Replies to post #89008 on Value Microcaps Motherboard

[kipp440]

AYSI - Chart

Looks like I need to do some reading!

http://stockcharts.com/charts/gallery.html?AYSI

Thanks!

Kipp

[littlefish]

Gilead, AYSI- I think the downside to AYSI right now is that they can't make enough wear plate so they're having to turn away a fair amount of potential customers right now. Once that 2nd mill gets finished off, we should see a very significant jump in revenues as soon as they bring in the people to do the work IMO.

As a shareholder, it is a little frustrating knowing lots of people want the product but can't get it due to capacity constraints. But it also leaves me very optimistic going forward and speaks to the quality of the product.

The shocking thing to me is that the VMC crowd doesn't seem to know how to put a PE on these guys (throw out the 10 forward PE junk IMO because this is not a mature cyclical company, it is a tiny growth company in a cyclical industry- very different especially when you look at the lack of market penetration AYSI has with Arcoplate, they could sustain this growth for some time IMO based on price and durability vs competitors).
If you look at the MUCH larger competitor ANI Bradken with a market cap around $1 billion, they trade at a PE of over 20 (obviously Bradken does more than build wear plates though so is more diverse).

And trust me, there's no way ANI Bradken could grow as quickly as AYSI is poised to do going forward.
Sure there's some risk being so tiny, but I would think AYSI deserves a steep premium to Bradken's 20 PE.
One reason why, growth: AYSI reported $3.4 mill revs for ALL of 2006. I expect them to BEAT that number in Q1 2008 (with just 1 mill)! In just one Q.
By comparison, Bradken did $549 mill revs in 2006 and $642 for ALL of 2007.
So we have Bradken growing at a sluggish approx 20% revs while AYSI if doing over $3.4 mill in Q1 08 will be on pace to be growing revs by more than 400% since 2006.

Here's a chart for ANI Bradken (trade on ASX Australian exchange):
http://www.bradken.com.au/investor.aspx?page=shareprice

Throw in the demand AYSI has and that IMO (and some others in the industry) AYSI's Arcoplate is better than Bradken's Duaplate and it leaves me wondering if investors are just looking at the past with AYSI and not the future?


I guess my point is that I feel this is just the very beginning of growth for AYSI and that is usually when you see the highest PEs. Yet AYSI has a very modest PE. Especially in light of the revs growth we'll be seeing in the next couple years barring some massive changes in their customer outlooks. Even if demand dropped heavily for mining equipment, it IMO would only allow AYSI to catch up to the demand for their product. Otherwise, I think the story will continue to be their inability to get enough product made to keep up with demand unfortunately. Maybe that thermoclad mill processing is tricky to get built. Hope that 2nd mill can get up and running sooner rather than later:)

But to each their own and good luck all!

[littlefish]

Giled, mining report: I would note specifically that the mining activity going on in Australia right now does not have a whole lot of capacity coming online in it yet (reflecting what is coming but is not yet here). Much of the WA iron ore projects are not scheduled to go into production until 2008-2010.
That's one reason iron ore prices will likely surge again this next year when priced cuz little of the mining activity has come online yet. FMG, one of the most aggressive at trying to expand, isn't set to ship any iron ore until May 2008! So none of their potential production will show in the mining update IMO. And they're the 4th largest iron ore company in the world by market cap I believe (behind the big 3).