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Alloy with the unusual afternoon earnings announcement ahead of deadline. Quarter was solid, with revenue up 42% y/y at $7.6 million, EBITDA of $2.2 million, and EPS of $0.063 on a reported basis and $0.082 excluding non-cash amortization.
I think we'll see a bigger Q3 as the iron ore price ramp has really gathered steam. Both BHP and Fortescue are working on new production, as are others, and I think we could see another $9 million+ revenue quarter. That would be a nice increase y/y from the $4.9 million reported last Q3 (impacted by COVID).
Trailing twelve month EBITDA now at $10.3 million, adjusted EPS at $0.44. Both will improve next quarter as we lap the COVID impacted periods.
With an Enterprise value of $25.7 million at current prices, AYSI trades at 2.5x trailing EBITDA and 4.3x EPS excluding net cash.
Needless to say, these are too low relative to the potential here. Companies in this space trade at 6x to 8x EBITDA, implying upside to over $5 per share in terms of fair value. We'll see if we can get there...
Most job openings I've seen at AYSI - looking to hire immediately. I'm sure given the current iron ore price boom and associated production capacity expansion, the company is experiencing high demand. I'm looking forward to seeing the results as they come out over the year.
https://alloysteel.net/careers/
TTTPF - Tremor continues to operate at a high level. Reported preliminary Q1 metrics, usually their weakest quarter, but the results are blowing out expectations and prior year. Their programmatic business is up 90% year over year! EBITDA of $25 million plus. They are now officially pursuing a dual listing in the US with expected timing in Q2. Q2 and Q3 results will look amazing with 100%+ growth relative to COVID impacted levels in 2020.
Tremor trades at 6x net revenue versus 20x for MGNI. Tremor is growing at a much higher rate and actually has better margins. I can see them posting $300 mil of net revenue in 2021... current market cap is $1.25 billion. If it trades up to Magnite’s valuation, this is a $35-$40 stock by the end of the year.
Magnite is currently at a pro forma revenue of $350 million, and a $6.7 billion market cap.
Tremor is currently my largest position and I added 35% more today after the results. This valuation gap with Magnite and Pubmatic will resolve, particularly once Tremor is listed here in the US.
TTTPF ($8.00) - Announced full year 2020 results, though full annual report is not out yet. The second half and Q4 performance really stand out, and with other CTV ad-tech based comparables (MGNI, PERI, TTD, etc) guiding and reporting strong Q1 figures, I'd expect Tremor to post some eye-popping y/y growth comparables in Q1 and Q2 over COVID impacted 2019 results. Relative to the US-listed ad-tech players (MGNI, TTD, PUBM), Tremor is quite conservatively valued, with and EV / EBITDA multiple that is a fraction of those other companies.
I particularly liked this little tidbit, which I believe would significantly close the valuation gap between Tremor and those other comps:
"The Company continues to explore, from time to time, the possibility of transactions in the capital markets, including the potential for a dual-listing of shares in the United States."
With its acquisition of SpotX, MGNI has really increased its exposure to video and CTV. An acquisition of Tremor would only further that leadership position. The market seemed to reward MGNI on the SpotX announcement and I think an acquisition of Tremor would be looked upon favorably as well. Realistically though, there may need to be a period of digestion here before MGNI is ready to make another deal. Pubmatic may be another potential buyer, as they are currently lacking from a video/CTV offering standpoint. Should be an interesting year in the ad-tech space...
Noticed that the introduction section for the board was removed, I'm looking into why it was removed. Hopefully, we'll have it back as it would be a pain to have to recreate...
Great Q1 report from AYSI, with strong top line and bottom-line growth. Backing out the non-cash amortization expense, EPS was actually $0.144 per share! I think Q2 will show another favorable y/y comp as activity in the sector remains at record levels. Prior year quarters for Q2 and Q3 were impacted by COVID, so the reported results for this year will have some very favorable comps.
The company remains severely undervalued, even as we move up into the $2's. In a sale, I think its certainly possible the company could achieve a 7x-8x EBITDA multiple, which would put proceeds in the $5 - $6 per share range.
There is more and more talk of a another looming commodity super-cycle. AYSI would certainly benefit in that environment.
AYSI - Now we just need some of that low-float momo love...
AYSI - Great quarter indeed and in line with my expectations for a strong showing. Backing out the non-cash amortization expense, EPS was actually $0.144 per share! I think Q2 will show another favorable y/y comp as activity in the sector remains at record levels. Prior year quarters for Q2 and Q3 were impacted by COVID, so the reported results for this year will have some very favorable comps.
The company remains severely undervalued, even as we move up into the $2's. In a sale, I think its certainly possible the company could achieve a 7x-8x EBITDA multiple, which would put proceeds in the $5 - $6 per share range.
There is more and more talk of a another looming commodity super-cycle. AYSI would certainly benefit in that environment.
TTTPF - here is a great summary of the opportunity and relative valuation discrepancy to MGNI and others in the industry.
1/ $TRMR vs $MGNI
— YieldFanatic (@Yield_Fanatic) February 7, 2021
Have had a few people reach out on $TRMR esp vs $MGNI – they arent quite similar.
But, $TRMR looks more attractive on relative valuation vs $MGNI – signifying 5-10x upside from here. $TRMR should be trading at £25-£56/share vs £5.48 today
MEGA Thread!
MGNI - (Formerly RUBI) - This stock has completely blown up well in excess of my wildest expectations. The stock did hit $10 right before the pandemic in 2020, and has since taken off as the next TTD / CTV darling. The stock was trading at $5-$6 in September, and now at roughly 10x that price in a mere 5 months. I've never been part of a run like this before, but it sure has been fun. I started selling shares and calls against the position a few weeks back and am now fully covered. Well into the overvalued range, but hey, I'll take it...
PERI has similarly done well in the space and trades at a discount to MGNI, might still be an opportunity there. But I've moved my attention over to another ad-tech play with a video and CTV focus, Tremor International over in the UK. Their CTV business is growing at a much faster clip and the total business actually generated more in EBITDA in 2020 than Magnite. Yet, while Magnite is valued at $6 billion+, Tremor sports a relatively skinny valuation of $1 billion...
Tremor trades in the UK, but has a US ticker TTTPF that allows US investors to get exposure. I've shifted half my proceeds from MGNI over to Tremor with the hopes of Tremor getting to at least 1/3 to 1/2 of the relative valuation of Magnite, which would be more than a double from the current valuation...
Iron ore industry is on fire. Record production, high iron ore prices, strong profits being reinvested in mines. All point to higher wear plate usage. Looking forward to Q1 results in mid February.
https://www.australianmining.com.au/news/bhp-breaks-waio-performance-record/
AYSI - As a holder of AYSI for far too long... things certainly do look up for the company. Goldman a few days ago put out some research suggesting the potential start of a new commodities super-cycle... BHP, Vale, Fortescue, the Australian dollar are all surging and hitting multi-year highs... The new administration will likely push for more stimulus, pushing demand for steel, iron ore, and in turn wear plate for maintenance and new mines / equipment to handle the higher demand.
For their part, AYSI appears to be more active, both in terms of filing timeliness and communication / marketing on their new website and social media platforms (i.e. LinkedIn). I liked the disclosure in the latest annual report that they stopped paying for the racing team. In my dream scenario this points to some larger strategy that could result in an uplisting / relisting to Australia / or even a sale. Granted, this is wishful thinking, but for the first time in a while, I feel things appear to be moving in the right direction for AYSI.
The valuation is a pittance... The company trades at roughly 2x EBITDA, when most in this space trade at 6x+. Bisalloy, the most directly comparable company is valued at 6.2x with roughly the same amount of EBITDA. That would equate to a roughly $4.00 share price for AYSI. I think 2021 will be a strong year from a growth and earnings perspective and I can realistically see growth of 25%+ for the year on the top-line.
On their LinkedIn page. Retweet of a post from a partner, sounds promising:
BHP has adopted Segnut for use on the refurbishment of the Car Dumper #4 at its Port Operations in the Pilbara. Alloy Steel International Pty Ltd is undertaking major works on the project and is using Segnut to secure the wear liners on the equipment, greatly improving the maintainability and safety of the facility.
On their LinkedIn page. Retweet of a post from a partner, sounds promising.
BHP has adopted Segnut for use on the refurbishment of the Car Dumper #4 at its Port Operations in the Pilbara. Alloy Steel International Pty Ltd is undertaking major works on the project and is using Segnut to secure the wear liners on the equipment, greatly improving the maintainability and safety of the facility.
Commodity super-cycle incoming?!?! Goldman Sachs believes so...
https://www.reuters.com/article/metals-supercycle-ahome/column-goldman-proclaims-the-dawn-of-a-new-commodity-supercycle-andy-home-idUSL8N2JF3R2
New administration will push for more fiscal stimulus and the expectation is that stimulus will increase the need for capex, and in turn, steel and iron ore...
BHP, Vale, Fortescue are all hitting multi-year / record highs on expectations of greater demand. The Australian dollar is hitting multi-hear highs. All of this is positive for AYSI and industry-wide wear plate demand.
Dare I say, is 2021 the year that AYSI breaks above $1 per share and stays there???
AYSI - hard to imagine there being any real impact. There is no where else for China to get the iron they need. Would take decades for China to even try to replace that supply. Could it eat into future demand out of Australia, possibly, but new mines would need to be built elsewhere, and new mines need wear protection.
Cutting off imports from Australia would be a classic “cutting off the nose to spite the face” scenario. Just not realistically plausible.
Monster quarter for AYSI. I get $0.14 per share with my calculations. I was expecting a bit more in terms of revenue for the quarter, but given the finished goods inventory levels, I think some of that will be carried into Q1. On a reported basis, the next two quarters should show some significant year / year growth, both in terms of revenue and profits. As you mention, the iron ore industry is hot and the company has expanded its offerings, including some higher tech wear management offerings.
I tend to focus on EBITDA, and 2020 was a record year in terms of EBITDA. $8.5 million of EBITDA to be exact. I see no reason why 2021 won't eclipse that mark. Company generates a significant amount of cash flow, would love to see some of that returned to shareholders.
I did find it interesting that the company ended its sponsorship of Kostecki Brothers racing in July...
Agreed, monster quarter. I get $0.14 per share as well with my calculations. I was expecting a bit more in terms of revenue for the quarter, but given the finished goods inventory levels, I think some of that will be carried into Q1. On a reported basis, the next two quarters should show some significant year / year growth, both in terms of revenue and profits. As you mention, the iron ore industry is hot and the company has expanded its offerings, including some higher tech wear management offerings.
I tend to focus on EBITDA, and 2020 was a record year in terms of EBITDA. $8.5 million of EBITDA to be exact. I see no reason why 2021 won't eclipse that mark. Company generates a significant amount of cash flow, would love to see some of that returned to all shareholders.
I did find it interesting that the company ended its sponsorship of Kostecki Brothers racing in July...
AYSI - Not only are pricing hitting 5-year highs, but production levels out of Australia are hitting monthly highs.
https://www.dailymail.co.uk/news/article-8980295/Australian-iron-ore-exports-surge-record-high-10-9-billion-October.html
BHP continues to work on their South Flank mine, which will need plate. Other mining companies are going through or planning production increases. All the while, Chinese demand remains strong.
https://www.mining.com/south-flank-is-84-complete-bhp-says/
In the past, Q4 has provided some pretty significant quarters, both in terms of sales and profits. Given the relatively light Q3, likely resulting from delays due to COVID, it wouldn't surprise me to see a pretty big sales and EPS # in Q4. The rising Australian $ will also make the #'s look bigger on a USD reported basis.
Now if only we could get them to pay a dividend with all that cash...
INFU - check out INFU, more attractive from a valuation standpoint. Price targets in the high $20’s coming out of a long basing period.
ZM - With a revenue multiple of 117x... Only 50x on a forward basis, though. What was a stratospheric valuation has only become more so.
Not the only one - so many others with nose-bleed valuations.
How about $3.3 billion for a pet insurance company with under $10 million of EBITDA trading at 7.5x revenue (TRUP).
Perhaps an insurance "tech" company with $100 million in revenue, losing more than $100 million in EBITDA. Sure, let's pay 36x revenue. (LMND)
How high these valuations go, anyone knows, but at some point, reality will have to set in.
Thanks, I finally received the notices from my brokerages electronically today. You are correct that there is little on the agenda. Personally, I'd like to see the board expand beyond just Alan Scott as the sole independent director. In my dealings, I've found that a diverse board can provide significant benefits to a company, well worth any director's fees that would need to be paid.
KIK, is the meeting expected to be in person or virtual? I would think with COVID and the significant restrictions around travel, the only real way to have a shareholder meeting would be virtually. I still have not received the notice, but was curious. If it's not virtual, it may make sense to push their legal counsel, Peter Sugar, to make it virtual so that shareholders will actually be able to participate in the annual meeting.
Has anyone ever tried to attend one of their shareholder meetings?
I haven't received it yet, anything of interest listed in the agenda for the meeting?
CNC job posting on their website...
Due to high demand, we are rapidly expanding and are looking for an experienced CNC Machinist to join our workshop. The role is a full-time position to start immediately.
About the role:
CNC lathe and millwork
General workshop hand
Forklift licence is essential
Located in Malaga
The Reward
Belong to a team of highly motivated and skilled professional people that have the vision to be the global leader and provider of manufactured wear products and solutions to customers seeking high quality and reliable products.
Not sure if that's the case here. As a shareholder of AYSI, you own shares in a Delaware corporation.
ALBO - After-hours selloff on NASH a few weeks ago indeed proved to be a good entry point for PFIC results. Piper was first to update their price target to $81 per share this afternoon, I expect more upgrades today/tomorrow.
I personally believe the opportunity is greater. ALBO has $150 million of cash with an $80 million line of credit with Hercules and enough capital to get through odevixibat commercial launch. They will also have the potential to receive a priority review voucher worth ~$100 million. Commercialization should be straightforward with only 10 sales reps needed for US, and similar for EU. ROW licensing can potentially provide additional upfront capital or licensing revenue.
Current enterprise value of $430 million ($330 million if you include the value of the priority review voucher) seems light given their 100% ownership of odevixibat and the potential opportunity in other pediatric liver disease (Biliary Atresia, Alagille, etc.). The current valuation is similar to MIRM, which does not have as robust of data as ALBO, and whose drug has significant AE's relative to odevixibat, and has to pay milestones and royalties on any future sales of their products. Certainly appears to be a value arbitrage between the two, with ALBO deserving of a higher valuation, in my opinion.
I respect this board's opinion and am curious if anyone here has a position or interest in ALBO. Thanks in advance.
ALBO - For those interested in ALBO and their odevixibat pediatric liver disease franchise, this may be a good entry point. Analysts have attributed no value to the NASH opportunity and management had always considered elobixibat as a stretch in NASH, potentially in partnership with another drug. Phase 3 data on the odevixibat PFIC indication should be out in the next few weeks and will be the key driver of valuation. Perceptive Advisors owns a stake and added in the company's latest capital raise.
My take on Q3 results... While it was encouraging to see a positive net income quarter given all the macro challenges related to COVID, my internal estimates were for better results. Excluding the non-cash amortization expense, EPS came in at about $0.053, which is a solid result. Iron ore prices are at relative highs and production activity in western australia iron ore in the company's Q4 appears to be near record levels.
The company's inventory balance increased through June 30 to $8.3 million, with $4.3 million in finished goods and $3.7 million in raw materials. For reference, in Q3 2019, the company finished the quarter with $7.1 million in inventory and proceeded to post sales of $9.9 million in Q4 of 2019 (14.4 million in australian dollars).
The elevated inventory figures at the end of Q3 to me indicate the potential for another strong Q4 sales result for the company. With the strengthening of the australian dollar, that same 14.4 million AUD sales would translate to $10.3 million USD in revenue. I realize its not a perfect correlation between inventory levels and future quarter sales, but in past, it has been a relatively good indicator of future activity/results. At that sales level, my model indicates a potential $0.12-0.15 in EPS for the quarter, excluding the impact of the non-cash amortization expense.
As a result, I have been placing bids at these levels to acquire more shares below $1.20 as I feel the potential for another strong Q4 is high. The increase in marketing activity at the company with its new website, increased social media activity and investment in smart liners is also a positive development, in my view.
The key question remains though, with the consolidation of family assets complete, what will the cash flow generated by the business be used for now?
Below is the article I referenced before in the Australian Mining Review on their new smart wear plate.
https://australianminingreview.com.au/techtalk/sixth-sense/
Added some today as well. The news for the iron ore industry out of Australia has been generally positive, with BHP hitting new highs today. Iron ore production has remained quite strong and the steel industry in China appears to have returned to normal levels of operations.
I think the quarterly report that will come out here in the next two weeks should continue to show strong operating results. The strength in the Australian dollar will help make Q4 reported results look stronger on a USD basis.
Business remains undervalued, with some good innovation and potential growth in the wireless smart plate. I'm curious if they will charge a fee on monitoring, which would be a nice recurring high margin cash flow stream...
I’m liking the more frequent business updates on the news section of the new website.
https://alloysteel.net/2020/07/arcoplate-wam-v3-perfect-match/
Their LinkedIn page is also frequently updated. The most recent update highlights a new article in a premier mining magazine in Australia that goes into detail of their new “smart” wear plate and the benefits for operators. A comment on the post comes from a maintenance guy at Rio, where we see that they’re currently in testing for over six months. They seem very excited about the potential.
Nice bid of 10k at $1.20 out there currently.
Thanks, I’ll definitely put it on the watch list and spend some time this weekend looking them over.
KINS - buying shares of KINS here under $5. Pre-announced strong results last night with book value per share $9.01 and operating EPS of $0.22. I think their commercial insurance blunders are behind them and with Barry back at the helm, the focus is on improving profitability and strengthening the book and balance sheet. At roughly half of book value, I think this represents a good opportunity to hold a strong profitable company that will look rly trade back up to book value with a few more solid quarters of execution. This is Barry’s second go around on KINS. There is a hefty change of control bonus in his employment agreement, which is where I see this heading in the next year or two.
I also like how they modified their trading blackout rules a week or so ago to include the scenario where they pre-announce their results. Should have taken that as a sign there were about to do it with positive results... oh well, wouldn’t be surprised to see some insider buys roll in the next few days/weeks.
I'm more curious as to who the buyer was. This was the highest volume trading day over the past several years...
There are only 5,557,597 freely traded shares, excluding Maria Kostecki
Well, someone thinks it’s cheap at $1.15...
Agree that the value is there, the issue has been that minority holders have not participated at all in the growth in value in the business.
It's incredibly disappointing to see the share price at $1.15, the same place it was back in 2010, 10 years ago, all while the company generated $37 million in earnings during at 10 year period... Instead the money has gone to two insider deals. At this point, there is nothing else for the company to buy from the family, except the property I guess. I've been wholly disappointed that I've parked a good amount of funds in this business, while my other portfolio positions have done extremely well.
Looks like someone big wants out... Not me. I may add to an already significant position. The iron ore sector continues to hum along and with all the infrastructure stimulus being floated around the world, I see continued demand for steel and ore.
Western Australia iron ore exports hitting records. WA has benefitted from environment issues in Brazil for the past year and is now benefitting from greater COVID impacts on Brazil production.
https://www.argusmedia.com/en/news/2112620-western-australia-breaks-weekly-iron-ore-export-record
AYSI’s first quarter was also likely impacted by cyclone activity and closures that held back production. No similar issues in Q2.
The strong AUD of late just puts it back to where it was pre-COVID. I don’t see it having a major impact of the value of AYSI unless it continues to strengthen past .75 - .80 AUD/$.
I added 6,000 shares this morning at $1.08. Iron ore at 7 month highs. Production issues in Brazil continue to favor mines in Australia. I expect this trend to continue for the foreseeable future with Australia gaining share of the overall market.
Glad to see it filed on time. Another strong quarter, with reported EPS of $0.052. The numbers have $307,000 of non-cash amortization expense associated with the IP purchase. This is non-cash expense. On a non-GAAP basis, excluding that non-cash expense, I calculate roughly $0.07 in EPS.
This is something we'll have to keep doing in terms of an add-back going forward until the remaining intangible asset balance is fully amortized. The expense is essentially a mirror of the prior royalty expense for accounting purposes. Obviously, there is no cash impact as its non-cash.
I'm more interested in Q3 results to see how they've been weathering the COVID crisis, though from what I've read in terms of mining operations, there has been limited impact.