RCR - RCR Tomlinson

[Skol]

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

In my paperwork here I've got a cutting from the WSJ. The formula I use is:

Market Cap + Debt - Cash divided by EBITDA.

ANG is about 10, RCR is about 5.

[COLIN]

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.

Skol: You may well be proved right but, looking at the charts, I'm not convinced that now is yet the time to be getting back in. I would want to wait for greater confirmation of a sustainable upward trend. And I feel sure that Phaedrus would agree.

It would sure be wonderful to be able to double my money again, as I did in holding between June and September last, but that was a miracle and unlikely to be repeated!

[Skol]

Took a punt yesterday and bought a few at $1.03, see how it goes. Up 6.5c in the last 2 days, not much, but might be the beginning of a trend.

[Sauce]

In my paperwork here I've got a cutting from the WSJ. The formula I use is:

Market Cap + Debt - Cash divided by EBITDA.

ANG is about 10, RCR is about 5.

Hi SKol, thanks for this -

I am no accountant either but it looks like you have calculated this ev/ebit for ANG using the debt, cash and ebitda from the end of year results (30th June 2009) but taken the market Cap from today. The EV/EBITDA using market value at that time it would have been about 5 or so.

In the 7 months Since June the company has raised cash and issued shares, purchased an earnings accretive business, and if their commentary is correct, experienced improving business conditions accross existing operations. Plus the share price has doubled. It will be more complicated and require guess work to work out current ev/ebitda multiple until we have better snapshot of current operations from the company in Feb - but it looks as though it will be higher than 5 but much lower than 10!

WIth RCR I would be concerned about low ROE and margins - they are tight at 5-6pc and have been decreasing for last three years. Also the business plan - which seems they are trying to unlock more profit from existing revenues (increase margins) rather than a nice clear, proven and sustainable high margin growth path like ANG! haha just playing

Make sure you check out FGE, very low ev/ebitda - almost no debt, hist PE 9 -10, double digit margins increasing year on year, and forward order book at nearly double last financial year. Company aiming for half billion revenues by 2013 - (168m for 2009).

I hope RCR pans out Skol - we can have a freindly ANG vs RCR shootout!

RCR 103.5 and ANG 328.

Cheers

Sauce

[Skol]

OK, you're on.
I have used current cap and '09 debt and cash.
I would have thought ASB would keep their site up to date on debt etc.
I have shares in MGR for example which shows 43% D/E ratio but apparently it's more like 18%.

RCR are advertising for a number of staff on their website so have some work under their belts.

[Sauce]

OK, you're on.
I have used current cap and '09 debt and cash.
I would have thought ASB would keep their site up to date on debt etc.
I have shares in MGR for example which shows 43% D/E ratio but apparently it's more like 18%.

RCR are advertising for a number of staff on their website so have some work under their belts.

Cool a bit of friendly competition will be good to keep us researching and learning! Yeh I think mostly ASB data only gets updated at each HY and FY? It pays to work out the data yourself from annual reports and announcements - I learn more hunting through everything to find and verify the numbers.

Good luck -

p.s. I don't think RCR is a bad company, its profitable and increasingly so and seems reasonable value at current prices - I just think they have cost pressures and have to find efficiency to deliver stronger returns, success of which is less assured and therefore current lower value warranted.

[Skol]

Hey Sauce, I think we're off. Up 3.5c today.

[Sauce]

Hey Sauce, I think we're off. Up 3.5c today.

Yes Yes, good start Skol!

P.s. We didnt mention a timeframe - I think a minimum of 1 year is really needed for a shootout of course we update progress with plenty of sledging at any point.

[Skol]

Yes Yes, good start Skol!

P.s. We didnt mention a timeframe - I think a minimum of 1 year is really needed for a shootout of course we update progress with plenty of sledging at any point.

OK, we'll make it a year, up to $1.10 now.

[Sauce]

OK, we'll make it a year, up to $1.10 now.

It looks like your timing was impeccable. Feb will be my month - bring on HY results, commentary and forecasts 15th of Feb for ANG - 22nd for RCR i think...