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KD
06-03-2004, 07:59 PM
Hi - I'm new to the forum I was fortunate enough to pick up a small parcel of ATR shares at 70c late last year. Found this forum later when on the lookout for other ATR holders - enjoyed the coverage and excitement here re ATR and posted on this recently under ATR thread. Naturally ATR holders are on the lookout for information on other Chinese companies like ATR. At the same time as I purchased ATR I also purchased some OTI (Oriental Technology Investment) at a little over 9c. Both ATR and OTI intended as long term holdings. OTI price shot off the blocks early but has come back since to around 11-14c. ATR price just continues to multiply. OTI are a small company (cap 15m) with a small PE (estimate currently 6x) and good growth prospects. New manufacturing facility should drive growth in next few years - demand for batteries in China should drive growth over the longer term. Having said all that, I know precious little about the company's history. Once traded as Apollo (manufactures Apollo batteries). Seems to have worked its way into a nice position in terms of balance sheet and industry dominance. Discovered the Loftus Capital Partners (LCP) are holders. Wilson recommends and holds LCP who invest alongside small companies particularly with Asian connections. So I'm trusting that LCP have done their homework. There might be some interest on this forum to add to the story and have a closer inspection of the company. Appreciate any feedback.

Companies Chinese subsidiary is Yangzhou Hua Yang Battery Co. Quote from Chinese web-site (http://www.huayang-battery.com):

“Yangzhou Hua Yang Battery Co.,Ltd. is one of the largest factories to produce automotive batteries in China, and have been producing 25 years. We have first class production and testing machines. 1 million batteries can be produced every year ... Yangzhou Hua Yang Battery Co. is the largest factory in China to export batteries to the Europe, Australia, South America and some Middle-east countries and regions.”

Interim report to June 2003 indicates continuing strong demand from Europe and steady demand from Australia. Company building a new factory to meet demand – has been delayed 5 months by local government rezoning policy but company compensated for work done by 25% reduction in land cost for new site. Present facilities operating at full capacity but growth in sales expected to level out until capacity starts to become available from new factory, possibly in 3rd quarter, 2004.

20% increase in cost of lead flagged as likely to affect margins. Revaluing of the RMB exchange rate also flagged – company intends re-entering Chinese domestic market which will provide a hedge against possible rise in exchange rate.

Historical financials are interesting but having trouble formating for posting at the moment.

KD
06-03-2004, 08:03 PM
I note that Dimebag has replied to my posting under ATR thread with some good points
------------------------------------------------------------------
Dimebag wrote

"Thanks for the lead with OTI. I have done a few hours research on the company over the weekend and can at first glance the company looks to have a fair bit of promise.

The company seems to have a reasonably consistent sales track record, and profitability is beginning to shine through.

Their sales effort into Europe have been assisted by a few external factors lately however - most predominantly the weak US dollar (and thus Chinese currency) which has enhanced the company's global competitiveness. This circumstance will surely not persist long-term, and thus external sales growth could be impacted should the US dollar turn.

Raw materials prices (lead) are also up 20% recently, and this will impact margins. OTI are exposed to these factors.

Still, the company does look promising. I'll be awaiting the 2003 full year results with interest. Hopefully the progress regarding capacity extentions will be promising. If the company can crack the local market, there may well be considerable upside. This will provide a natural defense against possible external sales weakness should China's currency increase dramatically.

Are you aware of any competitive edge the company's product has over its competitors. Is it any better, and sustainably so? I'm not too familiar with the battery market."
-------------------------------------------------------------------
Dimebag -

OTI seem to have a cost advantage by operating in China. I found an article where NZ was up in arms regarding flooding of local battery market with cheap Chinese imports. I will have to do some more digging to find article again. As I note above - my knowledge is limited too -

cheers

KD
07-03-2004, 04:30 AM
A few hours and red wines later -

of the stocks I hold OTI is the one I know least about and not through lack of trying. I can't agree more with Dimebag's response -1) there are external factors favouring recent performance; 2) these may not persist; and 3) for information one really has to rely on each and every co. report.

The last price movement was positive following last full year report. However the price response lagged co. report somewhat - unlike better known stocks where price movement pre-empts co. report. So I think this is the type of stock which really lends itself to forum such as this where a rapid collective appraisal of co. report is possible. OTI is not a 'rush out and by' but rather one to keep an eye on. This co. just hasn't the revenue/earnings history of the likes of ATR but recent performance and potential future market attract. A few other positives - 1) lead-acid batteries always need replacing; 2) there is no great need to change the mould every year or so (reducing need for capex); 3) Apollo is a strong brand; and 4) China is perhaps the right place to manufacture. I suspect poor performance early on may have preceded move to Chinese base - but only guessing. A question remains as to whether recent strong performance is simply a reflection of favourable external circumstances or is more sustainable. Over to the forum ...

cheers

KD
07-03-2004, 01:32 PM
world-wide list of lead-acid battery manufacturers: www.uuhome.de/william.darden/batbrand.htm

brief history of Apollo batteries:
http://www.apollobatteries.com.au/apollo.htm

still researching .....and thinking about consequences of rising lead prices ...

07-03-2004, 07:22 PM
KD do some research on apollo batteries in NZ is it the same company. sorry can not tell you any more as it is a long time ago.

KD
07-03-2004, 11:46 PM
were apollo batteries ltd (ABT)
now oriental technologies investment ltd (OTI)

changed on 08/03/00

any information on demise of ABT?

Dimebag
08-03-2004, 11:35 AM
KD

Sorry about the slow response. I am very busy at the moment so please forgive me if I take a few days to respond. I do read all your posts, but often will have to find time at a later date to type a response.

Thanks for the information. Very useful.

OTI did report a $1.3m profit for the half year to 30-06-2003. However, I did note that in the in chairman's AGM address to shareholders, he noted that pre-tax earnings were $1.1m for the first quarter. Given that OTI pay nominal tax, it could appear that second quarter earnings were more in the vicinity of $300k.

Fully year profit may come in closer to $2m, due to deteriorating external factors, and first half 2004 earnings may be down on the pcp. Still, OTI appear to be on a somewhat lowish PE of around 7-8x if second half earning can hold up.

Still, these short-term factors are realitively inconsequential. What is really important is whether OTI can thrive long-term. Indications to date would appear positive.

There are a few questions that need asking though. The company failed when it was based in Australia. Is it succeeding only because China's artifically low exchange rate is giving them a temporary competitive advantage selling into Europe?? Presumably, China's low-cost manufacturing environment are also contributing. These factors will not all persist long-term.

Still, if OTI can use this advantage to build up scale economies, this could give them the push they need to survive and prosper long-term.

Still relatively higher-risk (when compared to the likes of ATR) due to their limited track-record, and much lower competitive strength.

One I will definitely keep an eye on.

Best Regards
Dimebag

KD
09-03-2004, 12:25 AM
Thanks for this feedback - it's tremendous. Risk relative to ATR was clear at the outset just by a glance at historical figures but you have helped to crystalise the issues. Like you guys I'm busy too - so will come back on this a bit later.

In the meantime recent lead prices are in fact graphed on company website.

http://www.apollobatteries.com.au/newsflash.pdf


cheers

KD
10-03-2004, 03:41 AM
Final report 2003 out today. IMO very good result for 2003 - However report confirms OTI sailing into strong headwinds in shorter term with record (and rising) lead price the major risk at present. Losses now being made as a result and in discussion with customers for price rises. Longer term I'm liking this companies prospects. Continued growth by aquisition in China would seem on the cards. Personally more comfortable buying for longer term when the price of lead is at record highs than lows. PE low but not the bargain ATR was at similar PE. Share price firming. A good one to keep on the radar screen this year.

some key points in report -

2003 Net profit 2.65m (+84%)
diluted eps 2.24c (+81%)
pe @ 14c = 6.25
production facility still scheduled for completion 4th quarter 2004
2000 factories in China and OTI looking "to take full advantage of the opportunities arising from the inevitable consolidation process from this large number of small factories"

otherwise story remains much the same -

cannot meet demand - will get boost when new facility opens
confirmed combined capacity will more than double current capacity

concerns

lead prices doubling since beginning of last year and continuing to rise - co now making losses and may continue to do so but negotiating with customers for price increases. (I guess they're not alone in this regard).


Reduced tax rebates and new import duties on Chinese batteries - Confirm they are looking to re-enter Chinese market to mitigate such effects.

also

paid 0.53 million against profit share payment bringing total paid to 1.041 million (out of 20.8 million payable)

paid 1.9 million for 80% Yangzhou Apollo battery co. on June 28

Dimebag
11-03-2004, 03:55 PM
Cantab/KD

Thanks for the astute comments all round.

I'm with you guys on this one.

In demonstration of my outstanding market timing prowess, I managed to pick up 10,000 shares at 17c today (what appears very likely to be the day's high. I've done that a disconcerting number of times!).

If I had of known it was you Cantab pushing up the price this morning, I may well have bid less aggresively!!

But seriously, OTI really does have great potential. There will certainly be short-term profitability issues, but this is of little consequence. If lead prices do persist at high levels, as KD points out, OTI will not be the only battery company affected. We would expect to eventually see an across the board price increase to compensate.

Survivors of adverse conditions are often left better off after adverse events anyway, as less-fit competitors go belly-up. It could create a number of attractive acquisition opportunites for OTI.

I'm surprised they haven't acquired a few companies already. This would surely be the fasted way to boost capacity. If I were running the place this would be high up on my priority list right now. OTI have $7m in cash.

Earnings should near double in 2005 to say $5m ish. If this happens the stock should easily double to tripple.

A great many thanks to KD for uncovering this stock and bringing it to our attention.

Regards
Dimebag

Alban
11-03-2004, 05:23 PM
I also bought a few OTI today, nothing on the scale of Cantab though - thank you to KD for your analysis and also to Cantab and Dimebag

KD
12-03-2004, 12:10 AM
Seems like OTI share register swelled by half a percent at least over the last day or so! Feeling less alone now. Dimebag - seems you fell victim to some friendly fire. Not so long ago I remember feeling I may have missed out on ATR when it went to 90c. Felt cheated when OTI doubled to 9c. You're right when you say not to worry about a couple of cents. I could've picked up more OTI before the annual report and before talking to you guys - perhaps at 11, 12 or 13c but more comfortable buying now with annual report plus independent feedback. So, in respect to you guys taking the plunge - I'm going to increase my average purchase price of OTI as I am able. OTI aren't giving away their earnings and I can see them picking up factories on low cost loans from the Government - and I think a few of those 2000 factories might be start to feel the pinch.

Yes Cantab - I noticed Mr Corrigan on the board too - these sorts of things lead me to think that this may be a company not content to sit still.

By the way did you check the recent article I posted on the ATR thread - roof tiles had never crossed my mind!!


Anyway - all this activity has made my day - good luck to holders big and small!

KD
12-03-2004, 01:30 AM
apologies for the misinformation in the above -

"...on low cost loans from Government"

I guess I was recalling (incorrectly) the following statement from last chairman's address referring to purchase of new facility:

"this capital expansion will be financed through profit reinvestment that attracts tax concessions from Chinese Government and an increase in bank borrowing at subsidiary level in China"

I shouldn't write this stuff late at night!

KD

robbo
13-04-2004, 03:45 PM
OTI--Oriental Technologies Investments. OTI--I also think OTI is a bit of a sleeper--fantastic consistent Earnings, excellent ROE and ROA and also of course, a nice low P.E.

What do I also like about this solid little performer?
Well the Management look very solid, and extremenly stable. The MD George Su has been with OTI--nine years, since 1995 and now the boss since early (Feb) 1998.
Secondly I like OTI's FOCUS. They do what they do well, and stick to their knitting:ie:the manufacture and distribution of car batteries.
OTI has been demonstrably VERY successful in this line of Manufacturing in CHINA...and have a world-wide market which they currently sell into.
Fourthly OTI have a guardable and demonstrable proven International Market-Place Advantage--that is the ability to mix state of the art technologies with proven conventional technologies resulting in those BORING profitable formulaes so necessarry to long term profits and revenue growth....Cost Efficiency and superior quality of product that the market also agrees with as such.
To put this into some perspective, the capital costs are usually only a fraction of OTI's major competitors in Korea, China and Indonesia--.

Like others at Share Trader, also I love the presence of Patrick Corp's CEO Chris Corrigan being an owner of shares and non-executive Director.

Finally, I really do like the way OTI have largely eliminated credit risk, as most of the sales are backed by L/C's. This strategy seems to have also enabled OTI to take full advantage, of the incentives the Chinese Government gives to export businesses such as OTI.

Post Script: What other shares on the ASX are Chinese based manufacturers with dominant market position, very long credible and profitable history that have grown steadilly with proven stable management..all for between 13-15 miserly cents. Hmmm. When will this little share come into some Volume I just wonder aloud?

Cheers,
davidrob

KD
13-04-2004, 11:58 PM
davidrob - welcome and thanks for vote of confidence in OTI

Alban commented recently under another thread that lead prices have come down recently e.g. http://www.lme.com/lead_graphs.asp The peak was approximately double the price of the last few years. While it's good for OTI that these prices have fallen, they are still very high. Even if lead prices returned somewhere near normal soon(or if OTI are successful in renegotiating contracts with clients), I'm guessing that the impact of these high prices will take a while to flow through and the difficulties OTI reported in February will not disappear overnight.

So I guess this may keep a lid on things for a while and may present some opportunities for the patient looking to buy into OTI or increase their holding.

Ultimately the current lead price is unsustainable and a new factory will also be in production soon - so that's what I'm focusing on.

I remember looking at the price of this stock not even 12 months ago and it was half current levels. So some consolidation/weakness in short term is perhaps to be expected under current circumstances. It looked like the price was about to take off after the last report so I can understand urgency in buying then (Cantab/Dimebag). I wasn't in a position to buy at that time but would have done so too had I been able. I will be adding to my holdings shortly at current prices.

Apologies for not posting here for a while - guess I've been resting like the shareprice [V].

robbo
14-04-2004, 08:41 PM
Dear Cantab,

Yes this is a good point. Current trading is probably showing some nice little entry points for OTI, saw today some cute little opportunities at 12.5 cents...which is a darn good deal. But wait...is there more??

Cantab, how did you possibly discover that there were losses incurred in February..and if so how significant? Getting reliabe good factual data and information re. this company is always a challenge. When do you think this share might test 17-19 cents and even the magical two and a zero, or are we light years away. I'll put my neck out and say, I don't think its quite that far away and this year is on the cards,

Good talking to you Cantab,
Regards davidrob
quote:Originally posted by cantab

davidrob, welcome and good points but OTI was incurring losses during February so I wonder if there may yet be an opportunity to pick these up at a cheaper price. I think there is a bright future, once they overcome a few short term challenges. I've got a small holding.

Cantab

KD
14-04-2004, 11:25 PM
davidrob - if I could reply to your last post - The Review of Operations in OTIs Annual Report 2003 (p 3)gives a rundown on these issues -

"The large increase in the price of lead in the last 2 months has resulted in the Company's operations for the month of February suffering a small loss and unless the Company increases the prices of its products, loss may continue. The Company is, therefore, presently negotiating with its customers for price increases."

Until the 2003 report was available we were all scratching our heads here a bit with respect to this Company with really only the reports on the ASX to go by. You may not have had a chance to look closely through the 2003 report and the previous annual reports but worth studying as precious little else. Having said that the reports give a pretty good picture of the company. Doubt we'll see much posted on the ASX until the next report but I suspect we'll hear news on the new production facilities later this year and rundown on current situation in half year report. If you dredge up anything on OTI we are all ears.

cheers

robbo
15-04-2004, 06:17 PM
Hi KD,
thanks for your excellent response and for filling me in. I now have got a copy of said Annual Report and that has filled me in. Really appreciate your note though.

Can add another bit of info pertaining to this issue, having done a little bit of my own digging. Basically from what I can ascertain, lead prices in the first quarter of this year fluctuated very wildly.(like many other base metal prices....) This lead price basically peaked around Feb/March this year, and now it's on its way back to a more sensible level. It will take a bit of time for the effects of THE ACHIEVED price increases which were, from what I gather, successfully able to be passed onto customers,...... to flow through to the Balance Sheet.

Wonder how we can get powers that be at OTI Co. to get a few more Market Updates/Media releases/ ASX announcements happening rather than JUST the Yearly and Half Yearly Reports? At present it IS very LOW profile, but history of other excellent performers says that's not necessarilly such a really bad thing, and that: " NO new is good news..." Hmmm..what do you think?
Regards,
davidrob
quote:Originally posted by KD

davidrob - if I could reply to your last post - The Review of Operations in OTIs Annual Report 2003 (p 3)gives a rundown on these issues -

"The large increase in the price of lead in the last 2 months has resulted in the Company's operations for the month of February suffering a small loss and unless the Company increases the prices of its products, loss may continue. The Company is, therefore, presently negotiating with its customers for price increases."

Until the 2003 report was available we were all scratching our heads here a bit with respect to this Company with really only the reports on the ASX to go by. You may not have had a chance to look closely through the 2003 report and the previous annual reports but worth studying as precious little else. Having said that the reports give a pretty good picture of the company. Doubt we'll see much posted on the ASX until the next report but I suspect we'll hear news on the new production facilities later this year and rundown on current situation in half year report. If you dredge up anything on OTI we are all ears.

cheers

KD
15-04-2004, 09:15 PM
Hi davidrob - the prices have been passed on - that's positive news. I'm not sure about the ASX reporting - I guess if companies don't report often it gives investors a chance to get inside running by talking to the company. However I probably lack confidence to do so and get a fair bit anyway from annual reports and forums such as this anyway. I guess one thing we could do is discuss issues here and pinpoint good questions to put to the company.

cheers

skinny
18-04-2004, 11:10 PM
KD, Cantab - doesn't seem to be many willing sellers at the moment at any rate ! I've tried picking up some in the 11-12c range for a while with no luck, and put in a little bid for 50k on Thursday which did go through. Hasn't been any trades since then. Will certainly gooble some more if a large seller to the market :D

KD
18-04-2004, 11:24 PM
Cantab,Skinny - correct thinking IMO. Make the most of this window.

KD
18-04-2004, 11:56 PM
Well here's something to keep an eye on. My AspectHuntley's database tells me the company now has a website

http://www.orientech.com.au/

....which I find out is under construction.

robbo
22-04-2004, 10:19 PM
Hi KD..
Yes OTI does continue to represent excellent buying at 12, 12.5, even 13 cents...
On my assessment ---if you Look at consistency OVER 3 Years--OTI comes in at 242% Growth and over 1 Year 188% Growth---with EPSG over 2 Years being a whopping 270+ %Growth Per annum.. The company is Profitable on a Adjusted Basis--55&, with healthy gross margins which should now improve more so. revenue continues to increase on a compounding basis, with ROE being > 30 % and return on assetts growing steadilly above 8 % for the past 3 Years, and P/Earnins--p/e:a smidge over 5.

For me no news is often GOOD news, and thin trading just represents not a Zillion shares on offer for the volatility monkeys to swing from Tree to Tree.

OTI are having their Annual General Meeting in Sydney in just under a fortnight to be on 6/05/04, here in Sunny Sydney.

I'd be happy to ask any questions any interested parties at Share Trader would like asked, and get answers from Directors....I'll be popping my head in anyways.

Love all your excellent thoughts and comments.
For all those on this thread....as we go through the current minor correction/wobblies...what do we like oput there?? Does anyone agree with me that CCV, JBM(is that 13-14% annualized fully franked dividends I calculate..??), MXI, ATR, KOV, GUD FUN FAN and FWD are again looking like okaay fundamental bargains. On the small cap side, what about OCL, GPO, EMI and BQT..**for those following ATR see my chicken and/or the egg question...

Hope you all have some CASH put to one side to take advantage of some of the Bargains coming into view,
CHEERS,
davidrob



quote:Originally posted by KD

Well here's something to keep an eye on. My AspectHuntley's database tells me the company now has a website

http://www.orientech.com.au/

....which I find out is under construction.

thereslifeafter87
26-04-2004, 01:51 PM
I'd have to agree with you on FAN and ATR, I bought into fan at $2.60, before I sold a bunch at around $3.50 to buy some ATR. Still hold a decent amount in relation to my portfolio.

I also just bought into OCL. They look good.
Another coy you might like to have a look at is CCP - still quite cheap IMO.

ARP might also be a good opportunity with the Aussie dollar dropping against the US. Their profit was up 18% on last HY even with they Huge rise in the $AU.

Yes, I hold all these coys.

robbo
27-04-2004, 10:54 PM
Hi there thereslife after87,

Thanks for your thoughts. Yes I'm a very very big wrap for OCL.. One of those ones for the fundamental analysts who just let the consistent compounding figures do the talking.
Think Objective's profits and revenues vis a vis their Price, reps excellent VALUE. Also OCL are in the right niche and space with such very credible significant tender wins.
However its very thinly traded, and the Market just seem to be avoiding it largely at the present. Any thoughts on why this may be so??? Can't really work out Market's indifference and Under-Valuation myself. Love your feedback!!! Thanks for telling me to have a peek at CCP and ARP. Do you think the P/E on ARP, says its a bit too Fully Priced?? Don't understand quite what the acronym IMO means though. Please fill me in!! I know I'm probably a bit slow on the up-take.
Have a Good Day.
davidrobquote]Originally posted by thereslifeafter87

I'd have to agree with you on FAN and ATR, I bought into fan at $2.60, before I sold a bunch at around $3.50 to buy some ATR. Still hold a decent amount in relation to my portfolio.

I also just bought into OCL. They look good.
Another coy you might like to have a look at is CCP - still quite cheap IMO.

ARP might also be a good opportunity with the Aussie dollar dropping against the US. Their profit was up 18% on last HY even with they Huge rise in the $AU.

Yes, I hold all these coys.


[/quote]

KD
28-04-2004, 12:23 AM
davidrob - thanks for offer to take questions to AGM. I've no specific questions but would be interested if you can get more of a 'feel' for OTIs vision for their future. They are limited at present due to inability to meet demand and in my opinion (IMO) would seem to have real prospects for expansion beyond their new production facility.

By the way, I was in a boat shop the other day which sold only
Apollo batteries. Of course I checked out the price of the batteries ... no higher than normal (just changed my boat battery at Christmas and car battery in November). Not sure what to make of that but would have felt better had they been at a higher price. Mind you - I keep reminding myself of the great thing about batteries from a manufacturers perspective - they always need replacing!

Regarding the companies mentioned by Thereslife - a great selection of companies with solid and consistent EPS growth. I have not seen another company apart from Westfield Holdings with more consistent year on year EPS growth than ARP - very, very steady at about 20% per annum. Apart from currency issues ARP would have made this mark last year and should compensate should there be a rise in $US. I see ARP as a core stock in my portfolio for this reason and believe it deserves current PE. I do not hold CCP or FAN but they meet my criteria for growth and I have them on close watch. I've had a quick look at OCL thanks to posts here and elsewhere (not sure where now). Just a glance at figures at this stage so not prepared to comment further. BTW - today's notices for FUN are worth a read (I do not hold). I also think AEN is worth keeping an eye on - their revenue growth increases month by month and underpinned by solid contracts (I do not hold AEN either). I hold RDF at sub 80c and believe this company has many, many attractive features (market leader, high barriers to entry, potentially massive market, good management etc etc). Although price of many of these stocks have risen dramatically - price will continue to gain traction should there be, as would seem most likely, continued positive results. I do not know of any stocks with ATR like credentials that haven't risen markedly in price in the last 12 months. Alban may be onto something with AFC though - track record for AFC is not as long as above stocks (also illiquid but so are some of the above). Remember though, despite price rises many of these stocks still trade on a low PE (eg ATR, OTI) or, at least reasonable PEG ratio. Lastly I'm with Dimebag on ION - hard to resist buying more at current price but acknowledge greater risk (and potentially reward) than stocks mentioned above.

These are just some off the cuff thoughts and hope they may provide some leads. Appreciate your enthusiastic posts davidrob.

KD
28-04-2004, 12:58 AM
Just caught up with today's price action re ION and todays (typically) frank and detailed announcement. Above comments were made with respect to earlier price and prior to this new information which I haven't had time to digest (although market seems to like postive comments re Ford contract). Very pleased to see today's bounce and like Dimebag believe there is much to be learnt in this case no matter how the story ends up panning out. It may take a while for me to break even on ION though.

skinny
28-04-2004, 01:24 AM
Davidrob - good questions above - 2 others from me if you get the chance:

- are the expansion plans still on schedule ?
- how are all the smaller outfits handling the higher led prices ?
(i.e. I am hoping there are lots of them going bust and OTI is gaining market share).

thanks a bunch !

KD
28-04-2004, 01:44 AM
Davidrob - I hope you get an opportunity to raise above questions - Checking out latest lead prices - they are still on the decline - I'm sure there will be much to be said in this regard at meeting anyway but nonetheless interested in companies view on where price will settle and impact of prices on profitability over recent March, April period.

robbo
28-04-2004, 07:39 PM
Just wrote a great long bloody response to say YES I will definitely be asking all these questions and more.
davidrob
quote:Originally posted by KD

Davidrob - I hope you get an opportunity to raise above questions - Checking out latest lead prices - they are still on the decline - I'm sure there will be much to be said in this regard at meeting anyway but nonetheless interested in companies view on where price will settle and impact of prices on profitability over recent March, April period.

robbo
28-04-2004, 08:21 PM
As I was saying, I wrote a response to say how much, I was truly impressed, with all of your suggested questions, for the good people at OTI for the up and coming Annual Meeting, on 6/04/04.
Notice the nice little quoted share market price today finished at 16.5 cents(a rise of 17%). Bit of volume appearing as well. Although I like to FOCUS [u]only</u> on the FUNDAMENTAL NATURE of the business enterprise, the 2 year plus average increasing earnings, retained profits over tangible assets, pre-tax PFOFITS and returns to Shareholders and 2 year Share-Price Performance--the rather schizzo, and slightly irrational tendencies, of the little green/red daily flickering arrow--todays flowering was mildly positive!! The last 48 Hours was also maybe showing some increasing Volumes....hmmmm
Today also saw good gains on ATR--Astron. On this erstwhile premium internet site I posed the chicken and egg question re. ATR: placement or split---which first?? Well my thought is SPLIT.. The effect will be POSITIVE...for a couple of reasons in my opinion..It'll bring more interest and perceived Value/Affordability to ASTRON. Secondly, it';; bring some of the Fund Mgers and even some of the Institutions to cast their ruler over Astron, as it starts to BLIP BLIP on their radar.
Has anyone ever noticed just how [u]relatively few ATR shares are On ISSUE for ATR???</u>
For a Market Cap of $120 Million or so, it is surprisingly few, when compared with ATR's Peers. Which is of course GOOD !! More slices of Apple Pie to go around to us ATR lovers. Personally am trying to get as many as possible before the SPLIT...and before $5.00 plus becomes the newly entreched lower end of the Price range...within 2 weeks or so I suspect....

IDEA: Notice 2 Directors Buying/Acquiring BQT Directly today? Also amounts were substantial--Plus $140,000 in both instances.

Did a little scratching around. Directors have just come back from DUBAI...and what they want to shortly tell the market may just be the reason they put their own Hard Earned on the table.
(2) Also current Price represents a very good entry point for BQT
(3) Might also be some good export contracts/alliances coming in from United Kingdom say a friend of a friend.
I own BQT. PS..Look at Volumes going through BQT these last 72 hours...Hmmm
Good investing everyone.
I find everyone's contributions enlightening, refreshing and stimmulating. They are also excellent food for thought.
I know of NO other such quality ASX Shares quality Chat site, where one hears from Value Analyst Investors as well as Charting/Trading Jocks!!!
This is a most pleasant change, and certainly very much appreciated,by myself.
A BIG BIG thank-you to everyone for your unselfish honesty, candour and preparedness to SHARE and give of your insights, analysis, research, perspectives and relevant info on some truly undervalued Value Investments.
Cheers everyone,
davidrob



quote:Originally posted by davidrob

Just wrote a great long bloody response to say YES I will definitely be asking all these questions and more.
davidrob
quote:Originally posted by KD

Davidrob - I hope you get an opportunity to raise above questions - Checking out latest lead prices - they are still on the decline - I'm sure there will be much to be said in this regard at meeting anyway but nonetheless interested in companies view on where price will settle and impact of prices on profitability over recent March, April period.

skinny
28-04-2004, 08:51 PM
Davidrob - great to see such enthusiasm and thanks again for asking the questions. I also find the sharetrader site a cut above the rest and have been able to profit well both from companies that have been bought to attention on it, and the 'local' perpective that many of the punters have. These are both things that are difficult for me to get a personal handle on living here in Europe.

cheers.

David Hardman
28-04-2004, 09:44 PM
Agree about comments about this site. Keep up the good work.

Just wish you boys would stop snapping up OTI. I have missed out on picking some up again today!

KD - what site are you getting your lead prices from?

Also. Why don't OTI buy lead futures (do they exisit?) to hedge against unfavourable price movements. Seems like a more sensible option than trying to renegotate prices with customers after the fact.

David

KD
28-04-2004, 10:05 PM
David - lead graphs on

http://www.lme.com/lead_graphs.asp

you will note that recent rises represent a massive spike in the price preceded by quite stable prices. Certainly lead is the major input into the manufacturing process and OTI would be scrtching heads about how to mitigate this sort of spike in future. I would like to get hold of some longer term prices than on the above site to check how much of an anomaly the current price really is. If it is just very much a 'one off' event then perhaps dealing with this after the fact is sensible.

Before OTI , lead was just something I made sinkers out of - much to learn.

cheers

David Hardman
28-04-2004, 10:31 PM
Here is a very interesting document about history of lead prices and the metal itself.

http://minerals.usgs.gov/minerals/pubs/commodity/lead/380798.pdf

Looks like lead prices are traditionally very stable. The recent price rise is a major anomaly and looks like its starting to be corrected.

David

skinny
28-04-2004, 10:58 PM
David - as you say the history of lead prices is fairly stable so perhaps the spike was not seen until it was too late by OTI ? In any case the LME site posted by KD does in fact have data on lead & other metal futures. The 3 month futures is still at todays lead prices while the 15 month futures show only a little decline to around 670. (No data for 27 months which makes me wonder whether the market operates this far out ?)

Given there is a bit of a commodity price bubble at the moment IMO it probably isn't a good strategy for OTI to buy forward cover at the moment. On the other hand, if the futures are right it suggests historically high lead prices will be around for a while. I tend to go with this as the world economy and China is booming. Hence Cantab's questions on the ability of OTI to rise prices !!

David Hardman
28-04-2004, 11:12 PM
I realise I am viewing the situation with hindsight however I am surprised that they did not hedge years ago given lead is the single biggest component used to manufacture their product.

I guess with the traditional stable prices they thought it not necesary.

Yes it will be interesting to see if they can raise their prices.

I think the key for the long term growth is for them to get this new factory online. They have a riduclous situation of not been able to satisfy 50% of their order book.

skinny
28-04-2004, 11:21 PM
Yes volume is important but perhaps you also remember the TV add about the veggie farmer at the side of the road selling out of a van & wondering whether his problems would be solved if he just had a bigger truck ;)

KD
28-04-2004, 11:22 PM
Good one David! Some good material for OTI's website and my education continues!

Still and all I wonder too whether OTI hedge...I don't recall mention in their previous reports.

Hey Davidrob - make sure you get to the right meeting - 6/5/2004 at 11am. Thought you were having a dig at us for a moment suggesting we'd missed the boat for questions! We're depending on you.

KD
28-04-2004, 11:34 PM
Good point Skinny

Given there is a bit of a commodity price bubble at the moment IMO it probably isn't a good strategy for OTI to buy forward cover at the moment. On the other hand, if the futures are right it suggests historically high lead prices will be around for a while. I tend to go with this as the world economy and China is booming. Hence Cantab's questions on the ability of OTI to rise prices !!

Not so sure re the vegies though [?]:D

skinny
28-04-2004, 11:54 PM
You'd have to be a kiwi and over 30 to get it ;)
Point is that if margins are not positive selling more veggies off the bigger truck isn't very smart :D

robbo
29-04-2004, 04:16 PM
KD--saw your note re. Meeting Place, Time and Date.
That's the shin dig with the Table-Top Dancers right! Thought so...as I know you are ALL depending on me to show...and ASK the Right Questions.
cheers davidrob[:I]

quote:Originally posted by skinny

You'd have to be a kiwi and over 30 to get it ;)
Point is that if margins are not positive selling more veggies off the bigger truck isn't very smart :D

David Hardman
05-05-2004, 03:34 PM
David

So you will be at the meeting tgomorrow morning?

Got your questions sorted?

thereslifeafter87
06-05-2004, 02:29 PM
Lots of points of interest in the chairmans address...

Still making a profit, even with the lead price rise!

Also hints pointing to future acquisitions as the industry consolidates. Couple that with the new factory coming online in 4th quarter, and prospects for 2005 and beyond look interesting.

It would be good to know the exact production capacity of the new factory, then we could attempt to predict possible revenue for the next few years...

KD
08-05-2004, 03:36 PM
I've been away this week and have just caught up on announcements. The Chairman's address was quite informative and touched on many of the issues raised here over the last couple of months. I thought the address ended on a most positive note - ' the industry's inevitable consolidation will speed up in China ... creating more opportunities for our company which is well positioned to take advantage of the situation'. The overall impression I have is that management is dealing with current issues and plans are on track. Short term issues which are holding back profits in the short should be to our advantage in the long term as they are providing not only an opportunity for us to accumulate stock at an attractive price, but also an opportunity for the company to expand. It is reassuring that OTI still managed to turn a profit despite lead prices and without seeing benefit of price increases passed on to customers. Cantab - thanks for above thoughts and good you're still buying. Looking forward to hearing back from Robbo.

cheers

Dimebag
08-05-2004, 05:51 PM
Thanks everyone for the informative comments.

Haven't bought any more myself just yet but still holding the 10,000 I bought a few months back.

Cantab, my understanding is that there is a 20% profit share agreement, and then on top of that there is the obligation to pay 20% of profit up to $21m, or for 50 yrs.

The 2003 annual report shows $3.5m proir to profit share, ~ $2.6m after profit share of ~ $800k, and then $2.1m after the payment of $500k under the 21m/50yr plan.

Eps haven't deducted this final payment as I guess it as seen as retirement of debt more than anything. If you strip this away, eps was closer to 1.8cps last year.

However, I'm in agreement that OTI do look promising for the patient LT investor. It is unlikely the price will do much in the short term IMO barring a significant announcement.

Cheers
Dimebag

KD
09-05-2004, 01:49 AM
OTI holders,

back from Suncorp Stadium having watched the Reds demolish the Warratahs and, despite too many cellar-brations just couldn't help myself but tune into ShareTrader & OTI. I have to ask...where is Robbo?? (I was very much spooked by the Wesfarmers presentation by "David Robb' in charge of 'Energy'....(and plenty of energy with our Davidrob!!!)....Robbo - looking forward to your report...)

Thanks to all who have posted on OTI...in terms of disclosure ... I hold a number of stocks which are now reaching 12 months in my hands .. thats means 50% CGT discount for me as an Aus holder. I will be taking some profits now and reinvesting the capital in stocks such as OTI and profits (in my wife's name, as lower income earner) in stocks such as ION (@ +10% div yield with prospects of capital growth as well). I thank you all for your comments here on Sharetrader, and in particular, on OTI thread... I am a long term investor and will hold OTI for many years to come....I intend to add to my position and look forward to further discussions here.

cheers

robbo
10-05-2004, 11:03 AM
Sorry late with My Report on Oriental Technolgy.

You guys have obviously picked up on the One Big Ostensible Negative; that is the Debt Re-Structure Arrangement. This is, on talking to the Hong/Kong--Chinese directors(whom I will talk about in a minute...) partly a "political" bureaucratic issue, as the debt pay-back arrangement is currently with CVIC and Red Lion Resources. As you see, although this debt is "FORGIVEN";there is still technically a over-hang liability of $21 million. However CVIC is in liquidation, and when this debt is transferred to the Government entity--then this will be re-arranged on much more favourable written down terms...for political reasons as well s commercial..
Still the Liability does LOOK bad and weighs down on the Balance sheet as quite a blot on the old copy book, and for those who run their ruler over the figures, it has the net effect of suppressing the Co's share-Price Valuation to Trade around the 15-17 cent mark..the upper end of thiese numbers possibly approximating fair enough value AT THIS STAGE for OTI.
But that really is the only piece of baddish news I good pick up on this otherwise excellent company. After this short commercial break, I'll be back to tell you all the about the comments of Chris Corrigan, Laurence, George and the Chairman erard Mc Mahon, as well as to give you a feel for what went on.
Cheers \davidrob

quote:Originally posted by cantab

KD, I watched the game on tele and was cheering on the Reds. 9 wins on the trot against the Warratahs is a great record.

I agree with you that OTI will be one to hold long term.

Cheers

Cantab

robbo
10-05-2004, 07:27 PM
;)Yeah, thanks for that bit of really nice filler, during the commercial break cantab!!
Great Comments.
Agree with you; being just a tad more bearish at 14-15 cents, although I note in passing that OTI was up 10 meaningless percent on light trade, on another day when the XOA was down another 39 or so basis points-- a bit of the Senecean pessimist/realist philosopher coming out in you there cantab--heh what!![^]----(not a bad thing in these very corrective, as T.S. Eliot in his letter to Prufrock always reminds us,--April always was...., the cruelest month--,[?]--I think OTI might be a bit more immune to Market corrections as in many senses it is a bit of a defensive like Astron and has its own singular influences acting upon it(namely and primarilly Lead Prices!!!--no thanks to the punters on the London Metal Exchange!!).
Okay then, enough waffle and dribble.
I'm just off to have a nice spot of dinner and I promise the next report will be stictly succinct and cover the salient points; as well as letting all interested parties, in on the technological advances and tangible edge that OTI bateries have for a world full of Special Utility Vehicles like the Volkswagon Tourage needing lighter but more powerful batteries and/or needing two(2) bateries to fit under the bonnet of cars with more electical systems than Old Sparky might have required... (in the days before the lethal injection!!!!.)
The other think I want to touch on, which is TOTALLY relevant to OTI, in the world of car battery manufacturing--is the importance of KNOW-HOW rather than simply technology. This was underlined by Directors-- Lawrence Luo-lin Xin and George S Su
Well then. Dinners served,and getting cold. Back in an hour, or so!!
cheers,
davidrob

G;)
quote:Originally posted by cantab

Robbo, thanks for those valuable insights into the Debt Re-Structure arrangement. With $20m still to repay, it will take 40 years at $500k pa to repay, assuming OTI lasts that long. The PV of this sum, discounted much further and perhaps replaced by an issue of shares? looms as a big positive for shareholders. You probably have more to add so I wont preempt your final report.

I agree with your fair range value of 15-17c although with the current short term difficulties I would suggest they are worth around 14 - 15c. Hopefully with weak markets we can buy some more cheaper than that.

Cheers

Cantab

robbo
10-05-2004, 09:26 PM
Just checking that this bugger reply mechanism is working!! as I submitted an up-date, re OTI; about an hour ago and now I cannot see the response which was previously confirmed. Don't tell me, my last thoughts have been lost into cyber-space. Hmmm..
davidrob--Robbo

robbo
10-05-2004, 09:48 PM
Yes, well let us see whether I can achieve anything meaningful now.
Couple of Very Meaningful and bordering on being even mildly positive points DID emerge from the meeting which might be illuminating and therefore worthy of perhaps being drawn to OTI followers attention:
Without further ado, these points are as follows:
(1)--From talking to three of the directors and chairman, I got the distinct impression that this debt facility, will be off the Balance Sheet, or at least restructured very favourably within eight to twelve months. More information. Hmmm...??? Watch this space.
(2)Director Corrigan(CEO of Patrick and co-owner of Virgin and numerous other high profile public entities); was asked by yours truly, "Chris why does a very busy executive, like yourself, need to be involved with a relative minnow like Oriental Batteries/Tech??
My memory of Corrigan's Answer was along the lines of : "I know Lawrence Xin from way back, and when asked to come onto the Board, and knowing Lawrences's reputation for good executuve management, credibility and reliable transparency and delivering...well that was enough for me."
(3) Probably, my biggest Plus, note the capital P, was my summing up of this mgt team.
(4)OTI has a real and tangible set of advantages over their competition. Related to this, the high metal prices actually are providing OTI with an opportunity, more than a problem in some ways. Will get onto these topics in next posting.
cheers,
davidrob....Robbo

robbo
10-05-2004, 10:20 PM
Yes...we seem to back online now.
Summarizing OTI's advantages over their competition and the opportunity this brings in this time of unprecedented HIGH lead prices.
(1) OTI have a clear Technological advantage in manufacturing Large powerful car batteries, which are being demanded more and more by leading auto maker/manufacturers--such as Hyundai and Mercedes Benz, due to the introduction of Sat-Nav, DVD, Parktronic, and numerous other electrically based configuration on todays's mopdern motor cars. The R&D Team, is very much World's Best--incidentally headed up by an Aussie Engineer with a world leading reputation in this arena.
(2) This is coupled with OTI's Obsession, with running the lowest cost base--in terms of efficiency and cost per unit in the world. Dimebag,thought you'd like this point, re. world's lowest cost base--combined with technolically leading battery manufacturer--(see note below re. Tech aspect.....-- Dimebag(you've been a mean old miser, re cost control... from way back... looking at some of your postings from around the traps!!).
(3)Battery manufacture is ironically low tech--but IMPORTANTLY; HIGH HIGH--Know how about the nuances and manufacturing quirks and risks in the battery component manufacturing game. One of the numerous examples discussed to illustrate this, was the hundreds of thousands of $$$$$ you can lose; if you keep the batteries stored in the wrong humidity, temperature, or at the wrong angle. Whole large Batch can be rendered absolutely write-offable and useless and only good for destruction, if you make any technical mistake. THIS, strangely enough, is the trick in the Battery manufacture game!!
(4)Smaller players, often run by operational owner/factory workers--WILL be rationalized OUT of this INDUSTRY.
(5) Co's like OTI will and are getting this market share
(6) One of the correspondents to this thread, wondered about whether OTI had been subject to a due diligence on its opertions. Other way around.OTI did the due diligence on the company concerned. Did not at the time proceed. Could not agree on Price. These Guys Drive a very very Hard and tough Bargain, and REFUSE to concede on PRice. Categorically and emphatically. Picked up very strongly, that these guys are very shrewd, tough number crunchers, with clear numerical margin benchmarks,clear targets,they are keenly price conscious, cost conscious accounting MEAN and scrupulous to a fault with tight rein over every single penny. They do jknow how to say NO. They have re-negotiated prices with customers in their favour as a result of high metal prices. They do drive down costs. The meeting Hall for AGM was very very AUSTERE!!Very humble. No pretensions with Oriental Technology. I would have been arested if I had have gone for a third piece of cake. I did manage snaffle it down quickly all the same, but IT WAS TOUGH!!--Feel for me here guys. Come on. Empathazie!!
Just a small 3 star Hotel Room--with two packets of Arnott Biscuits. Make your own coffee or tea mate!! No trimmings AT ALL. No fairy floss at all. No B.S. Just down to business. Very impressed actually.....Will divide this posting onto another, so I don't go back into Dr Who's Time Machine.
cheers,
davidrob--Robbo

robbo
10-05-2004, 10:36 PM
--continuation of OTI REPORT from attendance of AGM by Robbo!
(7)OTI is a seeker/potential Buyer of Bargain and strategically correct Battery manufacturers in distress to acquire.
(8)OTI will more than double Output and Revenue within 6-8 mths when new factory opens and comes on stream. This will flow onto Balance Sheet Very Quickly.
(9)--(OTI) is in discussions with Japanese/German/Korean/European-- Auto Manufacturers re. Hy-Brid Electrical Cell Cars and Hydrogen/Petrol-Hybrids.(read Toyota Prius and Honda variants...). OTI seems, as much as one can ascertain, to have a long term future in the power systems of cars into the future.
(10) In short, I found management very accessible, transparent, up-front about the dirty linen(The Debt Re-Structure--with CVIC etc)and the tough business conditions re. the Lead Prices which is VERY Tough in the Jungle of Battery manufacture, as Lead is the primary and most significant inout cost, and there is NO substiture whatsoever available, although progress is being made to REDUCE the Lead Component require in Car Batteries, but can never be eradicated or substituted with known technology at present.
Hope the above postings,.... were of some minute interest Sharetraders...let me know any other qstions and I will see if I can answer. Yes, I did get M.D's email(George Su) so we do have an in-road here, but I don't obviously want to abuse this privilege!!
Cheers,
davidrob (Robbo)

redredwine
10-05-2004, 10:46 PM
Awesome post Rob, thanks. Have added to my watchlist. Was that your buy of 15k at .155 today?

KD
11-05-2004, 12:08 AM
Yes ditto for me on Cantab's post - thanks 1) for effort to get to the meeting and 2) for indepth, humorous and fascinating posts above - Robbo you're a legend! I'll be away for next couple of days and will look forward to discussions that these posts will no doubt generate and put in my two cents worth then.

cheers all!

KD
11-05-2004, 01:14 AM
We should all make an effort to get to the next meeting - each bring a plate :D

clearasmud
11-05-2004, 08:11 AM
Very interesting post Robbo.This Co could be a big Lt winner for us sharetraders!

Disc hold 120,000 Oti

clearasmud
11-05-2004, 11:18 AM
Its a suprise sharetraders are the majority of the buyers.

robbo
11-05-2004, 12:35 PM
Glad, you found the posts informative guys. In answer to Cantab's question--were the price increases achieved, able to restore margins, to pre-"record high" lead prices. Answer: negative I'm afraid. Just was able to absorb partial loss of margin.
However, crucially...this was beter than OTI's competitors ability to pass on margins. Why and how so. Part of the answer lies in the political and economic influence of the Ma family in Hong-Kong China(akin to sort of Packer influence in political/ecomomic power,over here in Oz).
Patrick Ma is a large Investor and non-executive Director of OTI. His family own large casinos and the largest newspaper in Hong Kong and shopping centres, throughout Hong Kong and China.
Interestingly also has rights to importation of Saab and,I believe, Mercedes into China's prosperous Guangdong. Co-incidentally OTI have exclusive supplier relationships with these co's.
Don't forget that General Motors, now owns Saab....
Never underestimate power of connections and political influuence in economic outcomes in China. Also don't forget, that Hong-=Kong is NOW China--and that the Ma family is also very powerful in Taiwan.
Just another little morsel...there just might be a connection here in relation to the restructure/retiring of the CVIC (now in liquidation--oh gosh--what a shame..)and some of the matters I allude to here. Put it this way, if your doing biz in China--you won't beat em unless you join 'em.
DISCLAIMER: The above comments,naturally are expressed, totally without prejudice; and are the view only of the author, and may have no basis in fact, and do not and must not represent any finacial or any other type of advice whatsoever, and naturally everyone must make their own enquiries before embarking upon investment decision in Oriental Technologies.(OTI).

Dimebag
11-05-2004, 01:37 PM
Hi Team

May I also convey my thanks to Davidrob for his insightful and entertaining comments. :)

It was me who took out the 15,000 yesterday. Thought I better up my stake to a more decent level before Cantab launched his takeover bid. [:P] Remarkably Mr Cantab now owns 0.365% of the company!! Impressive stuff.

I also bought another 11,000 this morning. When I think a company really has a lot of potential I simply can't be bothered quibbling over half a cent a share or so.

I'm in agreement with the sentiments elucidated above. OTI have a lot of potential and 2005 should be a pearler of a year.

Warren Buffett has often talked about how weak short term conditions and price wars (or margin erosion of any discription) assists the efficient and low-cost providers in the long-run. This is because the conditions weaken the weak players considerably, often to the breaking point. Pleasingly, OTI management seem to be cognisant of this and are looking to take full advantage of the situation, so hopefully they will be able to secure some very attractive acquisitions.

Davidrob: Dead right about the cost-advantage being an attractive feature. I believe Astron are doing so well because a well managed company with both a technological and cost edge is the perfect formula for success. It makes the company a sure winner.

Why? Because why would customers not buy? If the products are better and cheaper there isn't anything not to like. If OTI can (or have) replicated this situation, I am sure OTI will prove to be a great long-term success also.

As you say, operating in China, there is one reason customers might not buy. This is due, as you point out, to the importance of relationships in doing business in China. I was talking with a businessman who has owned and operated Chinese business interests for some time recently and he stressed this fact. But it looks as though OTI have this base covered also.

Looking to build a stake of up to 50,000 shares over the coming few months.

Thanks to everyone, and especially KD for identifying this promising young company.

Cheers
Dimebag

skinny
11-05-2004, 07:14 PM
Thanks for the great info from davidrob and other from me too ! I guess we can take out of this lots of positives - they are expanding capacity and the competition is suffering as I had hoped. The margins restoration isn't 100% but if it was I guess we wouldn't have the opportunity to get in at low prices and OTI wouldn't be in the position of being able to expand market share.

In the back of my mind for the long term viability of this company was the fuel cell issue so another positive is that that they are partnering up with some of the key players in this arena (Dadvidrob's 9th point !) And of course also good to hear that they seems to have made the right connections in China - I'm sure my investment in RPL.NZ has not gone as well as it should because of this issue.

...now with all these people in ST getting in perhaps some collusive behaviour on our purchases could be in order, no sense bidding against each other hmmmm ;)

Alban
11-05-2004, 08:09 PM
Not sure I'd read much into fuel cells and OTI, skinny. I can't see any reason for a fuel cell manufacturer to speak to OTI. To the best of my knowledge, technical and manufacturing overlap between lead/acid batteries and hydrogen fuel-cells are more or less non-existent. I am, of course, happy to be corrected on this point. [8)]

skinny
11-05-2004, 08:31 PM
Alban, thanks for bringing that up must confess I don't know the answer to that one ! Davidrob's point was that they were teaming up to produce power systems in the longer run for Hybrid Electrical Cell Cars and Hydrogen/Petrol-Hybrids, the later of which had me leap to think they were also looking at fuel cells. But perhaps its specialised conventional led batteries ? Can you confirm this one Davidrob ? In any case my cursory reading here is that hybrids look more likely to be the next phase of automotives and pure fuel cell cars maybe a long way away, so OTI is positioning well here still.

clearasmud
11-05-2004, 08:42 PM
Skinny,
agree hydogen cars are 15-20 yrs away.Have to wait until the oil runs out.

ynot
12-05-2004, 08:08 AM
ive jut been reading up on the hybrid car.early days yet but production increasing.production levels estimated this year equal last 4 years production.
what i dont know is does OTI have the ability to build the type of battery required by the hybiid.
currenty hybrids are using nickel metal hydride,
[as opposed to your common lead acid battery.]
replacing the nickel metal hydride will be the lithium - ion.
this has 4 times the energy density of the lead acid and 2 times the energy density of the nickel metal hydride.
does OTI have a future beyond lead acid?

Halebop
12-05-2004, 08:30 AM
Hi Ynot.

I think you mean OTI rather than ION?

...Unless ION are planning another acquisition... hmmmm [:o)]

ynot
12-05-2004, 08:41 AM
thanks halebop, ION im not so sure about !!

Halebop
12-05-2004, 08:52 AM
quote:Originally posted by ynot

thanks halebop, ION im not so sure about !!


Between you and me - I don't think you're the only one! :)

robbo
12-05-2004, 09:12 AM
"LET'S NOT CREATE AN ARTIFICIAL SHARETRADER INSPIRED BUBBLE HERE FOLKS"---:)
SYDNEY --AUSTRALIA: 8.00 am Eastern Standard Time.
Okay then, maybe,(and that's only a maybe remember....) we're all just a little wiser re. OTI now, but the silliest thing to do now, [as Skinny, so rightfully alluded to, is to create a mini "South Sea Bubble" situation.--ie: an artificial level of demand driven market action, created by, and participated primarily in by ourselves inadevertently.;)
I mean as always, let COOL Heads prevail here!!!
The market overall, is going through quite a decent bearish correction(although that may change short term after what the market saw as a positive Ozzie Budget, last night, in respect to predicted Inflation and Economic Growth.).
OTI are not Tulips; if you know what I mean by that Danish illustration.
Just to settle us all down a little,with some reality doses' remember the following:
(1)-- For every ONE and half cents (1.5 cents)----we add to say 15 cents, we have said that OTI has now 10% more Value.
(2) Let's not let Short Term Traders eat from our S.T. plate, by driving price up too quickly.
(3) UNTIL the floating Charge-encumbrance, soaking up 20% of profits annually for perpetuity, is OFFICIALLY and expeditiously dealt with, and off the balance sheet, to a significantly larger Degree than it is at the current time, the Market Must inevitably. price In this Risk and Liability. It is as Simple As That.
(4) Ditto the above caveat applies;..... for the Record High current Lead Prices. These are severely hittiing OTI profits at present.That is a statement of Fact and not conjecture. See Chairman's address in Annual Report.
(5) I'm not an expert on pricing Stocks; but I think Cantab said that fair value for OTI is 15 Cents. Maybe, as Dimebag did, squeeze another half a cent. Maybe!! ****Above that, you are paying a Premium for expected Future blue sky, and not current or historical earnings.***
(6)OTI is not a Newsy Company. They only report what [u]has</u> happened,and has been audited and achieved. They are not like some other co's, and speculatively report what they hope might happen. They certainly do not retain a Investor's Public Relation's firm to spruick every nuance, and change in the weather pattern, over Antartica, that because of the greenhouse effect will probably lift the share price!! OTI mgt leaves leaves that to the mad-cap Bio-Techs and I.T Dot Coms;and to the wildcatter,"rock-kicking" Western Australian nickel and gold explorers to indulge in.
OTI are NOT in the speculative game.
So let's all NOT get sucked in here. Its okay to Hunt with The Hounds,though not with the crowd of lemmings.:) But certainly let's[u] not</u> run with the hares. Always.f course, remeber the homilie, that the brief joy of exhilihartion in snaffling stocks at too high prices very quickly dissipates into annoyance with oneself, on seeing these very same stocks(as good as they intrinsically may be), retreat back to sensible value opportunity levels. OTI; IMO.... IS a good Investment. But only "at the right price".
Cheers,
davidrob (Robbo)
Disclaimer: The above comments are purely the personal ruminations and opinions of the author and are said on this internet chat site on a: totally "without prejudice basis". The comments do not represent the views of OTI and are of a personal nature only.Also they are not, and are not intended in any way to be construed or to be taken, as Financial Advice, and should not be taken as such. Investors as always, should make their own enquiries.
The author does indirectly holds shares in ASX code: OTI.
[quote]quote:Originally posted by ynot

ive jut been reading up on the hybrid car.early days yet but production increasing.production levels estimated this year equal last 4 years

Dimebag
12-05-2004, 07:05 PM
Cantab

Yeah agreed. I'm done buying for now. I was just uncomfortable with such a low stake of A$1,500 or so when I thought this was a good stock worth owning. So I've upped my stake to a more respectible A$5,600 (about 7% of my portfolio, compared with about 2% previously). I'm happy with that for now.

Do any punters have further comments about the possibility of substitute products longer-term (hydrogen cell powered or something?? Can someone enlighted me?).

Has someone already developed the technology?

These developments would impede OTI's ability to increase prices. A significant increase in price would no doubt prompt the punters to start looking for alternative and more cost effective inputs to manufacture batteries more cost effectively.

What is OTI's R&D budget like? Are they investing in the development of competing technologies? Is this a non-issue in the foreseeable future?

Interesting I ask all these questions after I have bought a stake.

I think there is some truth to the saying that you never really know a company until you have owned it. Having your hard earned on the line heightens one's awareness!

Interested in peoples comments about the above questions.

Cheers
Dimebag

skinny
12-05-2004, 07:25 PM
Good advice from Robbo - my holdings as a % of the portfolio is about the same as Dimebag's which is enough for what still must be considered a speculative investment in a country that has lots of promise but, lets face it, lots of short-term economic risk and even more political risk.

On the alternative batteries stake I think we can relax for now Dimebag as its not like hybrids/fuell cell cars are going to take over the world anytime soon, but it is something to learn about for sure. Thanks to ynot for pointing out there is a third alternative battery type (after led and fuel cells) - I think the "ion" s/he was referring to was the electrical charge not the company ;)

Alban
12-05-2004, 08:13 PM
Lead acid batteries (as made by OTI) are low-technology. They are used to store energy to provide the sparks to ignite the fuel in petrol engines. Once the engine is running, drawing its energy from petrol, a small proportion of the petrol energy is used to keep the battery charged to power spark plugs, head-lights, cassette players, etc.

Looking to the future, people are trying to reduce dependence on petrol. Instead of using a petrol engine, a car could run instead on an electric motor. (Or a hybrid containing both a petrol engine and an electric motor). Since it's impractical to keep cars connected to the mains, electric-cars use batteries as a source of energy. It would be possible but impractical to use OTI lead-acid batteries to run an electric car because these batteries are very heavy in relation to the energy they can store. (The relationship between battery weight and the energy it can store is what ynot called the energy density). OTI's lead-acid batteries have low energy density. They are thus not suited to powering electric cars.

Other batteries - such as the currently used Nickel-Metal Hydride batteries (and possibly Lithium-Ion in the future) can store much more energy for a given amount of battery weight. The technology associated with these batteries is considerably more sophisticated than lead-acid. Unless OTI have a well-funded and good-sized R&D effort, (unlikely given their market cap.) they will make no contribution to these newer battery technologies. Perhaps they are seeking (long-term) to win assembly contracts for Nickel-MH batteries from the patent owners? To the best of my knowledge, this would require major changes to OTI's assembly methods and machinery.

The petrol engine will remain supreme within my investment time-frame for OTI and there is no advantage what-so-ever in replacing the lead-acid batteries that are currently used in these engines with more expensive, high-tech batteries. With car-use burgeoning in China and high demand from Europe for OTI's high-quality, low-cost batteries I see a positive future for OTI within their current field of competence.

ynot
12-05-2004, 08:32 PM
thanks albian. i was getting a bit side tracked with high energy density batteries.
like you say if OTI just stick with there knitting they still have massive lead/acid market.

skinny
12-05-2004, 09:02 PM
Thanks Alban for the elaboration on the batteries. Perhaps the best would be to get a clarification from OTI directly on exactly what sort of relationship they have/envisage with the hybrid car makers !

Cantab, yes, I don't really care too much about any temporary slowdown in China. Of more concern is the political risk. I'll elaborate but it will turn into an essay sorry ! I see it coming in at two levels. First, as Robbo's post points out, part of the reason for the success of the company stems from them having formed good relationships with the "right" people, as you must in a country where legal frameworks and property rights are not well developed and the exercise of what little commercial law there is can be arbitrary and capricious. The risk here is that the right people go out of favour with their political masters, or that there is ill considered changes in the legal or regulatory environments that hamper OTI's operations. Point is that if any of these events occur the legal redress open to OTI is certainly not what you could get in a more developed western economy.

The second political risk, which I see (hope !) is more remote is the high level one where the Chinese leadership decide to depart from its present development course and turn more inward again. Some commentators I've read suggests this is a real possibility if the slowdown becomes something bigger, unemployment rises, and social unrest develops in the massess of people who have recenty migrated from their villages to the industrialising cities.

I should point out that the political risks here are no differnt in substance from many developing countries. Its the reason why though most professional advisors suggest limiting exposure of the portfolio to developing countries to 20% at most, despite the fact they know that growth will probably well out perform western growth performance. Is this advice well founded ? At the aggregate market level probably. I went through all of the ETFs for Asian countries offered in American markets earlier this year and looked at their performance since floated. The ONLY country where you would have made a buck is South Korea - the most developed in the bunch.

star
13-05-2004, 12:40 AM
Hi all

I have been reading this topic with interest. My concern with OTI is:

1. Battery manufacturing is low tech, labour intensive industry. The barrier of entry is low.

2. If a company's strategy is low cost and production efficiency, can this strategy be sustainable in long term? There is only limited room for you to improve in production cost. Also how can an overseas company compete with local companies in term of production cost?

3. What is OTI's competitive advantage in the future? Low cost or high quality with premium price? If the comany's stragtegy is high quality innovative product with premium price selling to Europe, then china's low labour cost does not have advantage.

4. Corporate governance issue. Majority of shareholders are directors. With majority voting power, directors can use managment fees or share option to benefit themselve and disadvantage minority shareholders. How can the minority shareholders protect their interest?

5. Everyone seems excited if a company has exposure to China. Sure market is huge, growth potential is great, but the economic and political risks should not be overlooked. I personally helped an English metal box company establised a plant (producing soft drink cans) in Guangzhou in late 1990s. Everyone thought with China's huge population, this co must be successful. But after three years operation, this company had to withdraw the investment, because the production cost could never compete with that of local's, plus complicated relationship with government and compliance cost for overseas companies. I am not saying OTI can not be successful in China, my point is as an investor, this risk should not be igored.

clearasmud
13-05-2004, 03:50 PM
I hear that some people only invest in small companies because that is where the growth is.Obviously it is safer to split your money among many small cos that you like assuming you can find them.
I like the comfort of knowing that a fundermental and long term view is being taken.
Cantab have you considered AFC and WFD:nz

fundir
13-05-2004, 03:57 PM
Clearasmud,

That is very much the approach that I take because it only takes 1 or 2 stars to keep your portfolio in very positive teritory. I tend to use partial sell downs on big gainers (100% plus) as seed money for further investments.

If you think AFC and WFD are worthy why not start threads up on them, this asx board does need a bit more action.

OTI itself has made it on to my probables watchlist, just waiting for available funds....

clearasmud
13-05-2004, 04:03 PM
Fundir,
there already is a good thread on AFC plus a thread on wakefied hospital on the NZ site.
cheers

thereslifeafter87
13-05-2004, 05:15 PM
AFC doesn't really excite me.

While 17% ROE is good it is not great.

It does have a low valuation, but is in a novel area of business which I'm not too sure I understand.

clearasmud
13-05-2004, 05:25 PM
I don't follow ROE;maybe i should.

skinny
13-05-2004, 06:43 PM
Star - good questions and thanks for the illustration of the risks of doing business in China that my rather academic post tried to get at !

My impression from Robbo's post of the AGM is their objective is to provide high quality at a low price to world markets, which is something that they can do by combining world class expertise with China's labour cost and scale advantage. Your question makes it seem that quality and low cost is mutually exclusive, why do you think so ?

On the labour cost aspect, sure, it will erode over time as China gets richer but not for a good while yet and if they end up just supplying to local markets in 20 years time of so the local is pretty big !

As far as governance goes IMO large insider holdings are normally a good thing as their interests are more aligned with common shareholders - think of the Paykels for example. In addition I have not heard any doubts expressed about the management on this board, quite the opposite in fact.

KD
13-05-2004, 11:18 PM
Hi OTI followers - away for a couple of days and the number of postings on this thread have almost doubled! Robbo's visit to the AGM has certainly sparked some interest. Dimebag - good to see you increasing your holding. Making a small, cautious initial investment is a good thing as it gets the mind focused. As ones understanding of a company grows then there may be an opportunity to add to initial holdings as you have done. This is why I have indicated here that I intend to add to my position on OTI - the combined research efforts on this forum have increased my level of understanding of OTI in a big way. So thanks for all contributions here.

Cantab I enjoyed your discussion on whether OTI is speculative or not. I view speculative stocks as ones which are not producing positive earnings and in which the share price is largely being driven by 'speculation' that substantial earnings will materialise. Value measures such as 'PE' have no meaning for speculative stocks and fundamental analysis of current or past performance is not possible. I hold a small percentage of stocks that fit this description because I see the potential for positive earnings and high growth. I view OTI as being in an early phase of EPS growth in which large increases in earnings can occur. This is typical of many small companies. In this respect OTI are a step removed from being 'speculative'. However OTI still rank higher than average on the risk scale - being small, they are more vulnerable to shocks - like the price increases in lead..and other risk factors have been identified here - operating out of China for one. But how 'small' are OTI? In terms of market cap they are 'minnows' (to quote Robbo) but in terms of position in their industry, diversity of clients, technology, time in the business, partnerships etc they are anything but 'small'(similar to ATR in this respect). The quality of management is one thing that has become increasingly apparent with Robbo's posts. For me, quality of management is an important risk factor. So - although OTI may deserve a higher than average risk rating, I think the term 'speculative' is inappropriate and 'moderate to high risk' is perhaps more appropriate (I know there are many definitions of risk and acknowledge I'm employing the term rather loosely here just to offer an alternative term to 'speculative').

The 'risk' rating I originally attributed to OTI has dropped due to knowledge I have gained so I'm prepared to invest more capital (at the right price). OTI rate highly for me in terms of 'value' given their low PE and emerging growth profile. So, for me, risk and value have to be weighed up when working out percentage of capital to invest and whether or not to invest in one stock or another. I'm prepared to take on moderate to high risk with OTI because I believe the value is there (at average price over last few months) and, with this, the possibility of high reward over the long term. One thing which will destroy 'value' is a speculative bubble. Any sharp rise in price at this point, while pressure on margins remains, I would consider as speculative buying. The last meeting did not indicate a return to 'normal' margins this year so, as noted in an earlier post by Skinny, one has to bear in mind the price of vegies at this point in time. So what is a reasonable price for OTI at the moment? - I'm not sure but the 24c as I saw offered today is not! I have said before that 13-14c is reasonable and I will stick with that for now. What is uppermost in my mind is the point that Robbo makes - a 1.5 cent rise represents a 10% increase in the market value of this company and, I should add, a 10% decrease in return on investment (compared to buying at 1.5c cheaper). I mentioned here before that 1.5 cents may seem small and immaterial at end of the day but this was not the best advice - 10% of my final return on OTI could be a very meaningful amount of money if I invest 5% of my holdings in this stock, for instance and treble my investment in a two or three years! I have to believe there

star
14-05-2004, 12:33 AM
Hi all

I have read the annual report 2003. The company actual made a loss after adjusments for exchange difference and profit share provision. Even before these adjustments the net profit margin to sales was only 10%. The sales growth was only 16%. Debt to equity ratio 53.68%.

The low margin should itself represent the maturity of the indutry and fierce competition in China. I think P/E ratio of 10 for this company is too high.

Skinny, I have not answered your question. I will do it at weekend.

Disc: no ITO holding, but with some interest.

star
16-05-2004, 08:13 PM
Skinny

Sorry for the delay. Just to come back to answer your question.

A sustainable strategy position requires trade off. It is hard to be in the middle. Different quality requires different product configurations, different equipement, different employee behaviour, different skills, different quality assurance procedure,and different management style and system. It is easy to say a company can provide high quality at a low price to world market, but in reality, its hard to deliver this result.

Any way that is in general. Lets look at OTI's cost structure in particular:

1. Raw material and consumables account for 76% of sales value. This percentage can only increase with the trend of lead price increase. In the recent letter to shareholders it is said no lead producer is willing to enter into forward contracts.

2.Employee benefit expenses only amount to 4.1% of sales value. Average wages per employee is A$3183 per annual. This level is less than the avarege income of Shanghai region. If ITO wants to produce high quality world class batteries, they have to hire more skilled people and pay more wages.

3. Depreciation and amortisation present 3.5%. With more capacity and new factory next year, the deprecaition will increase, but this impact will be offseted by increased production volume and sales. So the percentage to sales will probably stay the same

4. Borrowing cost,techincal advisory fees and head office expenses amount to 3.4%. These expenses are almost fixed.

So the current net profit margin of 11% can only be reduced unless ITO have the power to increase the selling price while not losing customers. In the letter to shareholders, Chairman Gerard already said the 1Q 2004 net profit reduced by 89% to RMB 0.6 million.

There are few other points I think can affect the company's profitability:

1. The total other expenses in income statement was only $243K or 0.78% of sales value, which included marketing, advertising, product design and development expenses. If the company want build more capacity, provide more product range and re-entry to domestic market, they have to spend a decent amount in this area.

2. A provision for bad debt of $4K or 0.2% for $2 million trade debtors (refer to note 6) is far too low. In China, bad debt level is quite high, a 2% or $40K bad provision should be very modest. This means the profit could be reduced by $40K in 2003's report.

3. No provision was prepared for any other estimated expenses, which is quite unsual if apply to New Zealand and Australia businss practice. The management might have intention to increase profit and make numbers look better.

4. Profit sharing of 20% NPAT each year is committed to the liquidated China Venturetech Internationa and Red Lion Resource Ltd for 50 years until the accumulated amount of $20,834,841 is reached. This has substantial impact on EPS. The current EPS of 2.24c is calculated before profit sharing. In fact the earnings contributed to shareholder are only 80% of NPAT. I would use esp 1.792c for ITO's valuation.

5. The liability of $20.8m to CVIC/RLRL was not fully recognised in the balance sheet (only $1.041m was accounted). Originally it was an indebtness to CVIC/RLRL and the nature of this liability was dislosed in note 15. If we treat the rest of $19.75m as non-current liability, the comany's balance sheet is technically insolvent (2003 equity value was $12.837m)

From turn over and capital size, ITO is a small player. What is ITO's market share in this sector? what is the competitors situtation in China? These, for me, are unknown.

I only analyse from financial and general strategy point of view here. Can ITO be successful? It is hard to get a clear answer. Its all depends on whether it can have the bargain power over suppliers, skills to manage risks, ability to seize the opportunities and compete with other competitors in the market.

star
17-05-2004, 11:07 PM
Cantab

I spent a few hours yesterday to study ITO case. I analysed the 2003' report from a professional, objective view point. If this info can help someone, I would be very pleased. If you disagree with what I said, it is fine for me. You need to have faith in ITO if you stay with it in long term.

As you have seen, everyone's risk tolerence level is different. I seek quality stocks while still have growth potential.

skinny
17-05-2004, 11:21 PM
Thanks for the more detailed comments Star, in particular the cost breakdown (a minor quibble - on your figures I calculate profits are 13% of sales not 11%). I agree that this investment is not for everyone.

My thinking on the quality/price trade-off was the same as Cantab's: since they can't meet demand from European car makers I took it as given ! Just to clarify Cantab : is it the case that 100% of sales is to European makers or is there some going to Chinese manufacturers or sub-contractors of the car makers ? If so I think Star has a point with the bad debt provisions, esp. if China hits a rough patch.

On the quality issue again, Star I was impressed you had the average wage figures for Shanghai at your finger tips but is this really the right comparison ? I would have thought comparing to the average wage of production (industrial) workers would have been more appropriate to see if there was any skill premium.

The final questions you raise Star are really important and I thought the report from the AGM by Robbo was promising : they have been able to get market share and smaller players are being driven out of the market with the higher raw material costs. OTI stated that their main constraint has in fact been lack of capacity and this is coming on stream as planned later this year. But promising is not the same as certainty and if you feel there are better risk/reward trade-offs around fair enough ! (Since you know the scene having worked in China any tips here appreciated ;))

star
17-05-2004, 11:57 PM
Hi Skinny

I used $3516K NPAT figure. I guess you used $3990K profit before tax figure.

The average salaries/wages in shanghai region is about US$4500-5000 per year. The difference between each region is more important than the difference between each sector. The best way is to combine these two factors, but I do not have the industry info.

By the way, I also have npx shares. I visited this ccompany in Auckland recently. It is a well managed company.

Cheers

robbo
19-05-2004, 09:10 PM
Really good in depth and RIGOUROUS look into OTI situation quys.
Just a few points here. (1) Lead prices are now trending down not up, and don't forget the upside of this Coin for the inevitable shak-out Survivors. I mean if all Car batteries need lead and cars need batteries then at some point there has to still be some car battery co's that may emerge in a position of Bargaining and Market position Strength when dust settles...Hmmmm (2) I did specifically ask Directors re. Wages. They assured me they were Paying above Award,subsequently were attrracting a quality labour force; and that the figures in Annual Report were accurate.
*** Don't forget I have now got the email addresses of the M.D, and so far he has been quite forthcoming. If anyone wants specific questions asked I promise to anwer them verbatim, without embellishment?!!--for you guys to weigh up with other evidence.

In the meantime, I just look out the window; here in Sydney,and get really annoyed at all that Car Traffic clogging up the roads, and with not much money for Public Railways it really is especially annoying to see all those big multi-funcioned Four Wheel Drives. Don't know how people in big European and Chinese Cities cope with all those cars??. Oh well. Got to get in my car now, to go to another appointment.
Toodle Doo davidrob.
quote:Originally posted by cantab

The Aussie dollar against the US dollar has fallen to 69c. All other things being equal if one was to buy the whole OTI business today it would cost 14% more in Aust dollars than a few months ago. There is also potential for the reminbi to appreciate against the US dollar over time. It's not a big factor but it's an interesting point. Owning a share of OTI represents assets in a hard currency.

Cantab

KD
19-05-2004, 10:31 PM
Good to hear from you Robbo - As long as those 4wds have dual Apollo battery sytems, wear ARB bullbars, are booked by Redflex red light cameras, create more projects for Transfield Services such as the Lane Cove tunnel - let them clog the streets :D!

This thread is kicking along nicely - thanks Star for your points - OTI takes a bit of study - I'm keeping finger crossed the lead price doesn't squeeze too hard and that OTI can eventually capitalise on this situation

- checked in last night to the metals exchange and it looks like the down trend has abated recently.

Anyway Robbo, your post reminded me of the following article about "progress" in China ...


Four wheels good, two wheels bad for China
By Isabel Hilton
December 24, 2003

Bicycles, the Bund and beautiful secrets are losers in China's modernisation.

Of all the signs that China, after nearly three decades of headlong growth, has moved into a new era, few have struck me as forcefully as the news that Shanghai city council is to ban bicycles from next year. I lived in China in the days when capitalist-style growth was regarded as political poison and I do not have much nostalgia for the political climate of those days. But I do remember with pleasure living in a city in which the bicycle was king.

Back then, only Communist Party officials rode in cars - mainly a big, green lumbering saloon called the Shanghai. They were driven by young men who wore white cotton gloves and carried large feather dusters with which, while waiting for their masters, they tried to keep the city's grime off the gleaming chrome bumpers. The car windows were curtained, lest the masses catch a glimpse of their rulers. If a very important visitor was in town there might be a Hongqi - a Red Flag - on the streets, a huge black limousine complete with bonnet flagpole. Both, though, were relatively rare. The rest of the city got about on buses or on bikes.

For Chinese, getting hold of a bike was not entirely straightforward. Even if you had the money there was a waiting list, and prized items like the bicycle were allocated to political favourites. There was one universal model, made in Shanghai - the no-gear Flying Pigeon - black, steel-framed and very heavy. It was sturdy enough to carry an entire family, a substantial piece of furniture or a pig, strapped to the carrier on the back.

So desirable was it that, even in Mao's China where official propaganda insisted that theft was almost non-existent, it was essential to have a lock and to park in an official bike park, where, for five fen - a sum too small to measure in dollars - an attendant would guard your wheels until you returned.

Greed, corruption and bad planning have transformed many of China's cities into polluted dystopias.
There was no waiting list for foreigners, still thin on the ground in those politically hostile days. And owning a bike opened up a whole series of opportunities.

It made conversations possible, for instance, at a time when to sit down and talk to a foreigner could put a Chinese citizen at some risk. Drifting along the street for a while, in the two-wheeled equivalent of step, meant that people would chat without falling under suspicion.

It also allowed a foreigner to get about inconspicuously. Foreigners were so rare, and exciting events so few, that any foreigner on foot was quickly surrounded by a large, if uncommunicative, crowd. It was not a pleasant experience. On a bike, though, the crowd barely had time to register you before you were gone. With the right clothes and hat, they sometimes barely noticed at all.

It has been some years since cycling was a pleasant experience in Chinese cities. A combination of greed, corruption and bad planning has transformed many of China's cities into polluted dystopias, friendly neither to the bike nor the human being.

China's idea of the modern has tended to lag behind the West. In the 20th century, dreary apartment blocks - copied from the communist bloc - were still being erected long after they had gone out of fashio

star
19-05-2004, 11:48 PM
Cantab and KD

Thanks for your comment. I have not had ITO shares yet. I wish you all the best for your venture (Cantab, I am a young professional.It may surprise you).

Intersting article about Chinese bikes. Can not immagine how big cities like Shanghai and Bejing cope with traffic jam. Also, normal apartments do not provide parking/garages, how can people find space for their cars. Bicycles are more practical and environmental friendly for China.

robbo
31-05-2004, 08:00 PM
Hi Guys. Thinking of dropping CEO a line(email...)to get another update. Any qstions you'd like me to ask, that I can see if I can weasel a bit of an answer, to give us a bit of the Good Oil?
Cheers Robbo
quote:Originally posted by cantab

Bit of a stalemate on the market at the moment.

Hopefully OTI will be able to take advantage of some other battery companies that are under pressure because of the high lead price and management/production inefficiencies. Eventually the lead price will find its equilibrium and the selling prices of batteries will adjust accordingly. Consolidation and a few falling by the wayside will help. Then OTI will be in a strong position with all this capacity acquired at distressed prices with the result that EPS could rise strongly in the medium term.

I was in Guangzhou more than a decade ago and recall all those Chinese on bicycles. Perhaps a few are now ready to trade in that old bike on a car! [:p]

Cantab

skinny
02-06-2004, 06:20 PM
davidrob - same old questions on margins and expansion progress useful i think...

One other is that I've read recent reports of manufacturing in China struggling a bit as increasing industrial output has led to rising electricity costs, partial blackouts and rising fuel and gas costs. I wonder how ION is getting on here ?

cheers !

p.s. I see the market stalemate was broken last night at 15.5c !

robbo
02-06-2004, 07:10 PM
Skiny, thanks for your thoughts re. Chinese output. I saw a report sort of saying the opposite--basically Chinese average people are getting a penchant for cars. I include the gist of your points in what I contain in my email...I will probably send off this missive sometime this Monday or Tuesday--it is now Wednesday evening 6pm here in Oz. By the way mate, what are you doing over there in Belgium? Nice Place, friendly people etc. I always recollect Agatha Christie's famous detective, her literay creation Poirot, as being quintessentially Belgian. What would you describe as quintessentially Belgiun Skinny??
By the way, I really like your proffered financial quote about he who rushes is basically an idiot....Reminds me of that other quote by the famous Swiss psycho-analyst--"Hurry is not of the Devil. It is the Devil"--[Carl Jung]
As an investor, I actually think often about the perils of rushing--and do like some of the Behavioural Psychological/Behavioural Finance approaches to Stock-Market fear versus greed and patience versus impatience approaches.
errr is ION operating in Chinese markets skinny--I thought it was primarilly a 3 Fold play revoving around a FORD Motor Contract with their BTR Gear-Box transmissions, Harley Davidson (Both of course American export deals) and Fuel Distribution/Transport and Storage with their Cootes Transport division.
Could stand corrected, but I didn't know about ION having any Chinese connection[?][?]
All the best Skinny
davidrob Robbo
quote:Originally posted by skinny

davidrob - same old questions on margins and expansion progress useful i think...

One other is that I've read recent reports of manufacturing in China struggling a bit as increasing industrial output has led to rising electricity costs, partial blackouts and rising fuel and gas costs. I wonder how ION is getting on here ?

cheers !

p.s. I see the market stalemate was broken last night at 15.5c !

skinny
02-06-2004, 07:44 PM
Oops, sorry, I meant how is OTI getting on with rising energy costs Robbo [:I]
I hold a bit of ION too and I'm always getting the market codes confused for some reason.

I'm an economist in Euroland, mainly looking at product market regulation. Its a good place for it as there is no shortage of red tape! The quote is from an add that used to be on NZ television warning youths of the dangers of alcohol indulgence. It features a young bloke getting pissed, scoring, then brawling at the end of the night and getting arrested. The add completely backfired as most of the target audience thought the lead character had a great time :D

So, its more a reminder to me of the law of unintended consequences than anything to do with share markets - but perhaps it illustrates that if you hold back too much you'll miss out [:p]

KD
02-06-2004, 10:11 PM
Anyone read the Fin today? The website tells me there is an article on lead market - some new mining etc. Gives some indication that lead prices might remain high. I'm not a daily subscriber so can't get access. Will see a copy in due course though.

cheers

KD
04-06-2004, 12:38 AM
Weighty Prospects (Ian Howarth AFR 2/6/2004)

(typed by KD - I'll never take 'cut and paste' for granted again!)

A global shift in the traditionally oversupplied lead market has prompted the development of Australia's newest lead mine. The Magellan project, 40 kms west of Wiluna in the north of western Australia, will generate 70,000 tonnes of lead concentrate when it comes into production next year. Lead, typically a by-product of zinc or silver mines, has become the Cinderella metal in the global mining industry in recent years. The removal of lead from paints and petrol in the past 20 years created a slump in lead demand, creating oversupply and weak prices. But Alan De'ath (apostrophe and all!), president and CEO of Ivernia West Inc, said demand had caught up with supply, principally through increased demand for lead-acid batteries. Invernia West and its partner, Sydney based funds management group Sentient Global Funds, are developing the Magellen mine near Wiluna for $US 26.6 million ($37 Million). The Toronto-listed Invernia West has 51% of the mine and Sentient the rest. The 70,000 tonne first phase of the mine is due to be operational by March next year, exporting lead concentrate mainly to China. A year later the second phase of the project, producing 90,000 tonnes of primary lead metal, will be complete. Mr De'ath said yesterday the Magellan project had a mine life of more than two 12 years and would produce lead at US13c a pound compared with the current market price of US45c a pound.


Well someone thinks the lead price is staying high. Had OTI been a partner I would have been very impressed!

cheers

KD
04-06-2004, 01:59 AM
Thanks from me too Robbo -


Cantab wrote

If OTI can takeover some struggling Chinese battery manufacturers at cheap prices and put in their own systems then this could be hugely profitable. I wonder what the probability is of OTI being involved in some industry consolidation?


The chairman's address at AGM ends with the note "This consolidation will create more opportunities for our company...." so they must be looking in that direction and the following gives a clue as to how...

"Our goal is to work with an international industry leader to jointly develop the Chinese domestic market and further develop its competitiveness through innovation and technology"

Without going back through your posts Robbo - was this 'vision' discussed in any detail at the AGM? Industry leader - Lion Group perhaps?? What does jointly mean? I wonder how negotiations are going? Doesn't sound like OTI will be content with just another factory.

KD
04-06-2004, 02:10 AM
FYI - Just a bit more on the previous story


Ivernia ponders local listing
By Barry FitzGerald
June 4, 2004

Toronto-based Ivernia is to consider listing on the local market once it has bedded down its new Magellan lead project near Wiluna, in Western Australia.

Magellan, the first pure lead play for longer than any one cares to remember, is set to capture the benefits of the price surge in the most unfashionable of metals.

President and chief executive of the $C65 million ($A69 million) Ivernia, Alan De'ath, said in Melbourne this week that Magellan was due to start producing lead concentrates (containing 70,000 tonnes of lead a year) in the first quarter of next year after spending $37 million on stage one of the project.

Stage two is expected to come on line in the third year of operations. It will cost an additional $24.5 million and will increase annual output to 90,000 tonnes of lead metal, with the addition of a smelter/refinery.

Although not yet listed here, Ivernia and the Magellan project already have substantial Australian involvement. Magellan is owned 51 per cent by Ivernia and 49 per cent by the Sydney-based $245 million private equity fund Sentient Global Resources.

Ivernia shareholders include the Australian-controlled British mining house Cambrian Resources (10 per cent), the Qantas pension fund (6 per cent) and Anglo American with 8 per cent. The stock last traded at C22˘.

Magellan's development is sweetly timed. The removal of lead from paints and petrol and by-product production at base metals mines meant decades of oversupply. Nobody wanted to fund a pure lead project.

But lead has been swept up in the China-led rise in demand for metals, with the price doubling in the past year to about US40˘ a pound. Mr De'ath forecast Magellan's initial cash operating costs at US18˘ a pound. When metal is produced from the smelter in stage two, it would attract a US5˘ a pound premium, effectively reducing net operating costs to US13˘ a pound.

Magellan's development is sweetly timed . . . with the price (of lead) doubling in the past year.Ivernia acquired Magellan, a 1991 discovery by Renison Goldfields, in 2002. Since then, Ivernia has increased total project resources to 15 million tonnes grading 6.4 per cent lead.

robbo
05-06-2004, 12:14 PM
Hi all you good people scattered around the Globe...

Have started email dialogue with Managing Director of George Su re. Sknny, Cantab and KD's questions, comments and observations, and George says he will get back to me by Friday 11 June, with the Caveat that his answers cannot be too specific and must be of a generalized nature only--for obvious disclosure reasons.

My experience with both the Chairman, Gerrard Mcmahon, Chris Corrigan, and George Su--and indeed the whole OTI Board culture--is that are very UNDERSTATED--and are more likely to underpromise and overdeliver--and certainly any announcements are always very much after the event/fact and not hyoing the Market in anticipation of any blue sky hopes.
In terms of their ASX announcements they are one of the most frugal co's on The ASX Board!!
So, what I am saying, is we will have to "read between the lines" with any feed-back I can legitimately obtain. I probably want to email George again this Monday/Tuesday, so what I would like to do is appoint maybe cantab and kd as the: "Question Devisor", and limit myself to asking him five(5) relatively specific questions--that he feels okay to give a meaningul response to. The objective is also to make them feel good and pat them on the back a bit--which without being Machiavellian or anything, is really with the genuine view; to get some ongoing dialogue--with inner sanctum of OTI-- going if possible....

Cantab...yes the Price is currently lidded at 16 cents--which on view is about right--I agree.The real question, is--will this price remain the High until end of financial year, and what would it take for people consider paying a premium for this stock. Certainly the other comment I would make, is that OTI is really very illiquid--when and what will it take for this stock to be re-rated and what is the next Testing point for OTI to break through--I mean would it be 18-19 cents perhaps?? Interesting idle speculation..

SO THEN...if KD and Cantab can have a shot EACH at your (5)-five most pertinent specific questions that OTI might be prepared to answer--and then from the Ten questions I will choose the Five(5) that I will start with--All with a View to give us something more to go one--some more "meat on the bone" as they say..-

Hope this is not too much to ask guys....Only trying to be helpful.
Cantab..thanks for your questions for the ASTRON meeting, will be there on 11/6/04 with bells on.

cheers,
Robbo

[quote]quote:Originally posted by KD

FYI - Just a bit more on the previous story


Ivernia ponders local listing
By Barry FitzGerald
June 4, 2004

Toronto-based Ivernia is to consider listing on the local market once it has bedded down its new Magellan lead project near Wiluna, in Western Australia.

Magellan, the first pure lead play for longer than any one cares to remember, is set to capture the benefits of the price surge in the most unfashionable of metals.

President and chief executive of the $C65 million ($A69 million) Ivernia, Alan De'ath, said in Melbourne this week that Magellan was due to start producing lead concentrates (containing 70,000 tonnes of lead a year) in the first quarter of next year after spending $37 million on stage one of the project.

Stage two is expected to come on line in the third year of operations. It will cost an additional $24.5 million and will increase annual output to 90,000 tonnes of lead metal, with the addition of a smelter/refinery.

Although not yet listed here, Ivernia and the Magellan project already have substantial Australian involvement. Magellan is owned 51 per cent by Ivernia and 49 per cent by the Sydney-based $245 million private equity fund Sentient Global Resources.

Ivernia shareholders include the Australian-controlled British mining house Cambrian Resources (10 per cent), the Qantas pension

KD
05-06-2004, 05:13 PM
Robbo, Cantab, Dimebag, Skinny et al. - I'm a newby to this investing game so you might place more store in others' questions. However, my track record this last year, my first year in investing on the ASX is not too bad. - On paper, my profits are &gt;50% on approximately 85K invested throughout the last 14 months (on a diversified portfolio of ASX listed companies). This represents a bloody good paper return on investment when considering the 85K is 100% borrowed! I have an equivalent amount invested across OS funds, defensive income producing trusts etc. Less favourable years will tell and I have to work on longer term strategies but enjoying the challenge. Could be classed as beginners luck - getting in at the right time - but I remind myself that I chose the time!

Personally I admire anyone who has the confidence to chin-wag with the MDs. As you note in your personal details - you are a 'professional investor' so I guess you can't afford NOT to talk to MDs and attend meetings. For the not-so full time investors amongst us, and the less experienced - you're efforts and willingness to share here are greatly appreciated. I hope, in the case of OTI, that efforts put in by all on this forum prove to be mutually benefitial.

Anyway - here are some (7) questions which perhaps summarise some of the issues raised on this forum and are uppermost in my mind. I have put these in the form of a statement followed by a question/questions which hopefully gives an opportunity for the MD to confirm/deny/correct the statement as well as answering the question.

here goes -

There has been recent a spike in lead prices and there remains a strong likelihood that demand will outstrip supply in the foreseeable future. Under this scenario it is unlikely that lead prices will return to historical lower levels in the near future. As a result of higher lead prices, margins have been compressed to the point where OTI have reported losses in recent months. From all accounts, OTI has been able to pass on some, but not all, of the additional production costs to their international customers. This situation raises several questions.

1) How long does management expect it will take before improvements in margins are seen as a result of the renegotiation of contracts with international customers?

2) Does this squeeze on margins worry OTI in the short-term, particularly given the planned opening of the new production facility?


As OTIs reports have indicated, this situation may also present opportunities for OTI to participate in the inevitable consolidation of the Chinese lead-acid battery industry with potentially highly profitable outcomes for OTI. Currently OTI cannot meet present demand but expects this situation to improve with the opening of the new factory. In this regard:

1) Beyond this present phase of expansion, does OTI have a vision to increase their market-share by participating in consolidation of the lead-acid battery industry in China?

2) What is OTIs current market-share and what is the potential to increase that share?

3) What capacity does OTI have to take advantage of this potentially emerging opportunity for consolidation?

more specifically -

- What capacity has OTI to fund aquisitions from current earnings streams?

- What capacity does OTI have to utilise external sources to fund aquisitions? In this regard would OTI have a preference for debt funding, equity funding or strategic partnerships?

On another tack - As new shareholders we are somewhat unclear on the companies history but the the Lion Group website offers the following background on Apollo:

"The Company ... established a battery manufacturing factory in west Sydney following listing on the Australian stock exchange in the mid 1990's. The move was not successful, and the business was eventually split into two segments, the factory moved to China, with the LION GROUP purchasing the Australian national distribution operations in 1999. The LION GROUP continued sourcing a substantial part of it's Apollo b

robbo
07-06-2004, 09:34 PM
KD and Cantab...great postings and all the very best to the both of you.
Heh Cantab, don't get caught with "priced for perfection" shares--on Margin Call heh mate !! ensure those P/E's are VERY VERY LOW--with correspondingly High ROE's And EPSG over 2 or 3 Years with some LIQUIDITY--Unlike OTI--although I think 15-16 cents is pretty Safe now, and even a bit of a Steal on many objective analysis. I mean name a stock like OTI that is trading at 16 cents with a P/e of about 7 and Increasing Earnings per share in the hundred of percent--OVER 3 Three years and Return on Equity of over 30 % ??? Potentially, I see OTI as ONE of THE Basic Bargain Value Shares--with Export Earnings and a HUGE market in a Focussed Easy Technology repeatable tick tock earnings---on the ASX today. I mean can anyone ever see a Buck on this Stock a couple of lazy years out from now. I certainly can.

By the way Cantab, do you agree with our esteemed colleague K.D. that OTI is currently running at a Loss???
Maybe I've got a bit of a screw loose, but I still put them down as about 11% Profit or even, a smidge over 11%+ Profit margins at present, with adjustable profit pre-tax from the last recorded figures... at roughly 60% Plus ??Hmmm...What are your numbers Cantab ?? [quote]quote:Originally posted by cantab
Yes guys, your questions are very duly noted. Some of the questions were a bit akin to asking mgt at OTI-- what will the price of Gold be in four and a half months time--substitute lead for gold:);)--I mean they are not seers or prophets !!! but the general thrust of the questions I will put to the mgt of OTI..
When? Tommorrow--Tuesday 8/6/04--promise I'll send off some sort of email ICBM !!
Now with such chin-wags, I'm sort of in the lap of the gods..or in this case the honchos and hombres at OTI--so unfortunately, I can make no promises--will just be cool and try and shimmy on up, into that cyber-space OTI room--and see whether a puff of smoke that might be a portent or sign or even goodness behold, maybe even some sort of clear guidance..
My guess will be there might, if we're just a tad lucky, be a bit of a tone, a general mood of optimism or maybe something a bit more realistic and less rosy. Possibly there'll be the need to "read the tea leaves--between the lines as it were."
But as promised, will do my best within the confines of being totally legit of course !![8D]
Now don't forget..this is always a FORUM and Robbo would love you all to share what shares You guys like and WHY... I mean what else is Value at Present--under $1.40 or so, with some consistent earnings that is undervalued, has some sort of market power/monoplosistic tendencies with low capitalization needs and some niche or branding and lowish Price Earnings...anything else on your respective radars ???

What do we think is Fair and Reasonable Pricing for O.T.I. ?? What number would be assigned to O.T.I if it Got any Brokerage or Media Support or coverage?? I don't think there is any current Broker covering O.T.I. or am I to be corrected. Cantab/K.D. if you put a p/e of say 14-17 on O.t.I what would that price it at??-IYO of course...What's our bets for the numbers this financial year for OTI...for me the really intersting numbers come in the six months after that, when new factory has had a chance to drop some revenue and hopefully profit to the earnings Top line and profits to follow?? Shares are all about TIME....gentlemen....Time...(thanks to T.S. Eliott..Love songs of Prufrock for those into 20th centurn modernist poetry!!)
Kindest regards,
davidrob---- Robbo


Robbo, here are some questions:

How long does the company expect it will take for profit margins to be restored to 2003 levels?

Does OTI forsee any possibility of over-supply in the battery industry occuring either within or outside of China?

How confident;) is OTI that they will participate

KD
07-06-2004, 10:23 PM
Issue of profitability - it's a matter of time-scale used - I was referring to monthly profit figures (so don't panic). Nonetheless these figures are likely to better reflect the impact of the lead price rather than the longer term figures.


Chairman's address - "As a result of these high lead prices our unaudited net profit during the March quarter plummetted by 89%" ( .... despite 20% rise in sales).

Final report - The large increase in the price of lead for the last two months has resulted in the company's operations for the month of February suffering a small loss and unless the company increases the prices of its products the losses may continue.The company is therefore presently negotiating with customers for price increases."

Going back to Chairman's address - "As production is presold in advance, price increases introduced in January/February will be delayed. Trading conditions remain extremely difficult."

Dimebag
08-06-2004, 11:21 AM
Great stuff KD/Cantab. Can't add much to those rather comprehensive comments.

However, if I could add something, I would ask a few questions with a bit more of a long-term time horison. What is their vision for the company? Where do they see the business in 5-10 years? If they expect to fill the capacity of the new plant within 6-8 months, are they currently looking to start building another one? Ideally what we want to see is a company with an aggressive growth orientation with ambitious goals.

Do they know much about the fundamentals of the lead market and do they expect lead prices to return to historic averages in time? What if they don't?

Also, are there any long-term risks of competing technologies overtaking lead-acid batteries (especially if lead-prices remain high)?

Regarding profitability, KD is right on the money. The PE ratio you quote is obsolete and largely irrelevent.

At the time of the AGM, lead prices were around about US$720 per tonne, having pulled back from a high of just under US$1,000pt.

Unfortunately, since then lead prices have risen back to about US$900pt, so it is likely that OTI are once again operating at a loss. As management stated, the outlook is very much influenced by the price of lead, and as yet there has been no let-up. (In light of this, it is perhaps surprising OTI's stock has not fallen).

http://www.lme.com/lead_graphs.asp

Profitability this year is anyone's guess, but it will almost certainly be considerably lower than last year.

Dimebag

Also,

Dimebag
08-06-2004, 11:25 AM
Here is some long-term perspective. Quite an extraordinary price move when cast in this light. Small wonder OTI were unprepared.

http://www.lme.com/lead_graphs.asp

Dimebag

stephen
08-06-2004, 11:46 AM
Hmmm. I've just been starting to study risk, after some stuff by Nassim Taleb (http://www.fooledbyrandomness.com/) caught my interest.

It's becoming clear to me that having a single plan based on extrapolating a perceived "trend" is not enough. It is wise to have several plans - at the very least one that addresses a reversal of your perceived trend.

So you say "small wonder that OTI were unprepared". I agree that it's human nature to expect things to continue as they are, but I'm starting to think I ought to expect better of management...

KD
08-06-2004, 02:16 PM
Hi Stephen - another perspective - it might be cheaper in the long run not to guard against a rogue bull - just repair the fence. IMO this applies to the current OTI situation and IMO OTI have adopted appropriate risk management. There may not be a return to oversupply of lead in the near term or for a long while but supply will meet demand eventually, so in the long run the current price is "unsustainable" (to quote management) e.g. new lead mines are coming on line (see recent posts here). Some of the increased cost of production should be passed on to customers and, in the long run, trading conditions should improve. The timeframes are of course uncertain - and it would be nice to glean some opinions from management in this regard. Like Dimebag I'm surprised OTI's SP has not eased ... However, increased capacity on one hand - reduced margins on the other...and, if someone has deep pockets, perhaps some opportunities to buy some distressed operations on the cheap - interesting times.

cheers

KD

cheers

robbo
08-06-2004, 09:39 PM
Heh Dimebag,
Good to hear from you mate- did I annoy or offend you???---with my comments;.... as I noted you did NOT mention 'ol Robbo in your Salutation as part of your latest contribution to this OTI thread:(Oh well, I've possibly put my foot in it somewhere along the line....[:0][:0]!! Hope you haven't gone and got the pip with for me Dimebag, for any reason--and if you have, then I'll say sorry in advance; that is, if I've said anything to annoy you Dime.--Anyway, looks like we are all having ONE GOOD long hard look at OTI at present----do you agree with KD that OTI is a bit Toppy with its price at 16 cents at present??? I mean you know I'm a bit more bullish,re. OTI-- so maybe I'll just end up with the egg on my face after all---WHO knows!![:I][:I];)
Cheers,
Robbo.


quote:Originally posted by Dimebag

Great stuff KD/Cantab. Can't add much to those rather comprehensive comments.

However, if I could add something, I would ask a few questions with a bit more of a long-term time horison. What is their vision for the company? Where do they see the business in 5-10 years? If they expect to fill the capacity of the new plant within 6-8 months, are they currently looking to start building another one? Ideally what we want to see is a company with an aggressive growth orientation with ambitious goals.

Do they know much about the fundamentals of the lead market and do they expect lead prices to return to historic averages in time? What if they don't?

Also, are there any long-term risks of competing technologies overtaking lead-acid batteries (especially if lead-prices remain high)?

Regarding profitability, KD is right on the money. The PE ratio you quote is obsolete and largely irrelevent.

At the time of the AGM, lead prices were around about US$720 per tonne, having pulled back from a high of just under US$1,000pt.

Unfortunately, since then lead prices have risen back to about US$900pt, so it is likely that OTI are once again operating at a loss. As management stated, the outlook is very much influenced by the price of lead, and as yet there has been no let-up. (In light of this, it is perhaps surprising OTI's stock has not fallen).

http://www.lme.com/lead_graphs.asp

Profitability this year is anyone's guess, but it will almost certainly be considerably lower than last year.

Dimebag

Also,

skinny
08-06-2004, 10:27 PM
Good to see the discussion moving along nicely [8)]

I found this rather interesting spreadsheet on LME prices and inventories recently on another channel....useful to summarise demand/supply situation for led and other metals. Info is to end April but its easy to update with more recent data from the LME.

http://www.users.bigpond.net.au/parker/lmeanalysis.zip

Dimebag
09-06-2004, 11:32 AM
Robbo

Sorry mate. Should have addressed you also (not to mention Stephen, Skinny, and others)! Please accept my apologies.

Your comments and thoughts are always appreciated.

Dimebag :)

winner69
09-06-2004, 07:01 PM
quote:Originally posted by stephen

Hmmm. I've just been starting to study risk, after some stuff by Nassim Taleb (http://www.fooledbyrandomness.com/) caught my interest.




Fooled by Randomness is one book that everybody into trading and investing (or life in general)should read at least once a year.

Peter Bernsteins Against the Gods also gets a regularly skim through and well worth reading

robbo
09-06-2004, 09:23 PM
Hi guys... and fellow car battery afficiandos.

Just received a bit of a missive from the Managing Director, of OTI--George Su, partly in response to some of questions. Basically saying he cannot be too specific re. privilieged information etc etc HOWEVER he is able to make a few general comments....
Can I just take your time and bother you all to basically paraphrase rather than verbatim quote his response:

"I'm happy to say that our business is doing comparatively WELL under the current circumstances.......and we are making good progress on the strategic alliance/takeover front. .......Some reduction in lead price will help a great deal but EVERY battery manufacturer [his emphasis, on the 'every']....IS facing the same Problem.... They are doing even tougher." [these last five words are quoted verbatim]

to continue from George Su......"The new factory is on schedule and looks very impressive already....."

So there you all are... To go further would be probably getting a bit from on disclosure requirements..om M.D. is in context and not a bit altered. There were NO other negatives whatsoever mentioned or canvassed. None whatsoever. These thoughts are NOT Robbo's but those of the M.D.---and I am rather grateful to George being prepared to take the time to share them with me and I hope you can all take them on board and come to your conclusions IN CONJUNCTION with all other research and factors re. Lead Price, currency Annual reports etc etc....I Personally emphasize that the above comments are not to be taken as financial advice in any way whatsoever.

For me The THING that still strikes me vis a vis LEAD price, is that ALL Car Batteries currently Do require lead...A miniscule proportion of cars are currently hybrid....Like .00001% So then the corrolary is rather simple. Battery prices will have to be increased by the STronger larger operators---and since battereis aint a charity business, yep, there will be obvious resisitance from Car-Manufacturers...but then they DO need those batteries...and so the Normal Supply and Demand and Profit imperatives will play out...with an overall Net effect of the Stronger having more market share.

Yep, I'm overall now a bit more positive and even quite happy with the Progress of OTI--but still I respect those with a more bearish inclination than me who as you all know is more bullish on OTI.

Cheers,
Robbo
quote:Originally posted by winner69


quote:Originally posted by stephen

Hmmm. I've just been starting to study risk, after some stuff by Nassim Taleb (http://www.fooledbyrandomness.com/) caught my interest.




Fooled by Randomness is one book that everybody into trading and investing (or life in general)should read at least once a year.

Peter Bernsteins Against the Gods also gets a regularly skim through and well worth reading

KD
09-06-2004, 10:22 PM
Hi all of you (at risk of possibly offending anyone by ommission ;),

I had a good chuckle over these last posts - Robbo - you crack me up! Dimebag - fancy forgetting Robbo :D!!! Robbo - I have borrowed [:0] but have not used shares for equity so I won't face margin loans. However, as Cantab has suggested - the leverage focuses one's attention just as owning a fair share of the company (Cantab - don't sell a thing!). Am I bullish or bearish on OTI - depends on the time-frame - but let's just say - I wouldn't mind having a few more for the long haul and was sort of thinking the current conditions might afford some nice opportunities.... I have a much better appreciation of the company thanks to the collective contributions here so feel comfortable lifting my meagre stake.

Robbo - thanks for passing on those words from our MD.

cheers

KD

skinny
09-06-2004, 10:50 PM
Re - borrowing concentrating the mind - I borrowed 50K Euros at the start of the year to invest in US markets and I have actually done better there than downunder where investments have been funded out of salary and other incomes sources !

OTI is about 5% of the portfolio at the moment and I'm unlikely to change that position until after the next report is released, despite the generally positive feedback here. I figure if it does show weaker earnings due to the high lead prices there could be a bit of a sell-off, and even if the news is good and it rallies I'm more than happy to pyramid up into that situation [8D]

KD
10-06-2004, 11:18 PM
Hi folks - had a refresh on OTI/ATR historicals last night... OTI is indeed showing a very consistent record of growth in revenues, earnings, capital, ROC, ROE and margin expansion. Ditto even moreso for ATR...and their PE's are still very inviting (just had to check again to make sure).

Also checked out some of your stock picks - Dimebag how many stocks on the market with a PE of 1? I bet you know!

cheers

KD
10-06-2004, 11:29 PM
PS - Cantab - your immediate and substantial purchase a great endorsement of OTI and pleased me no end!

Dimebag
17-06-2004, 02:12 PM
Cantab

I am also optimistic about OTI's future, and I think you are correct. A share price of circa $1.00 in three years is on the cards if things go to plan.

$10m in earnings could be achieved from 10% margins on $100m in sales.

They made a 8.5% margin on sales last year, and this had been increasing considerably over recent years due to economies of scale kicking in.

They are talking of introducing premium lines so these products are likely to have a higher margin.

If lead prices retreat, and/or battery prices rise, 10% margins would seem comfortably attainable as sales continue to grow.

They did $31m in sales last year, but the new factory is to double output. Price rises and premium lines mean that once the factory is fully operational, annualised sales of $70m-$75m can probably be expected. Acquisition of further capacity, or contruction of yet another factory, should lift sales capacity to $100m within 3 years.

So at $0.16 OTI are a screaming buy IMO.

In my experience, markets look about 6-12 months out, so there is much profit to be made by casting one's eyes a little further out onto the horison.

I mean look at the profits that were made on ATR recently. The price was obscenely low to begin with, but the near-sighted punters sold it down a further 50% when the capital raising was being conducted. Talk about taking your eye off the ball!

OTI appear unlikely to deliver much in the near term, so there is nothing to move the price. People tend to focus too much on current earnings, not future earnings potential (as they should). Once increasing profits start to flow, the punters will re-evaluate the situation.

China is a great place to do business, and will continue to be such in the coming decades IMO. A rising tide of 8%pa (economic growth rate) is apt to lift most well-managed boats at a much more rapid clip than anything in the developed world.

Growth rates of 20%+ in sales should be easily attainable for many many years. (all this goes for ATR as well!) Valuation ratios of PE's in the single digits or low teens are completely out of kilter with this potential.

I believe a positive announcement (e.g. a strategic alliance of some description) would do wonders for OTI's price in the near term. I think it would move 20-30% or more inside a few days.

In the mean time the stock is liable to bob aimlessly around so a good one to accumulate over the coming year on weakness.

Cheers
Dimebag

robbo
17-06-2004, 11:07 PM
Ditto that cantab...me thinks the same as YOU do. IMO:) the days of getting OTI for 13-14 cents again might be found somewhere; if you look very closely in the rear mirror.[8D]
I mean sure, one may pick up some skerricks and/or morsels of $5000 worth here or there, but punting in say $25-$100, 000 worth--well I think that's starting to look like plus 16 cents territory now, and unlikely to revertto south of say 15 cents for any meaningful period or amount...I mean wasn't if Kerry Packer who did say you only get one Alan Bond in your life when he Sold Channel 9 for a cool Billion dolloars in the days when a bill was a bill(still a lot of dough!!!)--and then bought it back for 150million 18 months later. nice one. But I digress....
Also remember, June is traditionally the worse time for "selling shares" as people who are irrationally nervous dump before June 30 for tax reasons--and look at OTI's resilience in this month when aslo the microcap secot has been basicaly very very bearish and lagging behind most of the other indexes this last 2 months anyway...and with Greenspan over in the old US of A ... and the Fed again not freaking everyone with interest rates--and people looking more and more to China as the new Ouput capitalist Hub, well what more need I say.
Also say I did buy another tranche of these little beauties--OTI---at 17 cents and then I got sucker punched as I usually am very prone to do[:I][B)]!! by them bighters drifting to say 14.5-15 cents for another fortnight,(as bad as being dudded on cream sponge cake; to be sure cantab...) at the END of the DAY the buggers are Worth north of 25 cents anyway...and everything must eventually revert to the mean intrinsic net worth value.... or so the Keynesian theory says anyway!!!
Anyway... without further ado, I think this train is bound for glory,
Robbo

in the
quote:Originally posted by cantab


quote:Originally posted by Dimebag

So at $0.16 OTI are a screaming buy IMO.

Cheers
Dimebag



Dimebag, the last time you said that we know what happened.

I agree with you that punters don't look out far enough. I'm getting myself positioned for takeoff because I agree with you that 16c is ridiculous considering the medium term prospects. I've just purchased some more Aussie dollars today with a view to accumulation on weakness. I'd be happy to step up to 1m shares. What is concerning me is that while I'm waiting for the share price to weaken, the possibility of a share price moving announcement is getting that much closer. Still, I've got a reasonable stake.

Cheers

Cantab

robbo
17-06-2004, 11:14 PM
Ditto that cantab...me thinks the same as YOU do. IMO:) the days of getting OTI for 13-14 cents again might be found somewhere; if you look very closely... in the rear mirror.[8D]
I mean sure, okay, one may pick up some skerricks and/or morsels of $5000 worth here or there, but punting in say $25-$100, 000 worth--well I think that's starting to look like plus 16 cents territory now, and unlikely to revert to south of say 15 cents for any meaningful period or amount...Unless there is someone very generous out there who does want to sell them to me for 14-15 cents...I mean I will be only too happy to accomodate them...come on down...I mean wasn't it Kerry Packer who did say you only get one Alan Bond in your life-time... when he Sold Channel 9 for a cool Billion dolloars, in the infamous 1980's when greed was good etc... in the days when a billion $$ was a bill(still a real lot of dough!!!)--and then bought it back for only 150million 18 months later. nice one!!! But I digress....
Also remember, June is traditionally the worse time for "selling shares" as people who are irrationally nervous dump before June 30 for tax reasons--and look at OTI's resilience in this month when overall the microcap sector... has been basicaly very very bearish and lagging behind most of the other indexes this last 2 months anyway...and with Greenspan over in the old US of A ... and the Fed thankfully not freaking everyone with interest rate rises and spoiling the party--and people looking more and more to China as the new Ouput capitalist Hub, well what more need I say....
Anyhow... say I did buy another tranche of these little beauties--OTI---at 17 cents and then; as per usual; 'ol Robbo gets sucker punched... as I usually am very prone to do[:I][B)]!! by some stray OTI small icebergs drifting to say 14.5-15 cents for another fortnight,(as bad as being dudded on cream sponge cake; to be sure cantab...) at the END of the DAY the buggers are Worth north of 25 cents anyway...and everything must eventually revert to the mean intrinsic net worth value.... or so the Keynesian theory says anyway!!!
Anyway... without further ado, I think this train is bound for glory,
Robbo

in the
quote:Originally posted by cantab


quote:Originally posted by Dimebag

So at $0.16 OTI are a screaming buy IMO.

Cheers
Dimebag



Dimebag, the last time you said that we know what happened.

I agree with you that punters don't look out far enough. I'm getting myself positioned for takeoff because I agree with you that 16c is ridiculous considering the medium term prospects. I've just purchased some more Aussie dollars today with a view to accumulation on weakness. I'd be happy to step up to 1m shares. What is concerning me is that while I'm waiting for the share price to weaken, the possibility of a share price moving announcement is getting that much closer. Still, I've got a reasonable stake.

Cheers

Cantab

skinny
17-06-2004, 11:16 PM
Woah ! What happened to the lets-not-get-too-carried-away line ;)

My frantic (and I fear futile) attempts to doush the flames:

- Over the next 1-3 years China may not be a great place to do business at all if the slowdown in not well managed as some quite respectable analysts think (e.g. Andy Xie at Morgan Stanley). Even if a Chinese crash does not impact OTI directly it may be quite -ve for equities with Chinese exposures...

- We don't know yet Cantab what the profit will be for this year given margin compression. Not everyone has long horizons and I'm hoping that the stock will be sold off on the figures once they are released.

- We also don't know whether the expansion will utlimately go as smoothly a promised. As Star was pointing out from his personal experiences China is a DIFFICULT place to do business for all its promise. I hold RPL shares so know that only too well [}:)]

Halebop
18-06-2004, 09:16 AM
quote:Originally posted by cantab

...it would only take one half decent announcement to see OTI spike. ..

Devils Advocate: So with that same lack of liquidity, what does one half "poor" announcement achieve?

Dimebag
18-06-2004, 10:17 AM
I don't understand why so many people are so concerned about liquidy when they are supposidly making a long-term investment.

To be so concerned, one must be either:
(1) Not a long-term investor at all, because you anticipate the need or inclination to get out in hurry in the near term, especially if there are a few negative company or share price developments; or
(2) Do not trust your judgement enough to lock your money away for 5 years, and anticipate you will be wrong and need to cash out

A true investor isn't concerned about liquidity because they are buying a stake in the company which they don't anticipate a need or inclination to sell in the near term. "Locking-away" one's money for 5 years plus is what should be in prospect.

As to not trusting one's judgement, I would have thought that if this is the case, investing in the stock market at all is perhaps not such a good idea.

Dimebag

Dimebag
18-06-2004, 10:24 AM
PS

This liquidy issue is perhaps one of the biggest reasons that micro-caps have outperformed their larger-cap counterparts by a significant margin for so many years.

Liquidity scares so many buyers away that great growth companies can sell for rediculously low prices.

As the company grows, and the stock goes up, liquidity steadily improves such that more investors are prepared to buy in. As more investors buy in, the stock goes up and liquidity improves and this cycle can prove very profitable for early holders.

The best opportunities are always where you have a fundamentally attractive proposition where the majority of investing folk dare not tread.

Illiquid micro-caps appear to be prime candidates.

Dimebag
18-06-2004, 11:14 AM
Cantab

Is that you in there buying up large circa 150,000 shares plus bidding for another 50,000 on the open? ;)

Halebop
18-06-2004, 02:05 PM
quote:Originally posted by Dimebag

I don't understand why so many people are so concerned about liquidy when they are supposidly making a long-term investment.

To be so concerned, one must be either:
(1) Not a long-term investor at all, because you anticipate the need or inclination to get out in hurry in the near term, especially if there are a few negative company or share price developments; or
(2) Do not trust your judgement enough to lock your money away for 5 years, and anticipate you will be wrong and need to cash out

A true investor isn't concerned about liquidity because they are buying a stake in the company which they don't anticipate a need or inclination to sell in the near term. "Locking-away" one's money for 5 years plus is what should be in prospect.

As to not trusting one's judgement, I would have thought that if this is the case, investing in the stock market at all is perhaps not such a good idea.

Dimebag


I'll often take an interest in a low liquidity company. But OTI are in a different ballpark. Liquidity is almost non-existent. Over 90% of the 116m shares are in the hands of just 45 investors. The bulk of the 630 shareholders in the last annual report owned few shares - 370 shareholders owned an average of less than 4,000 shares each. Daily volumes are low. This single positve thread about OTI has probably generated enough volume to raise the shareprice all by itself.

If the company is successful liquidity will improve as larger holders move to sell their interests at higher prices. That's fine.

But realistically, a true investor should be concerned about liquidity. Professional long term investors know they make mistakes. Ask Buffett about Berkshire's textile business or US Air or selling Coca Cola in the early 80's when he should have been buying? When you make mistakes in business and investing you need back-up plans and strategies - operationally often called Disaster Recovery Plans. If you are wrong about OTI what is your backup? How do you sell even 250,000 shares in a thin market like that? The good news is it will still be easy to do. The bad news is the results would be hard to stomach.

I'm basically a full time investor although I still do some consulting and have an interest in a software business my partners and I are fostering through a start-up development phase (read: spend money and hope). I'm certainly not the wealthiest guy around (or on this forum) but even I could not invest a worthwhile sum in OTI because the free float is just too small. I'd probably push the shareprice above 20 cents if I wanted a million shares. I couldn't conceivably buy more and expect to purchase at anything resembling great value. God forbid if things went bad and I wanted to realise my loss and dump them.

However what I'd say is this: I am a "true" investor (for what it's worth) and I am concerned about liquidity. I'm not concerned because I think it will reduce my profits. I'm concerned because I want to mitigate losses. As a true (yet very fallible) investor, I know that sometimes this happens, despite my desires and analysis.

Halebop
18-06-2004, 02:50 PM
quote:Originally posted by cantab

OTI has a similar distribution of shareholders as ATR. With ATR more than 90% of shares are owned by fewer than 50 holders. The Top 20 own almost 90%.

The ATR register shows 611 out of 1158 shareholders without a marketable parcel and another 451 holders with 1001 to 5000 shares. Only 65 shareholders out of 1158 in total owned more than 5000 shares!

That lack of liquidity stopped some from buying ATR which was great because it made it easier for the rest of us, who back our ourselves, to pick up the shares that much cheaper and easier.

Cantab

Hindsight is a fabulous thing. We are always right! [:p]

skinny
18-06-2004, 06:43 PM
Call me cantankerous Cantab but I'm only paid once a month and was hoping to get some more in the previous 13-16c range....couldn't you all have held off ;)

Just kidding - great going and I agree it looks set to break out with sweet FA on the sell side according to the depth charts on access brokerage [:p]

AFC looks to be in a similar boat wrt shareholder concentration, depth and current demand. On Dimebag's comments I'm going to do quite well on these investments, on Halebop's I could get screwed if either dissapoint. Thanks to heaven that returns are log normal!

ps: HB - think I'll start a thread on NZX on professional investing...

robbo
18-06-2004, 08:44 PM
Cantab & Dimebag,
Me buy OTI shares. Neveeeerr;) Not without some derivative options on the sponge cake at any rate[:p] Yep this thread is getting rather interesting. TRUST skinny to try to put that contrarian brake of his on.:)
If Skinny keeps braking like that, and with me tailgating him and everything, I'll end up Skiny's a... and there's much better places to be I'm really sure of that.. [:I][:I]
Oh well, wer're maybe starting to approach getting close to the end game for the next phase of the CONSENSUS VIEW ON ORIENTAL.--OTI--
Can any one else nominate a share, such as OTI-- with a low P.E. of about 4 and Profits at the quantum of OTI,( I could quote shares being currently quoted at $1.10 with similar profits and more problems/issues than OTI...) with OTI's 3 years of increasing earnings per share, in a massively expansionary market( CHINA)--and Europe incidentally..., AND being well entreched in their niche stable market with excellent Contracts, and on-going guaranteed Sales locked in.... AND where Demand [b]massively outstrips Supply, where the biggest expansion for automotive is going to be, with some several years now of Proven excellent Management and Proven Performance, without being involved in exotic new Blue Sky High Tech...with a must have Product: for UNDER 20 Cents......!!! $1.00 in 3 Years. Me says 18 months.
By the way if anyone can nominate Proven ASX performers with 3 years of consistent earnings, at such low P.E's and such High Returns on Capital over 3 years...for UNDER 25 Cents then Pleeeeease[8D]Let me know!!
Such Massively undervalued Quality, like OTI-- with relative little downside cannot stay at this price for ever IMO. As I've said, it may flicker around 15 cents ago for morsels..but North is OTI's logical share price compass bearing IMO

Regards, Robbo.

quote:Originally posted by cantab

Yes Dimebag I'm in there somewhere;)but I haven't done any buying this morning. Maybe it was Robbo.:D

skinny
18-06-2004, 09:04 PM
Hey ! I'm an economist and we're contrarian by nature...always looking for rain clouds on a sunny day. It makes me downright uncomfortable reading nothing but p-o-s-i-t-i-v-i-t-y.

Robbo - rear ending would be a bad idea, you need to keep your nose clean I reckon, might need it to sniff out the sponge cake at the next OTI meeting :D;)

clearasmud
18-06-2004, 11:03 PM
I believe and hope OTI will pull back-maybe soon if you guys stop buying!
There next profit result won't be flash.

Halebop
19-06-2004, 12:15 AM
quote:Originally posted by skinny

AFC looks to be in a similar boat wrt shareholder concentration, depth and current demand. On Dimebag's comments I'm going to do quite well on these investments, on Halebop's I could get screwed if either dissapoint. Thanks to heaven that returns are log normal!

Well the good news is you always get screwed if a share disapoints. I'm happy to agree there is a compelling, if moderately speculative value opportunity here. I have even toyed with the idea of buying some - not many though, I don't want to be paying 50 cents! I agree on most everything positive people say except (is this becoming a theme?) the extent or probabilities of the risks.

Good luck all.


quote:Originally posted by skinny

ps: HB - think I'll start a thread on NZX on professional investing...


Hey what the!? Could there be such a thing? [:p]


Disclosure: Nil OTI & hardly anything in shares at all at the moment.

robbo
20-06-2004, 08:37 PM
Getting the distinct feeling you'd prefer I put the old high testorone and randy bull back into the back paddock to:"cool of for a while" Probably been charged up by too much battery power--boom boom.
Okay then, I resolve to put the bullishness out of harm's way for a while..here's hoping we can all avail ourselves of some bearish OTI at 13- 14 cents...as I write this even I am starting to falgelate myself and think what a total DOG this OTI really probaby is.
Orinetal Batteries. Some God forsaken Chinese batery manufacturer, no-one's ever heard of...Crap prospects. Crap opportunity. Crap liquidity. Below average earnings per share...
. Very average, if not mediocre earnings. Profit Guidance---what profit.Likely to be red ink losses for at least 12 month on the basis of all probabilities.
Unfortunately the Lead price will sink this OTI ship for years and years to come; and by next year we'll all be driving electric hydrogen cars anyway.
Yep. OTI is a minnow and will stay that way for the forseeable future. Hopefully can sell my holding, and just take some losses and move to different things...
Regards,
reformed bearish Robbo


quote:Originally posted by cantab

Skinny, it's official, Dimebag can move markets. :D It will be interesting though to see how the market handles the next profit report or to be more precise, the outlook.

Robbo, being that bullish you'd have to have an order in there. ;)

Cantab

Halebop
20-06-2004, 10:58 PM
Oh for Christ's sake Davidrob! They are a SCREAMING BUY! [:o)] Now shoot the bear and get back to the farm. We've got cows to milk. (I tried milking the bulls but it's not a story I want to repeat).

skinny
25-06-2004, 09:05 PM
Cantab - the depth charts are certainly interesting eh :D

On margins I agree that the compression can't last forever but my *guess* is that OTI wont get much relief from lead prices over the next 6 months to a year and if it comes it will be in the form of higher battery prices. Chinese demand for raw materials is still growing (albiet at a slower pace) and to date significantly higher lead production is yet to come on stream.

Actually, when I get a chance I'd like to do some modelling of the global lead market - I know its not your cup of tea but there could be some real money to be made on the LME ;)

KD
25-06-2004, 11:58 PM
Hi to Skinny in Belgium and all folks in Kiwiland and Robbo from the land of the Blues - Well there's certainly a bit of life in the OTI SP and agree it is looking good - perhaps not so much for those waiting patiently to buy at lower prices but it all looks healthy. One thing to remember with the domestic Chinese market is that, not only would we expect a greater demand by Chinese for vehicles but China is also experiencing an increase in car manufacturing for the export market (not sure where I read that but saw some stats) - each one of those new cars is going to need a new battery. Anyway watching OTI and posts here with interest as always. Good luck to all!


cheers

KD

Dimebag
26-06-2004, 10:08 AM
Yeah the lead price continues to show no signs of let up. Closed last night at US$897.5/ton.

Such a correction will be necessary if OTI are to begin to make serious headway. They need to generate operating cash-flow to continue growing.

Robbo: You mentioned that management stated they only anticipated part of the cost of increased lead prices could be passed on to customers. Did they intimate how much (i.e. what proportion)?

In the long-term, as Cantab mentions, if lead prices persist at their current historically high levels, one would expect to see an across the board compensatory increase in prices. But this will probably take some time, and only if OTI are among the cost-leaders in the industry. If not, the lowest-cost operators will sell product at levels that more inefficient operators will not be able to compete at, and will ultimately drive them out of business.

From what we have heard OTI are cost competitive, but they need be on the lookout for industry consolidation that produces competing industry giants. OTI must grow quickly.

Also, if industry supply is ample, don't expect correcting prices to ensue for some time.

It really depends on the economics of the industry and arguably more information in needed.

Dimebag

robbo
26-06-2004, 10:38 PM
hI, EVERYONE--kd, CANTAB, Dimebag, skinny-, haleop and all the guys....--

In response to Dimebags' very reasonable question, re. "by what degree" OTI--can pass on the historically all time unprecedented high lead prices, as in what was ACTUALLY said at the AGM,
my notes on this subject, reading between the sponge cake blots on my copy book:)[:p],
specifically at the AGM--meeting, yep it was kept to the general comment along the lines of: "we are making good progress on passing on battery price increases", without getting down to the nitty gritty of: the proportions.
Say Dimebag and others"... Wouldn't in a way; this be analagous to sheet metal steel for cars, say from, Bluescope Steel--BHP??, that when iron ore prices are up, these are passed on to the manufacturers...This is a classic economic theory issue we have here, I mean who actually cops it in the neck: the OEM manufacturer--(Oriental), the car manufacturer, the Car Dealer(wholesaler), or the consumer. I mean, where does the absorption ultimately rest, and as Dimebag alludes to: what proportion of each player in the chain takes a hit proportionally on profit??

err..you might be a little sort of interested, from an email I got 2 weeks ago, in my quoting from the MD of OTI, George Su's email to myself; from a fortnight ago...
*** It says: "I'm happy to say that our business is doing comparitvely well under the current circumstances and we ARE making good progress on the strategic alliance front. Some reduction in lead price will help a great deal but every battery manufacturer is facing the same problem. They are doing even tougher.
....The new factory is ON schedule and looks VERY impressive already." This quote, from Mr Su, a fortnight ago, is verbatim with no embellishment.
Interestingly, George Su also has actually asked me to give him an idea of some corporate communication/public relations companies...here in Sydney, "to keep the ASX sharemarket and market generally, through the Aussie financial press informed."

By the way; OTI have always been very reticent on blowing their own horn...in the pst, in between Results...
However, at the AGM, the chairman, Mr Gerrard Machmahon and Mr Corrigann(non-exec Director and CEO of Patricks) did say, to my recollection and notes at the OTI AGM...that they have complete confidence in this management TEAM--and referred specifically to two other directors, and a manager at the PLANT-- apart from George Su, that he had known of them personally for some years BEFORE he, himself(Corrigan said, to my memory) became a director, and had a extremely high respect fo their track-record in OTI and other business operations, and that he (Corrigan)--had a excellent regard for their respective integrity and ability to consistently deliver, year on year--from both a innovativeness, COST CUTTING(Ruthless, with a capital R in this respect), high and proven technical expertise, and superiority in the Lead-Battery Industry(which; by the way, are still used in the Toyota Prius Hybrid--bec. they still need petrol as the starter..)&gt;

He also commented, to my rather clear recollection,on their commercial business acumen, as goes taking advantage of this UNIQUE window of business demand opportunity historicallyspeaking. It is quite unique in this respect.

This Level of Demand, for Car Batteries; it was pointed out at the AGM, is especially so; due to the rather happy coincidence of plainly to be seen socio-political and global economic convergence of economic demand forces that we are seeing in China's take up, of motor car usage among it's truly Huge middle class populace.
The other thing that was remarked upon re. OTI's mgt, was their v. good deal-making abilities, which is well complimented with their socio-political connections and ability to get a larger degree of relatively exclusive style supply long term arrangements.

For me this points to monopoly type advantages with the Manufacturers as far as Supply Contracts, of vital car battery's as a critical and non n

Alban
27-06-2004, 03:03 PM
Since I can't remember any of our usual charting suspects commenting on OTI yet, I thought it would be interesting to post a chart. Here's OTI's weekly chart for the last two years. A confirmed uptrend I believe, with a breakout to new highs in the last week (to be confirmed.) Looks promising.

http://emigratenz.org/OTI_weekly.jpg

thereslifeafter87
28-06-2004, 01:46 PM
Reading Robbo's post has confirmed in my mind my reasons for staying out of OTI.

The major factor is that OTI does not operate in a business with good economics. Unless they are the lowest cost supplier, they will not do well (can anyone confirm this? has anyone looked at other battery manufacturers?).

Let me explain my reasoning.

OTI is operating in a booming market. Demand for batteries is so high that they can only meet 50% of their orders. BUT, this has been offset by the high price of lead.

Robbo in his post has mentioned the high % of total lead consumption by battery manufacture. It is not unreasonable to conclude that whenever there is a cyclical high demand for batteries, there will be a corresponding high demand for lead. Thus, OTI's margins will always be squeezed during booms, and they will not be able to profit significantly from economic bouyancy.

I have looked at the lead chart at the link provided by Dimebag, and he is quite right in pointing out the significance of the recent increases compared to the recent history of the lead price. This would point against my theory. It would be interesting to see a chart going back further than 1998 though...

Everyone on here talks of a huge reprieve to OTI if lead prices fall, but everyone also expects OTI to pass on costs to customers. These positions seem opposed to each other. Surely if OTI is expected to pass on increases in cost to customers along with the rest of the battery industry, then it can also be expected to pass on savings to customers - competitive pressures will dictate this. This means the hoped for reprieve will not eventuate, and profits will not be significantly boosted.

OTI may be well positioned to acquire some of the competition,and thus increase production, but unless they are making profits on the sale of their batteries, there is not much point in producing more batteries is there?

It appears to me that OTI produce commodity products (how difficult is it to make a battery?), are heavily dependant on the price of lead, and thus have no ability to maintain profit margins over time.

Unless someone can prove that they have a competitive edge which allows them to increase prices above other suppliers without losing customers then I can't see any reason to invest (other than the chart provided by Alban). Sometimes cheap companies are cheap for a reason, and no matter how good management is they won't outperform over significant time periods.

I've also noticed a general push on this thread to compare OTI to ATR.

There are significant differences between the two.

ATR has a number of products in a number of areas involving zircon. OTI has one product.

ATR is vertically integrated so can offset rises in supply costs, and indeed profit from such rises.
OTI is subject to the fluctuations of the market.

ATR has highly specific products tailored to specific companies needs.
OTI makes batteries.

Of course, if the share price doubles in the next year then I could be left with a [B)] , however long term I believe I am right (subject to being wrong about the competitive advantage).

Comments/responses would be much appreciated. I have enjoyed reading the contributions on this thread.

Dimebag
28-06-2004, 02:37 PM
TLA87

The price of lead is determined by two things - demand and supply - not just demand.

Commodity prices often fluctuate sharply in small amounts of time. The recent stratospheric increase in lead prices is certainly not the first time such movements have been exhibited.

The key reason is that demand can increase quickly, but an increase in supply generally is subject to much longer lead times. When prices rise, supply of a particular commodity most certainly increases, but the phase in period can take some years.

For this reason, it certainly cannot be concluded that lead prices will always be this high when demand for batteries is high. If global lead supply is ramped up to meet this increase in demand, lead prices are likely to stabilise and ease over time from current levels.

But even if a lead price correction doesn't ensue, as we have discussed, price rises should compensate for the rise, thus sustaining long-term margins. But during the transition period, losses may well be incurred. If lead prices return to historic levels, then I imagine battery prices will be rated downwards.

Thus, in all cases, "normal" margins should be attained given time. And if OTI were to make normal margins on next year's projected sales, we would be looking at earnings per share of circa 4-5cps, so OTI's PE ratio is only cira 4-5x.


Are these margins sustainable?

You mention that you felt the industry economics were weak, and to some extent I agree. I certainly agree that being cost-competitive will be extremely important in the long-run.

There are two things to mention in this regard:

Firstly, OTI are based in China which gives them a cost advantage over manufacturers in other parts of the world. This advantage has allowed them to sell successfully into Europe over the past few years.

They will also have a cost advantage in terms of reduced transportation expense selling into the domestic battery market.

Secondly, the industry is currently quite fragmented, which means there are no large, dominant players which can price OTI out of the market. All indications at present are that OTI are extremely cost-competitive relative to its industry peers.

However, the current industry conditions mean that it is very probable that there will be an industry shake-out. Large scale industry consolidation is very likely. To my mind it is critical that OTI participate in this process and move quickly to secure a dominant position in China with a sustainable cost advantage, because if industry giants emerge, they will squeeze OTI in the long-term.

In this regard, OTI are quite well placed currently, and they are seeking a strategic partner which is a very promising development. Robbo has talked about this. This is why if such an agreement is secured, we would expect OTI's price to increase considerably as 4-5x earnings is far too low for a company with the potential to become the dominant low-cost player in the Chinese battery market.

Lastly, China is booming and demand for batteries can be expected to increase at at least 10%pa moving forward into the foreseeable future. Even if OTI were only an average competitor in a commodity market, commodity producers often do well when demand is firm. Its when demand slackens that things get really ugly. So in this respect China's economic performance would be critical to OTI's continued success.


Finally, I must agree that there are considerable differences between ATR and OTI. However, the main difference lies in the stage of development each company is in.

ATR have grow past there stages of early development and are now in a very productive growth phase. They have secured their dominance, and have created secure competitive advantages, and they should continue to do very well from here on in.

OTI are still a much younger company in their comparitively early stages of development. Risks are clearly much higher as such competitive advantages and dominance have not yet been secured and thus success in not assured.

However, OT

TheBossMan
28-06-2004, 03:45 PM
Sorry if this was dealt with already, but are there technology issues?

If lead is not sustainable in the long run, what else can be used? How well is OTI placed in this regard?

Disc:I havent done any research yet and I admit buying some OTI at an avg of .163, purely on the basis of this thread. So, thanks for the 15% increase so far.

skinny
28-06-2004, 04:11 PM
Hello again OTI aficionados,

Nice debate again - hot like the price action !

I’ve done a bit of research on lead prices in the weekend (no life I guess ;)) and the spike we’ve seen over the past year as Dimebag says isn’t something that hasn’t occurred in the past over a longer time perspective. Basically the price (USD per ton) has done the following since the mid-60s:

- stable at around $1000 to the mid-70s
- very volatile mid-70s to mid-80s (not surprising given the inflation environment), ranging in price from $500 to $2300 – considerably higher than the $890 price at the moment on the LME!
- low and stable prices from the mid-80s to mid-2003 at around $500 per ton.
- mid-2003 to today – a steep increase in prices as we know.

What about going forward? No one knows for sure but the link provided by KD to the Magellan lead project and its main developer, Ivernia West, sure was interesting. Ivernia report commodities ‘experts’ think a structural shift in the lead market has occurred and lead prices will stabilise at around USD 0.35 per pound or $700 per ton in the medium term (1 to 3 years), given current and expected lead production schedules. That’s about 20% lower than today’s price but still some 40% above the average seen from the mid-80s. If they are right then there is no doubt that ultimately battery prices have to rise.

Now I come to the real point of this message! What do folks think about ‘vertically integrating’ their investment in OTI by taking a stake in a lead producer, in particular Ivernia (trading as IVW on the Toronto stock exchange)? Could be a good way to manage risk should OTI have difficulty in fully recouping margins over the next 1-2 years, no? And if I remember my modern portfolio theory right we’re ‘sposed to try and find investments whose returns are negatively correlated to improve return per unit of risk.

Of course such an investment needs to be with the right company and at the right price so I spent a few hours researching IVW. They have a relatively new management team, with the CEO (a Mr. De’ath!) & COO joining in 2000. Both have loads of experience at major companies (Rio Tinto and Anglo American) and seem to have done a good job so far turning a company around which was near bankruptcy when they joined. Non-performing assets were sold off and the balance sheet was cleaned up so now they are sitting with little debt, a pile of cash, and only one asset – the Magellan lead mine in Western Australia for which development funding is secure. Like OTI this makes valuation of the company relatively simple. Essentially, it’s just the intrinsic value of IVW’s lead mine, which I had a stab at estimating by putting together a spreadsheet to calculate the NPV of the cash flows from the mining operation less expenses. Taking the existing cash position and CAPEX plans IVW expect; the production schedule and per-unit extraction costs (0.13 US cents per pound) IVW expect; Oz government royalties of 5%; the Canadian corporate tax rate of around 25%; and assuming: head office costs at 5% of sales, full depreciation of the initial capex costs of the mine over its life (estimated at 12 years), full dilution of the existing equity base via 100% exercise of current options and warrants, and a discount rate of 7.5% on the cash flows (my hurdle)....I came up with the following numbers:

- if lead price stay at current levels over the life of the mine the intrinsic value per share is 51c, 173% above the current share price (21c Canadian)
- if lead prices were to go back to the companies target ($700 US per ton) immediately once production starts (2005q1) and remain there the intrinsic value is 37c, 73% above the current share price
- if lead prices were immediately to fall back to $500 per tonne the current share price is fully valued.

Interesting eh?
I’d be happy to pass on the spreadsheet too for the real pros like Dimebag or Halebop to have a look at – no doubt it’s a bit screwy in places!

disc: hold 150k oti shares and loving it so far [:p]

Halebop
28-06-2004, 05:45 PM
quote:Originally posted by skinny

...What do folks think about ‘vertically integrating’ their investment...

...I’d be happy to pass on the spreadsheet too for the real pros like Dimebag or Halebop to have a look at – no doubt it’s a bit screwy in places!


Hi Skinny,

Thanks for calling me a "pro" but that remains to be seen!

I think you have gone to a much more detailed level of analysis than I normally go for. I just look at things like ratios and consistency - which is why I rarely invest in resourse companies because I don't rank my economic cycle forecasting skills. You're definately much better equiped to rate this sort of offering than myself! :)

I'm not adverse to risk though and tend to prefer to concentrate my choices rather than "hedge my bets". Historically, any investments I've made that might be seen as "negatively correlated" (goodness, I sound like an economist!) have been an accident of relative value rather than intent. Of course, if you asked me why I did this I would have sold you on it's beta smoothing properties! [:p]

All the same, I might have a look at Ivernia.

I'll ask you a question too: How do you derive a discount rate of 7.5%? (I'm just interested). Also a bit worried when we both arrived at a $7 DCF valuation for MHI and I used a 10% discount! [B)]

skinny
28-06-2004, 07:44 PM
Hi there Halebop, economists make the worst forecasters as they see too many alternatives, invariably stick to the middle-ground, and hence miss both the timing of changes in the cycle and the size of the peaks and troughs!

For the discount rate you can relax - I simply add 200bp to peak short-term bank interest rates over the cycle. For NZ this is about 10% and that is what I used in the MHI calculation :)

p.s. one other favourable factor about Ivernia I forgot to mention is that the NZD is near its historical high against the Canadian dollar. This should provide a bit of a cushion if all does not go to plan as well as Ivernia hope.

slam
29-06-2004, 11:37 AM
Hi All
Someone just got keen on OTI.
Biggest bid I've seen on this one. Are we expecting something soon? or is it just this thread ;)

Cheers
Slam

Dimebag
29-06-2004, 11:52 AM
Great analysis Skinny

As you mention, finding such negatively correlated stocks is the most efficient way to diversify. In all cases, such diversification is definitely optimal provided both investments are as promising as each other. If not, then there is a real cost to diversification, as eggs are being taken out of a superior basket and put into a somewhat inferior basket.

Whether the diversification is optimal in that case depend on whether the benefits exceed the costs, and this will ultimately depend on the particular investor's situation and risk preferences.

Personally, I'm like Halebop and are less interested in risk minimisation. If I think the upside at OTI is considerably higher than at IVW, I'd rather put all my eggs in OTI's basket and take the risk.

In theory, that discount rate you use is probably a little bit too low. There is a reasonable amount of systematic risk to resource stocks as commodity prices tend to be quite highly correlated with global economic performance.

Also, in any case it is also unlikely investors would ever price a resource company on just a 7.5% expected return, given the general uncertainty of returns (despite what portfolio theory might say about diversifiable risk).

Still, a very sensible idea Skinny.

Regards
Dimebag

(Slam yes stock now bid at 20c!)

MeNoBatty
29-06-2004, 12:41 PM
I'm with TLA87 on this one. Lead batteries is a dirty, old industry. Low margin, dog-eat-dog sort of stuff. There is a reason why this has a low PE.

The only thing the sparks some interest for me is Mista Corrigan on the board. He is the master of ruthless. I remember when he took on the warfies in Melbourne. That was a corker, and look where Patricks are today. Management is everything and this appears to be OTIs strength at the moment.

Good luck.

Dimebag
29-06-2004, 02:11 PM
PS

Skinny

Perhaps you should forward your analysis on to OTI's management (or I'm sure Robbo would be happy to do it - he seems to have ready access to management). Maybe OTI would be well advised to consider vertical integration themselves?

Dimebag
29-06-2004, 02:22 PM
TLA87/MeNoBatty

In my experience, looking at the "big picture" isn't always conjusive to reaching the best conclusions for an individual company, especially when the company is a small dynamic one.

Legendary investors such as Buffett and Lynch have always been extremely averse to simply extrapolating the big-picture to every company in the industry. Clearly, the industry / macro-economic background is a factor to be borne in mind, but it should never be conclusive.

There are examples abound of well managed companies that have succeeded beyond measure in tough industries, provided they are well managed and are competitive.

And as myself and Cantab have mentioned, there are very real competitive advantages emerging at OTI (and the quality of management appears very high and is yet to be challenged):

(1) OTI possess very real cost advantages vs their international (non-China) competition, especially selling into Europe.
(2) OTI have emerging product quality and delivery advantages also
(3) The existance of both 1 & 2 are buttressed by their recent sales growth track record
(4) OTI would also appear to have advantages against their Chinese competitors going by their most recent performance (based on anecdotal evidence spoken of by Robbo). There are several reasons for this:

The Chinese market place is far from a fully developed, perfectly competitive market. When looking at commodity businesses, the ones where even well-managed companies continue to struggle invariably exist in very well-developed, ruthlessly competitive industries, such as airlines. There are few market imperfections restricting full bore competition. This should be distinguished from industries where the competitive landscape is less developed.

I believe the latter situation persists in China. Why? Firstly, the market is very fragmented, as discussed. There are no dominaring industry giants in China with cut-throat pricing. And secondly, as Cantab mentions, and as has been discussed on previous occassions, the importance of local relationships when doing business in China cannot be overstated. These restrict price-competition.

Again, results to date would tend to validate these views.
Well placed, well managed companies can still do very well even if the industry segment is not the best.

Those are my opinions
Dimebag

Dimebag
29-06-2004, 04:38 PM
The stock is doing alright today. Up 4c to 23c as I type.

Nice profit of A$22,600 for Cantab. Not a bad day's work mate :D

Dimebag

robbo
29-06-2004, 04:56 PM
Re: Menobattys concerns with OTI's being a "dirty old industry."--

There is a Jewish famous proverb about gold to be found in:"dirty boring staid old" Industries--especially where they have proven boring old technolgy.

Does anyone know this Jewish saying/proverb--I'll have to look it up; if no-one can help me here....

Personally I love proven staid old, even dirty and boring must have favourites--AT THE RIGHT PRICES---where the Co. concerned has HUGE HUGE markets and unique competitive pricing power--and proven reliable management and successful track-record--LIKE OTI :):Dby the way, my calcs still put a 11% plus profit!... on the basis of last years revenue, : and, as has been said repeatedly on this site, at some stage those batteries must rise their price..(Supply and Demand must eventually kick in to restore equilibrium...always has, and always will...)
Why do I like proven boring consumer Brand/products Menobatty??: Well, have a look on the ASX at the share-market price performance of Centennial Coal, at a traditional printing co. called Penfold Buscombe--PPR --, or even PMP Printing for that matter--(PMP)both co's have had a share Price Increase of over 240% in last 10 months or so,and also Salmat mailing services or , Coca Cola and Gillette Razors in America, Colorado Shoes here in Oz,old fashioned technology tooth amalgam for teeth fillings; like as in SDI's dental products....( outstanding share price increase of 0ver 900% in lst 3 years), boring dirty old chemical companies like say Astron Chemicals (ATR) with a 900% share market gain--in 12 months-- and still ready to do another 350% minumium; Fleetwood caravans--(FWD)same basic old caravan design and relatively flimsy construction IMO--for last 25 years--share price increasiong at a compound rate of over 85-90 % a year, Fantastic Furniture (basic traditional no frill furniture mart--bed, tables and sideboards, and book-cases--share price increase of over 65% every year for past 3 years,old fashioned Victa lawn mowers, and hot water Sunbeam kettles to make a basic cup of hot water for tea or coffee--now known as GUD Industries, ASX code GUD--a superstar ASX performer--with over 85% a yaer share-price increase; these last four years, another traditional company is the basic; old home construction pink bat insulation business called Cool N Cosy (COS)--very basic old fashioned, been around for donkeys--look at their share price growth this last 9 months; Baxter (BAX) blood bags, the ultimate old fashioned, bloody and dirty blood and urine hospital consumable-dispensable product commodity--been around basically same product for 25 years--very old fashioned, and dirty--share price up 150% plus this last year....neeed I give more examples.....
Menobatty, definitely Give me old dirty boring stable "must have everyday consumables with proven old tech any day"-- over the new fangled, yet to be taken up dot coms or bio-tech wonderkids ANYDAY---and give me more safety and security of my precious capital...and often you can truly benefit--(IMO) from the overlooked less glamourous sounding...but true gritty, boring, safely compounding --"sleeper" stocks like OTI....

***The great tthing about OTI menobatty---is that HARDLY ANYONE IN AUSTRALIA--knows about it. Luckilly for us, this website is primarilly a KIWI contraption---and hardly any Aussie stock-brokers in Aussie, know about OTI.
Also menobatty, bec. OTI is still only capped at about--$24 million--- and has a strange sounding name, rather than XYX Car Batteries--OTI has slipped under the radar. So therefore there is a golden opportunity for us people with access to this New Zealand based site to snare OTI as a bargain...while it's price and relative maturity in the market and financial coverage and OTI's price earnings is still remarkably very low...(I mean less that 25 xcents for a share in this company...)and, might I add, before ;) the new second factory OPENS in September/OCtober--and before they acquire and or merge with another player in the Chinese car battery

Alban
29-06-2004, 05:29 PM
quote:Originally posted by Alban

I also bought a few OTI today, nothing on the scale of Cantab though - thank you to KD for your analysis and also to Cantab and Dimebag


Was just looking back to the first page of this thread which began in March and I should say thanks again guys - and I only wish I now had bought on the scale Cantab did.

Up 47% so far with more to come in the next few months, market willing.

stephen
29-06-2004, 05:32 PM
Although Jewish, I can't think of that saying. But I commend to you the famous Yorkshire proverb, "where there's muck there's brass".

thereslifeafter87
29-06-2004, 05:50 PM
Well :-) Looks like I've stimulated some debate!

Thanks for the responses guys, I can see why you are bullish.

Well done to all those who are already well in the black.

skinny
29-06-2004, 07:34 PM
TLA87 - we've been debating this for a while ;)

Robbo - I'm not going to tell you to slow down this time. No sense standing in front of a freight train and I'm up 80% now on my initial purchase [:p] Good points on the boring. I get sectoral reports from Goldman Sachs and the best performing sector for the past 30 years in the US has been boring old consumer staples returning around 16% p.a., which ain't bad for low beta stocks. Within that group breweries have returned an astonishing 18.5% p.a. Imagine getting that each year for 30 years!

Dimebag - I agree the return for IVW does not look anywhere near as good as OTI and you could in theory push up the disc. rate. In any case I'm reading the IVW board in Canada now for insights into the lead market and will pass on any gems I come across there. Some IVW bulls (as you might expect) think the lead demand/supply imbalance is more dire than what the futures suggest and the s*it will really hit the fan next year. Its more this extreme case that makes me think taking a stake in IVW would be worthwhile given it would help stabilise returns across the 2 investments. At any rate, I'm not sure whether OTI would be interested in my analysis but certainly perhaps OTI should at least look at forming a long-term relationship with IVW (or any other lead producer) to secure voume and prices if they haven't already done so....Robbo do you mind asking OTI mgmt whether they have thought about forming a business relationship with any of the lead miners ?

Alban - I wouldn't feel too sore in not getting as much as you might liked with hindsight - we've got another little gem in AFC (I think I remember seeing you hold some too Dimebag?) waiting to shine through. If we could just convince Cantab to scoop up the present scrip I'm sure it would fly [:p];)

p.s. just kidding Cantab and congrats on the fat paycheck yesterday!

KD
29-06-2004, 10:25 PM
quote:quote:
--------------------------------------------------------------------------------
Originally posted by Alban

I also bought a few OTI today, nothing on the scale of Cantab though - thank you to KD for your analysis and also to Cantab and Dimebag

--------------------------------------------------------------------------------


Was just looking back to the first page of this thread which began in March and I should say thanks again guys - and I only wish I now had bought on the scale Cantab did.

Up 47% so far with more to come in the next few months, market willing.



When I first took a peek at OTI they were 5 cents and were almost double that before I bought in - Glad I did but I'm sure I thought I'd missed the boat at the time. Agree Alban - wish I'd bought more too but I'm starting to see thing from Robbo's perspective - the boat may not have even hit the water yet! By the way, anyone got a 20 year view on OTI? - that's my timeframe.

Good luck to all!

KD

stolwyk
30-06-2004, 12:18 AM
Thanks guys,

Got a few some time ago. Have referred to them on HC during the last 2 days; no need to, there aren't any shares around unless one pays.

The system is gapping up every day and the "chimney stack" is rather steep, but still they come (1 year chart):

http://bigcharts.marketwatch.com/javachart/javachart.asp?symb=au%3Aoti&time=&freq=

Not too much different on a 3 year chart:
http://bigcharts.marketwatch.com/javachart/javachart.asp?symb=au%3Aoti&time=&freq=

No need to ramp the stock as it is already doing it very nicely by itself!

Running out of shares.

Gerry

skinny
30-06-2004, 03:44 AM
...well the AGM for IVW is tommorrow which usually causes a bit of a sparkle and I couldn't resist the idea of holding both the lead mine and the battery maker...just picked up 37k shares at 21c on the Toronto exchange. Between US oil and gas stocks, ION, OTI and now IVW I'm really screwed now if the internal combustion engine ever goes out of fashion [B)];) And I don't even own a car [:p]

slam
02-07-2004, 07:25 AM
Hi All

thekiwi started a thread on this one "ZFX - Zinifex Ltd"
After reading skinny's post about lead, thought this may be of interest.
Don't know much yet about the co but thought it may be an alternative to skinny's option as it is an Aus co.

Profile
Zinifex Limited (ZFX) is one of the largest integrated zinc and lead producers in the world. The company's operations include the mining and processing of zinc and lead ores and the smelting of zinc and lead concentrates. ZFX also produces significant amounts of silver and lesser amounts of copper and gold.

SMELTERS: The Budel smelter is located in the Netherlands and produces around 210,000tpa of zinc. The Clarkesville smelter is located in Tennessee in the USA and produces around 110,000tpa of zinc. The Hobart smelter is located near Hobart in Tasmania and produces around 250,000tpa zinc. The Port Pirie smelter is located in Port Pirie in South Australia and produces around 250,000t of refined lead, 40,000t of zinc and 450,000kg of silver per annum.

Their IPO was in March/04 I think and they have just had a profit upgrade from 13.6m in their IPO pros of another 30m.:)

They maybe worth a look at.
I will do some more digging and post on the ZFX thread.
If anyone else has any info on them, would be much appreciated

PS thanks for the great posts on OTI guys.

Cheers
Slam

slam
02-07-2004, 11:32 AM
Who's trying to cap this with 483499 at 27c ;)
going to fast for someone

Cheers
Slam

robbo
02-07-2004, 06:15 PM
Don't worry, they won't manage it: I am just going to calmly drive over them with my steam train if they try...;)[:0]

Robbo


quote:Originally posted by slam

Who's trying to cap this with 483499 at 27c ;)
going to fast for someone

Cheers
Slam

slam
05-07-2004, 09:54 AM
You go Robbo:)

skinny
07-07-2004, 02:37 AM
I got some interesting feedback from atendees of the AGM for IVW, the Canadian company starting the lead mine in WA from the first quarter of next year. Basically management's expectation is that high lead prices are here to stay for the next few years and there is a possibity of a big price spike later this year as inventories run really low. This appears to have started to be priced into the futures market on the LME, with the 3 month contract up from $700 US tonne to $867 since mid-May, which is nearly back to Feb highs. However, as yet the 15 month contract is still holding in at around 700 US. This may be too optimistic - see quote below for some analysis of the market I picked up off an IVW holder, interesting numbers on battery exports from China which at any rate suggests there is no problem yet on the volume side!

Anyways, management of IVW are planning to travel to China shortly with the express purpose of setting up long-term supply contracts with the battery producers.

Robbo - since you are in contact with OTI management do you mind asking them if they have been approached by Ivernia West yet in this regard? If not then perhaps the onus is on us shareholders to let them know...the contact details are:

Ivernia West Inc.
Suite 400, 44 Victoria Street
Toronto ON Canada M5C 1Y2
Phone: 416 867-9298
Fax: 416 867-9384
Alan De'ath, President & CEO; Kenneth Sangster, Executive Vice President & COO; Richard Perfect, Controller

cheers - just let me know where I need to send the Belgian chocolates to ;)


quote: Information released by China Customs on June 25th, 2004, shows that from Jan-May 04 6.69 Million SLI batteries were exported, a 13.2% increase year over year (YOY). More importantly, 39.7 Milion batteries were exported of the "other" variety. This category showed a 24.2% increase yoy. Of note here is the fact that May alone saw over 9 million batteries exported which is well ahead of the 2004 pace. Thus May showed a decided acceleration over Jan-April. Also keep in mind people that last year they expoted just over 80 Million in this category and that was a 33.7% increase over the previous year. Thus over a 2 year period, they are on track for a two year total percentage increase of 66%

Now given that most smelters seem to be producing about the same or less lead (the main exception being Yuguang Gold-Lead Co.Ltd), this would imply that China's smelters and battery manufacturers are compelled to import refined lead or seek concentrates for their smelters- there is no way around this fact. Absolutely no way!

They (Chinese lead producers/agents/smelters/writers) may say prices are too high but they will be (and have been!) buyers of lead (10 tonnes here or 12 tonnes there) because they have to stay in business even if their margins are squeezed! This is what I am seeing. Long term (next 2 years) it would appear then that we will see 37/38 cent/lb or $825/tonne lead for quite some time until supply starts to overtake demand in the balance. That moment seems far away at this point.
]

robbo
07-07-2004, 05:43 PM
Very good job Skinny. Have now sent your excellent research and worthwhile information to OTI's Managing Director. Trust, that this is as good as SENT skinny!!!..Turning to more pressing and important matters...re. the chocolates you OWE ME BIG TIME !!, am still going through some major inner conflicts; over whether to go for the inner centred caramels, or the inner centred mint variety. OH THE TORMENT OF IT ALL......He..ee..lp!!

EXTREMELY WELL DONE Skinny. Your a total legend mate...

Robbo


quote:Originally posted by skinny

I got some interesting feedback from attendees of the AGM for IVW, the Canadian company starting the lead mine in WA from the first quarter of next year. Basically management's expectation is that high lead prices are here to stay for the next few years and there is a possibity of a big price spike later this year as inventories run really low. This appears to have started to be priced into the futures market on the LME, with the 3 month contract up from $700 US tonne to $867 since mid-May, which is nearly back to Feb highs. However, as yet the 15 month contract is still holding in at around 700 US. This may be too optimistic - see quote below for some analysis of the market I picked up off an IVW holder, interesting numbers on battery exports from China which at any rate suggests there is no problem yet on the volume side!

Anyways, management of IVW are planning to travel to China shortly with the express purpose of setting up long-term supply contracts with the battery producers.

Robbo - since you are in contact with OTI management do you mind asking them if they have been approached by Ivernia West yet in this regard? If not then perhaps the onus is on us shareholders to let them know...the contact details are:

Ivernia West Inc.
Suite 400, 44 Victoria Street
Toronto ON Canada M5C 1Y2
Phone: 416 867-9298
Fax: 416 867-9384
Alan De'ath, President & CEO; Kenneth Sangster, Executive Vice President & COO; Richard Perfect, Controller

cheers - just let me know where I need to send the Belgian chocolates to ;)


quote: Information released by China Customs on June 25th, 2004, shows that from Jan-May 04 6.69 Million SLI batteries were exported, a 13.2% increase year over year (YOY). More importantly, 39.7 Milion batteries were exported of the "other" variety. This category showed a 24.2% increase yoy. Of note here is the fact that May alone saw over 9 million batteries exported which is well ahead of the 2004 pace. Thus May showed a decided acceleration over Jan-April. Also keep in mind people that last year they expoted just over 80 Million in this category and that was a 33.7% increase over the previous year. Thus over a 2 year period, they are on track for a two year total percentage increase of 66%

Now given that most smelters seem to be producing about the same or less lead (the main exception being Yuguang Gold-Lead Co.Ltd), this would imply that China's smelters and battery manufacturers are compelled to import refined lead or seek concentrates for their smelters- there is no way around this fact. Absolutely no way!

They (Chinese lead producers/agents/smelters/writers) may say prices are too high but they will be (and have been!) buyers of lead (10 tonnes here or 12 tonnes there) because they have to stay in business even if their margins are squeezed! This is what I am seeing. Long term (next 2 years) it would appear then that we will see 37/38 cent/lb or $825/tonne lead for quite some time until supply starts to overtake demand in the balance. That moment seems far away at this point.
]

KD
07-07-2004, 11:28 PM
KD feeds the scrum - Skinny takes the ball - flick passes to Robbo who scores in the corner with an email to management - it doesn't get any better than that (certainly not in State of Origin anyway)...:([xx(][B)]

robbo
08-07-2004, 02:04 PM
Maaa...te...can't resist this one...Go the Blues !!

Robbo
In and gloating... (the Winner Is....!! Sydney...NSW)


quote:Originally posted by KD

KD feeds the scrum - Skinny takes the ball - flick passes to Robbo who scores in the corner with an email to management - it doesn't get any better than that (certainly not in State of Origin anyway)...:([xx(][B)]

robbo
08-07-2004, 02:09 PM
By the way skinny, what do you know re. IVW, the company in Canda. Are they thinking of dual listing on the Aussie ASX ? What is their current market cap in Aussie dollars terms at a rough guess. Good current revenues/profits?? Be great if you knew mate.

By the way, my email system now tells me that OTI Management Has just Read my email, outlining, you excellent research and information to pass on vis a vis IVW --so they've officially got it.:) We'll see if they they acknowedge whether it was of interest to them, and I'll let you know.

Cheers.

Robbo


quote:Originally posted by skinny

I got some interesting feedback from atendees of the AGM for IVW, the Canadian company starting the lead mine in WA from the first quarter of next year. Basically management's expectation is that high lead prices are here to stay for the next few years and there is a possibity of a big price spike later this year as inventories run really low. This appears to have started to be priced into the futures market on the LME, with the 3 month contract up from $700 US tonne to $867 since mid-May, which is nearly back to Feb highs. However, as yet the 15 month contract is still holding in at around 700 US. This may be too optimistic - see quote below for some analysis of the market I picked up off an IVW holder, interesting numbers on battery exports from China which at any rate suggests there is no problem yet on the volume side!

Anyways, management of IVW are planning to travel to China shortly with the express purpose of setting up long-term supply contracts with the battery producers.

Robbo - since you are in contact with OTI management do you mind asking them if they have been approached by Ivernia West yet in this regard? If not then perhaps the onus is on us shareholders to let them know...the contact details are:

Ivernia West Inc.
Suite 400, 44 Victoria Street
Toronto ON Canada M5C 1Y2
Phone: 416 867-9298
Fax: 416 867-9384
Alan De'ath, President & CEO; Kenneth Sangster, Executive Vice President & COO; Richard Perfect, Controller

cheers - just let me know where I need to send the Belgian chocolates to ;)


quote: Information released by China Customs on June 25th, 2004, shows that from Jan-May 04 6.69 Million SLI batteries were exported, a 13.2% increase year over year (YOY). More importantly, 39.7 Milion batteries were exported of the "other" variety. This category showed a 24.2% increase yoy. Of note here is the fact that May alone saw over 9 million batteries exported which is well ahead of the 2004 pace. Thus May showed a decided acceleration over Jan-April. Also keep in mind people that last year they expoted just over 80 Million in this category and that was a 33.7% increase over the previous year. Thus over a 2 year period, they are on track for a two year total percentage increase of 66%

Now given that most smelters seem to be producing about the same or less lead (the main exception being Yuguang Gold-Lead Co.Ltd), this would imply that China's smelters and battery manufacturers are compelled to import refined lead or seek concentrates for their smelters- there is no way around this fact. Absolutely no way!

They (Chinese lead producers/agents/smelters/writers) may say prices are too high but they will be (and have been!) buyers of lead (10 tonnes here or 12 tonnes there) because they have to stay in business even if their margins are squeezed! This is what I am seeing. Long term (next 2 years) it would appear then that we will see 37/38 cent/lb or $825/tonne lead for quite some time until supply starts to overtake demand in the balance. That moment seems far away at this point.
]



</font

KD
08-07-2004, 04:55 PM
quote:FYI - Just a bit more on the previous story


Ivernia ponders local listing
By Barry FitzGerald
June 4, 2004

Toronto-based Ivernia is to consider listing on the local market once it has bedded down its new Magellan lead project near Wiluna, in Western Australia.

Magellan, the first pure lead play for longer than any one cares to remember, is set to capture the benefits of the price surge in the most unfashionable of metals.

President and chief executive of the $C65 million ($A69 million) Ivernia, Alan De'ath, said in Melbourne this week that Magellan was due to start producing lead concentrates (containing 70,000 tonnes of lead a year) in the first quarter of next year after spending $37 million on stage one of the project.

Stage two is expected to come on line in the third year of operations. It will cost an additional $24.5 million and will increase annual output to 90,000 tonnes of lead metal, with the addition of a smelter/refinery.

Although not yet listed here, Ivernia and the Magellan project already have substantial Australian involvement. Magellan is owned 51 per cent by Ivernia and 49 per cent by the Sydney-based $245 million private equity fund Sentient Global Resources.

Ivernia shareholders include the Australian-controlled British mining house Cambrian Resources (10 per cent), the Qantas pension fund (6 per cent) and Anglo American with 8 per cent. The stock last traded at C22˘.

Magellan's development is sweetly timed. The removal of lead from paints and petrol and by-product production at base metals mines meant decades of oversupply. Nobody wanted to fund a pure lead project.

But lead has been swept up in the China-led rise in demand for metals, with the price doubling in the past year to about US40˘ a pound. Mr De'ath forecast Magellan's initial cash operating costs at US18˘ a pound. When metal is produced from the smelter in stage two, it would attract a US5˘ a pound premium, effectively reducing net operating costs to US13˘ a pound.

Magellan's development is sweetly timed . . . with the price (of lead) doubling in the past year.Ivernia acquired Magellan, a 1991 discovery by Renison Goldfields, in 2002. Since then, Ivernia has increased total project resources to 15 million tonnes grading 6.4 per cent lead.



--------------------------------------------------------------------------------
KD



Robbo - the above article suggests Ivernia is contemplating local listing

cheers

KD (with the :(blues:()

skinny
08-07-2004, 06:24 PM
The article KD posted covers the basics about IVW Robbo, one I posted earlier puts my valuation on it. At the AGM they said a dual listing would be 'soon'. I think you could triple your money investing in it if lead prices stay where they are, double if they go back to $700 per tonne as per the futures, and you shouldn't lose anything if they come back to 90's averages. Thats not as good a return as we can expect from OTI over the long haul (as Dimey points out), but I see it more as an 'insurance policy' on my larger OTI investment.

robbo
08-07-2004, 08:55 PM
Copy that KD and Skinny.

Moving on; at an altitude of 40 000 feet, with hopefully minimal turbulence on our flight into profitville...

Rodger, over and out
Robbo


quote:Originally posted by skinny

The article KD posted covers the basics about IVW Robbo, one I posted earlier puts my valuation on it. At the AGM they said a dual listing would be 'soon'. I think you could triple your money investing in it if lead prices stay where they are, double if they go back to $700 per tonne as per the futures, and you shouldn't lose anything if they come back to 90's averages. Thats not as good a return as we can expect from OTI over the long haul (as Dimey points out), but I see it more as an 'insurance policy' on my larger OTI investment.

robbo
12-07-2004, 01:30 PM
Up-date: from OTI re Ivernia West Skinny.

My emails were down for a few days mate...but OTI have now actioned your Information so again, a big Thanks and well done Skinny....

To Quote M.D's response,

"Dear Robbo,

Thanks for the info.... I've been looking for such opportunities and would like very much to get in touch with Ivernia West.

If you do not object I'd like to arrange a meeting with IVW's management when they visit China.

**We would be interested in both procurement and in the operation of the mine as well."

Regards,

George Su
Managing Director of oriental Technologies

Cheers,
Robbo

quote:Originally posted by skinny

I got some interesting feedback from atendees of the AGM for IVW, the Canadian company starting the lead mine in WA from the first quarter of next year. Basically management's expectation is that high lead prices are here to stay for the next few years and there is a possibity of a big price spike later this year as inventories run really low. This appears to have started to be priced into the futures market on the LME, with the 3 month contract up from $700 US tonne to $867 since mid-May, which is nearly back to Feb highs. However, as yet the 15 month contract is still holding in at around 700 US. This may be too optimistic - see quote below for some analysis of the market I picked up off an IVW holder, interesting numbers on battery exports from China which at any rate suggests there is no problem yet on the volume side!

Anyways, management of IVW are planning to travel to China shortly with the express purpose of setting up long-term supply contracts with the battery producers.

Robbo - since you are in contact with OTI management do you mind asking them if they have been approached by Ivernia West yet in this regard? If not then perhaps the onus is on us shareholders to let them know...the contact details are:

Ivernia West Inc.
Suite 400, 44 Victoria Street
Toronto ON Canada M5C 1Y2
Phone: 416 867-9298
Fax: 416 867-9384
Alan De'ath, President & CEO; Kenneth Sangster, Executive Vice President & COO; Richard Perfect, Controller

cheers - just let me know where I need to send the Belgian chocolates to ;)

[quote]quote: Information released by China Customs on June 25th, 2004, shows that from Jan-May 04 6.69 Million SLI batteries were exported, a 13.2% increase year over year (YOY). More importantly, 39.7 Milion batteries were exported of the "other" variety. This category showed a 24.2% increase yoy. Of note here is the fact that May alone saw over 9 million batteries exported which is well ahead of the 2004 pace. Thus May showed a decided acceleration over Jan-April. Also keep in mind people that last year they expoted just over 80 Million in this category and that was a 33.7% increase over the previous year. Thus over a 2 year period, they are on track for a two year total percentage increase of 66%

Now given that most smelters seem to be producing about the same or less lead (the main exception being Yuguang Gold-Lead Co.Ltd), this would imply that China's smelters and battery manufacturers are compelled to import refined lead or seek concentrates for their smelters- there is no way around this fact. Absolutely no way!

They (Chinese lead producers/agents/smelters/writers) may say prices are too high but they will be (and have been!) buyers of lead (10 tonnes here or 12 tonnes there) because they have to stay in business even if their margins are squeezed! This is what I am seeing. Long term (next 2 years) it would appear then that we will see 37/38 cent/lb or $825/tonne lead for quite some time until supply starts to overtake demand in the balance. That moment seems far away at this point.
]



<hr heig

KD
12-07-2004, 09:39 PM
quote:

Weighty Prospects (Ian Howarth AFR 2/6/2004) (typed by KD - I'll never take 'cut and paste' for granted again!) A global shift in the traditionally oversupplied lead market has prompted the development of Australia's newest lead mine. The Magellan project, 40 kms west of Wiluna in the north of western Australia, will generate 70,000 tonnes of lead concentrate when it comes into production next year. Lead, typically a by-product of zinc or silver mines, has become the Cinderella metal in the global mining industry in recent years. The removal of lead from paints and petrol in the past 20 years created a slump in lead demand, creating oversupply and weak prices. But Alan De'ath (apostrophe and all!), president and CEO of Ivernia West Inc, said demand had caught up with supply, principally through increased demand for lead-acid batteries. Invernia West and its partner, Sydney based funds management group Sentient Global Funds, are developing the Magellen mine near Wiluna for $US 26.6 million ($37 Million). The Toronto-listed Invernia West has 51% of the mine and Sentient the rest. The 70,000 tonne first phase of the mine is due to be operational by March next year, exporting lead concentrate mainly to China. A year later the second phase of the project, producing 90,000 tonnes of primary lead metal, will be complete. Mr De'ath said yesterday the Magellan project had a mine life of more than two 12 years and would produce lead at US13c a pound compared with the current market price of US45c a pound.

Well someone thinks the lead price is staying high. Had OTI been a partner I would have been very impressed!

cheers

KD




Now I am impressed! [u]ATR2</u> - Good one Robbo & Skinny...

cheers

robbo
13-07-2004, 03:19 PM
Hi KD, how's it going...did you get my last reply??

Anyway--to SKINNY, KD, Dimebag,Cantab and all followers of OTI, re Canadian lead mine--ie: IVW.

Turns out that OTI's distributor, who I've been in touch with, here in Australia...have spent,this last 6 months;in quite a considerable amount of time actually negotiating with IVW in Canada, for equity/off-take type arrangement, surprisingly without much success, thus far...

Both Ozzzie Distributor, and now also having communicated with MD..so also including the OTI Directors..are at a bit of loss& don't quite understand---...(from what I can surmise...), "exactly" what was the real reason for this, 'state-of-play', but despite this, OTI are still aware, that IVW are still looking for customers/partners...and are arriving in China for this express purpose.

So, from what I gather, OTI are trying to understand IVW real motivations/intentions/ and agendas...

So to get to the NUB OF THE ISSUE...

Can anyone suggest anything, or does anyone know anyone, I'm assuming Skinny and/orothers, or anyone you chaps might possibly just know someoene; who might know someone else etc...who is close enough to the senior management of the company to communicate "off the record"; to sort of: "sound them[IVW] out, as tho waht their purposes/agenda etc actually is.. I am sure you get; where I'm sort of driving here.... as to knowing what I mean...So if anyone can help with CONTACTS at IVW, it would be possibly quite helpful for OTI...

On the major MACRO issue of what Cantab also discusses, on this OTI thread, It is good that OTI are definitely "thinking and planning" this way, in terms of having more control of their OWN destiny, and not to be forever so beholden to the vagaries and volatility of the Internmational Lead Price, as quoted on the LME...

I do take it, we all agree with these sentiments!!

So, to finish off, it would, I gather, be quite helpful for OTI to understand what they[IVW]-- want to achieve whilst in China, before OTI start discussions with IVW over the forthcoming weeks, as you could all comprehendo I'm sure....

Let me know if you can offer anything helpful in this regards,

Still On the Case,

Robbo.


quote:

Weighty Prospects (Ian Howarth AFR 2/6/2004) (typed by KD - I'll never take 'cut and paste' for granted again!) A global shift in the traditionally oversupplied lead market has prompted the development of Australia's newest lead mine. The Magellan project, 40 kms west of Wiluna in the north of western Australia, will generate 70,000 tonnes of lead concentrate when it comes into production next year. Lead, typically a by-product of zinc or silver mines, has become the Cinderella metal in the global mining industry in recent years. The removal of lead from paints and petrol in the past 20 years created a slump in lead demand, creating oversupply and weak prices. But Alan De'ath (apostrophe and all!), president and CEO of Ivernia West Inc, said demand had caught up with supply, principally through increased demand for lead-acid batteries. Invernia West and its partner, Sydney based funds management group Sentient Global Funds, are developing the Magellen mine near Wiluna for $US 26.6 million ($37 Million). The Toronto-listed Invernia West has 51% of the mine and Sentient the rest. The 70,000 tonne first phase of the mine is due to be operational by March next year, exporting lead concentrate mainly to China. A year later the second phase of the project, producing 90,000 tonnes of primary lead metal, will be complete. Mr De'ath said yesterday the Magellan project had a mine life of more than two 12 years and would produce lead at US13c a pound compared with the current market price of US45c a pound.

Well someone thinks the lead price is staying high. Had OTI been a partner I would have been very impressed!

cheers

KD

</font id="quot

airedale
13-07-2004, 06:59 PM
I have been following this OTI thread with interest and no doubt there is money to be made in automotive batteries, but I recently became aware of the development of a car which doesn't appear to need them. Check out www.theaircar.com . Although the air car is not in production yet.I believe that it may be in a year or two.
I am not suggesting that petrol and diesel will be superceded overnight, but this may be another pointer towards the end of the fossil fuel era.
Discl: None held

skinny
14-07-2004, 02:43 AM
Allo, allo

Looks to me like IVW are playing hardball - perhaps reflecting the tight state of world lead supplies. I am on holidy at the moment in St.Jean de Luz; on the French border zith Spain; and am struggling with a French keyboard writing this. Will zrite to IVW as a shareholder when I get back and also try to sound out opinions on the Canadian IVW chat board - Robbo thats about the best I can do I think; no high level connections unfotunately...

robbo
14-07-2004, 05:32 PM
Skinny while you "struggle with a French Keyboard", in between sipping Martinis, on the Mediterranen, or whereever sampling the Spanish French delights--BASTARD !!!:D:D[8D][8D]---I'll just tell OTI that their on their own...

When you get back from 'hols let me know, as I'm relatively reliably --informed-- of some very positive upcoming NEWS regarding Oriental--should be a bumper Results period from what I can gather.---
Might even start entering the market again if there are still decent qties at 23 cents & under...

-Heh cantab and skinny, what Price do you guys put on OTI post Results--if numbers come in moderately to even quite a bit ahead of expectactions??

--I still have OTI marked down for 90 cents to $1.30 by Xmas-as new factory draws every closer

My only concern with OTI--is NOT the steadilly growing PROFITS AND REVENUES--driven by strengthening and steamrolling levels of Demand... and all this, truly bodes VERY well IMO--nope, its the lack of liquidity...People just refuse to Sell OTI at a perceived present Discount..and seem bloody stubborn about that...it's always a case of the Offer having to matrch the Bid and not the other way around....AND because of the so little publicity--for OTI--no brokers cover OTI, no press releases, no financial journalism...it is just too much off the Radar screen, it seems..
might need to drop a note to Mr Kohler ;)[:0]--of Sydney Morning Hearald and Melbourne Age,....to rectify--but not before I get another couple more hundred 000 shares first...Kohler needs reminding that there is actually ONE other exclusively listed Aussie company...apart from Astron operating in and manufacturing with 2 factories in China.

By the way; has anyone seen the new Web pics of Orienetal Batteries factories..saw them the other day and they look impressive.

Cheers as always,

(The above points are said without prejudice. They are, as always, only my personal views, and are are only the thoughts of the author, and should not be relied upon for financial advice, or used to make a financial decision. Investors should do their own reeasrch and make their own enquiries before buying any share or security):):)

Robbo.

quote:Originally posted by skinny

Allo, allo

Looks to me like IVW are playing hardball - perhaps reflecting the tight state of world lead supplies. I am on holidy at the moment in St.Jean de Luz; on the French border zith Spain; and am struggling with a French keyboard writing this. Will zrite to IVW as a shareholder when I get back and also try to sound out opinions on the Canadian IVW chat board - Robbo thats about the best I can do I think; no high level connections unfotunately...

robbo
14-07-2004, 11:40 PM
See todays article quoted from The Wall Street Journal, in The Australian Financial Review--today Wed: 14/7/04--page 60

"China's flourishing car culture has been great news for car makers and economic growth.

In the first five months of this year, China added an average of 14,195 vehicles to the road each day.
Within two decades, the country should surpass the USA, as the world's biggest car market."

This article in todays, Australian Financial Review, is an excellent 2/3rds Page spread on Motor Car Demand growth in China--and I commend it to all interested followers of OTI...

Doing the back of the beer coaster math--and I had three crownies when I read this informative piece !!--5 months times 30 days a month = 150 days so far...at: 14, 195 EXTRA cars a day-- times about $110-$130 Australian dollars for a good 'ol car battery--yep that'll do nicely indeed,...;):) to go ON TOP of the exisitng growing Chinese car pool....

Cheers everyone

Robbo.


quote:Originally posted by davidrob

Skinny while you "struggle with a French Keyboard", in between sipping Martinis, on the Mediterranen, or whereever sampling the Spanish French delights--BASTARD !!!:D:D[8D][8D]---I'll just tell OTI that their on their own...

When you get back from 'hols let me know, as I'm relatively reliably --informed-- of some very positive upcoming NEWS regarding Oriental--should be a bumper Results period from what I can gather.---
Might even start entering the market again if there are still decent qties at 23 cents & under...

-Heh cantab and skinny, what Price do you guys put on OTI post Results--if numbers come in moderately to even quite a bit ahead of expectactions??

--I still have OTI marked down for 90 cents to $1.30 by Xmas-as new factory draws every closer

My only concern with OTI--is NOT the steadilly growing PROFITS AND REVENUES--driven by strengthening and steamrolling levels of Demand... and all this, truly bodes VERY well IMO--nope, its the lack of liquidity...People just refuse to Sell OTI at a perceived present Discount..and seem bloody stubborn about that...it's always a case of the Offer having to matrch the Bid and not the other way around....AND because of the so little publicity--for OTI--no brokers cover OTI, no press releases, no financial journalism...it is just too much off the Radar screen, it seems..
might need to drop a note to Mr Kohler ;)[:0]--of Sydney Morning Hearald and Melbourne Age,....to rectify--but not before I get another couple more hundred 000 shares first...Kohler needs reminding that there is actually ONE other exclusively listed Aussie company...apart from Astron operating in and manufacturing with 2 factories in China.

By the way; has anyone seen the new Web pics of Orienetal Batteries factories..saw them the other day and they look impressive.

Cheers as always,

(The above points are said without prejudice. They are, as always, only my personal views, and are are only the thoughts of the author, and should not be relied upon for financial advice, or used to make a financial decision. Investors should do their own reeasrch and make their own enquiries before buying any share or security):):)

Robbo.
[quote]quote:Originally posted by skinny

Allo, allo

Looks to me like IVW are playing hardball - perhaps reflecting the tight state of world lead supplies. I am on holidy at the moment in St.Jean de Luz; on the French border zith Spain; and am struggling with a French keyboard writing this. Will zrite to IVW as a shareholder when I get back and also try to sound out opinions on the Canadian IVW chat board - Robbo thats about the best I can do I think; no high level connections unfotunately...

<hr height="1" nos

clearasmud
15-07-2004, 07:55 AM
Cantab, What about Michaelangelo (MIC).They got a promising future ahead in China in Gold ore processing and mining.

clearasmud
15-07-2004, 02:05 PM
Cantab,I think MIC is going to make its money as a monopoly gold ore processor. Cheers

slam
19-07-2004, 11:13 AM
Anyone else see that?

thekiwi
19-07-2004, 11:14 AM
quote:Originally posted by slam

Anyone else see that?

See what?

slam
19-07-2004, 11:17 AM
The sell for 450k at 25c just dropped down to 20c, took out 30k and then was put back up to 25c.

Strange lol

Edit.
Looks like it's having the desired effect. Pushing the price down to the 200k bid at 18c;)

Cheers
Slam

robbo
20-07-2004, 06:05 PM
Picked up a few today for Only--a mere 18 cents and hoping to get MORE MORE OTI batteries...at 16/17 cents...what thinks the chances ??? Do Hope so...YUM !![:p][:p]:D
cheers,
Robbo

quote:Originally posted by slam

The sell for 450k at 25c just dropped down to 20c, took out 30k and then was put back up to 25c.

Strange lol

Edit.
Looks like it's having the desired effect. Pushing the price down to the 200k bid at 18c;)

Cheers
Slam

robbo
20-07-2004, 06:06 PM
quote:Originally posted by davidrob

Picked up a few tasty mosrsels of OTI today for ONLY a mere, 18 cents and hoping to get MORE MORE at 16/17 cents...what thinks the chances ??? Hope so...YUM !! [:p][:p]:D
cheers,
Robbo

quote:Originally posted by slam

The sell for 450k at 25c just dropped down to 20c, took out 30k and then was put back up to 25c.

Strange lol

Edit.
Looks like it's having the desired effect. Pushing the price down to the 200k bid at 18c;)

Cheers
Slam

TheBossMan
02-08-2004, 10:44 AM
After some inactivity lately, some buyers are popping their heads up at 21 and 20 cents. Is something on the cards?

David Hardman
03-08-2004, 08:19 PM
Lead prices took a tumble (Down 7.5%) last night after recent gains

Finally some relief for OTI holders

robbo
05-08-2004, 09:30 AM
My previous answer went into cyberspace !! Drats

In summary--its all pretty good in my opinion--and yep I can release the "courier pigeons"--and even have had a few homing pigeons re. OTI and ATR come back to the roost, but some little birdies whispered not to be guilty of "Ramping"--so honetly and frankly-- don't know how much to allude to, or which thoughts to pass on ??!

Cantab, KD, Bull, and everyone: re&gt; OTI in particular, would you prefer I restrain my thoughts and info perhaps till Seprtember, or maybe post a few snippetts re. effect Lead Prices, allinaces/ progress with securing Lead supply, new factory etc etc

Obviously my feed-back is my interpretation/impression of what I hear or broadly surmise; quoting statistics, specific dates and figures--relaivble or otherwise would be a no no from everyone's perspective !!

Cantab et al--Please let me know ....but I certainly am bnot into "ramping" OTI or any other stock for that matter--whether up or down;)[8D]

warmest regards and Hi to all,

Robbo


quote:Originally posted by cantab

I read in the last week how Chinese steel mills had on average increased their profits 96% on last year. Clearly they have had the ability to be able to pass on the raw material price increases.

OTI pre-sell their production. As they get the opportunity to establish a new forward price are they able to fully recover the higher cost of lead say to the $900 level. Robbo, have you had any feedback on this or can you give instructions to one of your courier pigeons?

Cheers

Cantab

stolwyk
05-08-2004, 10:42 AM
Don't worry too much about ramping DavidRob. I have come across several cases where someone complained about my ramping and in every case, I caught them out doing the same. These guys have the "holier than thou" attitude but it is sad to see them caught out so easily.

But anyone else who doesn't complain about my "ramping", just say what you want to say.

The last thing we want to see is the "thought police" in whatever shape.

Thanks for your info and I hope there is more to come.

Gerry

thekiwi
05-08-2004, 01:10 PM
quote:Originally posted by cantabAn example of good ramping was Dimebag ramping ATR when they were sub $1.00. That enabled many on this site to climb on board. A few snippets every now and then on the ATR topic would be nice too.:)


One thing Ive been thinking about, and readily admit there is no answer ... but is it not possible that you guys alone actually created the market or contributed a significant portion towards its climb?

Given current liquidity (eg I see today has had a total of 2000 shares) such activity can very much influence the direction of the stock?

thekiwi
05-08-2004, 04:15 PM
quote:Originally posted by cantab

The Kiwi, no doubt when ATR was sub $1.00 there were quite a few on this site who were buying because of Dimebag's analysis. It's now effectively $6.00 and that is not because of this site. The SP

The rationale being that price must reflect volume?
Whilst I do agree with you to an extent, if you were to sell either slowly or instantly 200,000 shares in ATR ... what would it do to the price?
Conversely if I was to begin a process of buying 200000 shares ... it would also move significantly ... and that "motive" would create a carry on effect in the market of that stock.

This is the same with OTI ... 600000 shares would alsost destroy it :)

For me it is just the concern of a lack of liquidity. I trade so that I have funds for all manner of "reasons", some of which are "If I need it tomorrow I can get it". WHilst that wouldn't appear to be the case in your situation because of the multitude of "significant" positions you hold ... for many it is a trap that may not be evident when reading the "paper gains" some have had here.

thekiwi
05-08-2004, 05:50 PM
quote:Originally posted by cantab
because I know they will come right in time. Anyway 600,000 OTI shares is not that much.


Not in everyones books :)

Thanks for your comments ...

robbo
05-08-2004, 10:30 PM
Hi Cantab and Kiwi--.

Firstly some vague disclosure: I.... or my various company/related--or -- related party entity interests own only approx about 730, 0000 OTI--not including I think about 270 000 jointly owned with my younger bro.... who is off putting people off to sleep, as an anaethesist !!!--so the lack of news-flow from Astron and OTI really suits his: "Investor profile !!!"-- for the record and only from memory.--most of my OTI--and much of my Astron for that matter--was bought before I even knew about good 'ol Sharetrader-NZ actually existed !!!--I was actually googling international searches on Astron in China one time about July/August last year--and an entry from Dimebag came up on some related link!!--AMAZING !!

For those vaguely interested-- my smallish but regular build-up (they really have to be small and regular in OTI--to get and sort of semi-reasonable holding--as KIWI quite lucidly alludes to ;)[8D]!!)& the investments in OTI have been steady and incremental over the last 2/3 years..having bought # 15% below 6 cents; #35% approx below 9 cents--and the rest mostly below 13 cents except for some drabs and dribs at 13.5 cents...and some at the 18 cent mark recently--- so after your next purchase of 600, 000 OTI Cantab--I will be nearly 50% behind your own holding Cantab!!--although don't count me out of more OTI please !!:D

Did you know we share our interest/ownership in OTI with a doyen of Sydney/Australian society, none other than Lady Mary Fairfax--now there's some useless and interesting trivia....!!!--There are also some other leading Sydney people--like Lady Street--wife of ex Chief of NSW Supreme Court on the sig share-holders list from memory....

Secondly: have you ever noticed something quite interesting before solid Good News --or more significantly Share-Price Rise--with OTI---???
Have we all locked in our answers--no 50/50 !

Answer: Golden Silence. That simple.

This stock is ONLY FOR those who ARE TRULY LONG TERM--I agree entirely with KIWI on this point[^], as it is NOT NOT a traders trapeze stock--far too illiquid and only for those who Invest purely from the Balance Sheet--as they(OTI) simply only let the financials do all the talking!!
To date--OTI rely solely on only the published financial numbers--"show me the money$$$$honey fundamentals"--the now three and soon to be 4 year consistently growing EPS--last EPS growth figure was a whopping 80% plus number--(and wait for the EPS following the numbers ex-second and larger than first factory..It's all really to be seen in the third year on year Return on Equity(capital) always extremely stedy, consistent & black and white increasingly positive and in its third year--which is Buffetts key criteria--nudging 30%--as well as the excellent EBIT and EBITA--year on year revenue growth and stable/proven management and massive Market in which it is operating with Focus and Proven technologies with sizeable/proven advantages against its competitors...

Its that simple.

Also, one final point--OTI has one emperical aspect that can now be seen historically.

OTI always under-promises and over-delivers. They simply quietly go about their business relentlessly cutting costs to the bone and doing the repetitive escalating in Volume expedentially...getting on with the three shifts a day Business--7 days a week-- of producing and selling more and more Batteries to the Biggest expanding Global automotive market in the world--China--and also to much of Europe....

I see OTI within 3 years--like Astron as needing not two factories--but another three(to make 5 factories)--as a minimum.
Why ?? Simple Supply and Demand....nothing mysterious--just boring old supply and demand.

By the way--I also see Astron--ATR-- as about to Explode its share price--like $7.50--within 4 months--yep--repeat $7.50---and that's CONSERVATIVE--and I was Lambasted before when I put my last price prediction out at $4.9..when ATR was $3.00 or so...and, not unrelated.... expect to maybe(no promises--just simply a hunch;):)-- see

KD
05-08-2004, 11:04 PM
Enjoyed all the 'chatter' today folks - great to hear from you all. Thanks Robbo for all the background on your history with OTI, ATR - Sounds like we found ST in the same way. Wish I had your conviction when OTI was sub 5c - I saw but did not buy. Cantab, Robbo - I find your disclosures here very encouraging and look forward to more discussions as reporting approaches. I look in on this thread almost daily as it is my OTI 'phone-a-friend' lifeline.

cheers

KD

robbo
06-08-2004, 09:26 AM
Thanks Cantab for such a very thoughtful, well reasoned(as usual...) and kind response--half dozen Crownie Lagers are being chilled in the fridge as we speak !!

By the way...Cantab--are you residing/posting out of Land of Oz or Long White Cloud ??!!--always wondered !:D
You have a really terrific and great day mate,

Keeping you posted,

warmest regards,

Robbo


quote:Originally posted by cantab

Hi Robbo, KD, and Kiwi, thanks Robbo for telling us about your interest = 1m shares, now that's impressive and a nice round number too, which makes it easy to calculate the unrealised gains in one's head, every 1c = $10,000 gain, LOL! and how you built it up was very interesting as well. Well done mate on buying your stake so cheap. KD, if I recall you also bought well too at around 9c. I wish you guys had been posting on ST earlier but if it hits $1.00 as I expect, my average cost of 15c will look cheap. It's a bit like someone who bought ATR at $1.80 pre-split - that now looks cheap with the share at $6.00 pre-split. If ATR grow EPS at 25% for 5 years then the SP should be about $10.00 so really it wont matter much if someone bought at the Dimebag special price last year or today at $3.00. The key is to hold until ATR becomes a mature company and let compounding do the work. Why sell at $3.00 when there could be another $7.00 or more to come?

It's not hard to see OTI achieving tax paid profit of $10m within 3 years. That puts OTI into the ATR league. The newly completed factory alone potentially puts them into a $5m profit situation once normal margins are restored.

Robbo, I hope you're right about the ATR and OTI share price projections. If OTI achieve $10m profit say in 3 years, diluted PE would then be $10m/121.5m shares = EPS 8.2cps, it's then a matter of determining an appropriate PE multiple. With a high growth rate a PE of 15 wouldn't be out of the way, SP = $1.23, no doubt Dimebag would say a PE multiple of 25 or 30 would be more appropriate for a company growing EPS at 25 to 30% pa and he would probably be right. Even so a PE of 15 is more conservative and is bankable for me.

The downside is 20c, that's all, it can't go any lower than zero! The other side of the coin is that there is no limit to the upside. The way I look at it is that one only needs one of either ATR or OTI to come off. I think both of them will do it but only one is required.

Robbo, looking forward to hearing what your drinking buddies have to say on OTI and ATR in the coming days leading up to the reports.

Cheers

Cantab

skinny
07-08-2004, 02:51 AM
Thanks guys for the steady buying! Most of mine was at 13c so the similarly steady rise up over 20 makes it a star in the old portfolio this year - especially over the last month with the US markets falling apart [xx(] BTW - I am on holiday (yes again Robbo) but have written to IVW mgmt and should hear back next week.

p.s cantab - I can't get into the debate on the other channel much more - I 'spose you can guess why ;) - if you drop a line to my e-mail happy to elaborate further.

slam
09-08-2004, 09:44 AM
Hi All
Yes a stalemate for a while but it had to happen Imo. The gap was big and had to fill in eventually. The good thing is that the bids have come up to the asks in the last week and now we are sitting in the middle of the trading zone.
Those 18c trades are starting to look real cheep:)

Cheers
Slam

robbo
09-08-2004, 02:15 PM
THE BILLIONAIRES SECRET: as quoted by J. Paul Getty

"...if you really want really make Money,--the Big Money---then You Should Do What nobody else is doing. Find the niches, that nobody else is filling. Look for those sometimes overlooked Opportunities. Hit 'em, and hit 'em really bloody hard. Strong and hard. Your not going to make money....the Big Money ...where the crowd already is...."

Hence the above is why OTI's slim Liquidity NOW---but not later:);) dos NOT worry me...but why I really Embrace OTI bec of limited Supply and Massive Chinese & global Demand, which is on top of already booked strong historical consistently climbing earnings.....&...so that is why I do like to embrace shares such as OTI, when I know the Fundamentals are just so GOOD and solid.

** ...Birds have been released Cantab--will let you know when Eagle has landed with what should be poitive news & ...--with any nice jiucy morsels & updates !!!--what do they so about ..'birds of a feather flocking together...':)

Robbo.


quote:Originally posted by slam

Hi All
Yes a stalemate for a while but it had to happen Imo. The gap was big and had to fill in eventually. The good thing is that the bids have come up to the asks in the last week and now we are sitting in the middle of the trading zone.
Those 18c trades are starting to look real cheep:)

Cheers
Slam

Dimebag
09-08-2004, 09:01 PM
Hi Team

My apologies for being so quiet recently - things have been fairly busy recently. Great to see everyone is still following and posting prolifically on our fav stocks!

Robbo

It's good to see you in your characteristically optimistic mode. Congratulations on your obvious success with OTI and ATR to date; 1,000,000 shares is truely impressive!

However, as far as those share price projections go (ATR $7.50 in 4 months; OTI $3.50 in 2 years), personally I would feel much more cautious.

Certainly, based on my own calculations, these prices appear to be based on very aggressive assumptions and appear a bit unrealistic. It is of course possible you are privy to information to which I am not. In fact I hope this is the case, because as you know I hold a (relatively - for Dimebag) large position in OTI and ATR. I would be only too pleased to see those prices come to fruition. But based on the information I have these prices appear a bit fanciful.

On the OTI front, you mention that you are looking forward to a fourth consecutive year of increased eps. I hope you arn't going to be disappointed because to my mind there is absolutely no doubt OTI's earnings are going to take a huge plunge this year, and based on current lead prices, they may in fact lose money. I certainly agree with you that OTI are for those with a longer-term investment time horison, but it is for this very reason. OTI's short-term results are not likely to inspire the market imo and in the absense of very encouraging developments/announcements, or a significant let up in lead prices, I would have thought it optimistic to think OTI's price will be much above the current at year end. The market is characteristically impatient doesn't tend to look very far out.

Remember, historic numbers are just that - historic.

For OTI to be $3.50 in 2 years, they would be capped at A$407.5m. I just can't see anything remotely like this happening.

Unlike ATR, OTI hasn't yet earned the right to enjoy premium PE ratios of 25-30x. They are still a young and unproven company with a limited successful operating history. They are by no means a clear market leader and may well have to contend with large competitors if the market is rationalised. Lead prices continue to cripple earnings. This will punish their earnings track record and not encourage confidence.

I would have thought 12-15x was optimistic looking 2 years out. Closer to 10-12x after earnings recover is probably (conservatively) realistic.

If we say that they do $36m in sales in 2004, $60m in 2005 and say $80m in 2006. If margins recover to 6% by then (after profit shares), that is earnings of A$4.8m (eps of 4.1cps). Only a PE of 5x on the current price.

12x earnings ~ $0.50. I would have thought this a more realistic target. Of course I may be being way too conservative but sometimes this is important to avoid overconfidence and thus possibly overexposure.


ATR on the other hand deserves PE ratios of 25-30x. It has a long track record of consistent and rapidly growing earnings. It has proven management, entrenched competitive advantages, and growth prospects that would be the envy of most companies. ATR is really a very very good company.

But even if we say they make A$11m this year, at $7.50 they would have a market cap of A$431m, with a PE ratio of 39x. This just ain't going to happen.

You mentioned in another post ATR having a PE ratio of 5x. Unfortunately this is incorrect. Perhaps the eps figures you used haven't been adjusted for the share split and stock issues??

On A$11m in earnings, ATR's PE ratio is 15.5x. An absolute bargain longer term, but I don't think the stock will be hitting $7.50 any time soon.

I'm expecting around about A$15m in earnings next year (26cps). PE ratio at current price ($2.97) is 11.4x.

I would feel comfortable expecting PE ratios of 15-20x, so the forward price is $3.90-$5.20 - say $4.55 as the midpoint (+53.2% from current levels which is a pretty high one year expected return!).

All in all, two

KD
09-08-2004, 09:29 PM
Hi Dimebag - a very sobre evaluation - perhaps Robbo is enjoying the Crownies just a little too much. Nothing would surprise me though with these two stocks - anyway the reason for posting was just to suggest that you might wish to cut and paste some of this in the ATR thread or put a pointer there. Hope you managed to get through all of those exams.

cheers

kd

Dimebag
09-08-2004, 09:59 PM
Hi KD

Thanks mate. Yeah got through a few tests/exams but the fresh assessments continue to roll in. I'm working on a 10,000 word paper at the moment. Thats due in a few weeks and I haven't put pen to paper yet!

By the way, I've been meaning to say thanks very much for identifying OTI and taking the time to share this stock with us. To date we have all done reasonably well, and over the coming years could do much better still. These profits are to your credit. It is very much appreciated.

Thanks a million (if your cantab or robbo - thanks a few thousand if your me! :D)

KD
09-08-2004, 10:16 PM
Hi Dimebag - re OTI - more than a pleasure. Let's hope Robbo's got the good oil and we all do extremely well - relatively speaking (& I'm more relative to you in that respect :) I've got a whole PhD to write and hardly put pen to paper aaaagghhh.


cheers

stolwyk
10-08-2004, 06:32 AM
I don't want to spoil the fun but it would be wise not to overate growth rates in the more difficult economic conditions to come, I think.


Gerry

David Hardman
10-08-2004, 12:54 PM
Looks like Dimebag's late night commentry has spooked the market today.

His thoughts are hard to fault.

I'm holding but have a 3 year horizon.

David

stolwyk
10-08-2004, 04:15 PM
Cantab,

I was referring to a likely deteriorating International economic situation which at this stage can't be quantified but could affect many.

I do hold ATR and OTI and prefer realistic discussions which enable us to justify the share price.

You wrote: "I will stick with my original predictions as to share price, of $10.00 for ATR in 5 years and $1.00 for OTI in 3 years".

I would think that is very realistic as you would have given the extra year, ie at a high rate of growth, you may have achieved in ATR's case in say 3.5 years and in OTI's case in 2 years perhaps.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks.

skinny
10-08-2004, 07:45 PM
quote:Originally posted by David Hardman

Looks like Dimebag's late night commentry has spooked the market today.


Be careful Dimebag :D

Gerry - IMO its way to early to be thinking of changing equity positions based on the global economic outlook, especially small focused companies like OTI. In fact, the macro factor I think poses the most risk to the world economy currently, ever higher oil prices, is something that may on balance be +ve for OTI over the next few years. It increases the incentive to substitute towards more fuel efficient cars so vehicle production could on balance actually increase as gas guzzlers are removed from the vehicle stock and are replaced by more fuel efficient models (I also hold ION [:p]). Even if (and its a big IF) the world economy tanks and vehicle production slows dramatically for OTI there is a silver lining as we would expect lead prices to tank too. So any sales slowdown from reduced new vehicle production could be met up for by a recovery in margins. And at any rate batteries only a have a shelf life of 2-5 years so OTI is not as exposed to the vagaries of the world new vehicle production cycle as most other parts suppliers.

stolwyk
10-08-2004, 08:01 PM
Skinny,

You said:

"Gerry - IMO its way to early to be thinking of changing equity positions based on the global economic outlook...."


I didn't say that at all.

Gerry

skinny
10-08-2004, 08:34 PM
Quite right Gerry - I'm guilty of extropolation - what you said was along the lines that 'it would be wise not to over rate growth prospects given a possible slowdown in the world economy'. Fair enough. I outlined why I think this shouldn't matter too much in OTI's case. At any rate so are you thinking then that OTI is a hold now, or would you build your stake in it further?

stolwyk
10-08-2004, 08:50 PM
Skinny,

I wrote the original post from a PR point of view.

You will recall that I agreed with Cantab. So nothing has really changed.

I have sufficiently invested in both OTI and ATR.

Thanks for everything you guys have done,

Gerry

robbo
12-08-2004, 10:16 AM
Haven't forgotten everone --but still waiting for any possible feedback,

will keep you posted,

Gee "the dimebag" factor certainly put OTI into some choppy weather back there--WOW !!;):)

Will keep you posted on this real "sleeper" of a stock,

Cheers

Robbo :):D

quote:Originally posted by cantab

Gerry, $10.00 for ATR is (deliberately) conservative based on 25% pa EPS growth for 5 years along with a PE of about 18.

I think OTI can hit 50c, perhaps a year after the new factory becomes operational in October, and then $1.00 following another 2 factories, either new or acquired by way of takeover.

I think Skinny makes some good points about OTI being somewhat immune from international economic head winds. As he rightly says, batteries are not a discretionary item.

Good to see you also own ATR.

Cantab

robbo
17-08-2004, 08:32 PM
As the afternoon was drifting into siestas time around half three,[|)][|)] and I was Just getting onto another well deserved crownie, the bar was looking rather deserted, not much else to do.... but watch admitedly awe inspiring and enthralling repeats of the Aussies; and in particular Thorpie winning yet another Gold medal--Go Aussies Go !!six gold; seven silver, and a bag of bronze!!!:D[8D]:D

and what do I faintly think I hear ??

was that a faint noise brushing against the saloon door......?

Not a birdie chirping around my ear surely..?

No, it must not have been...did I imagine hearing something a bit worrisome??

must have just been a faint day-dream, a vague foggy idea that seemed to perhaps vaguely suggest... that maybe unfortunately those sustained depressingly high lead prices just might, indeed probably on all probablity WILL smack OTI around the 'ol chops, in a rather negative fashion this reporting season..--which might come a bit sooner than first thought, probably by end of this week or so.... I reckon...(but sadly it'll be a rather flatish downer:( of an affair in my estimation....hmmmmm--:()[B)]

and with OTI funds, currently committed to building the new factory...which is NOT on stream YET;...and therefore the increased Production to come into the FUTURE--cannot as yet therefore commit to the earnings at present...and margins bashed about more than it was hoped...due to negatively surprsing & sustained long lasting HIGH lead prices...
well to summarize, my thoughts, and even what some of my pub mates thought they heard on the gapevine...& may have seemed to be vaguely and hazilly inferring; though can't be exactly sure, but ya know what I mean...;):(:(--things might indicate it could possibly be NO CIGAR for my hopes this time 'round

--Robbo's previous optimistic predictions[:I] could be in for a: "big rotten old egg on ze face treatment!![B)][B)]"--BUGGER--and there will be MUCH patience and thus annoying requirement to put these OTI stock certificates, under the magazines that are normally kept in my very bottom drawer...(to be forgotten about for quite a while....)

Yep--I reckon OTI is now a gunna--for the present, and only a good investment as a long termer....with emphasis on good investment in the LONG TERM....rather than short term...
so what can I say, but finish my crownie[|)][|)] and just wait another eight months [|)]--or so[:I][:I]....at least thats what might be indicated...'afraid so--but High Lead prices and restricted Production capacity at present might effect results negatively in the short term & if so are beyond OTI's control--(in my opinion only)...drat it...

Robbo

DISCLAIMER
The above comments are not, and should NOT be relied upon; in any way whatsoever AND SHOULD not BE construed as financial advice or guidance, and are purely the private and personal speculations and whimsical thoughts of the writer and are said on a completely WITHOUT PREJUDICE BASIS, AND the writer urges all readers or investors to do their OWN research and seek independent financial advice, and not rely upon these writings in any way whatsoever.

Regards,

Robbo

[quote]quote:Originally posted by davidrob

Haven't forgotten everone --but still waiting for any possible feedback,

will keep you posted,

Gee "the dimebag" factor certainly put OTI into some choppy weather back there--WOW !!;):)

Will keep you posted on this real "sleeper" of a stock,

Cheers

Robbo :):D
[quote]quote:Originally posted by cantab

Gerry, $10.00 for ATR is (deliberately) conservative based on 25% pa EPS growth for 5 years along with a PE of about 18.

I think OTI can hit 50c, perhaps a year after the new factory becomes operational in October, and then $1.00 following another 2 factories, either new or acqui

skinny
17-08-2004, 08:55 PM
Robbo - not to worry mate, most holders here seem to be in for the long term and I think we've all connected the dots in terms of the high lead price impact. I've posted an interesting article below on the lead market - if its right if anything prices will keep on building :( For long term holders the silver lining is that we could (I HOPE) see a sell off when the profit (erm loss) statement comes out giving a chance to accumulate more at bargain prices.

Your e-m also reminded me I forgot to post on IVW - no dice I'm afraid folks. They are a fully focused mining operation only and have even sub-contracted out their lead sales with Pechiney. And speaking of silver linings (ramp, ramp) despite the high lead prices, a 20% increase in proved lead reserves, and everything going right on schedule from when I last reported IVW's share price has languised on the Toronto stock exchange, off 15% from my initial buy in price (CAD $1.05). SO, connecting a few more dots I bought in again last night at 90c. I've read a few others NPV estimates of their operation and all come out at least $1.80 so could be good very nice gains in it once production starts in Q1 next year.

disc: IVW holding now double OTI's. The insurance policy has flipped!

[quote]quote:DJ FOCUS: World Lead Market To Tighten Despite Portovesme Restart

By Chanyaporn Chanjaroen
LONDON (Dow Jones)--The global lead market will become tighter by
September when demand from battery producers seasonally rises, given limited
inventories and production of the metal despite the restart of Italian lead
and zinc producer Portovesme, market players said this week.
The earlier-than-expected restart of Portovesme raised market concerns of
hefty lead stock rises that could trigger price declines in lead, which has
been on the uptrend.
The Sardinia-based company's restart is the only one so far after a
series of shutdowns of major lead producers in Europe during 2002 and 2003.
The period of September to October is the high season for lead demand
because battery producers - the largest users of the metal - start
replenishing their stocks ahead of winter in the Western hemisphere, where
car batteries usually need replacements.
"There is a real shortage in lead. Even metal from the restart (of
Italian lead and zinc producer Portovesme) in Europe will be easily
absorbed," said a market player familiar with global metals stock movement.
"We haven't seen any signs at all, not even from major producing
countries like China and Australia, that anyone have accumulated large stocks
(of lead)," the player said. "What is out there is very little."
Portovesme's production complex consists of an electrolytic zinc
refinery with a capacity of 110,000 metric tons a year, a 90,000 ton/year
zinc Imperial Smelting Furnace which also has a capacity to produce lead at
35,000 tons/year, and a Kivcet lead smelter with 85,000 tons/year capacity.
The Kivcet lead smelter and the electrolytic zinc refinery will reach
full capacity by early September while the Imperial Smelting Furnace will
reach full capacity by the end of the year, according to Portovesme general
manager Carlo Lolliri.
Heralding the Portovesme restart announcement last week were a series of
sharp stock rises in both lead and zinc. In the week ended Aug. 6, LME lead
stocks rose by 2,950 tons to 40,675 tons - a 7.8% rise from the level at end-
July. All stock rises were in Rotterdam, Vlissingen and Triste.
Lead stock rises came on the heels of a sharp backwardation, when the
cash-to-three-month lead spread peaked at $110 on July 28, market players
said. After the spread eased to the current level of $40-$45/ton, LME lead
stocks resumed the downward trend.
The current lead stock level of 39,625 tons is 63% down in the year to
date. Of the total stocks, 4,650 tons, or 12%, are already earmarked to be
shipped out of LME warehouses, according to the LME data.
"L

robbo
18-08-2004, 11:48 AM
Hi Cantab,

Believe it was Rockerfeller who can be attributed for that bloody quote Cantab !!,

Guess OTI might fall like a LEAD balloon...but with quips like that I better go back to my day job[:I], and have another crownie!

Yep patience will be a virtue for those who can wait...

Still, it would be nice if OTI could get overt this lead issue some which way in the medium term,

Regards,

Robbo


quote:Originally posted by cantab

Robbo, looks like you've about to cause an OTI crash.:D It was noticeable since your comments how buyers have all of a sudden disappeared and a few nervous nellies are crapping their pants.:D

Anyway this lead price/loss news is old news because the chairman said at the AGM the company was making a small loss in February due to the high lead price.

Who was it that said the sharemarket is a place where wealth is transferred from the impatient to the patient.;)

Are we about to see blood on the OTI trading floor?:D

cheers

Cantab

thekiwi
18-08-2004, 11:51 AM
But you guys shouldn't be concerned with price movements ... :)

Its only $7,155 of stock and a 10% (2c) drop ... as poor liquidity has always been an issue with this one.

robbo
18-08-2004, 11:54 AM
quote:Originally posted by davidrob

Hi Cantab,

Believe it was Rockerfeller who can be attributed for that bloody quote Cantab !!,

Guess OTI might fall like a LEAD balloon...but with quips like that I better go back to my day job[:I], and have another crownie!

SERIOUSLY though,,,fair value for OTI now is really between 13 & 14 cents, and if those who can still north of 14-15 cents for their OTI who are 3 month time horizon--then they will be counting themselves among the fortunate few.

Talking to other major OTI shareholders/people, they agree with me re. this fair price valuation, which outs paid to my earlier otimisitic projections. OUCH !! Paper losses are looking a little nasty[B)][B)]:(

But whicle they stay in bottom drawer, they're only just that--PAPER losses--although I might lighten OTI a bit around 16-18---what about you Cantab ??

Yep, also agree that patience will be a virtue for those who can wait...a year out from now I still DO like this share

Still, it would be nice if OTI could get overt this lead issue some which way in the medium term,

Regards,

Robbo


quote:Originally posted by cantab

Robbo, looks like you've about to cause an OTI crash.:D It was noticeable since your comments how buyers have all of a sudden disappeared and a few nervous nellies are crapping their pants.:D

Anyway this lead price/loss news is old news because the chairman said at the AGM the company was making a small loss in February due to the high lead price.

Who was it that said the sharemarket is a place where wealth is transferred from the impatient to the patient.;)

Are we about to see blood on the OTI trading floor?:D

cheers

Cantab

thekiwi
18-08-2004, 11:56 AM
Robbo ... not sure what you do ... buts near impossible to work out what is new in the post?

thereslifeafter87
18-08-2004, 03:36 PM
I'm staying Bearish on this one guys.

The upcoming results announcement will not be good. I think everyone has accepted that now.

I cannot understand how people are willing to risk money on the outcome of a question they don't know the answer to. The question in OTI's case is "Can OTI pass on increased costs to customers?"

This creates other questions such as "How far ahead are OTI's batteries pre-sold at fixed prices?"

Let alone "What is the lead market going to do over the next 5 years?"

I would want to be at least 75% sure of the answer to each one of those questions before I bought any shares in OTI. Otherwise all I would be doing is speculating.

Sure, the potential upside is huge, but what happens if OTI keeps losing money because they can't pass costs on? Or if they do pass costs on, but the price of lead keeps rising? or worst case, they can't pass costs on, and the price of lead keeps rising?

If they were going to acquire competitors, wouldn't they have done so by now? High lead prices have been around for some time.

When I watched the price go from 15c or so to 20 odd cents I almost kicked myself for being bearish and missing out. However, I made myself stick to my system for picking stocks no matter how bullish the predictions on this forum got.

I think that is how money is made - by keeping to your system - your own criteria for stock selection. When there are those nagging doubts eating at your mind, you simply shouldn't buy. One of my major criteria is that a company must have the ability to consistently grow earnings, and must not be wholly dependant on volatile commodity prices.

OTI is dependant on the lead price, and has shown that it will not consistently grow earnings where prices rise unexpectedly.

Possible future growth will now also be slower as OTI will not have increased equity to play with. In fact it is likely to be decreased.

Of course, this may all be a temporary setback, and with the new factory to come on line OTI could double revenue, and if lead stays stable and they can pass on increased costs then profits may skyrocket.

But those are Big 'Ifs'.

skinny
18-08-2004, 06:08 PM
Man did I get slammed last night!

The lead holding fell despite lead prices increasing cos someone put the wrong number in for a sell order at the end of the day (apparently is true!) My energy holdings sold off 3% in the US despite oil prices increasing to yet another record high. The old steady Eddie laundry holdings got taken to the cleaners (TAY) cos, shock horror, New Zealanders are taking more holidays and demanding higher wages. And OTI got sold off cos Robbo heard a whisper in the pub!! Funny old game [:o)]

p.s. good points Cantab - perhaps the most important factor for the patient is that OTI has us suckers, erm value investors, propping them up as they make a loss. If current lead prices are hurting OTI just imagine what it will be doing to the smaller Chinese family producers who don't have uz suggar daddies dolling out the readies. Higher lead prices might be a boon on the end if it results in a quicker consolidation of the industry in China.

robbo
18-08-2004, 07:49 PM
Aw shucks cantab...

just saying the bleedin obvious, and as for me moving markets, I'm sure none of what I think; or say has any bearing at all......

and hi also to kiwi...yep there's nothing new, except just for a REVISION of my previously optimistic prediction & thoughts; that we might see okay figures this financial--to a pretty almost "CERTAIN" feeling and intuitive "pseudo-knowledge";)which is my own researched opinion only-that we now will see disappointing numbers which will and should probably re-rate OTI Stock downwards.

If I was a broker...then I would possibly be tempted to put a strong Sell on OTI for short term holders now; and a HOLD on OTI for long term(very patient) holders.(but Kiwi, I am definitely not a broker/financial advisor--so these are just chat-site ruminations and NOT recommendations !!...as I am not qualified to give recommendations, as I've said. ):):)

So. Would I buy OTI at these prices now? NO. Def. not--in my opinion, as I now believe(in my personal opinion only) we'll see a unfortunate downward revision--on OTI price, which will now tumble quite a bit...but this will only be for 3-4 months, maybe 5 months, and then the medium-long term outlook for OTI--(in my opinion, only) will become more favuorable, if, and only if, other factors, such as LEAD supply & high prices, plastic prices and ability to supply--at a PROFIT... reverse from what I figure is happening at present.

Also--the Cost of the new factory--which is, I surmise, a Very Large "one off" capital expenditure... presumably has to be paid for, and re. the Balance sheet, expensed, and will, presumably be another hit on the balance sheet at this time...

So a confluence of one-off large cap ex expenditures, new hirings, High lead and plastic prices, will; I predict have a negative big impact on OTI balance sheet--but this is hopefully short term pain, and there will hopefully be long term gain for the patient Investor, who can weather this fierce storm.

Hope that clarifies my thoughts and what I have gleaned from what I hear/observe around the market-palce.

Regards,

Robbo
The above comments are said on a totally:"no prejudice basis" and are not to be taken as representing any form of financial advice, or informed opinion of any kind or to be relied upon, in any way whatsoever. Please do your own independent research, and take independent qualified financial advice, as always.
Regards,
Robbo


quote:Originally posted by cantab

Hi Robbo, the kiwi

Agree that it would be nice to know that OTI are making progress to recover the higher lead cost. Another thought, the cost of plastic must be going up along with the price of oil. Bugger, something else to worry about.:D


It's only a matter of weeks since Dimebag called OTI a screaming buy at 16c. I don't see that anything has changed since then.

I guess it's one of those situations where you pays your monies and takes your chances. If I'm right and OTI hit my target of $1.00 within 3 years, I'll be laughing. Alternatively if I'm wrong the guy who dumped his 25,000 OTI at 19c all the way down to 18c will look like a genius. :D Who knows, maybe there is an opportunity to sell now and buy back after the report. Time will tell.


Robbo, I'm seriously impressed how you have the ability to move markets on these illiquid stocks. First there was the SMH/AGE article on ATR, now OTI today. :)

Cheers

Cantab

skinny
18-08-2004, 07:59 PM
Robbo - i see it the same way re how an analyst would call it. If OTI were a more liquid stock with institutional following no doubt such a call would cause the share price to fall a fair bit. But as we know its a really thinly traded beasty and I really wonder how much scrip there is on offer from the more short-term focused punters...just a thought. Time will tell :)

KD
18-08-2004, 08:46 PM
Hi OTI owner analysts,

Happy to have propped up OTI today and look forward to either further opportunity at lower SP or positive SP response with respect to news re new factory.

cheers

stolwyk
19-08-2004, 01:51 AM
I would expect some setback though and therefore didn't invest that much. Let's see what happens next. Hopefully they can get through without a share placement but it is too early to say.

It wil also be a matter of timing any entry.

Gerry

clearasmud
19-08-2004, 07:42 AM
I topped up yesterday and may buy more if price tanks

thekiwi
19-08-2004, 10:16 AM
This is interesting ....

"The analysts do point out that battery producers have started to look for alternatives, principally nickel and manganese, for battery applications where performance characteristics are considered less critical because of the current high price of cobalt."

full story at

http://www.aireview.com/index.php?act=view&catid=5&id=475

airedale
19-08-2004, 11:19 AM
With the recent volatility in OTI I had a look at the weekly charts and I see that technically OTI has been a buy since about May 03 when the 8,13,26 week MA's began to rise. The 26 week MA is still rising and is at $0.172. The share price is dropping back to that level. Any support there on decent volume would be a good buy signal.
Fundamentalists who believe in the company will just go ahead and buy anyway.

robbo
19-08-2004, 11:43 AM
Hi all. --
need to clarifymy last few posts.

Fellow posters, asked me to report anything I might find out, discover or ascertain.

My last few posts are really just that.
To put it plainly, I am now not a short term Bull on OTI --and I provide my embarassed "egg ON MY FACE"- revised downwards new valuation-and for the short term, financially depressing opinion on OTI--in the light of feedback fellow posters asked me to me see what I could come up with from my investigations and enquiries.

To do otherwise would not be fair--that is, to just be recklessly bullish and then accused of "ramping" OTI....I have a deep respect for fellow Sharetraders and as a feed-back to readers,
I feel it is only ethical & fair to now call OTI as I find it to now unfortunately be--(for the short term at least). To keep being too optimistic or bullish, --on OTI now, would be contrary to my now current view...but instead as a fair thing to do, I would like to
to report the revised opinion/news/feedback/information
analysis or whatever as newly found, discovered or heard on the grapevine--so as NOT to be acused as ramping--

Hope that helps a bit,

cheers,

Robbo
DISCLAIMER
The above opinions are NOT to be construed as advice or financial advice and said on a totally "without prejudice" basis. They are strictly the persoanl opinions and thoughts of the author, and should not be relied upon in nay way whatsoever.

airedale
19-08-2004, 02:04 PM
Well that's very humble of you ,davidrob, The 26 week MA is now at about where Dimebag reckons fair value to be.

TheBossMan
20-08-2004, 04:43 PM
The price was up the previous day, as I got my friend to buy (only sale that day). Unfortunately, I dont have any friends to shell out a million or so...;)

Cooper
24-08-2004, 05:19 PM
Report out...
Revenue up 14.9%
Net Profit down 104.7%
Cash at Bank... a tad over 7.5mill... increased... (looking for other buying opportunities?
Cash Flows from operating activities down abt 50%, cashflows from investing activities increased by abt 5mill from -200,000 in Dec 2003.

Cooper
24-08-2004, 05:21 PM
eps -5 cents down for the half from 116 cents end of 2003.

TheBossMan
24-08-2004, 06:02 PM
Nothing new in the report? Except some potential acquisition, maybe?

robbo
24-08-2004, 10:22 PM
OUCH... "yep...."

Its a bit of a doozy I guess....and that Dark Cloud of a depressingly negative 20% of all Profits going to CVIC has got 'em over a worrying barrel.

They won't ever get Big Investors with that "nasty" hanging around like a VERY bad smell--what is the Legal/liquidation position on this CVIC debt/obligation/nasty overhang/skeleton in the cupboard...in relation to EVER[?]being able to get rid of this monkey on OTI's back & jettisoning this Negative seemingly intransigent and... ongoing Debt/Obligation of 20% of all ongoing profits--yuk !--[}:)][}:)]--for ever[?][?]..liability?

Any thoughts out there, as its got me very worried and a bit stumped to be brutally honest.

I was thinking of suggesting OTI re-locating the Head Office to the Netherlands--but that starts to look like the 'hard...ie' option these days[B)]--BAD IDEA:([8D][8]

Sure shows how the one who controls supply can kick your ASS very hard---He who controls PRICING (Lead)& controls the Market and Profit/[b]Loss--and the lead price is certainly going to have to be factored into the re-pricing of batteries...if head-way is to be made....

I was previously hoping OTI to be out of this BLACK HOLE in another 6-9 months..thinking now more like 18-24-30 months to be frank...very long-haul; on re-consideration...glad I'm VERY patient sort of chap--NOT !![}:)]; as these issues are unfortunately structural; and will need ironing out over the longer term now I'm afraid to say--(in my opinion)

feeling a bit/very flat over OTI overall,[}:)][}:)][B)]

but them's the breaks--bugger

glad still have/like: FAN, OCL, FWD, GUD, ASTRON and PPR, TRS and Photon.(and a few others in the little black book !!)

Robbo
DISCLAIMER

PLEASE ALWAYS DO YOUR RESEARCH

The above comments are not to be construed as financial advice in any way whatsoever, and are said on a "without prejudice basis" and should not be relied upon in any way whatsoever; as they are only the personally expressed opinions, ruminations and whimsical ideas and thoughts of this writer only."

Robbo.


quote:Originally posted by Cooper

Report out...
Revenue up 14.9%
Net Profit down 104.7%
Cash at Bank... a tad over 7.5mill... increased... (looking for other buying opportunities?
Cash Flows from operating activities down abt 50%, cashflows from investing activities increased by abt 5mill from -200,000 in Dec 2003.

skinny
24-08-2004, 10:43 PM
Cheer up Robbo mate :)
I thought the results weren't as bad as they could have been actually - they're still selling batteries for more than what it costs to make 'em (i.e. a tad cash flow positive) so as volume comes on stream later this year earnings should improve even if there is no margin relief. However - its pretty drastic when your inputs costs have risen from around 73% of sales to 92%! What I really would love to know is how they envisage to recover margins going forward. I agree completely that it isn't going to be from falling lead prices (see some recent analysis I picked up off DJ below), so I *hope* they have the muscle to re-negotiate more favourable terms. I have a very important chocolate fish riding on this now.


[quote]quote:DJ Asian Demand Growth Behind Strong Lead Market - Report

SYDNEY (Dow Jones)--The lead market has been re-energized thanks to growing demand in Asia against a backdrop of capacity reductions by major producers, Australian consultancy AME Mineral Economics said in a report issued Sunday.
Given the current global supply deficit, and with significant quantities of new and re-activated production not due until next year, AME said lead prices would remain at historically high levels until 2006.
AME noted that its forecast for an average London Metal Exchange lead cash price of $850 a metric ton this year will be a 24-year high in nominal terms.
"The market is in a supply deficit following a series of smelter and refinery suspensions and closures that have constrained production, while a third consecutive year of plus-2% global consumption growth is expected," it said.
At 0835 GMT Friday, the cash price of lead stood at $904.50/ton.
AME predicted that the world refined lead supply deficit would hit 130,000 tons.
"Metal inventories have been drawn down to very low levels, with LME stocks down to 40,000 tons, compared with 150,000 tons in November 2003," it said.
The focus of lead demand growth is now in Asia, it said, where rapidly industrializing countries are boosting levels of lead-acid battery manufacturing for their own expanding motor vehicle fleets as well as for export.
Now accounting for 77% of lead use, the lead-acid battery's dominance is steadily rising as motor vehicle fleets continue to grow and as industrial battery demand for reserve or standby power has again picked up after a slump between 2001 and 2003, AME said.
Meanwhile, non-battery applications are waning due to potential pollution and health problems, it said.
As with several other metals, consumption growth is greatest in China, AME said, noting that the country's share of total lead demand reached 17% in 2003, compared to 8% in 1996.
Asia's share of total consumption has risen from 30% to 39% over the same time frame, the report said.
By 2010, AME predicted that China and Asia's shares of lead use will reach 21% and 43%, respectively.
"The proportion accounted for by the traditionally dominant lead consuming regions of Western Europe and the United States will have shrunk to 42% in 2010 from 56% in 1996," it said.
A similar trend is taking place on the production side of the market, where China is also the nation where lead smelting and refining capacity additions are concentrated, the report said.
"In 2003, China became the world's largest refined lead producer, with 1.58 million tons, more than double its 1998 output," AME said.
"Western world refined lead production, however, declined in each of the years from 2001 to 2003 and will fall again this year, owing to a series of smelter and refinery closures and suspensions," it said.
But AME warned that the output decline outside China, Russia and Eastern Europe will be reversed in 2005 as several producers lift production to take advantage of the bull market.
It thus forecast that the refined lead market would post only a small supply deficit in 2005, when it expects the LME cash price to nonetheless average a historica

TheBossMan
25-08-2004, 08:27 AM
A) With the signalled consolidation in the industry and B) once the new plant is commissioned and beds in, OTI can be reviewed. For now, I'll sit tight on my holding. No doubt there will be a few holders bailing out...perhaps, the next two weeks will be a good time to buy.

Cooper
25-08-2004, 10:33 AM
Hi Cantab, You make a very good point IMHO about OTI's competition facing the same high lead and plastic prices... obviously unless someone comes up with alternatives a continued high price for both these products will see sales margins for OTI moving up in the short to medium term. I take it from your post that the lower margins are a result predominantly of forward sales and not due to a trememdous amount of competition in the market?
My main worry would be the strong amount of cash ATM... why? Obviously if it is being put aside for further expansion then it's a positive... bigger and better, more market share, increasing returns to scale etc, especially if demand is growing (which it very much seems to be) but if it's not for further expansion then what exactly is it for? Is it an admission they may need it in the near future as a safety net? Are they having that much trouble passing on increased costs?
Regards

Cooper
25-08-2004, 12:12 PM
Cheers Cantab...
Given that the problems all stem from a lack of availability of lead (therefore higher lead prices) which affects all battery manufacturers, and that OTI was only able to fulfill 1/2 it's 2003 orders, it would be a fair conclusion to draw that supply outstrips demand.
I can only draw conclusions from my time in the steel industry and there may be something I'm missing here... but given supply is less than demand theoretically it should be very easy for companies like OTI to pass the higher costs onto the customers as with excess demand the battery producers have enough room to do this... this ability to increase margins in the face of higher costs should be industry wide given a relatively high level of demand. They were signalling they would have problems with margins previously. How long ago were their contracts set? Given they can not supply their customer demand, are they not bargaining from strength? If so, why would they not ensure they had sufficient margin in their contracts to cover the possibility of higher input prices?
Apologies if I'm being a pain in the ass but I like the look of OTI yet have no idea of the market they are involved in or the details of their forward contracts.
Regards

Packersoldkidney
25-08-2004, 12:21 PM
quote:Originally posted by skinny

I have a very important chocolate fish riding on this now.


Just make sure that little brown bugger is overproof. :)

Cooper
25-08-2004, 02:13 PM
I appreciate the opinion Cantab, I have noted in earlier posts that in many people's opinion a key strength is the quality of management. Given this strength, the high level of demand and growth nature of the company I still like the look of OTI. I have no worries going against the crowd, just want to make sure that if I do go I don't go with any questions half answered. Thanks.

robbo
25-08-2004, 09:42 PM
Sure cantab,

more than happy to try & see if I can oblige with this good qstion re OTI's time-line on forward pre-production sales( if I haven't gone totally to drink with fear, loathing, and self-doubt in the meantime...;) )fair responses too I s'pose--"But still not happy Jan..."..& I wonder if you've also got thoughts re. options for dealing with the CVIC debt, which is the 'fly-in--the-ointment'--from where I sit...guess you too didn't think the Norweigan option, all that feasible--'ahem, cough, splutter...[:o)]'

If not any ideas from the cantab manual of all things wise and erudite, then this might also be on my qstions list....hmmmm

kind regards

Robbo


quote:Originally posted by cantab

I also thought the report was acceptable being in line with the Chairman's comments in May concerning first quarter trading.

Just as I thought, plastic became an additional issue due to the high oil price.

I think this is as bad as it will get and from here things should improve. The lead price is the key and probably will only fluctuate around these levels. Sooner or later though the price increases will take affect once the pre-sold production has been dealt with. Robbo, I wonder if you would be able to send an email to find out how far in advance OTI normally pre-sell their production on average.

Another consideration is that it is logical to expect that production from the new factory will be priced to reflect at least some of the cost increases.


[u]Other positives:</u>

NTA is 11.58c per share.

Operating cash surplus of $558,000, which helped out with building the new factory.

Strong cash position of $7.5m.

Sales revenue up 15% even though capacity constrained.

Realisation in the battery industry that general price rises are required.

New factory on target.

It sounds like the international battery alliance to tackle China is likely to go ahead.

A rapid consolidation likely to occur in the Chinese battery industry.

There is a risk that lead and oil could go a lot higher but in the case of lead I doubt it somehow, anyway without price increases there wont be a battery industry, fullstop. Probably OTI is fairly well placed to ride this out because of its cash position, better than average production efficiency/cost competitiveness along with its excellent product quality and customer relationships. If OTI is struggling one hates :D to think how some of the opposition is doing.

I'm holding because I would say this is as bad as it will get and things should improve soon, how soon I don't know, it all depends on how far out OTI pre-sell the production.

The report confirms what we already knew.

Cantab

KD
25-08-2004, 09:58 PM
G'day Oriental Technologists - the first thoughts that came to mind when I saw the report last night and the SP this morning was - this is the opportunity here - an entry point at last or a chance to 'top up'. Cantab - I hope you have summed up the situation correctly - I see it much the same way. However I can also see where Robbo is coming from - this weakness might hang around for a while and, in the meantime there might be better places to park the $. For me - I'm happy to top up and wait - be it patience or laziness - but I'm in no hurry to cash in the chips. The Oriental Express has a lot of track ahead and this is just a whistle-stop with a few passengers alighting and a few more jumping on board...

cheers

robbo
26-08-2004, 04:06 PM
Thought You'd Joined the Spy Who Comes In From The Cold KD !!

Not that you were defecting or anything, just wondered where you'd scuttled off to ! ;);)

Glad your too into PATIENCE with a capital P--bec.. we haven't seen the worse of the share-drop I'm afraid--in my opinion--13 cents, and faling, everyone's trying to salvage SOME of their dollars, knowing worrying that they cold get STUCK holding OTI--if they need their cash; and the OTI share becomes very illiquid--and the quoted price again descends/drops to penny dreadful status; at say only 7-9c cents, which is where it might realistically languish unfortunately.. The Sell side--at 2.15 pm when I dared to peek, is appearing ominously downward pressure building; and know one is really buying/little resistance-especially with All the Good News else-where..for short-medium termers to follow the Profits, esp.at the micro-caps/small stock end of things[}:)]:(:(

Did anyone see the Penfolde Buscobe-PPR result-- very IMPRESSIVE...--PPR-

which gave me some light relief with watching OTI & the rather nasty XXXX--cross trades--showing the brokers shuffling their clients possibly off/out of the OTI share-holder register..Still feeling GLUM to be frank...:(:(

Resigned to waiting around, and also aware of the sahre-market maxim that Bad News can come in 2s and 3s--so the rough weather might be in for some more stormy weather if previous sits like this are anything to go by.

Still Feeling Leaded. :(

Robbo

Disclosure:
The above comments are not to be construed in way at all, as financial advice, in way whatsoever, and the author does NOT vouch for their reliability. No representations; or responsibility for expressed personal opinion is taken for the above remarks.They are personal thoughts only and their veracity should not be relied upon for any financial decision. All of the above comments; are said on a stricly "without prejudice basis" and the author urges all sharetraders and subscribers to this web chat site; to do their own research, as always.

Regards,

Robbo.


quote:Originally posted by KD

G'day Oriental Technologists - the first thoughts that came to mind when I saw the report last night and the SP this morning was - this is the opportunity here - an entry point at last or a chance to 'top up'. Cantab - I hope you have summed up the situation correctly - I see it much the same way. However I can also see where Robbo is coming from - this weakness might hang around for a while and, in the meantime there might be better places to park the $. For me - I'm happy to top up and wait - be it patience or laziness - but I'm in no hurry to cash in the chips. The Oriental Express has a lot of track ahead and this is just a whistle-stop with a few passengers alighting and a few more jumping on board...

cheers

foodee
26-08-2004, 04:47 PM
Robbo
Yes PPR did very well-thanks to your enthus I did top up. Not involve in OTI but follow the thread. Hope the wait is not too long.
From many painful experiences, I learnt one seldom win playing catchup games.

cheers and good luck to one and all OTI followers.

robbo
26-08-2004, 05:08 PM
Hi Foodee,

Glad you liked and benefitted from my reco. re PPR--



Whatever you do--DO NOT SELL--(I.M.O.)--the overall market is digesting a LOT OF NEWS/released reports... at present--in my opinion--Penfolde Buscombe--PPR-- has only one problem for Buyers--so few Sellers !! --great "problem"--to have !!

Also this co.--PPR-- has relatively; very few share-holders; so earnings will not be diluted which is fabulous, especially now Profit is approaching the $7 Million mark--a very good milestone--IMO--:):)--for students of Growth Small Caps with Huge Potential going forward--especially with such a Now ridiculously Low P/E--valuation../opportunity...


My thoughts are: PPR will be knocking on the $2.25 plus, plus... door within three months---max, and with organic and acquisition growth Both Very very likely, it is an extremely solid and buyoant times for this Focussed Print Communications/Media Company.:):)

and the Four Year earings/profits numbers now are out for all to see and tyhe black & white realtiy Now and going forward does frankly appear truly supurb...--so well Done FOODEE:D:D[:p]

Once the Reporting period has died down, and people start scouting around for; & mathematically assessing relative VALUE--High consistent Value----year-on-year-on-year Reliable existing, repeated and anticiapated forward Earnings, and also consider: low dilution, High Return on Capital/Equity and return on Assets,very Low Debt and importantly LOW debt/P.E: ratio's -Penfolde Buscombe--PPR-- will look like one of the Safest rational Investment & excellent Value Growth Stories going around--(Just like ne, everyone will read the published Figures & study this released Annual Report)--indeed, with 2 more days of Reporting officially left,their: ( PPR ) Earnings per share Growth over 3 plus years--in non-cyclical mining stocks--just might end up qualifying; as ranking almost numbers 1-3 in the whole ASX...

Also; their newly appointed--TODAY-- Independent/Executive director from Paperlinx; is extremely well regarded/respected in the industry --together with the unique opportunity. to Benefit from the current inevitable consolidation in the Print Communications Market--(less future competitors and advantages of pricing power and scale) currently going on in OZ--a bit like what happened to the Packaging Industry: re Visy Board/Amcor and Tetra Pack approx: 10 years ago..

Foodee-- HOWEVER:--in deference to being a good sport---From this post on, I'll start up a new thread dedicated to PPR --as this is really an OTI channel, and might annoy my fellow posters--so I'll see you over on the other channel from this day forward, hopefully!! -- TOPIC: [PPR--Excellent Year-On-Year Growth Story ]

Kind regards,[8D]:)

Robbo.
Disclaimer.
The above comments are not intended as fiancial advice and are said/made; on a totally "without prejudice" basis.

Robbo.


quote:Originally posted by foodee

Robbo
Yes PPR did very well-thanks to your enthus I did top up. Not involve in OTI but follow the thread. Hope the wait is not too long.
From many painful experiences, I learnt one seldom win playing catchup games.

cheers and good luck to one and all OTI followers.

skinny
26-08-2004, 07:10 PM
Well...all I can say is...muchas gracias a los gentes sin cajones!

Topped up at 14C - average buy in price now 13.5c for my 100,000.
If it goes to 7-9C Robbo then I'll back up the truck :D
Read, re-read and read again Cantab's recent post - the longer term fundamentals are compelling. What we have going on here is a short-term crunch in profits that is an industry wide story, yet OTI is still hanging in there being slightly cash flow positive. I bet most other battery producers aren't. In two years time as lead supply comes on stream strongly we'll be laughing. But don't just take my word for it - check RobTV [:p]

http://www.robtv.com/
8:50 AM ET
AM Business with Pat Bolland
Power Breakfast
Alan De'ath, president and CEO, Ivernia

Duration: 7 m 18 s

KD
26-08-2004, 11:44 PM
Skinny - good stuff - a little tricky to locate - this is a more direct link for those interested.

http://www.robtv.com/shows/past_archive.tv?day=wed

Skinny - I don't own a truck but I'm oilin' up the wheelbarrow. I hope Robbo is right with that 7c level! Who can work out what the SP is going to do in the short term - but anyone who goes back through this thread would have to agree that there is nothing too surprising going on at the moment (just that I think the SP reaction is surprisingly delayed). Like you I bought in at around the 18c mark the other day - I thought if it was going to dip it would have done so but perhaps a little hasty in hindsight. However for OTI I think we can declare 7c (Robbo) to 14c (Skinny) buying territory! The Orient Express is arriving at the station (and, as Cantab points out - who knows for how long). OTI have weathered the squeeze over the last 6-12 months and have come up fighting. I really like the sound of that new factory, Chinese car manufacturing etc. the inevitable Ivernia type response to dig up more lead. Most of all I'm glad there is an opportunity opening up with the SP. Tell me I'm wrong here but I think the worst is over for OTI (if not the SP [:p] depending on which way you look at it).


cheers folks

TheBossMan
27-08-2004, 08:23 AM
There may be the odd seller getting out at .13 or even .12; I think there will be substantial support at .10, if it does come down to it.

From a buying perspective, if I honestly believe that the firm has huge profits ahead, a cent here or there shouldn't matter. I'd keep the powder dry and buy in late october/early november, prior to more news. Also, any more bad news would hav come out by then.

robbo
27-08-2004, 09:34 AM
Despite feeling "leaded"

I could/just "against-my-better-judgement"-- be arm-twisted to reluctantly bid the amount you suggest cantab--

and accomodate the sellers--at, oh shucks, shall we say; 10c--but it depends on how black is my mood:(:( and curtent slough of despond:(:( I guess....;)but anything might be remotely possible up to 10...:(:(;)

Corrigan leaving Board--if true, might be a good thing IF Labour-ALP win the up-comind Oz election, as they/Unions are not happy after the Waterfront dipute--where he was closely identified with Waterfront/Docks dispute & reform(read: smashing of Waterfront Union--read an article saying Patricks/Virgin(Corrigan also director).. would also be down-graded by some investor analysts if Austn Labour Party(ALP) were to win federal election....but cantab, that was a good observation and certainly I missed that one most definitely, so thanks mate...

chewing the fat[|)],


(excellent and informative series of posts; Cantab, KD, Boss, Cooper, Skinny and all other terrific OTI posters/followers [even though I'm still nerative/bearish-and worried re. that 20% Debt on-going encumbrance of 20% of all future OTI profits... and still obviously never happy with any LOSS/Red ink and so must be flat re batteries at present generally.

So despite being very much a Grizly unhappy BEAR--I do appreciate all your lovin' support !]

Regards
Robbo

[quote]quote:Originally posted by cantab

Hi all,

Interesting interview Skinny, 90,000 t of lead to be added to supply. A bit of a concern though that world lead inventory is currently at "acute" levels, so perhaps there is still a possibility of one more big lead price spike before the inevitable new supply enters the system.

One would expect that 'once bitten twice shy' will prevail, therefore OTI and other battery producers may think twice before pre-selling production at fixed prices for long periods of time. Shorter fixed price periods, or a lead surcharge may be required. OTI certainly wont be selling batteries out of the new factory at a loss or on long term fixed price contracts. Better to tell the customers desparate for OTI's batteries on long term fixed price contracts to come back and see us when we can get long term fixed price contracts for lead. :D Perhaps we need an organisation like OPEC to represent battery producers, I'm serious.

OTI produce about 1m batteries pa so to replicate last year's profit of $4m before tax, each battery on average needs to be increased in price by about $4.00, we can only pray that, that sort of price wont put some European customers of buying a merc or BMW. :D

While I think about it did anyone notice that Christopher Corrigan's name was missing from the eg list of Directors at 30 June?

Re todays action, missed that. An analysis of the trades and times thereof is interesting. My theory goes like this: 16.5c was previous resistance and therefore a support level. Real traders will exit once this is broken or when their stop loss is triggered. Fundamentals or future prospects count for nought. The key is to protect one's capital and live to fight another day. The first crack in the dam occured at 1.56pm when 100,000 shares were traded down to 15c. That broke support levels and it was like dominoes after that and quickly too. Commsec and ETrade had a field day with buttons getting pushed all over the place in quick succession.:D There were 6 sell orders between 1.56pm and 2.18pm totalling 257,000 shares.

KD, to me something doesn't make sense with the fact that at 13.5c the market cap of OTI is $15.7m, yet they are the biggest exporter of batteries out of China and in the top 3 battery producers in all of China. The balance sheet is strong with cash of $7m so the chances of OTI riding this out would appear to be very high.... and the market cap isn't that far away from NTA. Let's hope that the worst is not yet over for the SP.

Talk

airedale
27-08-2004, 11:06 AM
A very interesting link on robtv,thanks Skinny and KD. I ran the weekly charts on OTI with 8,13, and 26 week MA's. The latest uptrend started in April 03, and in that time [until the latest action this week] the SP only once fell below the 26 week MA.That was in Feb 04 when the price dropped to around 11 cents before bouncing back. In hindsight that was a buying opportunity to double your money because you could have sold at 22 cents recently.
The intriguing question, is this another chance to buy in below the 26 week MA. I think that the fundamentals are sound and when the price of lead and oil/plastic stabilises, and the new factory starts producing then OTI will bounce back.

KD
27-08-2004, 01:23 PM
Cantab - I noticed Corrigan missing but also that heading on the list stated (from memory) Directors for full year (???). Anyway I must check that. Yes - you have been consistent - no doubt about that - an absolute rock in fact - with Robbos waves creashing all about you :D

Dimebag
27-08-2004, 03:02 PM
Wise words Cantab. Well spoken.

Investors never cease to amaze me with their foolishness. To my mind there was absolutely nothing unexpected in this week's release. I must admit I had been surprise OTI's price had been so strong because I thought markets looked out between 6-12 months, and the outlook over that period was (and this was well publicised information) weak at best. I was actually somewhat impressed that investors were willing to cast their eyes (quite rationally) beyond the near term outlook.

However, it appears that the reverse was in fact true. Investors were speculating with a time horison of less than three months. Such antics really are extremely foolish.

If the type of temprement exhibited by Robbo is anything to gauge the mentality of the market by, it is simply no wonder that we see this inordinate volitility. With full respect to you Robbo, your view certainly are very suspect to change on what (I'm in agreement with Cantab on this point) is simply the revelation of old news.

Dimebag

(PS Cooper the result was eps loss of 0.05c, not $0.05 (i.e. 1/20th of one cent, not 5cps). In other words, OTI are operating at break-even.

Cheers
Dimebag

TheBossMan
27-08-2004, 03:17 PM
Perhaps Rob is being extremely clever and trying to bring down the market, only to top up at ridiculously low prices.

Agreed with Cantab that there is no new bad news. The short-term increase to 25 cents few weeks back may have sent some traders to anticipate ATR-like movement, but for those following OTI closely, it was quite obvious that it'll only bring in 'poor' results (temporarily).

If you treat a car battery as a commodity, then you'd agree it gets affected by price fluctuations. why is it that a previous year's profits were attributed to the 'great company', while this year it suggests doom and gloom.

What we see here is a classic manifestation of the sentiments of traders and investors (I read somewhere recently that "Warren Buffett invests in businesses as opposed to stocks").

skinny
27-08-2004, 07:23 PM
Great observations from y'all again. To bring some more information to the table in fact an 'OPEC type' body already exists for the world lead market :D

http://www.ilzsg.org/ilzsgframe.htm

Some very interesting statistics can be had from this site too in terms of world production and consumption of lead in the year to July 2004. It basically shows world lead production has not been matching consumption, hence the run down in inventory levels we see on the LME. In addition, more recent data from the LME shows the negative rate of change in inventory levels is increasing again:

http://www.lme.com/dataprices_historical.asp

All up I think the data shows we have to give more than a little credence to Alan De'ath's point of view in the interview with RobTV that inventory levels are getting to acute levels, in which case I'm afraid the spike in lead prices Cantab was worried about looks fairly likely.

I still think OTI is a fantastic long-term buy - this is more just a caution for those buying today with shorter time frames in mind who perhaps think the next 6 months will show a rapid improvement in OTI's fortunes. Frankly I don't see it happening unless they are able to move most production onto flexible price contracts. This is a crucial bit of information we are all in the dark about! On the other hand, I can't resist adding that my 'OTI insurance policy', IVW on the Toronto stock exchange, looks set to make a bomb over the next year and this has not been reflected in its SP at all IMO.