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.

Apologies if link didnt work previously

https://www.canva.com/design/DAFyssB7jN8/HA2XvYi5yGKG5twGn8IyDA/edit?utm_content=DAFyssB7jN8&utm_campaign=designshare&utm_medium=link2&utm_source=sharebutton

https://www.canva.com/design/DAFyssB7jN8/HA2XvYi5yGKG5twGn8IyDA/edit

my analysis

Assets fully allocated to FMG, BHP and Roy Hill Iron Ore under multi-year master service agreements.

▪ Delivered record results in 2HFY23 driven by full deployment, operational efficiencies, rate increases and double shifting of one asset.

o Strategic Decision to pull multiple assets in 1HFY23 for compliance upgrades to meet Tier-1 standards

o Impact on 1HFY23 earnings but facilitated deployment on new, improved multi-year contract

VYSARN LIMITED (ASX:VYS) - Ann: AGM Presentation 2023, 71077591, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Return (inc div)   1yr: 182.35%   3yr: 31.73% pa   5yr: N/A

Interesting announcement this morning about water asset management. Expands on the consultancy side of water management and a comment about traditional owner partners suggests a go between role with the T1 miners?

Target investment opportunities in water, infrastructure assets and associated opportunities to control, own and toll water. Vysarn has a suite of opportunities that it is currently evaluating.

Mr Richard Lourey has been appointed as Managing Director of VAM.

Mr Lourey is an experienced water and infrastructure executive and investors etablished Australia’s first dedicated water fund, was Head of Tyndall Australia Real Assets and was the Founder and Director of AWARE Water, a significant Australian water investment company.

Richard Lourey, Managing Director of VAM said: “It is a privilege to be given the opportunity to realise these opportunities for the benefit of our shareholders, traditional owner partners and future investors in the Vysarn funds.”

A good result and the SP already at Euroz Hartley's 20c valuation. Some increased capital spend coming in buying a new rig and expanding the Project engineering manufacturing with a new facility. Reduction in conversion of earnings to Operational Cash Flow due to less favourable terms with Tier 1 clients but potential for double shifting and stability of contracts. Should be resilient to a drop in iron ore demand due to Tier 1 contracts and diversifying to provide a wider revenue base.

Now my biggest holding in RL and 2nd in SM.

Summary of group results for FY2023: -

Revenue from Operations $64.96 million -  exceeded previous corresponding period revenue from operations by $18.66 million. 

Operational Cashflow was $9.66 million. The reduction in the conversion of earnings to Operational Cash Flow compared to the previous corresponding period is primarily a reflection of increased working capital requirements created by the redeployment of drill rigs to Tier 1 iron ore miners with less favourable trading terms.

EBITDA $12.45 million -

NPBT $7.08 million -

Net Tangible Assets $30.50 million -

Cash and Cash Equivalents $8.31 million

The board and management continue to maintain the view that one of the largest and growing impediments to ongoing iron ore production is the removal and disposal of surplus water.

Pentium water

The business experienced material expansion in staff head count growing to more than 20 advisors, developing its model to derive more revenue from lump sum project work. Advisory model evolved to include Company backed internal projects and has developed a portfolio of internal early stage projects focussing on opportunities across water pipeline infrastructure and associated mechanisms to control, own or toll water. These early stage projects in turn are creating partnerships and new opportunities associated with the supply of large volumes of water for irrigated agriculture and carbon sequestering. 

Pentium Hydro

The outlook for Pentium Hydro remains robust with demand for dual rotary rigs particularly strong. Due to limited supply of dual rotary rigs in the Australian market, in hand with the long lead times and prohibitive expense to import new dual rotary rigs, Pentium Hydro anticipates opportunities to increase the number of rigs double shifting for clients to meet this demand. 

As such, Pentium Hydro has recently identified an opportunity to acquire an additional used dual rotary rig. Subject to proceeding with the rig’s acquisition, it is anticipated that this rig would be acquired and rebuilt to Tier 1 standards within FY2024.

Operational improvements will continue to be rolled out in FY2024 such as the establishment of a Pilbara based critical spares facility which will help reduce any downtime associated with programmed maintenance and breakdowns, as well as a continued recruitment drive to bring more experienced water well drillers, supervisors and managers into the business. 

Pentium test pumping

The next generation test pumping unit did not meet its initial anticipated deployment timeline of 30 June 2023, with the extension of the delivery date due to delays in the construction and delivery of the reel unit out of Queensland.

The second unit is on track to be commissioned, deployed and operational inside the September quarter of FY2024 with multiple avenues of client enquiry providing opportunities for high utilisation rates from the outset. Incorporated within the new unit is the ability to injection test in addition to test pumping. This has been made possible via the inclusion of injection technology acquired from Project Engineering. To the Company’s knowledge, there is no other provider in Australia that can provide a single unit that can both test pump and injection test. Management anticipates that injection testing has the potential to be a high growth and material offering in Pentium Test Pumping’s suite of services in future periods. 

Project engineering

Opportunities to start moving the business to a production line model rather than manufacturing on a ‘just in time’ basis. In response to this anticipated growth, ProEng is currently sourcing new premises that will enable the establishment of an expanded MAR unit production line as well as bolstering staff numbers and expertise. These strategic initiatives will require a commensurate level of increased investment. 

Group

The diversification across the vertical service offerings will help create long term shareholder value by driving expanded valuation multiples traditionally afforded to multi-faceted business.The Company is well funded, anticipates material earnings growth and has identified a range of organic and acquisitive growth prospects. As always, the Company’s board and management will continue to focus on driving long term and sustainable value for its shareholders. 

VYS Earnings Update.pdf

Update from Euroz Hartleys giving a target of 20c.

"We have increased our Price Target to $0.20/sh; which reflects our view of FY'24 free cash flow potential.

Multiples based valuations are useful shortcut to a price target; though can be troublesome when companies are grouped with a bucket of peers that are trading at generally deflated valuations.

As a broad idea mining services valuations (in terms of EV/EBITDA multiples) continue to trade at 50% discount to 6x average and overtime we expect re-rate across the sector.

We also believe VYS's long term business model as it transitions towards water consultant ⁄ management business should warrant a premium..."

Disc: Held in RL and SM

Article from Tim Boreham on Stockhead that was syndicated in The Australian. Bump in the SP on Friday.

”20 ASX stocks that are primed to run in 2023”

Vy-not?

The Perth based Vysarn (ASX:VYS) is the only pure-play hydro-geological driller and it provides other end to end services such as pumping and aquifer management.

Vysarn’s resources-focused rota of clients includes BHP, Fortescue Metals and Gina Rinehart’s Roy Hill.

Vysarn recovered from a shaky pandemic period to record a $4.1 million pre-tax profit in 2021-’22, 270 per cent higher, on a 79 per cent revenue surge to $46.3m.

Management guides to a $5.1 million profit this year, with the lure of a maiden div in the 2023-’24 year.

The $32 million market cap has net debt of around $4.2 million but boasts strong cash flow, so we say ‘Vy-not?’ as an investment proposition.

Held in RL

I quite like this company for the same reasons Maaxwell has previously stated. One concern is their significant concentration in the Pilbara. However, What I can't workout is whether or not they have a sustainable competitive advantage. I know its a fairly niche service,  but what's stopping the big mining companies from setting up their own inhouse hydro drilling service, or another mob setting up?

CERTIFICATION TO ISO STANDARDS UPDATE

As announced on 21 December 2020 Vysarn Limited’s (ASX:VYS) (Company) wholly owned subsidiary Pentium Hydro Pty Ltd (Pentium) received a recommendation for its Management Systems to be certified to ISO standards by the accreditation body SAI Global (SAIG) with formal receipt of the certification expected to be in February.

The formal certification to ISO standards was received on 9 February 2021. ISO certification is valid for a period of three years and is subject to annual audits, with a recertification audit required after three years. This announcement has been authorised by the Board of Vysarn Limited.

Certified Management Systems conforming to ISO standards will now enable Pentium to position itself as a preferred contractor for all tiers of current and prospective clients across multiple industry sectors requiring hydrogeological drilling services.