Drill Torque - DTQ

[mark100]

No one is probably interested in new stocks at the moment but DTQ is one of the cheaper listings for quite a while. They listed on Tuesday with a 20c issue price and opened at 25.5c and have traded between 24.5 and 27.5c since. They also have some 30c options that expire in 2016.

DTQ is a coal and coal seam gas drilling contractor. 80% of 2012 forecast revenue is supposedly already contracted and at the 20c issue price the forecast FY12 PE is 4.7x with a dividend yield of over 10%. At current prices the forecast PE is around 5.8x

Even with the US and Europe on the skids I expect the coal and CSG industry to be drilling plenty of holes over the next few years. The biggest risk to earnings is possibly the weather. Another wet season in Queensland like the last would blow apart their forecasts. Being a QLD local, I highly doubt we'll get 2 years in a row of flooding rain but you never know!

Washington H Soul Patterson are 10% seed shareholders with I regard as a vote of confidence.

I bought on open at 25.5. I think even with the dodgy overall market this stock will gradually work its way through the stag sellers and move towards a forward PE of 7.5-8x over the next few months

[drillfix]

Hi Mark,

Tough market to make an entry / debut in but the stock sure does look quite interesting even Technically although it has only 2 candles :P

Like the fact its a QLD local as you say and that Soul Patterson are on board which makes its worth a long hold as well.

I myself am not good at the PE type forecast stuff but wouldn't mind a small parcel in the long account once/should/if market conditions improve from where we are at present.

[soulman]

Thanks Mark. Looks like you are busy with the IPO. Both DTQ and ICX looks quality and you being in QLD have more insight into it.

Are you a buyer in this market of other stocks?

[mark100]

Hi soulman, I have sold out of ICX for the time being at 27c but will be a buyer again when the market calms down. Missed it on its fall back to 22.5 yesterday! At present I'm only around 50% invested. I'll buy value if its trending up and any cheap IPOs. I passed on the Bega Cheese IPO, could have been a nice stag in a strong market but in reality the stock is being priced way too high and it might struggle on listing in the current market.

[Joshuatree]

Huang Chung ,you were looking at the IPO did you take it up?

[Huang Chung]

Managed to get a nice allocation Josh. Offer also included one free oppie for every 10 shares, so an added bonus.

Should just point out that current revenue by commodity type is:

Copper/ Gold 54%
Coal 25%
CSG 6%
Zinc 7%
Phosphate 4%
Uranium 2%
Iron Ore 1%
Dewatering 1%

Rig distribution by stage of drilling:

Greenfields 65%
Brownfields 23%
Mine Site Production 12%

They also manufacture some of their drilling consumables and spare parts in house.

[dumbass]

i like the look of this one too , seems cheap to comparitive companies.

The prospectus predicts current-year earnings of $5.3m, implying a price-earnings multiple of 4.7 times on the 20c issue price (and a 10 per cent yield).

Comparatives are Swick Mining Services (nine times), Ausdrill (10 times), WDS (14 times), Imdex (12 times) and AJ Lucas (15 times).

current year earnings pretty much tied up under contract.

[soulman]

Mark, I read your ICX post and bought and sold for about B/E at near 28-29. Thank god for that as I read they are only prospecting and no JORC has been established yet. They went as low as 20 today. Did you pick up any?

[mark100]

Hi soulman, in the current market I'm not looking to buy stocks like ICX unless it drops a lot more.

I've got a few buy orders in on profitable small caps but at prices that have not been hit even after todays falls. I think there are more falls to come so I'm not in a hurry to buy anything. I actully sold DTQ in the flurry to 28-28.5c yesterday but unfortunately bought it back an hour later for 27c!

At the moment I'm around 30% invested, I would like it to be zero but the liquidity of some stocks hasn't allowed that. I'm taking some comfort from the fact that the aussie market is at 2 year lows but I have only dropped back to where I was a month ago.

[soulman]

Yes, no positives from anything today. I take Phaedrus exit from sharetrader as a sign we all should take note. When he said he was out, I actually saw it as a sign to follow him out completely but didn't. Although I did lighten a bit. I mean the market was 4600 when he departed.

I guess lowball offer is the best to go as no one wants to catch a falling knife.

I did manage to pick up low ball of RES, CLR and RMS today and have exit them for a very small profit. But I can tell you that I won't be doing that again. I can buy a happy meal from McDonalds with the profits from CLR.

[mark100]

I almost bought CLR on the close yesterday, expecting a market bounce today. It would have cost me a lot of McHappy meals!

[soulman]

I actually sold CLR for 2.18 yesterday. Hence, the low ball at $1.85. I am out of this one but of course a cheeky bid at $1.65 is not out of the question for next time.

Actually wished I hold onto RES now. The heavies are out in force for this African coal miner.