quietly
confident this strong gross profit margin can be maintained. Key to this is cost outs
for Intergen.
Operating cash flow was disappointing; negative $3.6m for 1H15, impacted by 1)
increase in work in progress, 2) transaction and one-off costs and 3) higher receivable
days which are expected to return to a more normal level in 2H15.
Working capital was circa $8m at 31 Dec 2014. Included in working capital is work in
progress of $6m, up from $3m prior half, primarily relating to two projects that have
been invoiced subsequent to half year end.
40 of 66
Empired Ltd
(EPD $0.70) Buy
Balance sheet is stretched but manageable. True net debt to equity ratio (including
vendor liabilities) was 54% at 31 Dec 2014. Net debt was $13m at 31 Dec 14; a relatively
high net debt to equity ratio of 27% but manageable with interest cover circa 7x
FY15. Based on our forecasts, operating free cash flow over the next 2.5 years ending
FY17 covers deferred vendor liabilities totalling $13m (predominantly for Intergen)
over the same period.
EPD has guided revenue $110m-$120m for FY15, implying revenue $60m-$70m for
2H15. We view revenue guidance as conservative, given Intergen is expected to
contribute an additional $20m in revenue for 2H15 versus 1H15. Nonetheless, we have
decreased our revenue forecast slightly for FY15 to $125m, from $130m, still above
what we deem as conservative guidance. EPD has circa $100m (over average circa 5
years) pipeline of contract opportunities to support revenue growth, the majority of
which is anticipated to be awarded in 2H15.
EPD has guided revenue $145m-$165m for FY16, consistent with our forecast of
$154m for FY16. We are forecasting organic revenue growth of only 6% for FY16; in
our view this is conservative given the strong pipeline of contract opportunities.
Our EBITDA forecasts remain unchanged. We are forecasting a stronger second half
EBITDA of $7.4m, based on a similar EBITDA margin in 2H15 versus 1H15 on revenue
slightly higher than guidance.
41 of 66
Empired Ltd
(EPD $0.70) Buy
YEAR END 30 JUNE
Income Statement
13A14A15F16F17F
Service revenue
46.5 66.8125.4154.0165.9
Other revenue
0.00.00.00.00.0
Revenue
46.5 66.8125.4154.0165.9
COGS
-33.6 -45.8 -81.6-101.8-110.2
Other -8.5-15.4-32.0-35.4-37.9
EBITDA
4.4 5.611.816.717.8
Depreciation & amortisation -1.2-2.0-3.6-3.6-3.6
Other non cash
0.00.00.00.00.0
EBIT 3.2 3.6 8.213.114.2
Associates
0.00.00.00.00.0
-0.71.4-0.50.00.0
0.00.00.00.00.0
EBT
2.0 4.4 6.311.712.8
Tax expense
-0.4-0.5-1.9-3.5-3.8
Minority interest
0.00.00.00.00.0
0.00.00.00.00.0
Reported Earnings
1.63.84.48.28.9
Dividends
0.0-0.3-1.0-1.1-1.1
0.00.00.00.00.0
Retained earnings
1.63.53.57.17.8
2.22.14.98.28.9
2.22.14.98.28.9
Cash flow (A$m)
13A14A15F16F17F
Pretax Profit
+ Depreciation
- Tax Paid
+/- Other
Gross Cashflow
+/- Acq of subs/other investments
- Dividends
+ Proceeds from equity raised
+/- Proceeds from disp of subs/FAs
+/- Other
Net cashflow
2.0 4.4 6.311.712.8
1.22.03.63.63.6
0.00.00.00.00.0
-0.9-0.8-1.9-3.5-3.8
1.3
2.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-1.61.90.00.00.0
2.1 9.7 8.011.812.5
-5.0-6.3-6.0-5.0-5.0
3.5
-4.4
-6.5
-1.7
-0.7
0.6
-1.0
-4.4
5.1
6.8
-3.4
-16.3
-10.8
-5.7
-5.7
0.0-0.3-1.0-1.1-1.1
1.1
15.3
13.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.00.00.00.00.0
-2.50.20.00.00.0
-4.2-2.1-2.9-1.7 0.0
0.3
-3.9
-6.0
-8.9
-10.6
-3.9
-6.0
-8.9
-10.6
-10.6
Balance Sheet ($m)
13A14A15F16F17F
Cash 2.1
8.1
6.7
5.0
5.0
Receivables
5.811.120.925.727.6
Work in progress
1.63.33.84.65.0
Current tax assets
0.00.00.00.00.0
Other
1.20.80.80.80.8
Current Assets
10.723.232.136.038.4
Intangibles
11.727.848.148.148.1
8.012.817.218.620.0
Deferred tax assets
0.92.22.22.22.2
Non Current Assets
20.542.867.568.970.3
Total Assets
31.2 66.0 99.6104.9108.7
Payables
-5.0 -8.7-14.7-18.3-19.8
-1.9-3.5-5.0-5.0-5.0
Provisions
-1.2-2.0-2.0-2.0-2.0
Deferred vendor liability
-1.7-2.5-6.2-5.7 0.0
Current tax liabilities
0.00.00.00.00.0
Other
-0.4-1.2-1.3-1.5-1.7
Current Liabilities
-10.3-17.9-29.1-32.6-28.5
Deferred vendor liability
-1.90.0-5.20.00.0
-2.1-10.6-10.6-10.6-10.6
Provisions
-0.2-0.4-0.4-0.4-0.4
Deferred Tax
-1.6-2.8-2.8-2.8-2.8
-5.8-13.7-18.9-13.7-13.7
Total Liabilities
-16.1-31.6-48.1-46.3-42.2
Net Assets
15.234.551.658.666.4
Contributed equity
8.824.437.637.637.6
Reserves
0.50.71.11.11.1
Retained profits
5.9 9.412.919.927.7
Minority Interests
0.00.00.00.00.0
Total equity
15.234.551.658.666.4
PERFORMANCE RATIOS
13A14A15F16F17F
Growth & Margins
Revenue Growth
4%44%88%23% 8%
EBITDA Growth
71%28%
110%41% 6%
EBIT Growth
65%14%
127%59% 8%
79%
-5% 138%
66%
9%
EBITDA margin
9.5% 8.4% 9.4%10.9%10.7%
EBIT margin
6.9%5.4%6.6%8.5%8.5%
Normalized net profit margin 5%3%4%5%5%
Effective tax rate
21%12%30%30%30%
Liquidity
Current ratio (x)
Quick ratio (x)
Receivable days
Inventory days
Payable days
Risk Measures
Dividend Cover (x)
Payout ratio (%)
Net debt/equity (%)
4.13.11.71.41.4
1.01.31.11.11.3
1.62.21.91.71.6
6146475559
nanananana
6655525963
nanananana
21%23%24%14%13%
8
5
6
9
10
13%17%17%18%16%
Returns
Return on average cap employed (%) 8%
11%
6%
10%
10%
Return on invested capital (%)
9%
11%
7%
11%
11%
WACC (%)
10.6%
5%6%5%9%9%
12%
15%
10%
15%
14%
Company cost of equity (%)
12%
13A14A15F16F17F
Share Data
Issued shares (m)
Basic EPS (c)
YoY change (%)
YoY change (%)
YoY change (%)
Dividend/share (c)
Franking (%)
NBV/share (c)
NTA/Share (c)
68 95115115115
68
89
105
115
115
70
90
115
115
115
2.44.34.27.27.8
-3%
83%
-2%
69%
9%
2.34.33.97.27.8
17%
85%
-9%
85%
9%
3.1
2.3
4.3
7.2
7.8
68%
-26%
87%
66%
9%
0.51.01.01.01.0
100%100%100%100%100%
3.110.9 7.710.311.0
22.336.345.051.258.0
5.27.03.09.2
16.0
Valuation
PER (Basic) (x)
29.7
16.2
16.5
9.8
9.0
30.5
16.5
18.1
9.8
9.0
PER (Fully diluted, normalized) (x) 22.6
30.4
16.2
9.8
9.0
P/CFPS (x)
22.76.49.16.86.4
Price/NBV (x)
3.11.91.61.41.2
Price/NTA (x)
13.510.023.1 7.6 4.4
Dividend Yield (%)
0.7%1.4%1.4%1.4%1.4%
Fully dil normalized 3 yr EPS Cagr (%)25%
46%
22%
28%
PEG ratio (x)
0.5
1.4
0.6
EV/EBITDA (x)
22.8
17.88.56.05.7
EV/EBIT (x)
31.427.612.2 7.7 7.1
EV/Revenue (x)
2.21.50.80.70.6
NPV/SOP (A$)
0.80
WACC (%)
10.6%
OTHER INFORMATION
ASX Code
Next result
30%
0.83 / 0.48
0.01
EPD
Aug 15 (FY15)
COMPANY DESCRIPTION
Empired Ltd (EPD) is a WA based IT provider of services ranging from business
consulting to infrastructure and applications systems development and support.
EPD listed on the ASX in October 2007.
42 of 66
Fleetwood Corporation Ltd
(FWD $1.35) Speculative Buy, upgrade from Hold
Fleetwood Corporation
Half Year Results
Investment Case:
FWD has released half year results posting reported NPAT of $3.9m from $156m
in revenues. The result included $6.9m in asset revaluations and very broadly,
excluding this, the result saw a $4m RV loss, offset by a $5.8m profit in Manufactured
Accommodation. There are many moving parts which we explore below. Features of
the result were i) strong operating cashflows (partially a consequence of favourable
working capital movements) and ii) a large receivable booked in relation to the
Osprey Village. Consequently FWD has opportunity to meaningfully reduce debt in
the current half, which would be a significant catalyst. We upgrade to a Speculative
Buy, as should FWD be able to substantially reduce the debt there are enough
earnings green shoots to see share price traction off a low base.
Key Points:
•
FWD has reported 1H 2015 NPAT of $3.9m from revenues of $156m.
•
The result broadly consisted of a $4m loss in the RV division, $5.8m profit in
Manufacturing Accommodation and $6.9m in asset revaluations associated
with the capital invested in a major project.
•
In the second half FWD will benefit from first meaningful contribution from the
Combabula Village (we estimate $1.8m EBIT) and can further benefit from new
arrangements entered into with RIO at the Searipple accommodation village.
•
We are not forecasting any major improvement in circumstances for the
RV division in 2015, however during 2016 we would expect this division to
breakeven or undergo total restructure.
•
Operating cash flows were strong, including a favourable outcome on payment
terms in Eastern States education accommodation services and going forward
we continue to expect operating cash flow to broadly track EBITDA, which even
after excluding the one off impact of revaluations we expect to be circa $24m in
2015 and $41m in 2016.
•
A receivable for $53m was booked during the half associated with the Osprey
Village (per terms of arrangement with the WA government). Essentially the
WA Government is obliged to repay capital (the $53m) if agreement can’t be
reached in relation to the ongoing rental.
•
The subject is complex, however the key takeaway is that it is possible FWD may
have the debt sorted out by the full year result, a significant potential catalyst.
Year end 30 June
Share Price
1.35 A$/sh
Price Target (PER)
1.75 A$/sh
Valuation (DCF)
1.90 A$/sh
WACC10.0%
Terminal Growth
2.5%
Shares on issue
61.3 m, diluted
82.8 A$m
Enterprise Value
145.8 A$m
Debt
(77.3)
A$m
Cash
14.0 A$m
Key Financials
2014a
2015f 2016f
Revenue (A$m)
366.2
310.8 359.7
EBITDA (A$m)
27.7
33.7
41.3
EBIT (A$m)
10.2
12.4
18.6
Reported NPAT (A$m)
-0.3
6.2
10.8
5.3
6.2
10.8
22.7
27.4
33.4
Capex (A$m)
12.8
27.0
7.0
-22.1
3.6
19.7
Revenue Growth (%)
10%
-15%
16%
EBITDA Growth (%)
-32%
21%
23%
-67%
17%
73%
Normalised EPS (Ac)
8.81
10.13 17.54
-67%
15%
73%
PER (x)
15.3
13.3
7.7
EV:EBITDA (x)
5.3
4.3
3.5
EV:EBIT (x)
14.3
11.7
7.8
DPS (Ac)
2.00
2.00
4.00
Dividend Yield (%)
1.5%
1.5%
3.0%
Net Debt (A$m)
56.0
53.7
36.5
Net Debt:Equity (%)
26%
25%
16%
Interest Cover (x)
4.6
3.5
5.7
Share Price Chart
$/sh
$3.00
FWD 12 Month Price History
$2.50
$2.00
$1.50
$1.00
Feb-14
May-14
Aug-14
Nov-14
43 of 66
Analysis:
We provide below our breakdown of earnings for actual, 1H 2015 and forecast 2015
and 2016 (all splits are Euroz estimates):
IH ‘15 F
Revenue
margin
($m)
2H ‘15 F
EBIT
Revenue
($m)
($m)
margin
2015 F
EBIT
Revenue
($m)
($m)
margin
2016 F
EBIT
Revenue
($m)
($m)
margin
EBIT
($m)
Vans
22.0
-24.4%
-5.4
22.0
-21.6%
-4.8
44.0
-23.0%
-10.1
61.9
-5.0%
-3.1
Camec
25.0
4.0%
1.0
25.0
4.0%
1.0
50.0
4.0%
2.0
70.0
4.0%
2.8
9.0
4.0%
0.4
9.0
4.0%
0.4
18.0
4.0%
0.7
25.0
4.0%
1.0
-4.0
56.0
-6.1%
-3.4
112.0
-6.6%
-7.4
156.9
0.5%
0.7
3.8
Flexi Glass
Total
56.0
Manufactured accommodation
Searipple
12.7
10.0%
1.3
19.1
10.0%
1.9
31.8
10.0%
3.2
38.1
10.0%
WA transportables
11.6
-18.3%
-2.1
8.4
1.4%
0.1
20.0
-10.0%
-2.0
40.0
5.0%
2.0
Eastern States Transportables
65.0
11.0%
7.2
55.0
11.0%
6.1
120.0
11.0%
13.2
100.0
11.0%
11.0
Rental fleet
6.0
0.0%
-
6.0
0.0%
-
12.0
0.0%
-
13.0
0.0%
-
Osprey
5.0
50.0%
2.5
5.0
50.0%
2.5
10.0
50.0%
5.0
11.7
42.7%
5.0
-
35.0%
-
5.0
35.0%
1.8
5.0
35.0%
1.8
10.0
35.0%
3.5
8.8
98.5
12.5%
12.3
198.8
10.6%
21.1
202.8
12.5%
25.3
Combabula
100.3
Less overhead
(manufactured accommodation)
-3.0
-3.0
-6.0
-5.0
Total contribution
(prior to capital true up)
5.8
9.3
15.1
20.3
Valuation true up on capital
6.9
-
6.9
-
Manufactured accommodation EBIT
12.7
9.3
22.0
20.3
EBIT prior to overhead
8.7
5.9
14.6
21.0
Unallocated overhead
-1.1
-1.1
-2.2
-2.4
Reported EBIT
7.6
4.8
12.4
18.6
Interest
-2.0
-1.6
-3.6
-3.3
EBT
5.6
3.3
8.9
15.4
Tax
-1.7
-1.0
-2.66
-4.61
NPAT
3.9
2.3
6.2
10.8
•
Our 2015 and 2016 forecasts are largely unchanged.
•
We are looking for the RV division to continue to bleed in the second half,
however during 2016 to either breakeven or see a complete restructure.
•
We are looking for first contribution from the Combabula Village in 2H 2015 and
into 2016.
•
A feature of 1H 2015 was mining accommodation inefficiencies which we don’t
expect to be replicated.
•
We continue to expect Education to be strong however moderate.
•
We went to Hold at a higher share price and our 2016 earnings forecasts are
sufficient to support an investment case, off a low base, provided the balance
sheet holds up.
•
The status of the balance sheet then, is the cause of our speculation.
•
FWD have recognised a receivable associated with capital invested in the Osprey
village. Arrangements with the WA government are such that should a rental
guarantee fail to be negotiated, the WA government is obliged to reimburse
FWD its capital costs (circa $50m), which would immediately reduce debt by
circa $50m.
44 of 66
•
Other alternatives exist, which are being explored by the company, which might
see other equally satisfactory outcomes play out.
•
In the meantime FWD trades on a PE of 7.7x our 2016 forecasts, and, were the
balance sheet sorted, a 2016 EV/EBIT of 4 and EV/EBITDA of 2x.
•
While we concede many moving parts in relation to the earnings outlook of FWD
in our view the markets primary concern is the balance sheet and if this can be
dealt with the stock can trade up off a low base, and this is the nature of our
speculation.
•
10x our 2016 forecast EPS of 17.5c is $1.75 and this might be a reasonable share
price expectation once balance sheet issues are sorted out, notwithstanding the
many moving parts to earnings still to play out.
45 of 66
Income Statement
Sales
Other Revenue
COGS
EBITDA
Depreciation & amortisation
Other non cash
EBIT Net Interest income/(expense)
Associates
EBT
Tax expense
Discontinued/impairment
Reported Earnings
Dividends
Retained earnings
Normalised Net Profit
Cash flow (A$m)
Pretax Profit
+ Depreciation
- Tax Paid
+/- Other
Gross Cashflow
+/- Investments
- Dividends
- Acquisition
+ Disposal
+/- Other
Net cashflow
Net Cash/(Debt) at beginning of period
Net Cash/(Debt) at end of period
Balance Sheet ($m)
YEAR END 30 JUNE
PERFORMANCE RATIOS
13A14A15F16F
13A14A15F16F
332.1366.2310.8359.7
0.00.00.00.0
332.1366.2310.8359.7
-291.5-338.4-277.1-318.4
40.627.733.741.3
-16.0-17.6-21.2-22.7
0.00.00.00.0
24.510.212.418.6
-1.3-2.2-3.6-3.3
0.00.00.00.0
0.00.00.00.0
0.00.00.00.0
23.28.08.9
15.4
-6.6-2.8-2.7-4.6
-4.1-5.50.00.0
0.00.00.00.0
12.5
-0.3
6.2
10.8
-34.0-1.0-1.2-2.5
0.00.00.00.0
-21.5-1.35.08.3
16.3
5.3
6.2
10.8
16.3
5.3
6.2
10.8
Growth & Margins
Revenue Growth
EBITDA Growth
EBIT Growth
EBITDA margin
EBIT margin
Effective tax rate
-13%10%-15%16%
-57%-32%21%23%
-69%-59%22%50%
-71%
-67%
17%
73%
12% 8%11%11%
7%3%4%5%
5%
1%
2%
3%
28%35%30%30%
13A
14A
15F
16F
23.28.08.9
15.4
16.017.621.222.7
-6.6-2.8-2.7-4.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.00.00.00.0
32.722.727.433.4
-38.0
-12.8
-27.0
-7.0
-17.8
-32.0
3.2
-6.8
-23.2 -22.1
3.6
19.7
0.00.00.00.0
-34.0-1.0-1.2-2.5
2.9
0.0
0.0
0.0
0.00.00.00.0
9.00.00.00.0
0.00.00.00.0
-3.5-1.0-0.1 0.0
-48.8
-24.1
2.3
17.2
16.9
-31.9
-56.0
-53.7
-31.9
-56.0
-53.7
-36.5
13A
14A
15F
16F
Cash 12.7
6.4
5.5
12.7
Receivables
54.046.749.757.5
Inventories
41.744.534.239.6
Other
4.20.10.10.1
Current Assets
112.697.789.5
109.9
Receivables
14.045.745.745.7
114.4109.7115.4 99.8
Intangibles
67.464.364.364.3
Other
0.00.00.00.0
Deferred tax assets
4.24.44.44.4
Non Current Assets
200.0224.1229.8214.2
Total Assets
312.6321.8319.4324.1
Payables
-45.2-37.9-34.2-39.6
-44.6-62.4-56.3-46.8
Current tax liabilties
-1.10.00.00.0
Provisions
-4.4-3.9-4.6-5.3
Current Liabilities
-95.3
-104.2-95.1-91.7
Payables
0.00.00.00.0
Deferred Tax
0.00.00.00.0
0.0
0.0
-3.0
-2.5
Provisions
-3.2-3.2-2.1-2.4
-3.2-3.2-5.1-4.9
Total Liabilities
-98.5-107.4-100.1 -96.6
Net Assets
214.1214.4219.2227.5
Contributed equity
193.0194.1194.1194.1
Reserves
-0.6-0.2-0.2-0.2
Retained profits
21.720.425.333.6
Minority Interests
0.00.00.00.0
Total equity
214.1214.3219.2227.5
Liquidity
Current ratio (x)
Quick ratio (x)
Receivable days
Inventory days
Payable days
Risk Measures
Dividend Cover (x)
Payout ratio (%)
Net debt/equity (%)
2.40.71.30.3
1.20.90.91.2
1.51.41.61.8
59505754
48434637
56454742
0.4
na
5.1
4.4
145% -350%
20%
23%
18.9
4.6
3.5
5.7
15%26%25%16%
Returns
Return on average capital employed (%)
8.0%
3.4%
4.5%
6.2%
WACC (%)
4.1%
0.1%
2.3%
3.6%
5.6% -0.2%
2.9%
4.8%
13A14A15F16F
Share Data
Issued shares (m)
Basic EPS (A$)
YoY change (%)
YoY change (%)
Fully diluted normalised EPS (A$)
YoY change (%)
Dividend/share (A$)
Franking (%)
NBV/share (A$)
NTA/Share (A$)
60.560.561.361.3
60.5
60.5
61.3
61.3
60.5
60.5
61.3
61.3
0.21
-0.01
0.10
0.18
-78% -103% -1873%
73%
0.27
0.09
0.10
0.18
-70%
-67%
15%
73%
0.27
0.09
0.10
0.18
-70%
-67%
15%
73%
0.300.020.020.04
100%100%100%100%
0.540.380.450.55
3.543.543.583.71
2.432.482.532.66
Valuation
PER (Basic) (x)
6.5 -236.3
13.3
7.7
5.0
15.3
13.3
7.7
5.0
15.3
13.3
7.7
P/CFPS (x)
2.53.63.02.5
Price/NBV (x)
0.40.40.40.4
Price/NTA (x)
0.60.50.50.5
Dividend Yield (%)
22.2%1.5%1.5%3.0%
Fully diluted normalized 3 yr EPS Cagr (%)
PEG ratio (x)
EV/EBITDA (x)
3.65.34.33.5
EV/EBIT (x)
5.914.311.7 7.8
EV/Revenue (x)
0.40.40.50.4
OTHER INFORMATION
ASX Code
Next result
75%
2.75/1.10
1.0
FWD
FY 2015
COMPANY DESCRIPTION
Fleetwood Corporation Ltd (FWD) operations are on mobile accommodation,
and are based in three market sectors - retirement, recreation and resource
development. The company has two key divisions: recreational vehicles and
manufactured accommodation.
46 of 66
Matrix Composites and Engineering Ltd
(MCE $0.77) Hold
Date: 23rd February 2015
Matrix Composites and Eng.
Half year result
Investment Case:
Matrix has reported a solid set of first half numbers, generating EBITDA of $13.6m from
revenues of $78.5m. As a consequence the balance sheet is significantly improved,
with net cash (including progress claims) at $7.2m, a significant improvement on
the net debt position at year end of ($6.4). In short, MCE has added $15m in cash,
benefiting from a weaker AUS$ and productivity improvements particularly around
materials. A 2c dividend was declared and if it wasn’t for a deteriorating oil price,
prospects would be buoyant. As it is, the order book will wind down over the course
of the second half without replacement work won and visibility for 2016 is uncertain.
We maintain a Hold recommendation for the time being pending clarity on future
new orders.
Key Points:
•
MCE has reported $13.7m in EBITDA from revenues of $78.5m, up substantially
on the PCP.
•
The EBITDA number included $1.3m in foreign exchange gain and excluding
this EBITDAF was $12.3m compared to our forecast of $9.7m.
•
Our full year numbers increase from $20.9m EBITDAF to $21.7m EBITDAF and
NPAT forecast increases from $5.3m to $5.9m, not increasing at the same rate as
EBITDAF due to a higher depreciation charge than we had forecast.
•
The balance sheet is a highlight and the business is now net cash $7.2m
(including progress claims) a $15m improvement over the position in June 2014.
•
The improvement in EBITDA is a function of a deteriorating $AUS together with
efficiencies in production, particularly in materials.
•
The order book is circa $86m US and the business has production visibility into
1Q 2016.
•
Order conversion is experiencing delays, an understandable consequence of a
lower oil price.
•
While the replacement market offers a potential opportunity (as appetite to
maintain existing gear supersedes demand for new equipment), the size of this
opportunity is, as yet, unknown.
•
We maintain our Hold recommendation pending clarity on new orders sufficient
to fill the first half of 2016.
Year end 30 June
Share Price
0.70 A$/sh
Price Target
0.90 A$/sh
Valuation (DCF)
1.35 A$/sh
WACC11.5%
Terminal Growth
2.0%
Shares on issue
94.5 m, diluted
66.5 A$m
Enterprise Value
60.5 A$m
Debt (Dec 2014)
13.0 A$m
Cash (Dec 2014)
29.0 A$m
Key Financials
2014a
2015f 2016f
Revenue (A$m)
158.6
152.0 137.5
EBITDA (A$m)
18.6
23.0
19.7
EBIT (A$m)
6.7
9.7
9.0
Reported NPAT (A$m)
3.0
5.9
5.7
3.3
5.9
5.7
9.9
19.2
16.4
Capex (A$m)
7.2
5.0
5.0
8.6
13.7
10.2
Revenue Growth (%)
9%
-4%
-10%
EBITDA Growth (%)
148%
24%
-15%
na
80%
-3%
Normalised EPS (Ac)
3.45
6.22
6.03
na
80%
-3%
PER (x)
20.3
11.3
11.6
EV:EBITDA (x)
4.0
2.8
3.2
EV:EBIT (x)
9.1
6.2
6.7
DPS (Ac)
0.00
4.00
4.00
Dividend Yield (%)
0.0%
5.7%
5.7%
Net cash (A$m)
6.1
16.3
22.7
Net Debt:Equity (%)
net cash net cash net cash
Interest Cover (x)
3.3
7.4
10.7
Share Price Chart
$/sh
$1.70
MCE 12 Month Price History
$1.30
$0.90
$0.50
Feb-14
May-14
Aug-14
Nov-14
47 of 66
(MCE $0.77) Hold
Analysis:
We provide below our build up of earnings for MCE:
Henderson
FY 2013
FY 2014
1H 2015
2H 2015
FY 2015
FY 2016
actual
actual
actual
f/casts
f/casts
f/casts
115
136
76
72
149
133
Riser Buoyancy
Revenue ($m)
Well Construction
Revenue ($m)
6
5
2
1
3
5
121
141
78
73
152
138
Gross profit ($m)
54.53
67.76
35.71
33.13
68.83
62.29
GP margin (materials)
45.0%
48.2%
45.5%
45.1%
45.3%
45.3%
15.0
17.9
11.0
11.0
22.0
19.0
Factory overhead (EZL Estimate) ($m)
15.0
14.0
6.0
6.0
12.0
11.0
Total factory overhead ($m)
30.0
31.9
17.0
17.0
34.0
30.0
24.53
35.86
18.71
16.13
34.83
32.29
Total Henderson revenue ($m)
Factory overhead (direct labour) ($m)
Total factory contribution ($m)
MOSE*
Revenue ($m)
24.8
17.9
-
-
-
-
EBITDA Margin
4.0%
-8.4%
0.0%
0.0%
0.0%
0.0%
1.0
-1.5
-
-
-
-
EBITDA Margin ($m)
Total revenue
146.0
158.6
78.5
73.5
152.0
137.5
EBITDA prior to admin
25.52
34.36
18.71
16.13
34.83
32.29
Admin
4.1
4.4
2.0
2.2
4.2
4.0
R&D
0.5
0.4
0.3
0.3
0.6
0.6
Sales
5.7
6.0
2.2
2.3
4.5
4.0
Corporate
3.5
3.5
2.0
2.0
4.0
4.0
Super/ Fex
4.2
1.5
-1.5
-
-1.5
-
18.0
15.8
5.0
6.8
11.8
12.6
Administration costs
Total Admin costs
EBITDA ($m)
EBITDA margin
7.5
18.6
13.7
9.4
23.0
19.7
5.1%
11.7%
17.4%
12.7%
15.2%
14.3%
Depreciation
10.3
11.9
7.5
5.8
13.3
10.7
EBIT
-2.8
6.7
6.2
3.5
9.7
9.0
Interest
-1.4
-2.0
-0.7
-0.7
-1.3
-0.8
EBT
-4.2
4.7
5.5
2.9
8.4
8.1
1.3
-1.7
-1.7
-0.9
-2.5
-2.4
-3.0
3.0
3.9
2.0
5.9
5.7
Tax
Reported NPAT ($m)
*MOSE segement reporting ceased 2014
48 of 66
(MCE $0.77) Hold
YEAR END 30 JUNE
Income Statement
13A14A15F16F17F
Sales
146.0158.6152.0137.5137.4
Other 0.00.00.00.00.0
Revenue
146.0158.6152.0137.5137.4
Operating costs
-138.5-140.1-128.9-117.8-117.8
EBITDA
7.518.623.019.719.6
Depreciation
-10.3-11.9-13.3-10.7-11.1
Other (one off )
0.00.00.00.00.0
EBIT -2.86.79.79.08.6
Associates
0.00.00.00.00.0
0.00.00.00.00.0
0.00.00.00.00.0
EBT
-4.24.78.48.18.3
Tax expense
1.3-1.7-2.5-2.4-2.5
Discontinued operations
0.00.00.00.00.0
Minority interest
0.00.00.00.00.0
Reported Earnings
-3.03.05.95.75.8
Dividends
0.0 0.0-3.8-3.8-3.8
0.00.00.00.00.0
Retained earnings
-3.03.02.11.92.0
-3.03.35.95.75.8
Cash flow (A$m)
13A14A15F16F17F
Pretax Profit
-4.24.78.48.18.3
+ Depreciation
10.311.913.310.711.1
- Tax Paid
0.0-1.7-2.5-2.4-2.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
+/- Other (derivatives)
0.0-5.00.00.00.0
Gross Cashflow
6.1 9.919.216.416.8
-5.8-7.2-5.0-5.0-5.0
-16.0
5.9
-0.5
-1.2
0.0
-15.7 8.613.710.211.9
+/- Investments
0.00.00.00.00.0
- Dividends
0.0 0.0-3.8-3.8-3.8
0.0
0.0
0.0
0.0
0.0
+ Acquisition
0.00.00.00.00.0
0.00.00.00.00.0
+/- Other
9.40.70.00.00.0
Net cashflow
-6.39.39.96.58.1
Cash (net debt) at beginning of period3.3
-3.3
6.1
16.3
22.7
Cash (net debt) at end of period
-3.0
6.0
16.0
22.7
30.8
Balance Sheet ($m)
Cash 16.0
Receivables
Inventories
Other
Current Assets
Receivables
Intangibles
Other
Deferred tax assets
Non Current Assets
Total Assets
Payables
Financial liabilities
Progress claims and deposits
Current tax liabilties
Provisions
Current Liabilities
Payables
Deferred Tax
Provisions
Total Liabilities
Net Assets
Contributed equity
Reserves
Retained profits
Minority Interests
Total equity
13A14A15F16F17F
19.529.330.738.8
26.833.525.824.824.7
23.618.823.421.021.0
1.30.80.80.80.8
67.772.679.377.385.4
9.30.00.00.00.0
104.499.891.585.879.7
8.38.58.58.58.5
0.00.00.00.00.0
13.711.111.111.111.1
135.7119.4111.0105.3 99.3
203.4192.0190.4182.6184.6
-23.4-20.0-16.4-14.7-14.7
-6.1-13.4-13.0 -8.0 -8.0
-17.6-16.7-16.7-13.8-13.7
-5.60.00.00.00.0
0.00.00.00.00.0
-1.4-1.5-1.8-1.8-1.8
-54.1-51.6-47.9-38.3-38.3
0.00.00.00.00.0
-3.6-3.3-3.3-3.3-3.3
-13.10.00.00.00.0
-0.4-0.3-0.3-0.3-0.3
-17.1-3.6-3.6-3.6-3.6
-71.2-55.2-51.5-41.9-41.9
132.2136.8138.9140.8142.8
111.8111.8111.8111.8111.8
-0.31.21.21.21.2
20.723.825.927.829.8
----132.4137.0139.1141.0143.0
PERFORMANCE RATIOS
13A14A15F16F17F
Growth & Margins
Revenue Growth
1%9%-4%
-10%0%
EBITDA Growth
4% 148%
24%
-15%
0%
EBIT Growth
na na46%-8%-4%
na
na 79.9% -3.0%
1.5%
EBITDA margin
5.1%11.7%15.2%14.3%14.3%
EBIT margin
-1.9%4.2%6.4%6.5%6.2%
Normalized net profit margin -2.0%2.1%3.9%4.1%4.2%
Effective tax rate
30%36%30%30%30%
Liquidity
Current ratio (x)
Quick ratio (x)
Receivable days
Payable days
0.60.60.40.50.5
1.31.41.72.02.2
1.82.73.43.84.3
5069716766
6057524846
Risk Measures
Payout ratio (%)
Net debt/equity (%)
0% 0%64%66%65%
na
3.3
7.4
10.7
26.8
2% net cash net cash net cash net cash
Returns
Return on average cap employed (%)-3%
7%
10%
10%
10%
WACC (%)
-1%3%3%4%4%
-2%
2%
4%
4%
4%
13A14A15F16F17F
Share Data
Issued shares (m)
94.594.594.594.594.5
94.594.594.594.594.5
94.594.594.594.594.5
Basic EPS (A$)
-0.030.030.060.060.06
YoY change (%)
-79%
na
98%
-3%
1%
-0.030.030.060.060.06
YoY change (%)
na
na
80%
-3%
1%
Fully diluted normalised EPS (A$) -0.03
0.03 0.062
0.06
0.06
YoY change (%)
na
na
80%
-3%
1%
Dividend/share (A$)
0.000.00
0.0400.040.04
Franking (%)
100%100%100%100%100%
0.060.100.200.170.18
NBV/share (A$)
1.401.451.471.491.51
NTA/Share (A$)
1.401.281.301.321.32
Valuation
PER (Basic) (x)
P/CFPS (x)
Price/NBV (x)
Price/NTA (x)
Dividend Yield (%)
PEG ratio (x)
EV
EV/EBITDA (x)
EV/EBIT (x)
EV/Revenue (x)
-22.322.311.311.611.4
-22.320.311.311.611.4
-22.3
20.3
11.3
11.6
11.4
10.96.73.44.03.9
0.50.50.50.50.5
0.50.50.50.50.5
0.0%0.0%5.7%5.7%5.7%
na na na na na
77.4 73.8 64.1 62.6 54.5
10.34.02.83.22.8
-21.39.16.26.77.1
0.50.50.40.50.4
OTHER INFORMATION
ASX Code
Next result
70%
1.60/0.60
0.5
MCE
Feb 2015
COMPANY DESCRIPTION
Matrix is a manufacturer of deep sea oil exploration riser buoyancy systems and
other associated buoyancy products.
49 of 66
NRW Holdings Ltd
(NWH $0.28) Speculative Buy
NRW Holdings
Half year reporting
Investment Case:
NWH has reported a first half loss of $120.6m after $134.9m in impairments. The
underlying NPAT number we calculate as a $20m loss, primarily a function of write back
of profits previously recognised on the Roy Hill Project. This project is now recognised
at nil profit. Most of the cash impact associated with this project is captured and the
P&L outcomes ahead are wide ranging. Not much on this front has changed and the
balance sheet has further improved during the period to net debt $27m (from $34m).
The servicing of this debt is well covered by the Middlemount contract and NWH is not
going broke. At $0.28 NWH trades well under its $0.83 NTA and uncertain earnings are
priced. Speculation is around Roy Hill outcomes and possible future Adani work. Short
term catalysts are difficult to articulate, however NWH at $0.28 is probably oversold.
Key Points:
•
This was a half year result with many moving parts:
•
Some positives
oo
The majority of the loss was a consequence of impairment and write back
of prior year profits.
oo
Consequently the business still generated $30m in operating cash flows
and maintains a healthy $139m cash balance and net debt reduced $7m
to $27m.
oo
The business has a $900m order book, including a further 3 years at $110m
per year on Middlemount, which arguably generates sufficient cash flow
to support the current market capitalisation of NWH on its own (right sized
head office assumed).
Year end 30 June
Share Price
0.28 A$/sh
Price Target (PER)
0.48 A$/sh
Valuation (DCF)
0.63 A$/sh
WACC11.1%
Terminal Growth
2.0%
Shares on issue
278.8 m, diluted
78.1 A$m
Enterprise Value
101.0 A$m
Cash (Dec 2014)
138.9 A$m
Debt (Dec 2014)
166.8 A$m
Key Financials
2014a
2015f 2016f
Revenue (A$m)
1134.5
816.0 649.0
EBITDA (A$m)
119.0
35.4
72.1
EBIT (A$m)
66.2
-19.4
34.7
Reported NPAT (A$m)
44.6 -123.2
16.7
39.7
-22.1
16.7
105.8
43.1
54.1
Capex (A$m)
24.5
15.0
15.0
70.7
11.1
39.1
Revenue Growth (%)
-17%
-28%
-20%
EBITDA Growth (%)
-29%
-70% 104%
-46% -156% -176%
Normalised EPS (Ac)
14.23
-7.94
6.00
-46% -156% -176%
PER (x)
2.0
-3.5
4.7
EV:EBITDA (x)
0.8
2.9
1.4
EV:EBIT (x)
1.5
-5.2
2.9
DPS (Ac)
9.00
0.00
3.00
Dividend Yield (%)
32.2%
0.0% 10.7%
Net Debt (A$m)
34.0
22.9
-7.8
Net Debt:Equity (%)
9%
9% net cash
Interest Cover (x)
4.6
-1.6
3.2
Share Price Chart
$/sh
$1.50
oo
The business is tendering $2.5b in work, and from such a low base even
small wins make a difference. Newsflow on this front is certainly possible.
$1.00
oo
In the meantime, NWH is well leveraged to the massive Adani project (were
it to go proceed.)
$0.50
oo
NTA is still $0.83 (after $134.9m in impairments).
$0.00
Feb-14
NWH 12 Month Price History
May-14
Aug-14
Nov-14
•Negatives
•
The P & L impact of Roy Hill remains uncertain, with a range of possibilities. A
mitigating factor is that most of the cash impact has already been captured.
•
Our experience, is that these negotiations rarely end well for the contractor and
NWH, having essentially completed the project has limited physical leverage.
•
The outlook for 2016 is uncertain and a wide range of earnings possibilities exist
– the market has limited ability to meaningful capitalise earnings.
•
That said, the business will not go broke, opportunities exists and the stock is
probably oversold.
Analysis:
We provide below our break down of earnings:
50 of 66
NRW Holdings Ltd
Mining
Other
2013
1H 2014
2H 2014
2014
1H 2015
2H 2015
2015
($m)
($m)
($m)
($m)
($m)
($m)
($m)
2016
($m)
actual
actual
actual
actual
f/cast
f/cast
f/cast
f/cast
148
47
29
76
21
23
44
44
Middlemount
150
55
55
110
55
55
110
110
Mining
405
102
84
186
76
78
154
154
Action Drill and blast / other
151
52
58
110
49
51
100
120
Mining Orderbook
555
154
142
296
125
129
254
274
New mining job
-
-
-
-
-
-
-
80
555
154
142
296
125
129
254
354
RIO Cape Lambert Phase B
80
40
5
45
-
-
-
RIO Yandi
60
25
-
25
-
-
-
RIO West Angelas road
30
8
-
8
-
-
-
-
35
-
35
-
-
-
Forecast revenues mining
Civil
BHP Mooka Ore Car repair
Roy Hill early works
Roy Hill Rail
40
70
-
70
-
-
-
-
30
280
310
300
20
320
-
Roy Hill Civils
-
-
20
20
140
40
180
-
RIO ongoing
-
100
50
150
9
11
20
25
BHP ongoing
-
-
25
LNG ongoing
-
-
25
Infrastructure WA
-
-
25
Other
170
57
122
179
Civil Orderbook
860
365
477
842
Forecast services
Less unallocated revenues
Total revenue forecasts
Margin mining
449
80
50
175
151
570
275
44
16
14
30
10
10
20
50
-83
-14
-20
-34
-14
-14
-28
-30
1,376
521
613
1,135
570
276
816
649
12.0%
7.5%
4.4%
6.3%
6.3%
6.7%
6.5%
6.5%
Margin middlemount
-8.0%
8.0%
7.0%
7.5%
7.5%
7.5%
7.5%
7.5%
Margin drill and blast
11.0%
2.2%
10.3%
6.5%
4.0%
4.0%
4.0%
5.0%
Margin civils
10.7%
9.8%
5.1%
7.1%
-6.7%
-0.3%
-5.4%
6.3%
8.0%
-2.4%
-3.9%
-3.1%
0.0%
0.0%
0.0%
0.0%
Margin services
EBIT
Mining (ex Middlemount)
30.5
3.5
1.3
4.8
1.3
1.5
2.9
8.1
Drill and blast
16.6
1.1
6.0
7.1
2.0
2.0
4.0
6.0
Middlemount
-12.0
4.4
3.9
8.3
4.1
4.1
8.3
8.3
Civils
92.0
35.6
24.2
59.8
-30
-0.4
-30.5
17.3
Services
3.5
-0.4
-0.5
-0.9
-
-
-
-
130.6
44.3
34.7
79.0
-22.7
7.3
-15.4
39.6
Unallocated
-11.2
-9.3
-4.2
-13.5
-
-4.0
-4.0
-5.0
EBIT
119.4
35.0
30.5
65.5
-22.7
3.3
-19.4
34.6
Interest
-14.7
-7.5
-6.8
-14.3
-6.0
-6.2
-12.2
-10.8
EBT
104.7
27.5
23.7
51.2
-28.7
-2.9
-31.6
23.8
Tax
-30.7
-5.2
-1.9
-7.1
8.6
0.9
9.5
-7.1
74.2
22.3
21.8
44.1
-20.1
-2.1
-22.1
16.7
Total
NPAT (underlying)
EBIT Underlying
-22.7
-19.4
Impairments
-134.9
-134.9
EBIT reported
-157.6
-154.3
-6.0
-12.2
EBT
-163.6
-166.5
Tax
42.7
43.3
-120.9
-123.2
Interest
NPAT reported
51 of 66
NRW Holdings Ltd
•
Our second half assumes no further pain on Roy Hill. As mentioned above, we
see a range of outcomes possible.
•
In 2016 we are forecasting $649m in revenues from Middlemount, an assumed
new mining job and an assumed number of smaller jobs, particularly around
infrastructure and on the East Coast. We have limited confidence in these
forecasts, and a range of outcomes, both lower and higher are possible.
•
Based on the 2016 forecasts NWH trades a PE of 4.7 and EVEBITDA of 1.4x and
plenty of leverage is available.
•
At $0.28 NWH is trading at a significant discount to NTA, in not going broke,
has some news flow prospects and in the absence of the Roy Hill negotiation, is
oversold notwithstanding a challenging environment and uncertain earnings.
•
The Roy Hill contract then, is the nature of our speculation. A neutral result (from
here) we would view as a positive and at $0.28 NWH is likely oversold though the
cycle.
•
Further cash out of the business (and/or a large loss on Roy Hill) could well see
the share price deteriorate further.
•
Speculative Buy maintained.
52 of 66
NRW Holdings Ltd
YEAR END 30 JUNE
PERFORMANCE RATIOS
13A14A15F16F17F
Income Statement
13A14A15F16F17F
Sales 1374.4
1134.5816.0649.0649.0
Other 0.00.00.00.00.0
Revenue
1374.4
1134.5816.0649.0649.0
COGS
-1206.2
-1015.5-697.0-530.0-530.0
Other 0.00.00.00.00.0
EBITDA
168.2
119.035.472.172.3
Other non cash
0.00.00.00.00.0
EBIT 119.466.2-19.434.734.0
Net Interest income/(expense) -14.7-14.3-12.2-10.8 -8.6
Associates
0.00.00.00.00.0
0.00.00.00.00.0
0.00.0
-134.90.00.0
EBT
104.751.9
-166.523.925.4
Tax expense
-30.6-7.343.3-7.2-7.6
Minority interest
0.00.00.00.00.0
0.00.00.00.00.0
Reported Earnings
74.144.6
-123.216.717.8
Dividends
-50.2
-25.1 0.0-8.4-8.4
0.00.00.00.00.0
Retained earnings
23.9
19.5
-123.28.49.4
73.339.7-22.116.717.8
73.3
39.7
-22.1
16.7
17.8
Growth & Margins
Revenue Growth
EBITDA Growth
EBIT Growth
EBITDA margin
EBIT margin
Effective tax rate
1%-17%-28%-20% 0%
-14%-29%-70%104% 0%
-22% -45%-129%-279% -2%
-26%
-46% -156% -176%
6%
12%10% 4%11%11%
8.7%5.8%-2.4%5.4%5.2%
5.3%
3.5% -2.7%
2.6%
2.7%
29.2%14.0%26.0%30.0%30.0%
Cash flow (A$m)
13A14A15F16F17F
Pretax Profit
104.751.9
-166.523.925.4
+ Depreciation
48.852.854.837.438.3
0.00.00.00.00.0
+/-write downs
0.00.0
134.90.00.0
+ Foreign Exchange loss/(gain) 0.00.00.00.00.0
- Tax Paid
-46.0-0.320.0-7.2-7.6
-12.3
1.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Gross Cashflow
95.2
105.843.154.156.1
-93.1-24.5-15.0-15.0-15.0
5.5
-10.6
-17.1
0.0
0.0
7.670.711.139.141.1
+/- Acq of subs/other investments 0.0
0.0
0.0
0.0
0.0
- Dividends
-50.2
-25.1 0.0-8.4-8.4
0.0
0.0
0.0
0.0
0.0
5.3
0.0
0.0
0.0
0.03.70.00.00.0
+/- Other
0.00.00.00.00.0
Net cashflow
-27.854.611.130.832.7
-60.8
-88.6
-34.0
-22.9
7.8
-88.6
-34.0
-22.9
7.8
40.6
Balance Sheet ($m)
13A14A15F16F17F
Cash
131.0 155.5 136.6 137.3 140.1
Receivables
205.0200.5155.5155.5155.5
Inventories
48.636.715.115.115.1
Other
9.26.44.04.04.0
Current Assets
393.8399.1311.2312.0314.7
Receivables
0.00.00.00.00.0
Intangibles
24.4
19.60.00.00.0
395.8367.5211.9189.5166.2
Other financial assets
0.00.00.00.00.0
Deferred tax assets
0.0 0.023.723.723.7
Non Current Assets
420.2387.1235.6213.2189.9
Total Assets
814.0786.2546.8525.2504.6
Payables
-196.9
-170.9-84.8-84.8-84.8
-52.4-49.6-41.7-33.9-26.0
Provisions
-16.1-17.2-17.2-17.2-17.2
Other
0.0-7.0-7.0-7.0-7.0
Current Liabilities
-265.4-244.7-150.8-142.9-135.0
Payables
0.00.00.00.00.0
-167.2 -139.9 -117.8
-95.6
-73.5
Provisions
-1.2-1.5-1.5-1.5-1.5
Other
0.00.00.00.00.0
Deferred Tax
-27.3-28.2-28.2-28.2-28.2
-195.7-169.6-147.5-125.3-103.2
Total Liabilities
-461.1-414.3-298.2-268.2-238.2
Net Assets
352.9371.9248.6256.9266.4
Contributed equity
156.5156.4156.4156.4156.4
Reserves
2.92.82.82.82.8
Retained profits
193.5212.7 89.5 97.8107.3
Minority Interests
0.00.00.00.00.0
Total equity
352.9371.9248.7257.0266.5
Liquidity
Current ratio (x)
Quick ratio (x)
Receivable days
Inventory days
Payable days
Risk Measures
Dividend Cover (x)
Payout ratio (%)
Net debt/equity (%)
1.90.50.30.40.4
1.51.62.12.22.3
1.72.13.43.53.5
6465808787
1215141010
6866675858
1.51.8 na2.02.1
68%56% 0%50%47%
8.1
4.6
-1.6
3.2
4.0
25%
9%
9% net cash net cash
Returns
Return on average cap employed (%)22%
12%
-4%
9%
9%
WACC (%)
15%8%8%8%8%
22%
12%
-40%
7%
7%
13A14A15F16F17F
Share Data
Issued shares (m)
Basic EPS (c)
YoY change (%)
YoY change (%)
YoY change (%)
Dividend/share (c)
Franking (%)
NBV/share (c)
NTA/Share (c)
279279279279279
279279279279279
279279279279279
26.6
16.0
-44.2
6.0
6.4
-24%
-40% -376% -114%
6%
26.59 16.00 -44.20
6.00
6.38
-24%
-40% -376% -114%
6%
26.3
14.2
-7.9
6.0
6.4
-26%
-46% -156% -176%
6%
13.09.00.03.03.0
100%100%100%100%100%
34.1537.9515.4719.4220.11
126.56
133.4089.1692.1695.54
117.81
126.3789.1692.1695.54
Valuation
PER (Basic) (x)
1.11.8-0.64.74.4
1.1
1.8
-0.6
4.7
4.4
1.1
2.0
-3.5
4.7
4.4
P/CFPS (x)
0.80.71.81.41.4
Price/NBV (x)
0.20.20.30.30.3
Price/NTA (x)
0.20.20.30.30.3
Dividend Yield (%)
46.4%32.2% 0.0%10.7%10.7%
Fully dil normalized 3 yr EPS Cagr (%)
PEG ratio (x)
EV
166.7112.1112.1112.1112.1
EV/EBITDA (x)
0.60.82.91.41.4
EV/EBIT (x)
0.81.5-5.22.93.0
EV/Revenue (x)
0.10.10.10.20.2
OTHER INFORMATION
ASX Code
Next result
80%
1.39/0.26
0.80
NWH
FY 15
COMPANY DESCRIPTION
NRW Holdings Ltd is a WA based Contractor, operating under four divisions, Civil
Construction, Mining Services, Promac and Action Services.
53 of 66
Peet Ltd
(PPC $1.15) Buy
Peet
Half year reporting
Investment Case:
PPC has reported solid first half numbers in line with expectations, delivering $17.1m
NPAT (EZL $16m) and very strong operating cashflows of $65.4m, resulting in a
significant reduction in net debt (including land vendors) , from $281.1m to $211.3m.
NPAT guidance has been issued for the full year of $38m, in line with our forecasts.
PPC has declared an interim dividend of 1.5c. PPC has a large diverse land bank and
with this much improved balance sheet position is well placed for sustained growth
through the cycle. In the meantime mkt value NTA is $1.14, which ascribes no value to
the funds management business. Buy maintained.
Key Points:
Share Price
1.15 A$/sh
Price Target (DCF)
1.57 A$/sh
Valuation (DCF)
1.57 A$/sh
WACC8.5%
Terminal Growth
3.0%
Shares on issue
484.8 m, diluted
557.5 A$m
Enterprise Value
768.8 A$m
Debt (Dec 2014)
266.0 A$m
Cash (Dec 2014)
54.7 A$m
Key Financials
2014a
2015f 2016f
Revenue (A$m)
296.7
331.7 337.9
EBITDA (A$m)
54.9
71.2
74.1
EBIT (A$m)
52.1
68.4
71.3
Reported NPAT (A$m)
30.4
38.2
44.0
29.1
38.2
44.0
15.6
21.3
28.8
Capex (A$m)
-3.8
-2.8
-2.8
39.3
76.2
43.0
Revenue Growth (%)
23%
12%
2%
EBITDA Growth (%)
70%
30%
4%
92%
32%
15%
Normalised EPS (Ac)
6.71
7.89
9.08
na
13%
15%
PER (x)
17.1
14.6
12.7
EV:EBITDA (x)
11.4
8.8
8.5
EV:EBIT (x)
12.1
9.2
8.8
DPS (Ac)
3.00
3.50
4.00
Dividend Yield (%)
2.6%
3.0%
3.5%
Net Cash (A$m)
-281.1 -225.1 -201.5
Net Debt:Equity (%)
67%
51%
43%
Interest Cover (x)
1.6
2.5
3.6
•
PPC delivered a first half NPAT of $17.1m (EZL $16m) and has issued guidance
looking for $38m.
•
Operating cash flows were very strong at $65m and the balance sheet has
strengthened considerably, with net debt including vendor liabilities decreasing
from $281.1m at year end to $211.3m.
•
1,456 lots settled in 1H 2015, versus 1,507 lots in the pcp and PPC has benefited
from higher prices and a greater portion of development settlements this half.
•
The business has 2,232 contracts in hand as at December 2014 versus 1,990 at 30
June 2015, and while conditions moderated in WA over the period, activity has
clearly been generally robust.
•
Victorian conditions remain solid in our opinion and the jury is out somewhat in
relation to QLD, with the massive Flagstone project now on the horizon.
$/sh
$1.45
•
In 2016 PPC will see several new projects ramp, including Forresdale in WA,
Chase in Baldivis (WA) and potentially Flagstone City in QLD.
$1.30
•
In addition, projects purchased in November 2014 will make first full year
contribution in 2016, namely Golden Bay and Mt Barker, with Stratton
contributing in 2017.
•
Finally, PPC has previously flagged a medium density strategy which will be
gathering momentum during 2016.
•
Overall we see an improving balance sheet, solid 2015 earnings and the diversity
of available avenues for continued growth in 2016 as drivers of our investment
case. Buy maintained.
Year end 30 June
Share Price Chart
PPC 12 Month Price History
$1.15
$1.00
Feb-14
May-14
Aug-14
Nov-14
54 of 66
Peet Ltd
(PPC $1.15) Buy
Analysis:
•
PPC trades at 14.6x our 2015 forecast NPAT of $38.2m and 12.7x our forecast 2016
NPAT of $44m.
•
These metrics are approx. fair compared to peers which we provide below:
PE
Company
Share price
Yield
FY15
Peet
PPC
$1.15
Cedar Woods Properties
CWP
Finbar
FRI
Stockland
SGP
$4.60
17.6
Sunland
SDG
$1.71
14.8
AV Jennings
AVJ
$0.62
13.8
13.7
Average
FY16
FY15
FY16
14.6
12.7
3%
3.5%
$6.00
11.3
11.3
4.7%
5.0%
$1.29
10.5
8.8
7.8%
7.8%
16.1
5.2%
5.2%
10.2
3.2%
4.4%
10.3
4.0%
4.8%
11.5
4.9%
5.4%
•
PPC has often traded at a premium to the sector, a consequence of the large
diverse land bank and perceived higher quality funds management business.
•
Concerns around balance sheet strength should now be behind it and in our
view debt levels are now manageable and improving.
•
We would expect PPC to hold current trading metrics and trade up with EPS
growth which we continue to forecast over the medium term.
•
15 x our 2016 forecast EPS is $1.36 and this is a reasonable expectation over the
next 6 months as PPC delivers 2015 and the balance sheet improves.
•
Our 12 month price target and DCF valuation is $1.57, which we believe PPC can
trade to with successful delivery and demonstrable further growth over the first
half of fiscal 2016.
•
A key catalyst to this will be first evidence of sales on the significant Flagstone
project, expected in 1Q 2016.
•
Buy maintained
55 of 66
Peet Ltd
(PPC $1.15) Buy
YEAR END 30 JUNE
Income Statement
13A14A15F16F17F
Sales
199.8257.1299.0307.4317.2
Other 40.939.632.730.426.1
Revenue
240.7296.7331.7337.9343.3
COGS
-208.4-241.9-260.5-263.7-265.3
Other 0.00.00.00.00.0
EBITDA
32.354.971.274.178.0
Other non cash
0.00.00.00.00.0
EBIT 29.652.168.471.375.2
Associates
0.00.00.00.00.0
-22.5
-1.8
-3.0
0.0
0.0
EBT
-0.941.556.564.772.9
Tax expense
0.2 -9.9-16.9-19.4-21.9
Minority interest
0.0-1.2-1.3-1.3-1.3
Reported Earnings
-0.730.438.244.049.7
Dividends
-1.6 0.0-20.2-19.4-19.4
-22.5
-1.8
-3.0
0.0
0.0
Retained earnings
-24.828.615.024.630.3
Normalised Net Profit
15.129.138.244.049.7
15.129.138.244.049.7
Cash flow (A$m)
13A14A15F16F17F
Pretax Profit
-0.941.556.564.772.9
+ Depreciation
2.72.82.82.82.8
0.00.00.00.00.0
+ associates dividends
0.00.00.00.00.0
- Tax Paid
5.5 -4.4-16.9-19.4-21.9
0.0
0.0
0.0
0.0
0.0
Write downs
22.50.00.00.00.0
+/- Other
-28.4-24.3-21.0-19.3-16.0
Gross Cashflow
1.415.621.328.837.8
-0.9-3.8-2.8-2.8-2.8
-10.3
27.5
57.7
17.0
28.1
-9.839.376.243.063.1
+/- Acq of subs/other investments -57.0
0.0
0.0
0.0
0.0
- Dividends
-4.0 0.0-20.2-19.4-19.4
120.3
3.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.00.00.00.00.0
+/- Other
-41.0-6.50.00.00.0
Net cashflow
8.536.255.923.643.7
-325.7 -317.2 -281.1 -225.1 -201.5
-317.2 -281.1 -225.1 -201.5 -157.8
Balance Sheet ($m)
Cash Receivables
Inventories
Assets held for resale
Other
Current Assets
Receivables
Investments
Inventories
Financial assets
Deferred tax assets
Non Current Assets
Total Assets
Payables
Provisions
Liabities assets for resale
Other
Current Liabilities
Payables
Derivative fin insturments
Provisions
Deferred Tax
Total Liabilities
Net Assets
Contributed equity
Reserves
Retained profits
Minority Interests
Total equity
13A14A15F16F17F
36.438.850.646.828.7
46.843.043.154.154.9
139.0143.1130.2128.3125.3
0.00.00.00.00.0
0.01.20.00.00.0
222.2226.1223.8229.1208.9
21.728.624.024.024.0
147.1162.2162.2162.2162.2
403.1397.5390.5384.9376.0
20.818.418.418.418.4
12.411.411.411.411.4
2.92.92.92.92.9
608.0621.0609.4603.8594.9
830.2847.1833.2832.9803.8
-49.4-55.4-66.3-67.6-68.7
-103.5-58.1-58.1-58.1-58.1
-10.6-11.1-11.1-11.1-11.1
0.00.00.00.00.0
-4.50.00.00.00.0
-168.0-124.6-135.5-136.8-137.9
-0.2-0.2-0.2-0.2-0.2
-250.1-261.8-217.6-190.2-128.3
-4.5-3.3-3.3-3.3-3.3
-0.6-0.6-0.6-0.6-0.6
-26.5-36.5-36.5-36.5-36.5
-281.9-302.4-258.2-230.8-168.9
-449.9-427.0-393.7-367.5-306.8
380.3420.1439.5465.4497.0
325.2328.6328.6328.6328.6
4.28.88.88.88.8
36.0 66.3 85.6111.6143.2
14.916.416.416.416.4
380.3420.1439.4465.4497.0
PERFORMANCE RATIOS
Growth & Margins
Revenue Growth
EBITDA Growth
EBIT Growth
Normalised Net Profit Growth
EBITDA margin
EBIT margin
Normalised net profit margin
Effective tax rate
13A14A15F16F17F
43%29%16% 3% 3%
-15%70%30% 4% 5%
-16%76%31% 4% 5%
-20%92%32%15%13%
13%18%21%22%23%
12%18%21%21%22%
6%10%12%13%14%
22%24%30%30%30%
Liquidity
Current ratio (x)
Quick ratio (x)
Receivable days
Inventory days
Payable days
0.31.41.01.01.0
1.31.81.71.71.5
1.71.51.41.51.2
8364535863
214213191179174
7679859394
Risk Measures
Dividend Cover (x)
Payout ratio (%)
Net debt/equity (%)
-0.4 na1.92.32.6
0%45%44%44%39%
0.91.62.52.83.6
83%67%51%43%32%
Returns
Return on average cap employed (%) 5%
5%
5%
5%
5%
1%1%1%1%1%
0%
8%
9%
10%
10%
13A14A15F16F17F
Share Data
Issued shares (m)
Basic EPS (c)
YoY change (%)
YoY change (%)
YoY change (%)
Dividend/share (c)
Franking (%)
NBV/share (c)
NTA/Share (c)
320431485485485
321433485485485
321433485485485
-0.27.07.99.1
10.3
-113% na13%15%13%
-0.2
7.0
7.9
9.1
10.3
-113% na13%15%13%
4.7
6.7
7.9
9.1
10.3
-20%43%18%15%13%
0.03.03.54.04.0
100% 0% 50%100%100%
0.43.64.45.97.8
118.797.490.696.0
102.5
112.293.186.892.298.7
Valuation
PER (Basic) (x)
-528.016.414.612.711.2
-528.016.414.612.711.2
PER (Fully diluted, Normalised) (x) 24.4
17.1
14.6
12.7
11.2
P/CFPS (x)
264.032.026.219.414.7
Price/NBV (x)
1.01.21.31.21.1
Price/NTA (x)
1.01.21.31.21.2
Dividend Yield (%)
0.0%2.6%3.0%3.5%3.5%
EV
687780783759715
EV/EBITDA (x)
19.4
11.48.88.58.0
EV/EBIT (x)
21.2
12.19.28.88.3
EV/Revenue (x)
2.62.11.91.91.8
OTHER INFORMATION
ASX Code
Next result
43%
1.55/1.01
0.40
PPC
FY 2015
COMPANY DESCRIPTION
Peet is a residential land developer based in Perth, Western Australia. Peet
generates income from three main areas: land development; unlisted property
syndicate management; and, joint ventures. Geographically, operations are
concentrated on Victoria, Western Australia and Queensland.
56 of 66
Quick Comment
Empired Ltd (EPD $0.73) Buy
Contract win
Key Points:
•
EPD has secured a contract through its wholly owned subsidiary Intergen
(acquired Nov 2014) to provide its cloud based Enterprise Content Management
(ECM) service ‘Cohesion’ to New Zealand government agency Ministry for
Primary Industries (MPI).
•
The contract is valued at circa NZ$12m over 6 years.
•
Cohesion is EPD’s proprietary ECM solution delivered as a service and developed
predominantly on the Microsoft SharePoint platform. Cohesion was developed
by Intergen.
•
Cohesion is based on Microsoft technologies to deliver Microsoft portal solutions
in the cloud on an ‘as a service’ consumption based model. The technology is
based on enterprise content and records management and has been tailored
for mid-tier government agencies in New Zealand. There is growing adoption
for this type of service (due to its lower cost model); the contract with MPI is
the third New Zealand government contract awarded to Intergen since being
appointed to a panel of 3 suppliers ~12 months ago for the provision of ECM as
a service.
•
Further contract wins with Cohesion for New Zealand government agencies is
anticipated.
•
Our forecasts remain unchanged. This contract win contributes ~$2m revenue
to our organic growth revenue forecast of circa $10m in FY16 (out of our total
revenue forecast of $154m for FY16).
•
EPD has a strong tendering pipeline of circa $90m (over average circa 5 years),
of which 70% is due for award in 2H15. EPD expects further contract wins in the
near term.
Investment Thesis:
EPD is trading on a fair multiple EV/EBIT 7.5x for FY16 (the first full year contribution
from Intergen). The tendering pipeline is strong and could provide upside to our
earnings forecast for FY16. The added Microsoft capability through the acquisition
of Intergen places EPD in a stronger position to win larger contracts with new and
existing customers. EPD has a scaleable platform that supports higher activity levels.
EPD is trading at a moderate discount to our DCF valuation of $0.80/sh. We anticipate
contract wins will provide upside to our DCF valuation closer to our 12 month price
target of $1.00/sh.
Empired Ltd (EPD)
Share Price
Price Target
Valuation
Shares on issue
0.73
A$/sh
1.00
A$/sh
0.80A$/sh
114
m(dil)
83
A$m
Enterprise Value
Debt
Cash
Vendor liabilities
Working capital
109
A$m
20A$m
7A$m
13
A$m
8
A$m
Disclaimer
Euroz Securities declares that it has acted as underwriter to and/or arranged an equity issue in and/or
provided corporate advice to Empired Ltd during the last year. Euroz Securities has received a fee for
these services.
57 of 66
Quick Comment
Heron Resources (HRR $0.135) Speculative Buy
Analyst: Jon Bishop
Woodlawn Mining Lease Secured for 15yrs
Key Points:
•
HRR has received final documentation from the NSW Govt. (DRE) granting
renewal of the Woodlawn mining lease for 15yrs, commencing Nov 16th, 2014.
•
The 2,368ha area covers the entire operational footprint of the former mining
operations as well as the previous satellite operation at the Cowley Hills Mine.
•
The Company is now able to progress mine development upon reaching Final
Investment Decision (currently by early CY’16 for the combined U/G+tailings
development). NB: A BFS has already been completed for the WRP (Woodlawn
Tailings Retreatment Project).
•
Phase 1 drilling Woodlawn is now complete, with results currently being
compiled into underground Mineral Resource modelling and the PEA due in
mid Jun H’15.
Investment Thesis:
On-going work leading into the PEA due mid Jun H, continues to substantiate the
technical and commercial attributes of the Woodlawn Project. Drilling continues to
confirm extensions to the existing resource lenses and highlight potential new lenses
at Woodlawn. At an EV of $15m and with +$28m in cash, HRR is cheap. HRR provides
exposure to the high grade Zn (~10%), Cu (1.6%), Pb (4.0%) Woodlawn assets, set
against a favourable zinc macro outlook. We expect an updated resource for the
Woodlawn Project this H and completion of a DFS later within 12mnths from the PEA.
Heron Resources Ltd (HRR))
Share Price
Price Target
Valuation
Shares on issue
$0.135
A$/sh
$0.40
A$/sh
$0.33A$/sh
360.9
m(dil)
$48.7
A$m
Enterprise Value
$18
A$m
Debt
-A$m
Cash and liquid investments$31
A$m
Largest Shareholder
Sprott 10.4%
58 of 66
Quick Comment
Mineral Deposits Ltd (MDL $0.79) Buy
Company Update
Key Points:
•
TiZir (MDL 50%, ERAMET 50%) has received notification that is application for
US$16.2m in Govt funding to be used in the US$70-80m upgrade of the Tyssedal
smelter has been successful.
•
In Q3 this year Tyssedal will undergo a scheduled refurbishment and capacity
upgrade costing US$70-80m. Post capital works Tyssedal will have the flexibility
to produce either chloride or sulphate slag. Initially it’s likely to produce chloride
slag as all of Grande Cote’s ilmenite can be used in this process – reducing the
reliance on 3rd party sales.
•
As part of the upgrade Tyssedal will install, test and continue the development
of a more environmentally friendly upgrading process that could ultimately
reduce its CO2 emissions by as much as 90% and reduce energy consumption
by up to 40%.
Investment Thesis:
This is a very positive announcement for MDL significantly reducing the potential
that further external funding maybe required for TiZir. We now estimate TiZir to have
a buffer of ~$31m, up from US$15m by year end CY’15. We understand there are no
strings attached to the govt funding. Longer term, potential EBITDA of $140-150m is
forecast and the strategic value of a vertically integrated produced with a mine life of
+25yrs should be realised. MDL represents deep value against our $2.82/sh valuation
and is trading at <25% of its net assets.
Mineral Deposits Ltd (MDL)
Share Price
Price Target
Valuation
Shares on issue
0.79
A$/sh
2.50
A$/sh
2.82A$/sh
103.7
m(dil)
81
A$m
Enterprise Value
Debt
Cash
Largest Shareholder
56
A$m
NilA$m
25A$m
Allen Grey 15%
59 of 66
Quick Comment
Sirius Resources NL (SIR $3.00) Buy
Baloo Update & Ni Offtake with BHP
Key Points:
Sirius has been sold off because market was overly optimistic on two fronts:
•
Gold Exploration Baloo - results today from aircore drilling are interesting but
nothing spectacular, so market hopes of a large deposit being found are lower.
•
Nickel Offtake – a deal with BHP for 3 yrs for 50% of product is good, but it does
diminish any expectation that competitive bidding for offtake might lead to a
corporate outcome in the short-medium term.
Our view of fundamental value remains unchanged, valuing Sirius at $3.27/sh:
•
Baloo – a deposit of 100-300koz being defined, intuition is probably toward
lower end intially, valued at $75m ($0.18/sh).
•
Nickel Offtake – no change to expectations, as contractual details are not
disclosed, we have assumed 72% payability of Ni in concentrate.
The reality with Baloo is that this deposit will be more complex than originally thought
and will require substantial RC drilling which has not yet commenced. However it
does remain open in all directions and the blue sky is still large, especially in context
of the nearby analogue at St Ives (Invincible deposit 1.3moz and growing). A total of
311 aircore holes have been drilled at Baloo, with results awaited for 129 holes.
Investment Thesis:
Sirius is low risk Ni price exposure. It offers a well equitised balance sheet, high
quality mine development project and renewed exploration momentum. NovaBollinger’s position on the cost curve insulates it from price risk, in part due to the
copper credit differentiating it from peers. The two year development means NovaBollinger cannot disappoint expectations on production and cashflow in short-med
term. Exploration success early in 2015 on both nickel and gold prospects will most
likely lead to an increased budget and newsflow. Our valuation on Sirius remains at
$3.27/sh. The nickel price has retraced in recent weeks however we have positive
medium-long term view.
Sirius Resources NL (SIR)
Share Price
Price Target
Valuation
Shares on issue
$3.00
A$/sh
$3.50
A$/sh
$3.27A$/sh
422
m(dil)
$1,266
A$m
Enterprise Value
$1,021
A$m
Debt
NilA$m
Cash
$245A$m
Largest ShareholderYandal Inv
35%
60 of 66
Weekly Share Price Data
Weekly Share Price Data for Stocks Covered by Euroz
Resources
Industrials
Weekly ShareWeekly Price
Euroz
Last Analyst
ChangePriceVWAP Target Recom. Note
$/sh$/sh $/sh
Precious Metals
Weekly Share Weekly Price
Euroz Last Analyst
Change Price VWAPTarget Recom. Note
$/sh$/sh $/sh
Mining Contractors AQP*
GRY**
IGO
MML**
NST
RRL**
RSG
SAR
TGZ**
TRY
BYL
NWH
-6%
0.24 0.25
0.49
3%
0.07 0.07
0.17
-4%
5.46 5.64
6.00
9%
0.96 1.00
1.94
1%
2.23 2.27
2.05
-1%
1.90 1.92
2.10
3%
0.35 0.35
0.34
7%
0.44 0.42
0.53
-6%0.630.680.65
-2%
0.54 0.56
1.04
Buy Feb 15
Hold Sep 14
Buy Feb 15
Buy Feb 15
Hold Feb 15
Hold
Jan 15
Hold Feb 15
Buy Feb 15
HoldFeb 15
Buy Feb 15
GC
AC
JB
JB
AC
AC
JB
AC
AC
JB
Oil & Gas
BPT
-4%
1.05 1.06
1.13
Hold Feb 15
COE*
2%
0.23 0.23
0.50
Buy Feb 15
CVN
-3%
0.15 0.15
0.28 Spec Buy
Jan 15
DLS
-1%
0.99 0.99
1.15
Buy Feb 15
HZN
4%
0.13 0.13
0.10
Sell Feb 15
LNR
5%0.220.200.30 BuyMar 15
NSE
-4%
0.03 0.03
0.23 Spec Buy Oct 14
OEL
0%
0.10 0.10
0.13
Hold Nov 13
PVD*
0%
0.41 0.40
0.75 Spec Buy Dec 14
SEA* **
4%
0.56 0.55
1.05
Buy
Jan 15
SEH*
-5%
0.20 0.21
0.39
Buy Mar 15
STX
-4%
0.11
0.11
0.17 Spec Buy Feb 15
TAP
-17%
0.30 0.31
0.25
Sell Mar 15
JB
MS
MS
MS
MS
MS
MS
MS
MS
JB
MS
MS
MS
Base Metals
EMX
14%
0.05 0.05
0.87 Spec Buy
Jan 14
GC
FND
0%
0.14 0.14
0.40
Buy Dec 14
AC
HIG
2%
0.06 0.06
0.16 Spec Buy Nov 13
AC
HRR
-4%
0.14 0.14
JB
MLX
2%
1.24 1.22
1.75
Buy Feb 15
AC
PAN
1%
0.56 0.57
0.75
Buy Feb 15
AC
SFR
-2%
4.40 4.44
4.75
Hold Feb 15
GC
SIR
-12%
2.75 2.97
3.50
Buy Feb 15
GC
SUH* ** -48%
0.02 0.02
0.14 Spec Buy
Jan 14
GC
-2%
-9%
0.40
0.25
0.40
0.27
0.57
Hold
0.48 Spec Buy
Aug 14
Feb 15
GA
GA
Engineering & Construction Contractors DCG
-5%
1.40 1.45
1.70
Hold Feb 15
FWD
2%
1.34 1.33
MAH
20%
0.05 0.05
0.17 Spec Buy Aug 14
MCE
5%
0.76 0.73
0.90
Hold Feb 15
MLD**
-1%
1.10
1.10
1.48
Buy Feb 15
RCR
-2%
2.30 2.43
2.41
Hold Feb 15
SXE
-6%
0.37 0.38
0.51
Hold Feb 15
RH
GA
GA
GA
GA
GA
GA
IT Services
AMM*
0%
2.67 2.69
2.60
Hold Feb 15
RH
ASZ**
2%
0.79 0.78
0.90
Buy Feb 15
RH
EPD*
-4%
0.71 0.71
1.00
Buy Feb 15
RH
IIN
2%
6.52 6.46
7.82
Buy Feb 15
GA
IWG*
12%
0.37 0.34
RH
Property
CWP*
-1%
6.01 6.18
7.77
Buy Feb 15
GA
PPC
4%
1.20
1.17
1.57
Buy Feb 15
GA
FRI
-3%
1.25 1.26
1.83
Buy Feb 15
GA
Other Industrial
ASB
0%
1.58 1.58
1.70
Buy Feb 15
AHE
0%
4.19 4.17
4.25
Buy Feb 15
CLX
0%
1.30 1.30
1.60
Buy Feb 15
COZ
-3%
0.07 0.07
IMD**
0%
0.32 0.32
0.60
Buy Feb 15
MKB* ** -6%
0.15 0.15
na Spec Buy Nov 14
TOX
1%
2.98 2.98
3.38
Buy Feb 15
RH
RH
RH
GA
RH
RH
GA
Bulks
AGO
-10%
0.18 0.19
0.22
Hold Feb 15
GC
BSE
0%
0.12 0.12
0.20
Hold
Jan 15
AC
FMS* **
0%
0.01 0.01
0.07 Spec Buy May 14
GC
ILU
12%
8.47 8.03
8.60
Hold May 14
AC
JAL
0%
0.07 0.07
0.34 Spec Buy Sep 14
GC
MDL
7%
0.80 0.79
2.50
Buy Feb 15
AC
MGX
-8%
0.23 0.24
0.27
Buy Feb 15
GC
NFE
-15%
0.02 0.02
0.10
Sell Sep 14
GC
OMH
2%
0.33 0.31
0.51
Hold Aug 13
GC
RHI
0%
0.60 0.00
4.25 Spec Buy Sep 14
GC
* Euroz Securities declares that it has acted as underwriter to
and/or arranged an equity issue in and/or provided corporate
advice to these companies during the last year. Euroz
Securities has received a fee for these services.
** The analyst declares that he has a beneficial interest in
this stock.
61 of 66
11
Weekly Price & Liquidity Tables
Weekly Price & Liquidity Tables for Stocks Covered by Euroz
ResourcesIndustrials
25%
14%
20%
12%
10%
20%
9%
7%
15%
7%
5%
5%
4%
4%
12%
3%
3%
2%
2%
2%
2%
1%
1%
0%
0%
0%
0%
0%
0%
0%
-47%
0%
-1% -1%
-2% -2%
5%
5%
-3% -4% -4%
-4% -4%
-5%
10%
-4%
-5%
4%
2%
-6% -6%
-10%
2%
2%
1%
0%
0%
-8%
0%
0%
0%
-10%
0%
-1%
-12%
-15%
-1%
-2%
-2%
-2%
-3%
-5%
-15%
-4%
-5%
$m
Absolute Weekly Turnover
160
Av. 12mnth Current Week
DCG
FRI
Av. 12mnth
90
Current Week
80
120
-6%
Absolute Weekly Turnover
$m
100
140
EPD
BYL
COZ
MLD
RCR
CWP
ASB
AMM
IMD
CLX
TOX
AHE
IIN
FWD
ASZ
PPC
IWG
MCE
-10%
MAH
SUH
SIR
TAP
NFE
TGZ
AGO
AQP
MGX
IGO
STX
SEH
BPT
NSE
CVN
HRR
DLS
TRY
SFR
RRL
OEL
BSE
FND
PVD
RHI
JAL
FMS
NST
PAN
HIG
MLX
OMH
COE
GRY
RSG
LNR
SEA
HZN
MDL
ILU
SAR
EMX
-20%
MML
-17%
MKB
15%
Weekly Share Price Performance
Weekly Share Price Performance
20%
70
100
60
80
50
40
60
30
40
20
20
3%
BYL
COZ
FRI
MKB
IMD
SXE
FWD
RCR
DCG
EPD
CWP
IWG
NWH
ASZ
MLD
MAH
PPC
TOX
AMM
ASB
IIN
NFE
JAL
NSE
SUH
HIG
FND
FMS
OMH
AQP
HRR
EMX
GRY
STX
TGZ
BSE
MDL
LNR
PVD
COE
TAP
OEL
CVN
TRY
MLX
SEA
HZN
PAN
RSG
AGO
SEH
SAR
MML
MGX
DLS
SIR
SFR
RRL
BPT
ILU
IGO
0
AHE
10
NST
0
Weekly Market Performance
Weekly Commodity Price Performance
3%
2.6%
2%
1.2%
1%
1.6%
1.3%
0.7%
0.3%
0%
-1%
-2%
0.2%
0.1%
0.0%
0.0%
0.9%
0.0%
0.5%
0%
-1.0%
0.3%
0.1%
-0.1%
-1.4%
-1.6%
-1.6%
-0.2%
-0.3%
-0.5%
-0.6%
-0.7%
-0.7%
-1.0%
-3%
-4%
-5%
-3%
-5.0%
-5.1%
-6%
Source: IRESS/Euroz
62 of 66
11
Commodity Price Data
Gold
$/oz
2000
USD$ Gold
AUD$ Gold
Euroz
forecast
1600
2000
US$/oz
R/oz
20000
R/oz
80
1600
60
1400
40
1200
20
1000
18000
Euroz
forecast
1800
100
1200
PGM Basket Price
US$/oz
Moz
120
16000
14000
12000
10000
800
ETF Holdings
400
Mar-11
Mar-12
Mar-13
Mar-14
0
Mar-16
Mar-15
Platinum
US$/oz
800
Mar-11
Koz
2000
8000
Mar-12
Mar-13
Mar-14
6000
Mar-16
Mar-15
Palladium
US$/oz
koz
3500
1000
3000
900
1700
2500
800
2500
1600
2000
700
2000
1400
1500
600
1500
1300
1000
500
1000
500
400
1900
Euroz
forecast
1800
1500
1200
1100
1000
Mar-11
ETF Holdings
Mar-12
Mar-13
Mar-14
Mar-15
0
Mar-16
300
Mar-11
3500
Euroz
forecast
ETF Holdings
Mar-12
Gold:Oil ratio
Mar-13
Mar-14
3000
500
0
Mar-15
Gold:Silver ratio
80
30
Euroz
forecast
25
70
60
20
50
15
40
10
5
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
140
Oil (WTI)
20
Mar-11
Mar-16
Oil & Gas
US$/bbl
US$/mcf
6
100
5
80
4
60
3
40
Euroz
forecast
20
Mar-13
Mar-14
Mar-15
Mar-13
Mar-14
Mar-15
Mar-16
Uranium
80
Euroz
forecast
70
60
50
40
2
30
1
20
Mar-11
0
Mar-12
Mar-12
US$/lb
7
Natural Gas (Henry Hub)
120
0
Mar-11
Euroz
forecast
30
Mar-16
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Source: IRESS/Euroz
63 of 66
Copper
US$/lb
kt
5.0
Nickel
US$/lb
kt
15
800
Euroz
forecast
4.5
400
Euroz
forecast
600
300
4.0
3.5
10
400
200
3.0
200
2.5
2.0
Mar-11
100
LME Inventory
LME Inventory
Mar-12
Mar-13
Mar-14
Zinc
US$/lb
5
Mar-11
0
Mar-16
Mar-15
kt
1.20
Mar-13
Mar-14
0
Mar-16
Mar-15
Lead
US$/lb
1500
kt
1.50
450
Euroz
forecast
Euroz
forecast
1.10
Mar-12
400
350
1.25
1.00
1000
300
0.90
250
1.00
0.80
200
500
150
0.75
100
0.70
LME Inventory
LME Inventory
0.60
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Tin
US$/lb
0.50
Mar-11
0
Mar-16
kt
18
Euroz
forecast
15
9
10
6
5
Mar-14
0
Mar-16
Mar-15
Lead
kt
1.50
450
Euroz
forecast
20
12
Mar-13
US$/lb
25
15
Mar-12
50
400
350
1.25
300
250
1.00
200
150
0.75
100
LME Inventory
LME Inventory
3
Mar-11
Mar-12
Mar-13
Mar-14
0
Feb-16
Feb-15
Iron Ore
US$/t
Iron Ore 62%
0.50
Mar-11
CNY/t
Euroz
forecast
200
Mar-13
350
2650
Mar-14
Mar-15
Thermal Coal (Newc)
Thermal Coal (RB)
Hard Coking Coal
Euroz
forecast
300
2600
0
Mar-16
Coal
US$/t
2700
SHFE Rebar Futures
Mar-12
50
2550
150
250
2500
2450
200
2400
100
150
2350
2300
50
Mar-11
100
2250
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
50
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Source: IRESS/Euroz
64 of 66
8000
ASX Small Ords
ASX Small Ords (RHS)
ASX All Ords (LHS)
ASX Small Resources (LHS)
7000
6000
3500
19000
3000
17000
2500
5000
ASX All Ords (RHS)
6500
15000
5500
2000
13000
4000
1500
3000
11000
1000
2000
Mar-12
Mar-13
Mar-14
7000
Mar-11
0
Mar-16
Mar-15
4500
9000
500
1000
0
Mar-11
DJI v ASX All Ords
DOW Jones (LHS)
Mar-12
Mar-13
Mar-14
Mar-15
3500
Mar-16
EUR:USD & EUR:AUD
AUD:USD
1.15
1.60
EURUSD
Euroz
forecast
1.10
EURAUD
1.50
1.05
1.00
1.40
0.95
1.30
0.90
0.85
1.20
0.80
0.75
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
1.10
Mar-11
Mar-16
Mar-12
Mar-13
US Interest Rates
%
Real interest Rates
Mar-15
Mar-16
Mar-15
Mar-16
Chinese PMI
5
Inflation
Mar-14
US 10yr Bond Yield
70
Euroz
forecast
4
China manufacturing PMI
China overall business conditions PMI
65
3
2
60
1
55
0
50
-1
45
-2
-3
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Chinese interest rate, inflation & new loans
%
8
China 1 Yr Benchmark Lending rates
China CPI YOY
40
Mar-11
Mar-16
CNY$ B
30
1,400
6
Mar-14
Cars
2,600,000
China electricity consumption yoy
China monthly car sales
2,400,000
20
1,200
1,000
4
Mar-13
Chinese electicity consumption & car sales
%
1,600
China monthly new loans
Mar-12
2,200,000
2,000,000
10
800
1,800,000
0
600
2
1,600,000
400
1,400,000
-10
200
0
Mar-11
1,200,000
0
Mar-12
Mar-13
Mar-14
Mar-15
-20
Mar-11
Mar-16
1,000,000
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Source: IRESS/Euroz
65 of 66
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66 of 66
11

Weekly Informer - Saracen Mineral Holdings

Transcription

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