AJ Lucas Group Limited [Archive]

ananda77

19-10-2005, 10:57 AM

major:

-improved- as my initial intention was to have this share on the Watchlist.

In the meantime, going by 'On Balance Volume', price action heading towards -Four Year Support- @78.5

Sorry, I have not the knowledge to comment on Fundamentals (maybe
Halebop, (please!!!) can give us a helping hand.

No matter what, it will turn and the next point for turning is around the 80cent mark...of course, if it doesn't then maybe a parachute may help...

<center>http://img.villagephotos.com/p/2004-12/905046/ajl2.gif</center>

Kind Regards and Keep the Powder Dry

Halebop

19-10-2005, 11:50 AM

quote:Originally posted by ananda77

Sorry, I have not the knowledge to comment on Fundamentals (maybe
Halebop, (please!!!) can give us a helping hand.

I've been keeping my eye on the technicals with this one too. I haven't even looked at the Fundamentals though. If I get time I'll have a quick scan tonight but I'm not 100% comfortable with valuing and assessing the industry. It can turn on a dime and I don't have a lot of exposure. ...My stepfather once owned a large African civil engineering firm and managed another mid sized Queensland based company for a while in the 80s but that 20 year old knowledge is as good as my industry insight gets.

ananda77

19-10-2005, 12:34 PM

Thanks Halebop.

...excerpts from the company representation 2005:

<center>http://img.villagephotos.com/p/2004-12/905046/ajlAnnual1.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/ajlAnnual2.gif</center>
<center>http://img.villagephotos.com/p/2004-12/905046/ajlAnnual3.gif</center>

yogi-in-oz:

What's in the stars??

Kind Regards

Lizard

20-10-2005, 10:17 AM

I don't think the market liked them adding a $13m provision to that loss for the final accounts.

Also, the sp drop does make me wonder if additional capital raising is required.

There are alot of positive signs on the horizon for AJL, but then again, things were looking good for them in late 2003 when the sp was at $2 - and look where they are now.

I find this type of company, reliant on large contracts and with variable cashflows, to be very difficult to value and potentially risky. AJL have tried to reduce this risk in recent years with sources of recurring revenue.

They are worth watching though, as if they meet their budgeted EBIT for 2006, they are going to look cheap at this price (95cps), as P/E will probably be around 6-8 and yield could be over 7%.

Skol

20-10-2005, 04:19 PM

I've been following the fortunes of this stock for a while. Not that I profess to be an expert but I reckon this one is due to turn around. I've been buying a few at these levels. Looks like a one off glitch to me.

skinny

20-10-2005, 05:10 PM

Bit of history with this one here -

http://www.sharetrader.co.nz/pop_profile.asp?mode=display&id=5976

Could be worth a trade, but despite being in an attractive sector I have no real confidence in the earnings prospects of this company given managements failure to stick to their business development plans and poor risk management over the past 2 years.

As Liz says from a fundamentals perspective its hard to value the company given the lumpy contracting revenue streams (and capex too for that matter). In '03 they announced a change in strategy to develop more stable reccurring revenue streams; which made sense on paper and they seemingly followed through in '04 with purchases of the facilities management and consultancy businesses. Performance so far of the former has been poor (perhaps reflecting margins in a business that serves food to airlines are never going to be great!) while the later has worked really well in the present commodities boom environment. It and the coal seam gas businesses have been the revenue generators.

What really irked me tho was the pretty much unannounced moves through '04 into a range of risky mineral development projects that have generally been disasterous (e.g. the $12m write off with Nerdhilic). In addition, the execution of the core pipeline contracting busines has also been fairly poor - the TTP fall through could just be bad luck, but a range of contract disputes they have embroiled themselves in over the past few years suggests that mgmt has not paid sufficient attention to details/contingenices when specifying the contracts.

Anyways, just my thoughts, if they can improve execution its a good buy; if not watch out! The fact the market has taken it down below $1 suggests there is a fair ammount of skepticsm over their ability to translate the fat order book to the bottom line!!

ananda77

20-10-2005, 09:37 PM

Reading the 'fundamental' contributions with interest...

My 'technical' perspective:

-2 days of continuous sunshine -Why?-

-a share in a primary up-trend often forms a new high supported with peak volumes immediately followed by a secondary correction (down)

-in the same way, a share in a primary down-trend often forms a new low supported on peak volumes immediately followed by a secondary correction (up)

-at this stage of the ajl-play, a considerable resistance will be encountered at 109 which may be a: broken (high volume please) or b: respected

a: keep cool and wait for conformation (resistance into support)= BUY

b: Stay Out!! and wait for another go at resistance or a new low

...like in the 'fundamental' arguments, a lot of uncertainty can also be found in the 'technical' analysis and consequently this share remains on my 'Watchlist'

<center>http://img.villagephotos.com/p/2004-12/905046/ajl4.gif</center>

Kind Regards

ananda77

10-11-2005, 10:11 PM

...the volume is a bit of a worry though, but still cautiously optimistic: -long-...just a bit of "RED on White" will do...gap between 107/109...

<center>http://img.villagephotos.com/p/2004-12/905046/ajl5.gif</center>

Lizard

25-01-2006, 08:19 AM

Interesting to see that this little run didn't last. Now fallen back to 83.5cps.

The technicals and fundamentals now seem to be at odds. Technically, the share price continues it's downtrend, while fundamentally, a strong "recovery" HY06 result seems likely to be reported in February. Management comments at the AGM in late November were quite bullish, with reported strong demand and improved control over contract terms and conditions. Cashflows were said to be strong and the company on track to meet budget forecast.

The mooted PNG pipeline project seems to be heading forward, and AJL have previously said that they consider themselves strong contenders to receive a substantial amount of work from that project. (Perhaps the share price says that they are not?).

ananda77

25-01-2006, 10:42 AM

up-date: ajl...NOW trading @01/02-support

So far, using shorter timeframes (daily. hourly) for analysis, there have been 2 good short-term trading opportunities, but the technicals have not given a medium/long term BUY-signal since the first posting.

However, considering that ajl trades now close to the 01/02-year support, that's a trading opportunity I do not want to miss and consequently have placed my order. Remember: be a trader not a price-taker...

<center>http://img.villagephotos.com/p/2004-12/905046/ajl6.gif</center>

Halebop

25-01-2006, 11:10 AM

Hi ananda77,

I kind of like the look of that support level. Still haven't had an in depth look at fundamentals but I think there have been enough changes with this company that such analysis doesn't mean much. They don't make my FA grade on a high level sweep, other than appearing to be "cheap", so I won't be looking too closely. I will keep an eye out for a trade though! Personally I'd prefer to wait for an uptrend to confirm, or at least clearer confirmation the downtrend has stopped. They could theoretically double or triple in value so leaving a few cents on the table is neither here nor there to me.

ananda77

25-01-2006, 11:38 AM

...fair enough...

...however, trading so close to a support line has value and I try to capture that value with my buy-order...albeit responsible enough to give me breathing space, but still influencing the market by trying to create a 'down-draw-effect' in this particular situation.

Lizard

24-02-2006, 02:15 PM

I couldn't resist buying more at 82cps, despite the terrible chart - then watched it fall to 73cps... been scratching my head as to how bad results could possibly be?

But the last few days, looking like it's thinking about a U-turn....

Halebop

24-02-2006, 02:37 PM

Still not looking trade friendly to me Liz. If the share price didn't confirm it the OBV certainly hints at which way the money has been flowing on this one for the last 2 years.

The broad trendlines have been pretty reliable up to now. Maybe on a break through 80...

2 Years...
http://img161.imageshack.us/img161/9807/ajlax21feb03to26feb069ii.png

6 Months...
http://img161.imageshack.us/img161/5876/ajlax24aug05to26feb067vk.png

Lizard

24-02-2006, 03:25 PM

Definitely would like to see it go through 80cps. Probably some resistance there. The uptick in OBV over the last couple of days is the best we've seen for some time. Also, have seen this stock move fast on low volume before.

I'm only looking at the chart in the context of sentiment factors i.e. the fact that if you believe the agm presentation from end of Nov, the imminent HY result should be a big turnaround. Although it did occur to me after I'd bought that my assumption they would immediately recommence dividends might be overly optimistic...

80cps now...keep going...

Beefheart

24-02-2006, 03:47 PM

I'd suggest any Director buying/selling after this half year announcement will be an especially good indication of future prospects.

Like you Lizard, I don't expect a div at this half year but who knows?

Regards
BH

Lizard

27-02-2006, 01:43 PM

Looking better again today Halebop. Definitely through the 80cps now on reasonable volume.

Halebop

27-02-2006, 04:17 PM

quote:Originally posted by Lizard

Looking better again today Halebop. Definitely through the 80cps now on reasonable volume.

Like the volumes (well, relatively), the rise in RSI above the mid point, the trend line breaks in both OBV and the share price.

Certainly not calling it a confirmed uptrend. Noting on pure technicals the price could rise to $1.50 before any serious resistance was felt, a conservative trader could wait a while for a better confirmed trend line.

2 Years...
http://img137.imageshack.us/img137/7921/ajlax26feb04to28feb068wg.png

6 Months...
http://img137.imageshack.us/img137/6900/ajlax26aug05to28feb062sc.png

Skol

02-03-2006, 10:39 AM

This share has moved in the last few days and I'd like to hear what some of the technical guys think. I have bought a few at .88 and think it will go higher with the moving average ticking up.

Halebop

02-03-2006, 12:09 PM

Skol have a look at the chart posted just a few days ago. Nothing has changed from there.

The share price has broken well above it's previous down trend line
RSI has gone into positive territory
MACD is touching on positive
OBV has broken it's down trend line
Volumes have held a little higher than normal

The price rise from a few days ago has attracted some sellers so I suspect it could do nothing much useful for a few hours / days / weeks but it very much looks like a worm that turned.

Fundamentally I'm not so impressed by the company. Liquidity is a bit tight and they managed to lose money in what was a good year for many in the industry, albeit despite cost pressures. It does look as though it's a recovery year though so the share price could be expected to re-rate.

Disc: Bought between 82.5 and 89.

Skol

02-03-2006, 12:39 PM

Halebop,
Appreciate it, thanks.

ananda77

02-03-2006, 03:51 PM

Halebop/Skol:

...you will be right...if the result will be a good one.

...in case of an average/bad one, the buyers in the low 70's will quickly drive the price back possibly to a new low!!!

...personally I had an order in at .77 and no way would I buy at these levels now. The next time to buy (after the result) will be above the resistance at .94 on confirmation of .94 as support.

Kind Regards

ananda77

02-03-2006, 04:36 PM

quote:Originally posted by ananda77

Halebop/Skol:

...you will be right...if the result will be a good one.

...in case of an average/bad one, the buyers in the low 70's will quickly drive the price back possibly to a new low!!!

...personally I had an order in at .77 and no way would I buy at these levels now. The next time to buy (after the result) will be above the resistance at .94 on confirmation of .94 as support.

Kind Regards

...this is the picture

<center>http://img.villagephotos.com/p/2004-12/905046/ajl7.gif</center>

Lizard

07-03-2006, 09:20 AM

Result didn't match up to my expectations at all. Might be long term value, but too much risk left in this one to hang around for it... will look for an orderly exit asap.

Halebop

07-03-2006, 11:37 AM

We'll see if the market agrees shortly but I didn't mind the result. None of the divisions could be described as "firing" although it was a good bounce for Pipelines. It would be nice to see Construction and Facilities earn a little more margin wise and they seem to be ramping up scale quite quickly. In terms of top line revenue growth diversification seems to be paying off.

I'd be more interested to see their accounting treatment for Gloucester. Given this is more a "market test our skills" endeavour rather than a "create a gas business" one, I'd like to see the costs expensed even if the gas flows are good.

skinny

08-03-2006, 10:19 PM

Mkt has obviously disagreed with your assessment HB!

Had a look through the HY, good to see +ve (albeit low) profit margins in all business segments and the eps of 3.7c looks at least doable for the 2nd half given the $110m work on hand. So p/e cheapish now at under 10 + the potential with Gloucester makes it an interesting value proposition.

But once bitten twice shy as they say - mgmt don't seem too convinced about further margin recovery given the incr. competition and wage costs, plus the capex this one chews through on plant and machinery add up to a cash flow position that is still pretty vulnerable.

Will continue to keep it on the watch list but no hurry to dip the toes in yet [|)]

Halebop

09-03-2006, 02:32 AM

Can say that again Skinny. Had a tight stop and it got triggered today. Easiest money I've lost in while. [xx(]

ananda77

10-03-2006, 06:04 PM

...don't think this was a bad result.

Their comments however about bidding against strong competition from outside and inside Australia seems to confirm 2 things which ultimately might be the reason why the market would want a bigger risk premium for the shares:

1. despite a full orderbook, the orders might be 'overflows' from orders bigger companies rejected due to 'full order books'

2. to really compete for a bigger and more sustainable market share (bigger contracts), lots of cash is needed to achieve this...so no dividend for some time and increased development risks

...the result so far:

<center>http://img.villagephotos.com/p/2004-12/905046/ajl8.gif</center>

...still on the watchlist, for another -10cents perhabs???

Kind Regards

Lizard

04-04-2006, 05:41 PM

Now back over $1... it has certainly been all over the place! Lost money but could either have lost more or made some...depending how much nerve I'd had. I guess the moral of the story might be that buying more of a share you are already angry with is just as bad as buying more of a share that you're in love with when it comes to decision making!

Halebop

04-04-2006, 07:18 PM

Hehe. This one burned me too then poked a stick in my eye as it sped by. Stop lossed for -10% when I could have been up over 20% instead.

Gertie

04-04-2006, 07:43 PM

ABN 12 060 309 104
4 April 2006
Australian Stock Exchange Limited
Via Electronic Lodgement
GORO PROJECT OPERATIONS SUSPENDED
The Company wishes to announce that following a number of serious incidents around
the Goro Project site on 1 April 2006, the client has been obliged to cease activities on
the project until the site is deemed to be safe to continue the works and the threat of
further incidents has been removed.
These incidents involve a number of threats against personnel, together with the
vandalisation and destruction of equipment, by masked and armed persons. The
Company#146;s personnel and equipment have not been harmed.
At this time, the Company is not aware how long work on the project will be suspended
but hopes to resume work soon. The Company believes that any costs arising from
damage incurred or from delays to the project will be covered by Goro Nickel under its
insurance policy and contractual obligations.
For further information, please contact Allan Campbell, Chief Executive Officer on 02
9809 6866.
Allan Campbell
Chairman & Chief Executive Officer
About AJ Lucas Group Limited
AJ Lucas is Australia#146;s leading specialist infrastructure services provider. It is the
country#146;s largest builder of long distance gas pipelines and a world leader in horizontal
directional drilling, an advanced technology for the installation of underground conduits
without excavation. Other divisions provide gas management services to the coal
industry, construction, civil and property services.
157 Church Street
PO Box 675
Ryde NSW 2112
Australia
Tel + 61 2 9809 6866
Fax + 61 2 9807 6088
www.lucas.com.au

Skol

10-04-2006, 04:44 PM

Finally looks like a decent sort of breakout on this one.
3.7 million shares changed hands a couple of days ago so something's up.

Lizard

01-08-2006, 05:02 PM

Acquisition of McDermott drilling. Sounds like a positive move.

(Don't hold any)

skinny

19-09-2006, 04:59 PM

The financial results presentation makes interesting reading. If they meet expectations for 2007 revenue growth and margins then at present prices the fwd p/e is around 7. Plus there is a bit of blue sky potential with the Gloucester Basin gas feild developments. I think its worth a punt on the fundamentals, but wonder about the chart - still pretty weak?

disc: none held.

skinny

05-10-2006, 01:23 PM

Chart looking a bit better to my unschooled eye (rising OBV, cross of 50-day MA, improving RSI yadda yaada) + some recent goods news on the contracting side:

http://stocknessmonster.com/news-item?S=AJL&E=ASX&N=428588.

Have bought a few.

Skol

06-10-2006, 06:51 PM

Up 10.5c today.

skinny

07-10-2006, 11:53 AM

Up 17% in the past week. It remains a bargain if their forecast earnings for '07 and beyond are realised -- could head back to over $2 in the next year. The fact that they haven't had the best track record of meeting expectations in the past, however, leaves me pretty cautious about putting too much of the portfolio into it.

skinny

18-10-2006, 02:22 PM

Now up 25% since the beginning of October. My reading of the chart is that blue skies are ahead if they crack $1.10 (currently $1.04)

Lizard

18-10-2006, 02:48 PM

Nice work Skinny. This company has managed to put me off long-term investment in contractors with lumpy revenues and margins, but it seems a good chance it could go back up as fast as it came down.

Skol

27-10-2006, 07:53 PM

quote:Originally posted by skinny

Now up 25% since the beginning of October. My reading of the chart is that blue skies are ahead if they crack $1.10 (currently $1.04)

Keep your fingers crossed, not far to go.

Skol

30-10-2006, 11:43 AM

Up 6.5 c this morning, not at all bad. Maybe there's something going on, anyone got any ideas?

Skol

30-10-2006, 12:38 PM

True, relative to others maybe for but for this time of the day this is above average for AJL. On most days AJL rarely trades more than 80000 shares.

skinny

30-10-2006, 01:17 PM

Up over a $1.10 this morning, again on low volume but respectable enough for them.

Liz - will be interesting to see whether our favourite newsletter writer will upgrade AJL on the basis of the technicals now looking much healthier.

ananda77

30-10-2006, 02:16 PM

...sufficient evidence to suggest good support between 75 and 80

<center>http://img.villagephotos.com/p/2004-12/905046/ajl1.gif</center>

...as a trader I would be out now at 115 and buy back if the resistance at 115 is taken out with high volume. The share has not made it yet to a long-term uptrend and looks like being overbought in the short-term. Ergo, looking now at a correction and see if it is supported again at 104.

<center>http://img.villagephotos.com/p/2004-12/905046/ajl2.gif</center>

...as mosteph suggests, Volume is an issue

Kind Regards

ananda77

30-10-2006, 05:28 PM

quote:Originally posted by MoSteph

Ananda77 - thanks for that and, yes, agreed.

I would appreciate your opinion on Au:Sot if you've got a tick.

mosteph: for the short-term too late - for the medium- to long-term too early

...if I had to make a 'buy' decision...definitely not before price breaks 95/100 range...that's purely from my technical perspective.

<center>http://img.villagephotos.com/p/2004-12/905046/sot1.gif</center>

Kind Regards

skinny

01-11-2006, 07:36 PM

Ho hum, another day another few percentage points up.

It may not fulfill all the criteria of a break out, but I am happy with 50% gain so far since beginning of October :D

Actually on thinking about the OBV indicator I guess one problem with it is that for it to rise you need to have a large seller(s) at some point come to the party. The fact that, in this case, we have not obviously seen this might be seen as a bullish signal in the sense that the share price perhaps has not risen enough yet to tempt any large holders to offload stock. Whaddaya reckon?

ananda77

01-11-2006, 10:01 PM

skinny:

...congratulation

...looks now that 115 could be the new support

...still maintain the stock will correct and confirm 110 or 115, unless there is something fundamentally happening, which would justify a continuous rise...and that's the whole problem for me with ajl: just can not get the fundamental picture together

Kind Regards

ananda77

01-11-2006, 10:27 PM

mosteph:

You have done the right thing and got in early -no problem-

...several reasons why I would wait with a buy-decision on sot (if I had to make one now that is).

-the big problem they have is 'customer subscriptions'
-industry extremely competitive
-fast changing technology
-I haven't even got a TV or Stereo

...that is no share for me :):):)

Kind Regards

skinny

02-11-2006, 12:25 AM

quote:Originally posted by ananda77

skinny:

...congratulation

...looks now that 115 could be the new support

...still maintain the stock will correct and confirm 110 or 115, unless there is something fundamentally happening, which would justify a continuous rise...and that's the whole problem for me with ajl: just can not get the fundamental picture together

Kind Regards

Ananda, its worth going through the numbers as, at face value, the fundamentals look OK to excellent.

In the last business update (17th September) AJL forecast revenue will increase around 25% to $220m for the year end June 2007, and increase to around $400m within the next few years. They also expect the EBIT margin to improve from its woeful level of just over 2% to 6-8% in 2007 as they get more out of their fixed-asset base (which is at least credible given the huge increase in the ammount of work in hand). For 2007, EBITDA should then come in around $13.2m to $17.6m. In 2006 depreciation and ammortisation was around $5.2m. In 2005 it was $4.8m. So for 2007 it would likely come in around $6m. EBIT could be in the range of $7.2m - $17.6m. AJL carries around $26m in interest bearing debt so interest payments will be around $2m (this part is a rough stab as don't have abreakdown of their debt schedule). They also have a $4.6m tax credit they can offset against future profits. All up then NPAT could be $4.6 to $12.3m. With 52m shares on issue (excluding the recent McDermott drilling issue) EPS for 2007 may be between 8.8c - 23c. With the share price at $1.20 the fwd 2007 p/e is 5.2 - 13.6.

If your pessimistic and think margins won't improve much over 2006 levels, and for sure some contracting disaster will hit as it did in both 2005 and 2006, them then its probly already near fair value. On the other hand, if they do get it together and achieve near the upper end of the 2007 forecast then:

(1) the stock still represents a pretty cheap 2007 earnings multiple, and
(2) their longer term forecast of increasing revenues to $400m might start getting some weight put on it by the market (i.e. multiple expansion).

E.g. if they achieve NPAT of, say, $10m for 2007 and the market puts them on a 'growth' p/e of 15 then the share price could be in the neighbourhood of $2.80 within the next year. Personally I'm aiming for around $2, which is just taking the SP back to 2004 levels!

Anyways, happy to be corrected on any of the above.

ananda77

03-11-2006, 10:33 AM

MOSteph:

...right or wrong does not matter, more important is what do I understand

...if I do not understand the industry, how can I be sure when to buy or sell?

Technical analysis is an excellent tool to read market action and to time entries and exits. However, my initial buy or sell decision (the share selection), apart from using a screener, has nothing to do with technical analysis, but is based on my fundamental understanding of an industry.

...now I am not an accountant -they do numbers- but it does not take much brain to figure out some basic demand/supply imbalances and if such imbalances are likely to continue, or even better, are an intrinsic part of an industry over a longer time frame...that's where the money goes

...consequently, the shares I am most comfortable with belong to:

-energy sector
-mining sector especially and foremost silver

Kind Regards

ananda77

03-11-2006, 03:53 PM

...sounds a lot better, anyhow...

...you brought the share to the market's attention, now you reap the rewards -Good on you- and do not forget to be charitable

...how about we come back to ajl...:):):)

Kind Regards

skinny

24-07-2007, 07:32 PM

Another good day for AJL - now up 300% since my buy in last October. Not quite as fast as some of the other picks but I'm not complaining :)

winner69

28-05-2011, 05:17 PM

Another good day for AJL - now up 300% since my buy in last October. Not quite as fast as some of the other picks but I'm not complaining :)

Bot looking too good these days as the company fighst for survival

Too much debt wins again ... the companies with 'lazy' balance sheets are the survivors .... the world will learn one day that being overleveraged usually ends in tears

The Big Ease

13-01-2012, 10:01 PM

Well it is back on the boards and this could be the comeback story of 2012.
The Cuadrilla stake has hit something of enormous potential and consequence with the shale of about 1000m (wowa-wee-wa!). Apparently abotu 4 times thicker than the shale in the US which is changing hands about billions.

It looks like shale is the next CSG. Massive funds flowing into the sector in the USA, but yet to get going in AUS, even though we have some of the best deposits in the world.

What are your thoughts?