View Full Version : NAM- Namoi Cotton
If you're looking for a defensive stock with some potential check this out.
NAM is on its lows for the last 12 mths, drought, high dollar, cotton price etc. etc.
P/B .66
P/S .19
P/E 5
NTA .90c/share, current price .59c
USDA reckons that there will be a deficit of 11 million bales for the 2007/2008 season, and who knows exactly how much agricultural land has switched from cotton to ethanol crops.
Cotton price coming off its lows and futures predicting higher prices.
Contrarian buy, but 8.2% dividend yield while you wait for some action.
Not hugely liquid, but limited downside for this one in the event of a correction.
Worth noting that Aussie cotton farmers are likely to be squeezed by the diversion of essential irrigation water to higher priority uses.
Hommel
21-05-2007, 03:23 PM
Have held this one for about a year. Waiting for downtrend to turn and I will buy more to add to my holding.
Olam obviously think there must be something in it for them after their takeover offer for QCH.
Mick100
21-05-2007, 05:34 PM
Since Jan the wether forcasters have noticed a cooling of water temperatures in the eastern pacific ocean. In the past this occurance has signalled the end of el nino wether patterns and the beginning of la nina wether patterns. La nina wether patterns usually bring above average rainfall to eastern australia.
So yes, in my opinion, this rainfall may be the turning point. ie, the beginning of the end of the drought in eastern australia - very significant indeed. .
/
Lizard
21-05-2007, 05:42 PM
But their forecast is for near halving of bales ginned and marketed in 2007 over last year, and they are only able to say that they are forecasting to "be earnings and cashflow positive". For the following (Feb 09) financial year, they were cautious regarding water availability and legislation. That doesn't sound low risk and/or limited downside.
clearasmud
21-05-2007, 05:58 PM
I think the market has written off the existing business but nta is 90c,management is very strong and they are looking for new opportunities.
Mick100
21-05-2007, 07:10 PM
Yeah Lizard, I wouldn't be in a hurry to jump into this one. As you say the crop will be down by 50% for 07-08. So if the drought is broken it will be 08-09 season before NAM gets to benefit from more favourable weather conditions.
CLEARASMUD, the highly specialised ginning equipment (which makes up the bulk of NAM's NTA) is worth diddly squat if theres no cotton to gin.
I agree with you about managment - very conservative which is a must in such a volatile business.
Overall I think cotton prices will improve from now on over the long term. The increasing prices of corn and soybeans means that cotton plantings have been significantly reduced this yr in the US. Cotton will increase in price simply because it's grown on the same ground as these other crops. It will take a few yrs to bring cotton inventory levels down. At the moment there is about the equivelent of half the global annual cotton crop in inventory (50m bales?)
disc. hold NAM
,
clearasmud
21-05-2007, 08:16 PM
Mick,
I believe That the ginning equip could be re-exported to where it is needed.
I think the balance sheet has allowed for the transport costs and disposal value.
There was an attempt to takeover NAM in July 06 by QCH, but rejected by the board, now QCH subject to takeover attempt by Olam.
Battle heats up for QCH.
www.smh.com.au/news/business/dreyfus-fires-150m-shot-in-battle-for-qld-cotton/2007/05/22/1179601410403.html
Mick100
28-05-2007, 01:49 PM
Another 15mm of rain forcast to fall in NSW tuesday - wednesday.
.
The drought won't last forever, winter makes rain more likely of course.
In the US 20% of cotton land has been converted to ethanol crops I discovered a couple of days ago.
Up 3c today.
Read the part about NAM
www.theaustralian.news.com.au/story/0,20867,21810523-643,00.html
Since I don't live in Oz I was wondering if some kind viewer who lives in the cotton growing area of NSW could give me an update on the drought situation. I watch the dam levels on the net but takes a few days to catch up.
NAM holding its own during the recent selloff.
trader-jim
10-06-2007, 10:14 PM
quote:Originally posted by Skol
NAM holding its own during the recent selloff.
Having a share buy-back is probably keeping the price up, hopefully the drought will end before the buyback finishes!
Mick100
11-06-2007, 12:55 AM
quote:Originally posted by trader-jim
quote:Originally posted by Skol
NAM holding its own during the recent selloff.
Having a share buy-back is probably keeping the price up, hopefully the drought will end before the buyback finishes!
I kept tabs on how many shares were being bought in the market by NAM
In the three weeks after big slide in the shareprice they bought back less than 400,000 shares from turnover of 2,077,000. No shares have been bought back since then. So the shareprice has not had too much support from the buyback so far
Skol, could you provide me with a link to those dam levels please?
.
Try this:
http://waterinfo.nsw.gov.au/sr/StorageSummary.html
Mick100
11-06-2007, 01:48 PM
Excellent skol - thanks
.
My pleasure-things are looking up,as long as you're not a cotton farmer in Alabama, worst drought in 50 years. Some rain in Oz and the cotton price moving north.
The only share on my watchlist that went up yesterday.
Dams starting to fill, cotton price up about 15% in the last month and QCH done & dusted, probably only a matter of time until someone makes a move.
clearasmud
28-06-2007, 08:36 AM
Skol,
Why are you so sure someone will make a move?
Clearasmud
Already been attempted once by QCH.
Altogether too cheap.
P/E 5
P/B .68
P/S .2
Div. Yld 9%
NTA/share .90c
clearasmud
28-06-2007, 12:15 PM
Hi Skol,
do you think the offer price will be north of 70c?
Who knows? The last attempt in July 2005 was pitched at 71c and the shareprice reached 74.5c. The takeover offer was rejected.
Scuffer
28-06-2007, 08:46 PM
I'm with you on this one Skol I think this will jump it just needs the money to see the possibilities appearing.
Article in todays Age about the effect of biofuels on the price of cotton. NAM creeps slowly northwards.
www.theage.com.au/news/business/hidden-biofuels-menace-higher-interest-rates/2007/07/18/1184559866606.html
For the patient NAM shareholders maybe some excitement at hand. Up from 45c to 57c in the last 2 days.
www.theaustralian.news.com.au/story/0,25197,23073849-643,00.html
One of the bright spots in the current gloom.
Hommel
19-01-2008, 09:17 AM
Maybe our (holders) patience will be rewarded at last.
Lizard
04-05-2012, 07:55 PM
NAM is not my favourite type of stock, but on the list of possible recovery trades. Currently, they are looking for a cornerstone investor, as debt is out of hand after some bad seasons with unprecedented volatility in cotton futures. This has left them with a market cap of $20m against revenue of over $800m and NTA of $105m.
Currently forecasting a better season, with EBITDAR forecast at $30-$35m. Debt facility has recently been renewed for 12 months. Debt is currently $121m and the aim is to reduce to $60m by Feb 2013. Currently they are in the process of ginning and shipping a record crop.
Not sure I'm brave enough to try this one - one look at the financing cashflows has me stand back in awe. Would probably want to wait until after the equity raising announcement, despite today's 2.5cps rise to 21cps. However, given the value gap between that price and the $1.12 per share of net assets, it could be a punting stock.
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