Hughes Drilling Limited ("HDX")

[steve fleming]

After having a go at Fairfax yesterday, hopefully newscorp is more accurate with their take on HDX!

http://www.theaustralian.com.au/busi...-1226652561233

Unearth some mining services bargains

• BY:CRITERION
• From:The Australian
• May 29, 2013 12:00AM

Hughes Drilling (HDX) 27.5c; E&A (EAL) 64c: BUYING opportunities are emerging in mining services because not every stock is suffering to the same degree, but the market is acting as if they are.

Take Hughes Drilling, which on Friday confirmed its revenue and rig utilisation were in line with 2012-13 expectations outlined last September.

Hughes operates mainly in the Queensland coal sector and is exposed to producers rather than developers.

Job pricing remains steady, with rig utilisation at 97 per cent.

Hughes stock has retreated 40 per cent since hitting a 40c high in January, emulating the retreat of Boart Longyear and Ausdrill.

Canaccord Genuity analyst Aaron Muller forecasts current-year earnings per share of 6c, rising to 8c in 2013-14. This puts the stock on an earnings multiple of 4.5 times for the current year and 3.4 times for next year.

Engineer E&A yesterday said it was on target to achieve guidance of a second half similar to the $4.1m posted in the first half.











A "pleasing" third quarter took earnings for the first nine months of the year to $6.04 million. E&A exec chair Stephen Young cited official data showing $268 billion of committed resource projects, with $205bn in the oil and gas sector (E&A is involved in three of the LNG projects).
Unusually, E&A is an investment company with eight independent subsidiaries in heavy engineering, plant construction and maintenance and "fluid solutions". It also has a small corporate advisory arm.
E&A likens its structure to a submarine and its compartments: if one business gets into deep water it won't affect the banking covenants of the others. They also said that about the Titanic's bulkheads, but we're dreamy enough to ascribe a long-term buy.

Hughes is a spec buy: it's either a bargain or too good to be true

[Corporate]

BHP selling is probably a good sign to start buying!

[steve fleming]

BHP takes the axe to its coal mines
http://www.theage.com.au/business/mo...529-2nbyo.html

Thanks KW. One of the key take outs from the BHP coal update (the presentation yesterday makes for interesting reading) was their intention to massively increase coal production (to lower costs of production) in Queensland. BHP are an HDX client.

"The focus for BHP now is to run its mines hard to boost cash flows, the company said, with capital outlays to be halved to $2 billion over the next two years as major projects are completed.

Part of the spending under way is to ''de-bottleneck'' shipments. BHP's Queensland mines are unable to boost exports at present, but capacity is to be raised to about 75 million tonnes annually over the next few years from an estimated 49 million tonnes at present."

As a current BHP/BMA service provider, this is a good thing for HDX. As an incumbent (which offers significant cost advantages when tendering) HDX should be well placed to tender for these new production contracts at a meaningful (but agree with KW here, may be reduced, bearing in mind, blast drilling is only a very small input cost to the mine operations) margin.

As, Ballieu Holst note, HDX is a low cost operator that should ACTUALLY benefit from the cost restructurings taking place at the moment.

I.e. replacing highly unionised, high cost labour with an efficient, low cost operator such as HDX.

Anyway, this hopefully will be my last post on HDX for a while, am starting to get a bit bored of having to write about it.

Like any company it has got risks, however it is also very cheap (for a reason some might say), and is ultimately leveraged to any growth/contraction of Australian's second largest export (and a massive part of the Australian economy), coal.

[Joshuatree]

Thanks Steve and KW(contrarians contrarian).Im sticking to my contrariwise sentiment in HDX. It is in the right time , right sector, rightreichdrills, right lowest cost efficiency,to do well.Am sitting, waiting for results to speak for themselves.Going on what we know,am expecting Rewards to come. Weary of repeating myself too. cheers.

[NZSilver]

Not sure on others but im still in the red on this one - ive been largely ignoring it however - Trading Halt this morning on open.

[Entrep]

Share acqusition

[yabster]

punters on HC are linking it to Mutiny Gold- but may be stab in the dark (both in halts til Tuesday).

[Joshuatree]

Coincidental imo ,HDX exclusively blast production drilling coal. I just hope its a fillip for the s/p whatever it is.

[Joshuatree]

Buying JSW for re $24.4 mill ; $7 mill in HDX shares @ 26c rest in debt.JSW a leading drill contractor in west aus with 24 rigs , 140 staff. Expands the range of drills reichdrills can manufacture. "Extend our core blast drilling ops into the iron ore mines of NW WA" etc. JSW T/0 re $30.6 mill.

[NZSilver]

Results out, seem positive except drop in eps.