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Stock action is telling me that earnings will be out any day and they may disappoint.
I LOVE IT!
Market makers are having a jolly old time jerking us around. The suspense is hard to take, but I'm hanging tough. I can't believe that our closeted management would undertake to screw all shareholders and open themselves up to litigation. Last time I checked, they still have prisons in Australia.
These market makers see the buying interest here and they are running in front of that interest with fractionally higher bids. I.E. 0.552 bid. The public cannot enter fractional orders, only full cents.
p.s. congrats to swampboots for having the shoes to step in when he did.
Anyone care to wager that Gene or his people are the buyers out there?
Today's volume biggest in a while. I'm impressed with the support. Someone is absorbing the blocks.
The prior message is a copy of article posted by David Pinsen.
Alloy Steel International (AYSI.OB) is a nano cap company headquartered in Australia that uses a high tech, proprietary process to manufacture protective wear plates for mining equipment. Essentially, the company is a picks & shovels play on the mining industry (particularly iron ore and coal mining, currently), an industry which has of course benefited from the demand for industrial commodities by China and other emerging economies.
Alloy Steel was the subject of a few posts here by Seeking Alpha contributer Michael Alexander, including (most recently) this post from last February, "AYSI's disruptive technology leads to record growth and earnings". Since then, the stock has dropped by more than two thirds. Much of that drop occured after the company's most recent quarter showed lower earnings than shareholders (including me) expected.
It looks like I overestimated how much the company would earn this year. My mistake. I thought it would earn over 30 cents this fiscal year, but that appears to have been unrealistic given the capacity constraints the company mentioned in our call earlier this week. Nevertheless, the company has already earned 17.2 cents in the first three quarters of this year, better than the 14.9 cents it earned in its previous best year (2008).
My general idea regarding small growth companies is that if I can buy shares at a single digit multiple to a conservative estimate of what the company will earn next year, that’s probably a good deal.
Imagine that AYSI earns in all of 2011 what it has earned so far in the first three quarters of this fiscal year (17.2 cents). That seems like a conservative estimate to me (absent macro headwinds from China affecting the mining industry, I would expect the company to add to its 2010 earnings next quarter, and grow earnings by a modest amount or more next year*). If you estimate that the company will earn ~17 cents next year, at its closing price Thursday (93 cents), the company was trading for about 5.5x that forward earnings estimate. That seems like an attractive valuation to me, even given the current secular bear market.
With these thoughts in mind, I added shares earlier this week at .90 per share (my average cost currently is about .95 per share).
*As a quasi-hedge against a decline in iron ore demand from China, I am holding some puts on BHP, which happens to be a customer of Alloy Steel's wear plates.
Disclosure: Author is lng AYSI.OB and is holding puts on BHP
I had an order in today at 0.80 and it was filled at 0.70 when the block traded. Thanks again Dave for your hard work.
Agreed! Given the "Uniqueness" of the product, one would expect sales and earnings to increase. Unfortunately, this company is a closed book and will be so until the day that the grand old man steps back and lets some new blood work his way in. It wouldn't hurt either if that new blood had a sense of representing a "public company".
Hi Dave,
Do you expect any answers to our questions in our lifetime??
6-Aug-2010
Quarterly Report
Item 2. Management's Discussion and Analysis
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our financial statements, the notes to our financial statements and other financial information contained elsewhere in this filing.
Overview
We manufacture and distribute Arcoplate, a wear-resistant alloy overlay wear plate produced through a patented process. We believe that wear is the largest single factor leading to production losses in the mining, mineral-processing, and steel manufacturing industries. Consequently, wear solutions are indispensable for these businesses. The wearing of metal parts is generally defined as a gradual decay or breakdown of the metal. This wear of equipment may be due to many causes and accordingly, the selection of wear plate solutions can be a relatively complex process.
In order to minimize the effects of wear, businesses have traditionally employed such wear-combating materials as rubber compounds, ceramics, alloy castings, welded overlay wear plates, and quenched and tempered carbon steel plates. We believe that each of these materials offer a limited solution to the problem of wear. While tungsten carbide is generally recognized by the mining, mineral-processing and steel manufacturing industries as the most wear-resistant material suitable for industrial use, because of its high carbide content, we believe that the high costs associated with tungsten carbide make it impractical for most businesses. We believe that Arcoplate provides industry with solutions to most wear-related problems at a cost which is competitive with conventional welded overlay wear plates and substantially lower than tungsten carbide.
Results of Operations
For the Three and Nine Months Ended June 30, 2010 Compared with the Three and Nine Months Ended June 30, 2009
Sales
Alloy Steel had sales of $4,770,846 for the three months ended June 30, 2010, compared to $1,307,160 for the three months ended June 30, 2009. These sales consist solely of the sale of our Arcoplate product. Substantially all of our sales during the periods were denominated in Australian dollars. Sales were converted into U.S. dollars at the conversion rate of $0.89896 for the three months ended June 30, 2010 and $0.69961 for the three months ended June 30, 2009 representing the average foreign exchange rate for the respective year to date periods.
Alloy Steel had sales of $15,741,798 and $4,632,438 for the nine months ended June 30, 2010 and the nine months ended June 30, 2009 respectively. These sales consist solely of our Arcoplate products.
- 5 -
The increase in sales for the period is a result of the continuing return to normal operations by several of the Company's customers after the downturn experienced by the world economy during the same period last year. During the quarter, the demand for our product continued to increase as mining companies continued to return to their normal level of exploration and production. The Company has continued to promote its product in the market place as a superior option for maintenance.
Gross Profit and Cost of Sales
Alloy Steel had cost of sales of $2,643,220 for the three months ended June 30, 2010, compared to $1,092,332 for the three months ended June 30, 2009. The gross profit amounted to $2,127,626 for the three months ended June 30, 2010, compared to $214,828 for the three months ended June 30, 2009.
Alloy Steel had a cost of sales of $7,252,241 and $3,006,545 for the nine months ended June 30, 2010 and the nine months ended June 30, 2009 respectively. Alloy Steel's gross profit was $8,489,557 or 53.9% of sales, and $1,625,893 or 35.1% of sales, for the respective nine month periods. The increase in gross profit percentage is attributable mainly to increased margins on various orders as demand has continued to grow allowing the Company to return to more normal pricing models from the discount pricing models that were being used to generate sales during the downturn, increased efficiencies in production gained with the additional manufacturing capacity provided by the new mill completed prior to the global economic downturn, arising from an increased absorption of overheads due to the increased volume of production, and a decrease in the amount of raw materials being consumed during the testing phase of the new mill during the period to June 30, 2009.
Operating Expenses
Alloy Steel had no material operating expenses other than selling, general and administrative expenses for the three and nine months ended June 30, 2010 and 2009.
Alloy Steel had selling, general and administrative expenses of $1,407,452 for the three months ended June 30, 2010, compared to $805,294 for the three months ended June 30, 2009.
Alloy Steel had operating expenses of $3,894,080 and $2,130,305 for the nine months ended June 30, 2010 and nine months ended June 30, 2009 respectively.
The expenditure for the three and nine month periods ended June 30, 2010 increased compared to the three and nine month periods ended June 30, 2009 as operations continued to return to a normal state with the increase in orders received from customers. Areas in which costs increased include bonuses paid in line with the increased sales achieved, administrative staff remuneration through increased salaries and additional staff and increased off-site temporary storage costs for goods produced and raw materials. These increased costs have been partially offset by the production efficiencies noted above.
Income (Loss) Before Taxes
Alloy Steel's income before income tax expense was $698,985 for the three months ended June 30, 2010, compared to an loss before income tax of ($582,863) for the three months ended June 30, 2009.
Alloy Steel had a net income before income taxes of $4,618,021 and a net loss before income taxes of ($463,700) for the nine months ended June 30, 2010 and nine months ended June 30, 2009 respectively.
Net Income (Loss)
Alloy Steel had a net income of $357,319, or $0.021 per share, for the three months ended June 30, 2010, compared to a net loss of ($437,951), or ($0.003) per share, for the three months ended June 30, 2009.
Alloy Steel had a net income of $2,974,859, or $0.171 per share, and ($396,002), or ($0.023) per share, for the nine months ended June 30, 2010 and nine months ended June 30, 2009 respectively.
It is noted that predominantly all operations of Alloy Steel are conducted by the Australian subsidiary, and therefore, the majority of the amounts reported are initially recorded in Australian dollars by the subsidiary. The value of the Australian dollar compared to the US dollar has been volatile over the reporting period, and therefore the exchange rate movement continues to have a reasonable impact upon the value reported by the Company. This is evident in the calculation of the Company's comprehensive income for the period which reflects a foreign currency translation loss of $270,841 for the nine months ended June 30, 2010 compared with a foreign currency translation loss of $162,328 for the nine months ended June 30, 2009.
- 6 -
Liquidity and Capital Resources
For the nine months ended June 30, 2010, net cash used by operating activities was $3,340,316. The net income may be reconciled to this amount by an adjustment for depreciation and amortization of $240,626, a write down of assets to fair values of $20,913, income received in forms other than cash of $4,916, a loss on the disposal of fixed assets of $5,892, noncontrolling shareholders interests in subsidiary loss of $2,044 and a decrease in cash and cash equivalents attributable to changes in operating assets and liabilities of $104,986, which consisted primarily of a decrease in accounts receivable of $404,656 and an increase in inventories of $870,066, an increase in other current assets of $48,376, and a decrease in accounts payable and other current liabilities of $39,661, offset by an increase in tax payable of $658,433.
At June 30, 2010, the Company had a working capital surplus of $4,415,756.
The Company is actively reviewing options to raise additional capital through debt and/or equity financing. Although it currently has no commitment to do so, any additional capital raised would be applied to the research of nanotechnology and to an overseas manufacturing expansion.
Significant Changes in Number of Employees
No significant change in the number of employees is anticipated in the next three months.
Purchase or Sale of Plant and Significant Equipment
Other than as described in Item 5 below, we have no material commitments for financing to purchase or construct machinery to expand our capacity to produce Arcoplate.
Effect of Recent Accounting Pronouncements
The effect of recent accounting pronouncements has been detailed above in Note 2 to the Financial Statements contained in Item 1.
FORWARD-LOOKING
Any thoughts on what our reclusive leaders will have to say at the next earnings report?
Anybody notice the current quote? $2.12-$2.18, 50,000 x 50,000.
I have never seen those kind of numbers for this stock.
Here are the requirements.
he following table summarises some of the key criteria your organisation will need to meet to be eligible for listing:
Admission criteria General requirement
Number of shareholders Minimum 500 investors @ A$2000
or
Minimum 400 investors @ A$2000 and
25% held by unrelated parties
Company size
Profit test
Asst test
A$1 million net profit over past 3 years +
A$400,000 net profit over last 12 months
or
A$2 million Net Tangible Assets
or
A$10 million market capitalisation
Either they get a PR firm or they issue a book or cd called "Australian for Wall Street.
New this A.M. Looks good!
Form 8-K for ALLOY STEEL INTERNATIONAL INC
4-May-2010
Results of Operations and Financial Condition
ITEM 2.02 Results of Operations and Financial Condition
Preliminary Half Year Profit Advice
Mr G Kostecki, Chief Executive Officer of Alloy Steel International Inc, is very pleased to advise the market of the company's profit performance for the period ending March 31, 2010, being the first six months of the company's fiscal year.
It must be emphasized that these results are still subject to final audit review, but no material changes to the figures are anticipated.
The profit before taxation for the period under review was $3,919,036 (2009 $119,164) an increase of $3,799,872. After taxation impost, the amount attributable to stockholders was $2,617,540.
This profit was generated on sales of $10,970,952 (2009 $3,325,278).
Mr Kostecki commented that this is truly an outstanding result, a tribute to the employees of the company and further proof that the previous downturn in the mining industry is reversing.
The company is expecting this trend to continue and at April 30, 2010, there were confirmed orders of $8,650,000 waiting to go into production.
As the market will perceive the company is starting to garner the benefits from the new super Arcoplate released in the latter half of last year.
The company expects to lodge the 10Q for the period early in the second week of this month.
Dave-once again,many thanks for your diligence and efforts. Vector Vest is widely followed and respected. I have recently started to use them as a technical research source. I use their numbers as a complement to Investors Business Daily. Between the two, they cut away a lot of the fat and make my trading decisions somewhat easier. They certainly help with market timing.
Why do I suspect the UBS is now working the balance of the old Pershing order?
I have been adding on pullbacks at least once a week for months now. I too will lay a couple of low bids in the hope of cleaning this seller up. I know it can't be anyone from management because they are prohibited from selling into an earnings report. This sometime feels like water-boarding torture. In my next life, I will only deal with companies that "talk" to their shareholders . Right now , it just feels like a one way street, not a partnership.
Thanks Dave. That would be a tremendous addition to have AYSI on their grid.
I am impressed with the buying in size ticks. Someone is stepping up to the plate. I do however wish we had a word or two from management to update the current state of business, the investigation, etc.
That was a perfect example of what can happen when one puts in a STOP order on a BB stock with Ali Baba and the thieves who do BB stocks.
You just got your $2.60 print plus. Down to $2.35 . Now $2.65 bid . I think we go up from here. GLTA.
Someone is stocking up on our baby at $2.75
The quiet is killing me. When can we expect to get an update from management? Anybody??
Why has Knight left the building??
My account is at E-Trade and for the most part, the executions are slow but o.k. . I run 2 different windows during the day and I find E-trade quotes tighter than the other quotes that I get from a different firms Level II. The Market Makers at this level DO PLAY GAMES. I especially warn all about placing orders near the close. They have several times not shown my execution near the bell. particularly if I was causing an uptick.
Could not hurt.
Market makers having a jolly time playing with us today. Tree shaking in order. Hold tight!!!
I cannot understand the 5 for 1 scenario and a price of 60 cents. If we ever expected to make it to the major leagues, why are we dropping down to class A? I would rather a 1 for 4 reverse split which would give us a float of 4,375,000 shares and a price of 12. We could then apply for a listing with a beautiful growth pattern. Although a small cap, our stock could be purchased by some institutions and ultimately as the price appreciates, we could have a secondary offering.
Wish it were so. This is a head fake. We will need some volume. 50-100,000 on the buy side should do it. Are you listening RAW?
Good work! Great posts! Thanks
Hey guys...Get a room and keep it private.
I completely agree with your logic regarding Pert. I'l wait this dance out and nibble as they unload. GLTA.
NASDAQ SmallCap Market Listing Requirements
Small capitalization companies can be listed on the NASDAQ SmallCap Market if they have: (1) net tangible assets of $4 million, or (2) $50 million market capitalization, or (3) net income in the latest fiscal year or two of the past three fiscal years of $750,000. In addition, these companies must have a public float of $1 million, a market value of the public float of $5 million, a minimum of 300 shareholders, and at least three market makers. Also, these companies must have an operating history of at least one year or $50 million market capitalization. The initial minimum bid price is $4.00 and the same ongoing minimum bid price and peer review requirements as are set forth above apply
I truly hope they apply for a Nasdaq listing. It would put us on the world map. It would also create a fair market for our stock and take it out of the pink sheet bandits hands.
As for Raw ...who gives a sh-t? Maybe he is swimming with the fishes...who probably couldn't stand him either.
Dave,
Thanks as always for all your hard work. You do realize that YOU have become the P.R. Department we have always asked management to setup.
Dave,
Thanks as always for all your hard work. You do realize that YOU have become the P.R. Department we have always asked management to setup.