Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
PKZ reports strong results -
EPS of $1.49 for Q4 and $6.28 for the year, versus $1.09 and $3.90 the prior year - stock is around $43
Q4 EPS impacted negatively by about $0.42 due to temporary inventory build ups.
Reserves are large and growing with replacement of an impressive 180% of production for the year !
Company targeting 12% increased production in 2005. Share buyback continues along with increased dividend. It should be a banner year !
CALGARY, March 3 /PRNewswire-FirstCall/ - PetroKazakhstan Inc. ("PetroKazakhstan" or the "Company") announces its financial results for the three months and year ended December 31, 2004. All amounts are expressed in U.S. dollars unless otherwise indicated.
HIGHLIGHTS: - Record financial results; earnings up 58% over 2003 and cash flow up
40% over 2003
- Significant increases in oil reserves attributed to exploration
success and improved performance in the Kumkol and Akshabulak fields
- Reserve recognition of substantial Natural Gas Liquids and natural gas
- Exploration success in Kyzylkiya and Aryskum
- Increase of regular quarterly dividend to C$0.20 per quarter
- Shares begin trading on the Kazakhstan Stock Exchange
- Build up of oil and products inventories decreases fourth quarter
income FINANCIAL HIGHLIGHTS: -------------------------------------------------------------------------
(in thousands of US$
except per share amounts Three Months ended Year ended
and shares outstanding) December 31 December 31
-------------------------------------------------------------------------
2004 2003 2004 2003
-------------------------------------------------------------------------
Gross Revenue 405,131 310,648 1,642,427 1,117,324
-------------------------------------------------------------------------
Net income 114,937 88,808 500,668 316,940
-------------------------------------------------------------------------
Per share (basic) 1.51 1.14 6.40 4.06
-------------------------------------------------------------------------
Per share (diluted) 1.49 1.09 6.28 3.90
-------------------------------------------------------------------------
Cash flow 118,850 110,339 560,491 399,975
-------------------------------------------------------------------------
Per share (basic) 1.56 1.42 7.16 5.12
-------------------------------------------------------------------------
Per share (diluted) 1.55 1.36 7.03 4.92
-------------------------------------------------------------------------
Weight Average Shares
Outstanding
-------------------------------------------------------------------------
Basic 76,089,557 77,827,328 78,285,025 78,149,904
-------------------------------------------------------------------------
Diluted 76,922,009 81,110,704 79,708,905 81,292,206
-------------------------------------------------------------------------
Shares Outstanding at
End of Period 76,223,130 77,920,226 76,223,130 77,920,226
-------------------------------------------------------------------------
The Company announces fourth-quarter 2004 net income of $114.9 million ($1.51 per share) compared with $88.8 million ($1.14 per share) for the same period in 2003. Cash flow for the fourth quarter of 2004 was $118.9 million ($1.56 per share) versus $110.3 million ($1.42 per share) for the same period in 2003.
For the year ended December 31, 2004, net income was $500.7 million ($6.40 per share) compared with net income of $316.9 million ($4.06 per share) in 2003. Cash flow for the year was $560.5 million ($7.16 per share) compared to $400.0 million ($5.12 per share) for 2003.
The Company generated both record net income and cash flow in 2004. Improvements in the Company's transportation costs and higher prices contributed to these record results.
Fourth quarter earnings were affected by a build up of crude oil inventory and in transit volumes of 1.7 million barrels and an increase in refined product volumes of 630 thousand barrels as compared with inventory and in transit volumes at September 30, 2004. Our refinery turnaround, which began in the middle of October, was completed successfully, but with a build up of crude inventories. We also moved the sales point for crude oil on one of our export routes closer to the final destination. This build up of inventories led to a deferral of earnings and reduced our net income for the fourth quarter by an estimated $32.0 million compared to the third quarter of 2004, an impact of $0.42 per share.
There was also a build up of crude oil in transit and inventory levels when comparing with December 31, 2003. There was an increase of 1.08 million barrels with an estimated reduction in net income of $14.5 million.
SHARE REPURCHASES
The Company's substantial issuer bid share tender, which ended on July 19, 2004, resulted in the repurchase and cancellation of 3,999,975 shares at C$40.00 per share.
The Company's Normal Course Issuer Bid program was renewed on August 13, 2004 and will terminate on August 12, 2005. Under the terms of this share repurchase program, the Company is able to repurchase up to 7,091,429 Class A common shares through the facilities of the TSX. In the third quarter of 2004, the Company repurchased and cancelled 1,257,500 shares at an average price of C$40.00. No repurchases were made in the fourth quarter of 2004.
At the end of the fourth quarter, the Company had 76,223,130 common shares and 2,086,656 options and convertible securities outstanding.
Additional repurchases and cancellations of 459,100 shares at an average price of C$42.62 have been executed in January 2005.
LISTING ON THE KAZAKHSTAN STOCK EXCHANGE
On December 27, 2004 PetroKazakhstan's common shares began trading on the Kazakhstan Stock Exchange, being the first foreign company to be granted approval for listing. The Company believes that this will create an excellent opportunity for Kazakh investors to participate in the growth and success of its business operations in Kazakhstan.
UPSTREAM OPERATIONS REVIEW
-------------------------- PRODUCTION
As announced, for the fourth quarter 2004, production averaged 152,510 barrels of oil per day ("bopd") and for the year as a whole production averaged 151,102 bopd. Mechanical pump failures on some high rate wells as well as allocation of capacity at the Kumkol Central Processing Facility used by both PetroKazakhstan and the neighbouring field operator, Turgai Petroleum, and the delay in drilling of a number of Aryskum development wells negatively affected overall production. As these problems either have or are being addressed, and as the development program for the Kyzylkiya, Aryskum and Maibulak ("KAM"), Akshabulak and Kumkol North fields progresses, PetroKazakhstan's 2005 annual production target is 170,000 bopd. However, the company recognizes that this target can only be achieved with the timely receipt of various regulatory approvals and in the absence of unforeseen marketing constraints.
EXPLORATION AND APPRAISAL
During 2004, the Company's successful exploration and appraisal program resulted in the addition of some 25 mmbbls in the proved and probable category. The extension of the Kyzylkiya field to the north and into the new Kolzhan license is now an integral part of the field development as new wells will be brought on to production quickly. Similarly, the drilling of wells to locations below the Aryskum gas cap, resulted in the discovery of new reservoirs in high quality channels sands. Production rates of up to 1,600 bopd confirm the similarity to sands in the Akshabulak field. This opens up a whole new concept for development of channel sands in this geological trend in our licenses, which will be pursued with further seismic and appraisal wells in 2005. As in previous years, the Akshabulak field yields further reserves additions as channel sands and extensions to the existing reservoirs are found from successful appraisal drilling.
In 2005, the Company will drill at least 17 E&A wells, acquire a minimum of 400 kilometres ("kms") and 300 square kms of 2D and 3D seismic respectively.
The Company now has an exploration prospect inventory that includes 94 independent structures and over 1.1 billion barrels of unrisked reserves.
RESERVES
On February 23, 2005, PetroKazakhstan reported significant additions to its oil and gas reserves in 2004. As of January 1, 2005, Proved and Probable reserves totaled 549.8 million barrels oil equivalent ("mmboe"), compared to last year's total of 495.4 mmboe. This year's total comprises 502.9 million barrels of oil ("mmbo"), 32.1 mmboe of Natural Gas Liquids ("NGLs") and 88.4 billion cubic feet ("bcf") of natural gas representing a replacement of production of 197%.
Of the 549.8 mmboe reported, 71% (or 392.0 mmboe) is proven and 29% (or 157.8 mmboe) is probable. The proven reserves are further broken down into 229.7 mmboe of proved producing and 162.3 mmboe of proved undeveloped.
Oil reserves have increased from 490.0 mmbo to 502.9 mmbo, replacing production by 123%. Similarly, total oil and NGLs reserves have increased from 490.0 mmboe to 535.0 mmboe, replacing production by 180%.
NGLs and gas reserves additions have been a result of PetroKazakhstan programs for the full utilization of its gas resources: extraction of Liquefied Petroleum Gas ("LPG") at plants in the Akshabulak and KAM fields, efficient use of produced gas at the Kumkol Power Plant and conservation of dry gas by re-injection into reservoirs for future extraction and sale.
These reserve additions and the low associated capital cost translate into finding and development costs that are extremely low at $1.08/bbl and $1.53/bbl for the one and five year periods, respectively.
Finally, the independent reserves evaluator, McDaniels and Associates Consulting Ltd, has estimated that the Company's proved, probable and possible reserves are in excess of 800 mmboe.
DOWNSTREAM MARKETING, TRANSPORTATION AND REFINING
------------------------------------------------- CRUDE OIL PRICES AND TRADING
Throughout 2004 the international crude oil markets remained nervous about the lead up to the elections in Iraq, production interruptions, and the level of US inventories. At the same time strong demand from China and transportation capacity limits in Russia added further upward pressure to an already upward market. As a consequence of these issues, international crude oil prices remained at extremely high levels with an enormous level of volatility. The highest recorded daily mean for Brent dated in 2004 was $52.03/bbl with a low of $29.13/bbl producing a price spread over the year of $22.90/bbl.
In response to the supply concerns OPEC increased their output of heavier sour crudes. While this addressed the overall supply demand balance it caused a distortion of the heavy sour/light sweet differentials. Crude grades such as Urals saw their discount against Brent rise from around $1.60/bbl at the beginning of 2004 to a high of $7.50/bbl by October 2004. This generated a strong incentive for European refineries to buy the cheaper heavier grades and consequently the Mediterranean market became long on sweet crude and prices for sweet crudes began to slide against Brent in November 2004. Grades like CPC Blend and Siberian Light faired worst recording a discount to Brent of up to $4.50/bbl. While Kumkol performed better, the premium against Brent which typically was between $0.50 to $0.80/bbl slipped to a discount of between $0.10 and $2.00/bbl during the last 6 weeks of 2004. Kumkol closed the year at a discount to Brent of $0.12/bbl.
DIFFERENTIALS
Our export netback differential to Brent constitutes our largest single expenditure and the management of this cost is one of our primary objectives.
On a yearly basis, our average 2004 differential was $12.62/bbl, $1.49/bbl lower than the $14.11/bbl achieved in 2003. This was the result of the elimination of FCA contracts, the higher utilization of cheaper routes and our KAM pipeline and Dzhusaly terminal.
However, the fourth quarter of 2004 saw a deterioration of the differential (to $13.83) reflecting the changes in the crude oil markets above and the seasonal impact of night time shipping restrictions in the Bosphorous Straits, increased demurrage costs and shipping rates. This situation is expected to continue for the first quarter of 2005.
On a go forward basis, the Company anticipates the average differential to return to the $12.00/bbl range.
New pipeline infrastructure currently being built in or near Kazakhstan, namely the Baku-Tbilisi-Ceyhan ("BTC") pipeline to the Mediterranean and the pipeline from Atasu to Western China expected to be operational by mid-2006 are anticipated to have a positive impact on differentials.
REFINING AND REFINED PRODUCT SALES
----------------------------------
The ongoing continuous improvement program at our Shymkent refinery continues to yield significant value benefits. By measuring the change in product yield value on a fixed crude and product price basis (thus eliminating the variations of market prices) we obtain indications of a steady trend of improvements over the last two years which have generated efficiencies in excess of $2.00/bbl. This trend has shown an on going improvement as well as a significant reduction in volatility.
By the second quarter of 2004 the Vacuum Distillation Unit ("VDU") was operating at maximum capacity and regular sales were being made through the Baltic port of Tallinn. During 2005 we expect to be able to increase the yield and to develop additional outlets for our Vacuum Gasoil ("VGO").
Refinery unit costs showed an increase from $0.58/bbl in 2003 to $0.80/bbl which is line with the equivalent figures in 2002. The primary reasons for the increase was lower throughput reflecting partially the maintenance turnaround in 2004 and the additional operating costs associated with the start up of the VDU.
otcbargains: SWTX
I still think this stock will dip ahead of the 5/15 Q1 results, or afterwards, since they're going to be down sharply from Q4. But I'll pick up a few shares at the right price if the opportunity presents itself, but that may not be until May ...
TMXN +.44 to 2.14 on 1.7M shares
Huge reserves in Kazakhstan ... mentioned as a likely double or triple at 'The Street.com' ... and one likely to soon make a move to the AMEX. Only potential pitfall is that the Kazakhstan government is seeking a bigger bite of profits for new companies ... here's the text from 'the steet.com' ...
Still, Chernoff feels that Transmeridian has the most immediate upside left.
Transmeridian has long touted its rights to a major oil field in Kazakhstan. But the company now has the financial flexibility to make that field pay off. And it could attract a lot of new attention along the way.
"TMXN is likely to move from the OTC bulletin board to the American Stock Exchange very shortly," Chernoff explained. "This move will put TMXN and its huge exploration and production potential on the radar screens of oil and gas investors around the world."
The stock slid 1.8% to $1.68 on Tuesday. Looking ahead, however, Chernoff says the shares "could double or triple" on the basis of the value of the company's reserves.
2morrowsGains: PLUS will have plenty of cash to buyback shares with their $4 per share settlement award. That's one effective way of boosting the stock price and increasing EPS at the same time. Also, a buyback of shares below book value serves to further increase the book value on the remaining shares !
ETEC qualifies to bid on more NJ projects
This could mean significantly more business ... stock looks cheap at $1.80 with EPS of .21 through 9mos of their March fiscal year (excluding .04 charge in Q3). EPS is fully taxed and diluted. Easy comparison coming up in March versus .01 last year. Stock is down from a recent high of 3.15.
TRENTON, N.J., March 2, 2005 (PRIMEZONE) -- Emtec Inc. (OTC BB:ETEC.OB - News) announced today it has received the SCC Contractor pre-qualification for the telecommunications discipline from the New Jersey Schools Construction Corporation (SCC), a subsidiary of the New Jersey Economic Development Authority (EDA). The SCC is a public agency responsible for implementing an $8.6 billion overhaul of the educational infrastructure of hundreds of schools throughout New Jersey.
The SCC is entrusted with the responsibility for financing, designing and constructing all of the school facilities projects in Abbott districts - school districts that receive 55 percent or more in state funding for education. In addition they are also responsible for providing grants to fund the state share of facilities projects in non-Abbott districts.
This classification enables Emtec to participate in the bidding process on specialty construction contracts advertised by the SCC. The requirements for this qualification include having a current classification with the New Jersey Department of Treasury, Division of Property Management and Construction (DPMC).
``We are pleased to have received this designation with the SCC and we look forward to the opportunity to provide telecommunications solutions to the New Jersey school systems utilizing State funding through the SCC,' said John Howlett, Emtec CEO.
wade: DGIX
That was definitely one of the risks while I was accumulating ... plenty of days with zero volume. But there's no such thing as a perfect stock. There's always some negatives that can be found. And often my biggest winners have NOT been the one's that I expected to do the best. So sometimes in thinly traded issues, I've come to own the equivilant of several days of average volume. Back in September, DGIX was trading only an average of 500 shares a day for the month. At $0.50 per share, that's the equivilant of $250 bucks a day volume. This February it averaged over 116k daily volume, which is about $150,000 per day at current prices. Pretty damn good improvement, but I never would have guessed it could change that dramatically. A 600x increase in daily dollar volume in a mere 5 months is amazing! ETEC and TMFZ are other examples of very thinly trades issues that have gained a stronger following. Hopefully CGNW will also get 'discovered' after next quarter's results when the trailing PE drops the big loss of last year's March quarter, and the PE shows up as under 5 in all the stock screeners. It could make all the difference in a thinly traded stock like CGNW.
lentinman: ELN
That opening price would certainly seem to be more than a coincidence, though 1 year is a long time. It would be interesting to see the statistics on how often gaps get filled, how quickly, and whether the retracements really pertain to the gap, or could be attributable to normal volatility in share price. I suppose it depends to some extent on the investors who hold or watch the stock. If there are many technicians among them then the gap would have more relevance ... otherwise not.
hweb: LMIA
Thanks for LMIA, though I also got out a few weeks ago in the mid to upper 5's for about a 30% gain. But heck, that was in a few weeks time, and most money mangers are thrilled to see 30% in a year ! But over $7 I'd be concerned about this quarter's #'s given the possiblity of taxes, and the implied guidance for Q4 was not all that strong. But the CC and foward guidance will be key to where it goes from here.
DGIX has evidently be boosted by institutional investors. That's what I would attribute some of those large 100k block trades to. Hopefully they're thinking it deserves of PE of 15 and an AMEX listing. After all, it was once a Nasdaq stock, till they failed to meet the continued listing requirement of share price.
hweb2: ETEC
I've been accumulating. Someone seems to be unloading a lot of shares, perhaps not realizing that last quarter was .05, not .01 as reported, due to the charge. But I won't complain if it goes still lower. It means I'll be buying even cheaper shares !
otcbargains: you may want to consider opening a 2nd account at Waterhouse. I'm going to be paying closer attention to execution problems at Ameritrade on OTCBB stocks, however I have no complaints with them for listed and Nasdaq stocks. I remember trying to unload a bunch of DLGI when they reported weak earnings, and none of my orders got executed even though I kept entering below market orders as the stock dropped. Poor execution can cost a bundle !
linuspop: Ameritrade
I recommend you send them an email. It's especially frustrating to miss out on executions on stocks starting a quick upward move on an announcement like today's for CGIH. Were it not for my Waterhouse backup account, I would have missed out on adding to my CGIH holding. Depending on the size of the trade, it could mean $1000's. It's penny wise, but pound foolish to look at only commissions when choosing a broker. Large spreads and poor executions can hurt you far more, especially with larger trades.
Waterhouse tops Ameritrade yet again
Maybe that's why hweb2 trades at Waterhouse. At 3:54pm I look over my day's activity and see that my low-ball bid for BWLRF at .58 has not gotten filled. Bobwins has been pounding the table on this one and he's made a strong case that it's not just because it starts with his initials, 'BW'. I see the lowest ask on level2 is 8000 shares from GNET at .605 and 2500 shares from NITE at .605. I know Ameritrade works through NITE a lot, so I figure they'll quickly fill at least 2500 shares at that price. At 3:55 I enter my trade at Ameritrade to buy 5000 shares of BWLRF. 45 seconds pass, and nothing happens. I then enter the same trade at 3:56 at Waterhouse. Immediately 2500 shares execute at .605, and at 3:57 the remaining 2500 shares execute at .605. In the meanwhile I didn't even get a partial fill at Ameritrade and 4pm passes with the order still open. It appears that Waterhouse is the better broker for trading OTCBB stocks. Especially in a fast moving market, efficient and optimal order routing is critically important.
otcbargains: Ameritrade
I'll certainly be more alert to execution problems at Ameritrade and will shift more trading to Waterhouse as appropriate. It can make a big difference, especially in a fast moving market. That's one reason I like to have more than one brokerage account.
Waterhouse tops Ameritrade on Executions
It's happened before. This time I sent Ameritrade a note ...
Entered an order to buy 2000 CGIH at 4.90 at 10:17am. No execution even as 1000's of shares traded in subsequent minutes below my limit price. At 10:18am I enter the same order in my Waterhouse account and it executes immediately. At 10:23am I enter another order at Waterhouse to buy 2000 CGIH at 5.00. 500 shares execute immediately at 4.99 and the remaining 1500 at 4.98 at 10:25. In the meanwhile I entered another order at Ameritrade at 10:24 to buy 2000 at 5.00. No execution, yet 40000 shares trade at or below 5.00 over the next 3 minutes. This type of thing has happened before. What's going on ? Are you not routing the orders efficiently ? Are you favoring certain market makers over others ? Should I be trading at Waterhouse more often ?
nsomniyak: CGIH
Typically, in my experience, the move happens within a few days to 1 or 2 weeks at the most, after the announcement. It's been a long time in coming for CGIH, since they announced plans to apply for an AMEX listing late last summer. I'm very glad they finally made it, and it should given them better visibility and significantly broaden the stock ownership to include individuals and institutions that don't buy OTCBB stocks.
CGIH will benefit significantly with an AMEX listing. It's in the same internet search engine sector as GOOG and YHOO, and should command a much higher PE once listed, imho. CGIH continues to grow very rapidly both internally and through acquisitions. It has already gained .32 to 5.04 in the last 15 minutes since the announcement.
nuts: CLF has had a great run these past few weeks and last year. If you like the steel sector, ZEUS and MUSA look like the cheapest plays to me. It looks like the sector may have another strong year, in spite of concerns about too much new capacity coming online in China. The low PE's are discounting a lot of risk imho. Good luck.
bones1420: Taxes, Schd D
I use Quicken each day to enter my trades and track my portfolio performance over time. It's good to have a complete 20 year history of every trade I ever made. Quicken now allows you to import daily trades directly from your broker but I still do the entries manually because of the way my Quicken accounts are setup. At tax time Quicken is compatible with Turbo tax and you do a quick export of the year's trades and get a complete schedule D.
But I've been old fashioned, at least until this year, by manually aggregating trades where the sale occurred the same day but the purchases spanned different days. The IRS allows you to put 'VARIOUS' for the purchase date. So I do the 1040 entirely by hand, though Quicken does the preparatory work for me. I've always favored submitting a handwritten 1040 since I suspect it may reduce the chances of an audit (not that I have anything to hide, but nonetheless an audit would be a nuisance at the least). A typewritten copy can easily be scanned and analysed by computer, whereas a handwritten copy cannot be handled so efficiently. Of course, it's even possible that the reverse is true, and that an audit is more likely of a handwritten 10K, but it sure is easier for them to process the typewritten one's, so I think a greater percentage of those get audited.
Nonetheless with about 1600 trades in 2004, which aggregate to about 420 with 'VARIOUS' purchase dates, I don't relish the thought of spending perhaps 10 hours to handwrite 20+ pages of Sched 'D'. This year they may be getting a typewritten version from turbotax. However I did write a simple 'post processor' which reads the Quicken export file and aggregates the trades as I have done manually before importing them into turbotax, so I'll be reporting just 420 entries, rather than the full 1600. I figure, don't given them more information than they're asking for.
Anyway, how are you frequent traders handling your portfolio tracking and schedule D's ?
Knowledge: DGIX
I would usually take a favorable view of a shift in ownership like that. The seller is probably looking to lock in some profits, while the buyer is looking to ride the stock to higher levels. Basically a shift into 'stronger hands', and hopefully the new large stakeholder will also be buying shares on the open market to 'underscore' their interest and drive the stock higher.
Bobwins: BWLRF re ZINC and INDIUM
Worldwide Indium production is primarily a byproduct of ZINC processing according to what I've read. Here's an interesting article on the subject ... at $1000 per kilo, hopefully Breakwater will be cashing in ...
HONG KONG, Feb 2 (Reuters) - The government of Zhuzhou city in China's southern Hunan province has shut down five indium plants for a month because of power shortages and pollution concerns, trade sources said on Wednesday.
They said about 10 indium plants in nearby Xiangtan city had also been shut down for the same reasons.
The total capacity of the closed indium plants was not immediately available. The two cities are near the capital city of Changsha.
The Zhuzhou government had ordered all indium plants in the city to close between Jan. 27 and Feb. 28, the sources said.
Chinese indium suppliers say they expect prices to smash new records this year on strong demand from Asian flat-screen TV and computer manufacturers. The closures may fuel the price further.
Zhuzhou and Xiangtan are two main indium producing cities in China, which supplies about 40 percent of world demand.
Traders estimated China produced more than 200 tonnes of primary indium last year, mostly as a by-product of zinc.
Traders in Europe said spot indium prices were hovering around $1,000 a kg, against $875-$925 late last year.
"The market is being pushed on the supply side at the moment, not on the demand side. This (closure) underlines the supply deficiency, and the price will go up," a European end-user said.
"We're getting offers above $1,000/kg on the table now, and after the festivities (Lunar New Year) when the Japanese buyers come back to try and secure new long-term contracts, they will find that it is a different game." he added.
Production at Zhuzhou Smelter, China's number two indium producer aiming to make 20 tonnes this year, remained normal, a company official said.
"We do not need to shut down...we have a special facility to control emissions," he said.
But power shortages have forced Zhuzhou's listed Zhuye Torch Metals Co. Ltd. <600961.SS> to temporarily lower zinc production rates by a third.
The sources said Zhuzhou and Xiangtan were suffering from a drought which was worsening water quality of the already polluted Xiang River which runs through the two cities and Changsha. The river also is the source of drinking water for local people.
Waste from indium plants to the river was threatening drinking water for more than 100,000 people, a report from a newspaper in Zhuzhou said.
The simple technology of indium production and high prices of the metal had attracted unauthorised operations in Zhuzhou, the report said.
Trade sources said the indium plants in Zhuzhou and Xiangtan bought slag from Chinese zinc smelters to produce indium, a soft, silvery-white metal, causing serious pollution problems to the cities and Changsha.
ZEUS and MUSA continue to trend up after stellar earnings reports on Monday. But they still sell at trailing PE's of under 5, a significant discount to peers elsewhere in the steel sector. They have some catching up to do to other steel processor like TONS, up 200% over the last several months. The MUSA warrants (MUSAW) are doing especially well, of course. Up 60% this week, due to the added leverage they provide.
otcbargains: SWTX
I think this is a tricky stock. Investor perceptions about the risks vary significantly, imho. If their guidance is on target, or even conservative, I think this stock will ultimately head much higher. But it's a very competitive sector with many variables that are constantly changing. They have their share of challenges ahead. I'll be watching the stock for a good entry point over the next 10 weeks, if the opportunity presents itself. Time will tell. Good luck.
Bobwins: BWLRF
Indium, a precious metal that is a byproduct of ZINC mining, was mentioned on the SWTX CC as being in short supply, hence a 10x rise in price to $1000 per kilo in the last 2 years. It's now fully 20% of their COGS ! Does Breakwater produce much Indium ? That could really boost their earnings further, as it's rising in price even much faster than ZINC. Could Indium become a significant profit contributor for them ?
PS You wouldn't be more partial to BWLRF just because it starts with your initials, 'BW', would you ? Factors like that can have a subconcious influence, even if you're not aware of it. (just kidding)
otcbargains: SWTX
Do you mean in Q1, or the just reported Q4 ? Q4 was great, but obviously is not representative of what Q1 will look like. I think the stock will drop ahead of, or upon the Q1 report, which they gave weak guidance for. Gross margins are expected to drop into the low to mid 30's and revenues are seasonally weak, so EPS may be pretty low for Q1. I'm watching from the sidelines for now, but the stock is already down .12 from its morning high of 1.41. I think that at some point between now and the 5/15 Q1 report, the stock will dip significantly.
wade: SWTX
There are plenty of risks with SWTX, but I think there are fewer stocks than you imply with a forward PE of 5. Value is getting tougher to find these days. I've had most of my success with low PE stocks. In fact, I think the biggest winner from this board YTD is WGMGY, up over 200% since Jan 1. The PE was way too low on that stock, and the market has corrected for it ! Low PE stocks can be a bonanza, and I've benefitted greatly from this board. WGMGY is just one example.
Big revenue growth is not in the cards for SWTX. ASP's are dropping significantly for their plasma displays. But adjusted for special items, management indicated that EPS would have been $0.15 for 2004. If they meet the high end guidance of $0.25 in 2005, that's 67% bottom line growth with a PE of 5. Of course, that's an optimistic scenario, fraught with potential pitfalls. Who knows how high the price of Indium will go ? Q4 gross margins are at a peak partly due to special circumstances, and not likely to be repeated. But they're not forecasting 4x $0.10 or $0.40 for 2005. If they did, the stock would be zooming.
I'm not getting back into SWTX today, but may take a small position if it dips enough.
echos: TALL
I was very impressed by your post. TALL's expenses seem to be well short of what might be required to provide 'excellence' in software maintenance and support of such a diverse product lineup. No doubt they are taking many shortcuts that could ultimately haunt them and scare away customers. I own no shares of TALL, but had been considering taking a small position. I now have a better perspective of the Company, and might still buy a few shares, but on a somewhat different premise. A good PR job by the Company might still lead to short term gains in the stock price, but their long term outlook would seem to be fraught with uncertainty.
PS I spent 18 years with IBM in network support, but also dabbled in software development. I still enjoy writing code periodically for my own use, and consider it to be a form of mathematical poetry.
SWTX CC highlights
I listened to the call, though somewhat casually, since I no longer own any stock, but was impressed by the Q4 results. Here are a few key points :
- Share count 32.7M as of 12/31, and expected to grow no further.
- Guidance for '05 is for 10% revenue growth, or more if new customers come onboard. Working against the revenue growth are declining ASP's of displays (-20% to -30%) in a very competitive sector. But unit sales should be up sharply.
- Net Income is expected to range from 10 to 13% of revenues ... hence EPS guidance of $0.19 to $0.25 for the year. If they make the high end, that's a forward PE of under 5 based on today's closing price of $1.18. And management surprised to the upside in Q4, so maybe they're being overly conservative. But the future is tough to predict in this sector ...
- Indium has grown to 20% of COGS due to a 10-fold rise in the price of this metal over the last 2 years. Now selling at $1000 per kilo. Company is exploring alternative metals, but it's at least a year away from application.
- Plentiful NOL's, so little or no taxes for several years.
- CAPX spending to rise to $1M in '05 from $400k last year.
- Q1 is seasonally weak with lower revenues and tighter margins ... so don't look for a repeat of Q4. Gross margin guidance is for low to mid 30's.
I may buy back into this stock on weakness, but it could rally tomorrow based on the big Q4 surprise. I may wait for their seasonally weak Q1 results before I get back in. Good luck to all shareholders of SWTX !
Bobwins: CPE
Darn, 40% is a lot of hedging. Of course a hedge at $40 may not consider the proceeds of selling the futures contract, so it may translate to a significantly higher price than $40, depending on when they sold the contracts.
lentinman: ACSEF
There's always risk ahead of an earnings report, but their past guidance has generally been too conservative, and hopefully that will prove to be the case again this time. The y/y comparison for Q4 and the whole year should be excellent based on their remarks and given the 9mos results. But I'm not taking a large position yet, but will await the results first, which last year came out on 2/24 ... so hopefully any day now ...
hweb: SWTX
I'm very surprised at the strength of their Q4 given all the pessimism. CC guidance will be the key, but the PR certainly has a positive tone.
SWTX purchases look like 'assignments'
The purchase prices are in the $1.70's, way over the market prices. Typically that means they were 'forced' purchases due to some outstanding put options at that strike price. It's just a guess on my part.
stock_peeker: CGIH
I think that's it ... GOOG, YHOO and FWHT all down today on downgrades and an earnings disappointment from FWHT. I'm accumulating more CGIH at this level. Hopefully they'll be on the AMEX within the next few months.
WGMGY +.26 to 1.75
I got out of this stock way too early as it broke over $1. It's now up 200% since Jan 1 ! What a flyer !
WIRX to apply for AMEX listing
That should give the stock a further boost if they get accepted, though several other's like CGIH and AOBO have applied and been in 'limbo' for a long time.
DGIX traded a 280k share block at 1.05
This stock is being accumulated by institutional or wealthy individual investors. That bodes well for more liquidity and a higher valuation down the road ...
lentinman: ACSEF
I've been accumulating in the low 6's. This stock was a winner for me late in '03 into '04 when they came in with a series of strong earnings reports. The stock is down over 50% from its 52wk high of 12.59 and is showing strong support at this level. Evidently the Company's guidance for a sequential decline in Q4 revenues is the reason for the big pullback, but they also indicated that growth should resume in Q1. EPS of $0.56 for 9mos is pretty good for a $6 stock, especially considering the huge y/y growth and the hot digital motion control sector they're in ... Q4 results are due out shortly, but I think the expected temporary lull in growth is already fully in the stock. The forward guidance will be the more important thing ... from the Q3 PR ....
Revenues for the third quarter were $4,108,000 compared to $2,510,000 recorded in the third quarter a year ago. Net income in the third quarter of 2004 was $735,000, or $0.22 per share, compared with net income of $276,000, or $0.10 per share in the third quarter a year ago. Revenues for the nine months period ended September 30, 2004 were $10,792,000, compared to $6,590,000 in the same period a year ago. Net income for the nine months period ended September 30, 2004 was $1,877,000, or $0.56 per share, compared to $507,000, or $0.18 per share in the same period a year ago.
This is the seventh quarter in a row with sequential increase in activity and results. Based on softened demand in the last few weeks and on inputs from our leading customers, we expect to see a decrease in revenues in the fourth quarter relative to the third quarter, but a significant increase relative to the fourth quarter of 2003 and renewed growth in the quarters afterwards.
hweb: CAMT looks good for bottom fishing. I definitely think it's a good buy, expecially if it goes too much lower. I've got a GTC limit order at 3.50.
lentinman: CPE
I have a positive view of the Company and took an intial position today. But I did think it relevant to mention the tax issue, since it appears that their earnings will soon be taxed. I was aware of it before I bought the stock. Q2 of 2005 might even match the $0.58 they earned last year, even with the new burden of a 35% tax rate. Production should be greater and oil prices higher. Plus, as Bobwins indicated, a stock like this, trading on the NYSE, deserves a higher PE than just 7 or 8 going forward, given their growth prospects. And it's already got analyst coverage, with more attention likely as the market cap rises sufficiently to pick up major brokerage house coverage. It's still early and the time to get in is now, imho. Thanks to Bobwins for this good find !
Bobwins: CPE
Thanks for this one. It looks very promising and I bought an opening position this morning. Analyst estimates for EPS of $2+ in 2005 are impressive for a $15 stock. Lots of prospects for production increases. One caveat is taxes. Last year's Q2 of $0.58 EPS was untaxed, but the taxman cometh unfortunately. Looks like they are near the end of their NOL carryforwards and deferred tax assets, so a 35% tax rate starting real soon. Nonetheless, I'm sure analysts are well aware, and their forward estimates are fully taxed. Oil prices are much higher now than last year's Q2.
The Company follows the asset and liability method of accounting for deferred income taxes prescribed by SFAS No. 109 “Accounting for Income Taxes”. The statement provides for the recognition of a deferred tax asset for deductible temporary timing differences, capital and operating loss carryforwards, statutory depletion carryforward and tax credit carryforwards, net of a “valuation allowance”. The valuation allowance is provided for that portion of the asset for which it is deemed more likely than not that it will not be realized.
SFAS No. 109 provides for the weighing of positive and negative evidence in determining whether it is more likely than not that a deferred tax asset is recoverable. The Company had incurred losses in 2002 and 2003 and had losses on an aggregate basis for the three-year period ended December 31, 2003. However, in December 2003, the Company refinanced nearly all its highest cost debt, incurring an early extinguishment loss of $5.6 million, but achieving significant interest savings in the future. In addition, the first two of the Company’s deepwater projects began production in November 2003, resulting in a significant increase in 2004 production as compared to 2003. Nevertheless, relevant accounting guidance suggests that a recent history of cumulative losses constitutes significant negative evidence, and that future expectations about income are overshadowed by such recent losses. As a result, the Company established a valuation allowance of $11.5 million as of December 31, 2003. The Company revised the valuation allowance in the nine-month period ended September 30, 2004 as a result of current year ordinary income, the impact of which is included in the Company’s effective tax rate and resulted in no net income tax expense (benefit) for the period.
Bobwins: Thanks for BWLRF. ZINC prices are indeed soaring, and they should be posting big numbers for the March quarter, and beyond. I initiated a position in the stock this morning.