RCR - RCR Tomlinson

[STRAT]

Retail investors are a thing of beauty. They will carry the uptrend on longer and for further than anyone ever envisaged. Thus starts a new bull market :-)

lol KW. You mean, like, all of us?

[COLIN]

Phaedrus: Your time, effort and suggestions greatly appreciated. Subsequently sold half my holding at 125 - if the same daily pattern emerges again tomorrow I will probably be tempted to sell the rest and wait on the sidelines until the fever passes.
Many thanks, again.

[Sauce]

After reading this thread in it's entirety I wonder if the posters here have run the ruler over Austin Engineering? Based on the numbers, and a very basic understanding of both businesses, I cannot find a single reason someone would want to own RCR over ANG (that's not to say there isn't one! I would love to hear others peoples views).

Both businesses operate in the same sector and have comparable market caps (but that's about all that's comparable!).

For instance:

MARKET CAP
RCR = $156m
ANG = $159m

EPS 2008/2009
RCR = 14.2/11.1 = -22.4%
ANG = 24.73/31.39 = +27%

OPERATING MARGIN
RCR = AVERAGE (8 years) 7.5% CURRENT = 5.9%
ANG = AVERAGE (6 years) 13.3% CURRENT = 13.61%

RETURN ON EQUITY
RCR = AVERAGE (8 years) 11.58% CURRENT = 7.5%
ANG = AVERAGE (6 years) 28.5% CURRENT = 28.45%

DIVIDENDS (CURRENT)
RCR = PAYOUT RATIO 25% = YIELD 2.08%
ANG = PAYOUT RATIO 25% = YIELD 3.45%

GEARING
RCR = 22% INTEREST COVER = 3.26x
ANG = 3.5% INTEREST COVER = 24x

PE RATIO (CURRENT)
RCR = 10.81
ANG = 7.39

I realise the historical numbers don't tell the whole story, so please enlighten me if I am missing an important point. To me it seems like ANG outright destroys RCR comparing fundamentals.

ANG have over double the margins of RCR; quadruple the ROE (they have made much better use of their gearing compounded by higher margins), almost double the yield, lower debt/better capital structure, and best of all they are trading at a 31% discount to RCR.

Not to mention RCR have had profit downgrades, delayed projects, appointed a new CEO etc. ANG have gone from strength to strength with management under promising and over delivering, and they have still grown profits significantly during current crisis.

Sure RCR was a screaming BARGAIN earlier this year..... but likewise ANG was, and although now less of one, still is. My opinion is that RCR is now at fair value. I believe ANG is still trading at a discount (approx 30%). A re-rating to PE of +10x and increased earnings due to South American expansion should see the share price perform exceptionally well over the next 12 months, and way outperform RCR from here.

Any thoughts, criticisms, would be much appreciated.

Disc. Hold ANG Do not hold RCR

[h2so4]

After reading this thread in it's entirety I wonder if the posters here have run the ruler over Austin Engineering? Based on the numbers, and a very basic understanding of both businesses, I cannot find a single reason someone would want to own RCR over ANG (that's not to say there isn't one! I would love to hear others peoples views).

Both businesses operate in the same sector and have comparable market caps (but that's about all that's comparable!).

For instance:

MARKET CAP
RCR = $156m
ANG = $159m

EPS 2008/2009
RCR = 14.2/11.1 = -22.4%
ANG = 24.73/31.39 = +27%

OPERATING MARGIN
RCR = AVERAGE (8 years) 7.5% CURRENT = 5.9%
ANG = AVERAGE (6 years) 13.3% CURRENT = 13.61%

RETURN ON EQUITY
RCR = AVERAGE (8 years) 11.58% CURRENT = 7.5%
ANG = AVERAGE (6 years) 28.5% CURRENT = 28.45%

DIVIDENDS (CURRENT)
RCR = PAYOUT RATIO 25% = YIELD 2.08%
ANG = PAYOUT RATIO 25% = YIELD 3.45%

GEARING
RCR = 22% INTEREST COVER = 3.26x
ANG = 3.5% INTEREST COVER = 24x

PE RATIO (CURRENT)
RCR = 10.81
ANG = 7.39

I realise the historical numbers don't tell the whole story, so please enlighten me if I am missing an important point. To me it seems like ANG outright destroys RCR comparing fundamentals.

ANG have over double the margins of RCR; quadruple the ROE (they have made much better use of their gearing compounded by higher margins), almost double the yield, lower debt/better capital structure, and best of all they are trading at a 31% discount to RCR.

Not to mention RCR have had profit downgrades, delayed projects, appointed a new CEO etc. ANG have gone from strength to strength with management under promising and over delivering, and they have still grown profits significantly during current crisis.

Sure RCR was a screaming BARGAIN earlier this year..... but likewise ANG was, and although now less of one, still is. My opinion is that RCR is now at fair value. I believe ANG is still trading at a discount (approx 30%). A re-rating to PE of +10x and increased earnings due to South American expansion should see the share price perform exceptionally well over the next 12 months, and way outperform RCR from here.

Any thoughts, criticisms, would be much appreciated.

Disc. Hold ANG Do not hold RCR

RCR has a lower margin but a larger turnover and $185m in equity as compared to ANG's lower turnover and $51m in equity.

The other thing is RCR spends only twice as much as ANG on Cap Ex to achieve a turnover more than 3x ANG's turnover.

And RCR has been around longer.

I think your right ANG is trading at a 30% discount but RCR in my opinion is still very good value. I'm just waiting for the buy signal from Phaedrus?

That's my thoughts.

[COLIN]

After reading this thread in it's entirety I wonder if the posters here have run the ruler over Austin Engineering? Based on the numbers, and a very basic understanding of both businesses, I cannot find a single reason someone would want to own RCR over ANG (that's not to say there isn't one! I would love to hear others peoples views).

Both businesses operate in the same sector and have comparable market caps (but that's about all that's comparable!).

For instance:

MARKET CAP
RCR = $156m
ANG = $159m

EPS 2008/2009
RCR = 14.2/11.1 = -22.4%
ANG = 24.73/31.39 = +27%

OPERATING MARGIN
RCR = AVERAGE (8 years) 7.5% CURRENT = 5.9%
ANG = AVERAGE (6 years) 13.3% CURRENT = 13.61%

RETURN ON EQUITY
RCR = AVERAGE (8 years) 11.58% CURRENT = 7.5%
ANG = AVERAGE (6 years) 28.5% CURRENT = 28.45%

DIVIDENDS (CURRENT)
RCR = PAYOUT RATIO 25% = YIELD 2.08%
ANG = PAYOUT RATIO 25% = YIELD 3.45%

GEARING
RCR = 22% INTEREST COVER = 3.26x
ANG = 3.5% INTEREST COVER = 24x

PE RATIO (CURRENT)
RCR = 10.81
ANG = 7.39

I realise the historical numbers don't tell the whole story, so please enlighten me if I am missing an important point. To me it seems like ANG outright destroys RCR comparing fundamentals.

ANG have over double the margins of RCR; quadruple the ROE (they have made much better use of their gearing compounded by higher margins), almost double the yield, lower debt/better capital structure, and best of all they are trading at a 31% discount to RCR.

Not to mention RCR have had profit downgrades, delayed projects, appointed a new CEO etc. ANG have gone from strength to strength with management under promising and over delivering, and they have still grown profits significantly during current crisis.

Sure RCR was a screaming BARGAIN earlier this year..... but likewise ANG was, and although now less of one, still is. My opinion is that RCR is now at fair value. I believe ANG is still trading at a discount (approx 30%). A re-rating to PE of +10x and increased earnings due to South American expansion should see the share price perform exceptionally well over the next 12 months, and way outperform RCR from here.

Any thoughts, criticisms, would be much appreciated.

Disc. Hold ANG Do not hold RCR

Sauce: Assuming you still hold your ANG (I am) you will no doubt be pleased with yesterday's action - up 13% on a down day, but for no obvious reason. Perhaps others, like me, have been perusing their Annual Report - just out - and have got excited by those "big rig" pictures. The 5-year comparative graphs certainly look impressive - exponential growth.

Meantime RCR seems to have run out of steam, after that magnificent spurt a few weeks ago. Looks like the market has come round to agreeing with you.

[Sauce]

Sauce: Assuming you still hold your ANG (I am) you will no doubt be pleased with yesterday's action - up 13% on a down day, but for no obvious reason. Perhaps others, like me, have been perusing their Annual Report - just out - and have got excited by those "big rig" pictures. The 5-year comparative graphs certainly look impressive - exponential growth.

Meantime RCR seems to have run out of steam, after that magnificent spurt a few weeks ago. Looks like the market has come round to agreeing with you.

Hi Colin,
Thanks for your post. Very glad to hear you are holding ANG. I wrote a long post last night on the ANG thread about my thoughts on future prospects, only to be unable to connect to the sharetrader site when I hit the post button, and lost my whole post so I gave up!

Yes I am still very overweight in ANG, in fact I decided a cheeky top up was in order, and stole 15000 shares at $2.09 and $2.10 on the recent dip. Still very much cheap cheap - even with latest rise, its well sub 10 PE - with imminent growth potential from Conymet with subsequent sales of JEC/Westech products in SA adding to Conymet's current revenue sources.

I will have to find the quote and post it here, but management have stated publicly that they believe South America could provide more revenue for their company within two years than their Australian operations do. They stated this during the middle of the financial crisis, and while they were conducting very thorough feasibility. This is not an insignificant comment from A team who have a reputation for good conservative approach to managing the markets expectations.

They now have the vehicle they needed, they know they have the demand through many discussions with their existing and potential customers, who are supporting their SA expansion. And they certainly have the track record and experience.

I am very confident that there will be considerable EPS growth in the next two years. With heavy hitters like Thorney and BKN on the share register, thats another vote of confidence.

Next step of information flow will be November AGM - the company should be providing profit guidance and progress report on expansion.

The biggest risk is still delayed/stalled projects and contracting capital expenditure by the mining companies. However it seems that as each day goes by this risk is subsiding. Time will tell!

Non-holders should not let the recent price rise put them off. Worth every cent up to $3. I will revive ANG thread when I get some time, must be some other holders out there!

Yes, I must admit to enjoying the truck and digger porn also.

Regards,
Sauce

[h2so4]

Meantime RCR seems to have run out of steam, after that magnificent spurt a few weeks ago. Looks like the market has come round to agreeing with you.

Steam or no steam RCR has a long way to go. Assuming tides and winds are favourable we can always set our sails or break out the oars.

[Sauce]

Steam or no steam RCR has a long way to go. Assuming tides and winds are favourable we can always set our sails or break out the oars.

So true

[Skol]

I sold some RCR a while back but I'm going to pick up some more now the price is down.
This company seems quite cheap on a EV/EBITDA ratio and hasn't participated in the recent rally.

Low P/B & P/S.

I'm not an accountant though so more informed comment than mine would be welcome.

ANG has twice the EV/EBITDA ratio of RCR and a debt/equity of 52% vs 32% for RCR.

That would make RCR a better deal if another party was interested in buying the company.

[Sauce]

I sold some RCR a while back but I'm going to pick up some more now the price is down.
This company seems quite cheap on a EV/EBITDA ratio and hasn't participated in the recent rally.

Low P/B & P/S.

I'm not an accountant though so more informed comment than mine would be welcome.

ANG has twice the EV/EBITDA ratio of RCR and a debt/equity of 52% vs 32% for RCR.

That would make RCR a better deal if another party was interested in buying the company.

Hi Skol

ANG has NET gearing of approx 18% after recent cap raising/share issue.

How exactly are you calculating the enterprise value of these companies?

Cheers
Sauce