DSB - Delta SBD

[mark100]

DSB is a recently listed underground coal mining contractor with operations in QLD and NSW. Clients include all the standard big-name miners. DSB seems to be similar to MYE but a fair bit smaller. Market cap is $41m

FY10 NPAT was $4.9m on revenue of $75.9m to give EPS of 11.3c. The issue price was 80c, now 97c putting them on a FY10 PE of under 9. However they didn't provide any forecasts in the prospectus so you have to make a guesstimate of whether the earnings are sustainable. If the boom continues they probably are.

I hold a few but would like to see some commentry on future earnings

[mamos]

I have had a look at them too. I would like to know how they have been affected by the floods before investing.

[mark100]

I would hope if there were any flood related problems they would have told us by now. Otherwise I'll view them as having poor disclosure, not a good look for a recent listing

[mark100]

Not a bad report from DSB. I was expecting the worst with the poor market depth recently although it seems the stock is simply suffering from being a new unknown listing.

Underlying NPAT for the 6 months was $2.16m (adjusted slightly to reflect listing costs) with a full year forecast of an underlying profit of $5m - $5.3m. That gives EPS of around 11.8cps and a PE of 7.7x.

More importantly is the prospect of 'significant upside' to the work book in FY12 from new contracts as well as a continuation of the existing contracts.

DSB seems to be a smaller, cheaper version of MYE

[mamos]

I've had a quick look at the result and dont think it is that great. Good part is the guidance. I would have thought given the strong coal mining environment that top-line growth would have been higher.

ETR was only 13.5%. Adjusting for 30% rate would have decreased statutory NPAT to $1,380k.

If they can meet FY11 guidance will be cheap.



Not a bad report from DSB. I was expecting the worst with the poor market depth recently although it seems the stock is simply suffering from being a new unknown listing.

Underlying NPAT for the 6 months was $2.16m (adjusted slightly to reflect listing costs) with a full year forecast of an underlying profit of $5m - $5.3m. That gives EPS of around 11.8cps and a PE of 7.7x.

More importantly is the prospect of 'significant upside' to the work book in FY12 from new contracts as well as a continuation of the existing contracts.

DSB seems to be a smaller, cheaper version of MYE

[Lizard]

I came across this in one of my screenings. Looks interesting, although I am always nervous of new listings - particularly ones like this that don't seem to have listed with any particular goal in mind, so funds just go to repay existing shareholders.

However, agree that it looks pretty cheap if they can achieve forecast and upside from additional contracts/variations could be significant. On watch for now.

[mark100]

Well they actually delivered the top end of forecast. Underlying NPAT of $5.3m, with 44m shares EPS come in at 12c and the PE is around 6.7x. Handy final div of 3.6c as well. As mamos previously mentioned the tax rate is low at around 15%, which is up un the prior years rate of less than 10%.

With a full years contribution from new contracts in FY12 we should get some growth.

I had previously sold at a small loss here although I bought a few just after open based on the result

[FarmerGeorge]

Anyone out there still holding these? Not a bad result to Dec 12 and looking reasonable for FY13. Stock very illiquid, margins under pressure and somewhat reliant on small number of key contracts but pays ok dividend and looks CHEAP.

[Lizard]

At around 10cps, market cap is now about $4.7m - i.e. down about 90% since listing.

They really took a knife to the accounts last year - removed the goodwill and also appear to have managed to slash debt through equipment sales and cashflow (based on the AGM Presentation). The AGM also suggested a short-term revenue increase of 35%, although it is not clear what base this is off and margins are likely to be at the low end. Still, it does seem likely that they could return to profit for 2014/15, which would likely make market cap low if that is the case.

However, there is little stock on offer and it is probably too early to consider paying up for them, as the outlook for coal remains weak. A depreciating AUD may help somewhat, but this is probably still a "last puff of the butt" type play to catch a rebound that may occur on improvement in the current period. Lack of liquidity may see me binning this idea though...

[Lizard]

Now down to 6.5 - 9 cps (depending which side of the spread you're on). Last traded at 7.5cps yesterday on a profitable result, which boosted it 33% on the day - not as exciting as it might sound given the recent dip in price.

At current price, market cap is $3.6m, with a profit of $0.75m for the FY on revenue of $67m - given they booked a loss in first half, this could be promising. Market is not too exciting, but they still have $50m in order book for coming year (almost identical to this time last year) with a pipeline of work they believe will book them between $30m to $130m of additional work over the next two years.

The coal industry may be in the doldrums, but with metallurgical coal forecast to hold current production levels in Australia and thermal coal forecast to increase, there should be still ongoing work for DSB. It's about as contrarian as they come, but DSB are holding their own. If industry conditions are able to hold, or even improve slightly, this one is likely to become a dividend payer sometime in the next 12 - 24 months. Worth a punt at these levels when liquidity allows...