Pinned straw:
The market was disappointed with the results despite record revenues. I think there was expectation of info on a possible dividend which was mentioned earlier. Also the note about 2nd half likely to decrease due to "requirement to invest in further resources to support growth initiatives, the strategic rotation of drill rigs through compliance upgrades, project delays and potential other risks identified herein". I like the open discussion of risks which gives confidence in the long term prospects for the company. VAM has the potential for a major expansion with significant capital costs in the coming years. We could see the SP pull back a bit after a very strong run up from 9c and I am looking for an opportunity to reenter in SM. Still my largest holding in RL
The Company’s carry forward tax loss balance was fully utilised during the period.
Company was in a net cash position for the first time since the relisting of Vysarn in September 2019 with net cash of $1.69 million
PW Management is aggressively targeting a 50% increase in staff numbers year on year to not only service growing client demand but to expand PW’s service offering in wider fields of adviser expertise across water and environment.
PH the recent significant decline of the battery metal sector has created the potential for short term utilisation risk. Management is monitoring early signs of contagion in client confidence which is manifesting in scope of work and project investment decision delays.
PH has a small exposure to the nickel sector which is currently experiencing systemic issues on a global scale. This presents immediate utilisation risks with management prudently preparing for reallocation of assets should the need arise.
The dual rotary rig purchased internationally to replace a conventional rig in the PH fleet has had significant arrival and release delays due to the recent protracted industrial action on Australian ports. Management still intends to attempt to receive and upgrade the rig for deployment inside FY24 but anticipates there will be up to a 4 month delay
PH rig suite was involved in a major flood event on a client’s mine site. The Company is currently negotiating an equitable settlement with the client and PH’s insurer.
VAM’s focus in coming financial periods will be to position the Company to be able to execute agreements securing long term water supply partnerships and securing long term off take. Should the Company be successful in securing such agreements, then VAM will turn its attention to securing funds for the construction of a major pipeline to convey water.
In preparation for the Company’s next leg of growth an appropriate level of investment will be made in the 2HFY24 to acquire further senior human resources in asset management, equipment maintenance, information technology and business optimisation. The Company continues to forecast meaningful year on year earnings growth for FY24. Nevertheless, with the requirement to invest in further resources to support growth initiatives, the strategic rotation of drill rigs through compliance upgrades, project delays and potential other risks identified herein, it is the Board’s current view that 2HFY24 EBT will not exceed 2HFY23 EBT.
Vysarn gave an update today and they are ticking along nicely.
Revenue up 16.8% to 75.9m.
Ebidta and NPBT up 30.8% and 54.9%.
Their cash position has shrunk by 55% (8.3 – >3.7m). But so has also their debt from 9.7m to 2.8m. In addition they got more outstanding with debtors 60% increase (10.4m -> 16.6m). They say that all debtors are tier 1 companies. Cost of doing business.
All divisions seems to be doing well growing revenue, EBITDA and EBT across the board.
The asset management division has as we already know got a Joint Resource agreement with the Kariyarra Aboriginal Corporation which is close to Port Headland. The economics here seems to potentially be very attractive with the cost of water currently being far higher in WA compared to the East coast.
Vysarn are still looking for accreditive acquisitions on the East Coast and holds a 30m credit facility with NAB should an opportunity arise.
Just a quick look through after work but the thesis is still very much intact and the market seems to concur on an otherwise sluggish day on the ASX.
Still very much a happy holder and would consider adding more except that it’s already grown into roughly 10% of our portfolio.
Such a rocky road...
Feel sorry for the one selling at 34c this morning (maybe got spooked by the market). Old MHM holders or holders from past acquisitions? Was tempted to get more here.
Still some residual effects from the nickel downturn in Pentium Hydro although it looks like vysarn is navigating and perhaps coming out of the other side
@laoshi I suspect the cautious outlook from management has been the major reason for the sell off post results. A flat PBT in the 2H would still be a decent result, but with the growth of the non-hydro drilling segments you'd still expect some modest growth. The Test Pumping segment in particular should have a much stronger 2H given the 1H was disrupted but the second rig is now fully deployed in the field since late September.
That said, this is a management team who upgraded guidance twice last year. I suspect James and Peter want to be known as a conservative management team who underpromises and overdelivers. Hopefully that remains the case this year.