Maybe this adds a bit more context on the ALS buy thesis?

ALS appears to have less volatility in profitability compared to competitors Eurofins (ERF) and SGS

Or maybe investors are hungry for dividends. I couldn't compare percentages quickly, only growth.

There is also already a real-time sensor for PFAS that competes against the current lab-based methods.

Despite that the share price has bounced back as predicted. Probably this means the PFAS market is still big enough to accommodate lab based methods for now?

Interesting. ALQ was down 10% at one stage and cut through the 200 MA before recovering to finish above that.

Citing headwinds in the mining division. That is interesting given that the gold price has been going to the moon recently.

Does that mean higher the gold price imply less discoveries and hence less work???

I'm still working out if 5% NPAT down is an overreaction.

This will be a long one but at the end it just wasn't worth the effort deep diving the valuation.

Firstly I understand why the high PE now.

ALQ has split the statutory from the underlying EPS.

Looks like ALQ have convinced analysts that all the Nuvisan stuff is a one-off so they are willing to look past the abnormal result while highlighting the growth opportunity in Environmental testing, particularly with PFAS.

An example of this is from Goldman Sachs, May 21st

Goldman Sachs analyst Niraj Shah has maintained their bullish stance on CPBLF stock, giving a Buy rating on May 14.

Niraj Shah has given his Buy rating due to a combination of factors, including ALS Ltd.’s resilient performance and strong future growth prospects. The company’s FY24 results were in line with expectations, and there is a moderate single-digit organic revenue growth forecasted for FY25. Life Sciences, a segment of ALS, has shown approximately 4% growth, which is believed to be partly due to the increasing demand for PFAS testing, while also benefiting from strategic scope growth. Additionally, the concerns surrounding Nuvisan are abating as the company initiates a transformation project, with a company-wide focus on the integration of recent acquisitions, which is expected to further strengthen its operational framework.

Furthermore, despite a decline in exploration activities, ALS’s Minerals segment demonstrated only a minor decrease in organic revenue and maintained robust EBIT margins, suggesting a stable and potentially higher margin baseline for the future. These factors, coupled with new service offerings and favorable market trends towards green metals, support the thesis of sustained margin expansion. With ALS Ltd. currently trading close to the median of its peer group, there appears to be potential for further margin growth. Shah’s upgraded earnings forecasts for the coming years, along with a valuation roll forward and multiple updates, have led to an increased twelve-month target price, reinforcing the Buy recommendation.

In another report released on May 14, Morgans also upgraded the stock to a Buy with a A$15.00 price target

Below are some slides on the PFAS opportunity for ALS. Seems like a good story and I think the company has done well to convince the analysts.

Good story. But doing a Google search on PFAS testing or PFAS testing labs and there are quite a few providers, not just ALS.

I'm going to call out that ALS will need to do another acquisition or two to maintain market share.

That's why there is also a leverage ratio of around 1-2x

However that is just my view which I think it makes sense but there will be others that will think otherwise.

Finally one for the gold bugs...

Since my exit here ALQ obeyed the law of averages where each time I sold the price goes up! It is something I definitely need to stop doing

The reasons selling were

* Leverage at 2x ebitda

* Nuvisan integration

Despite the selling it appears everything is still holding up. Maybe it's the div yield or maybe the branching into environment testing like PFAS.

But ALQ is still "addicted" to debt.

Will have to do more investigation

After a shock period including sudden resignation of the CEO for personal reasons, which saw a selloff similar to Megaport when their CEO resigned, ALS has managed to lift guidance and still sees strong trading conditions

Underlying net profit after tax (NPAT) guidance range to between $312 million and $322 million, up from $300 million to $320 million

Probably a good option to be in ALS if you don't want risk owning a mining company in gold or base metals but prefer some indirect leverage to mining and other industries via their testing and analysis services.

Still have a high debt to equity ratio though. Can't seem to shake that monkey off their back.

[held]

06-May-2020:  Further update on impact of COVID 19