Lizard
28-12-2013, 09:27 PM
I picked this in the competition this year, so thought I should write it up.
There may have been an ST thread on SCD once, but I suspect that sometime in 2013, admin purged threads that hadn't been posted on in the last 2 years, so if it was once out there, it no longer seems to be... history is free to be re-written :eek2:
Scantech (http://www.scantech.com.au) has always been in the business of automated in line analysis. The original Coalscan technology was spun out of CSIRO in 1981. It has since been expanded into the cement industry and is now followed by other mineral analysers, particularly the use of the Geo-scan for iron ore.
I would like to recite the listed history of SCD (as I occasionally love to do), but since it first listed about the time I started my first permanent job, the year I first heard of "global warming", and the year the PC began to replace the electronic typewriter in the business I'd joined, I would probably lose my audience by the 20th annual report... and we'd still be six years away from the important bits. I asked Bigcharts to fill you in on the important stuff instead...
5249
... you get the picture :D
After some financial turbulence, they arrived in the new millennium with revenue of $5.4m and losses of $2.9m, including costs of about $1m from an IP dispute (resolved). The current MD came on board in March 2001, in time to take credit for a jump in revenue to $7.5m and a small underlying profit. From there, things seemed to be moving on at SCD - steady revenue growth and some bumpy growth in profits through to 2009 when revenue topped out at $15.7m, with NPAT of $1.5m and much patting of backs at the AGM. Unfortunately, the delayed effects of the GFC, high AUD and dramatic slow down in company investment resulted in falling revenues and profits through the next two years, reporting only $9.5m revenue and $0.025m NPAT for 2011. This left the share price at around the 25cps level.
Eventually, business picked up again and by 2012, all was back on track with $15.4m revenue and record $1.7m NPAT. This was cheerfully followed by $17.7m revenue and an 80% profit leap to $3.12m in 2013. The market applauded with a $1.35 share price, but was somewhat deflated by the AGM where the Chairman let slip that they didn't expect to produce a new record in 2014.
Currently the share price sits at 83.5cps, giving it a market cap of $14.6m and P/E ratio of 4.70. Based on the Chairman's optimism that they would hope to clear historical retained losses in the current financial year, the forward P/E would be 5.3. This would also put them in a position to begin paying dividends in 2015.
While I'm not usually a fan of businesses that aren't obviously going to make more in the current year than they did in the previous one, I consider in this instance that 2013 was a bit of an outlier in a bumpy uptrend. I also think the lower AUD may generate some upside for them, since 90% of earnings are from offshore. Finally, I think they may now be reaching "critical mass" where service revenues to existing installations will underpin the business and they will be large enough to appear on the radar of both investors and potential acquirers.
It's been a long, slow path for Scantech, but, like the Tortoise, they've plodded on and perhaps will finally have their day?
There may have been an ST thread on SCD once, but I suspect that sometime in 2013, admin purged threads that hadn't been posted on in the last 2 years, so if it was once out there, it no longer seems to be... history is free to be re-written :eek2:
Scantech (http://www.scantech.com.au) has always been in the business of automated in line analysis. The original Coalscan technology was spun out of CSIRO in 1981. It has since been expanded into the cement industry and is now followed by other mineral analysers, particularly the use of the Geo-scan for iron ore.
I would like to recite the listed history of SCD (as I occasionally love to do), but since it first listed about the time I started my first permanent job, the year I first heard of "global warming", and the year the PC began to replace the electronic typewriter in the business I'd joined, I would probably lose my audience by the 20th annual report... and we'd still be six years away from the important bits. I asked Bigcharts to fill you in on the important stuff instead...
5249
... you get the picture :D
After some financial turbulence, they arrived in the new millennium with revenue of $5.4m and losses of $2.9m, including costs of about $1m from an IP dispute (resolved). The current MD came on board in March 2001, in time to take credit for a jump in revenue to $7.5m and a small underlying profit. From there, things seemed to be moving on at SCD - steady revenue growth and some bumpy growth in profits through to 2009 when revenue topped out at $15.7m, with NPAT of $1.5m and much patting of backs at the AGM. Unfortunately, the delayed effects of the GFC, high AUD and dramatic slow down in company investment resulted in falling revenues and profits through the next two years, reporting only $9.5m revenue and $0.025m NPAT for 2011. This left the share price at around the 25cps level.
Eventually, business picked up again and by 2012, all was back on track with $15.4m revenue and record $1.7m NPAT. This was cheerfully followed by $17.7m revenue and an 80% profit leap to $3.12m in 2013. The market applauded with a $1.35 share price, but was somewhat deflated by the AGM where the Chairman let slip that they didn't expect to produce a new record in 2014.
Currently the share price sits at 83.5cps, giving it a market cap of $14.6m and P/E ratio of 4.70. Based on the Chairman's optimism that they would hope to clear historical retained losses in the current financial year, the forward P/E would be 5.3. This would also put them in a position to begin paying dividends in 2015.
While I'm not usually a fan of businesses that aren't obviously going to make more in the current year than they did in the previous one, I consider in this instance that 2013 was a bit of an outlier in a bumpy uptrend. I also think the lower AUD may generate some upside for them, since 90% of earnings are from offshore. Finally, I think they may now be reaching "critical mass" where service revenues to existing installations will underpin the business and they will be large enough to appear on the radar of both investors and potential acquirers.
It's been a long, slow path for Scantech, but, like the Tortoise, they've plodded on and perhaps will finally have their day?