you are correct in saying the board which is representative of 30-35% of the stock in CHL is very confident of the company's prospects going forward. They are basically confident for the same reason CPB are out to grab CHL now. Sharply higher earnings on the back of large increases in tonnages to be tested for export certification, along with higher demand for exploration and production testing services as mines ramp up production to satisfy the higher throughput capacity.
The BHP run Hay point coal terminal ran at 70% capacity for 15 of the 26 weeks of the H2 reporting period yet the company still made good profit growth from 1.1c (H1) to 1.4c (H2). You can bet the growth will be much stronger over the next 12 months as Hay point moves to 130% of 05/06 capacity by the beginning of H2 in 06/07. Add to that the conclusion of the 29MTpa expansion at gladstone from 40-69MTPa, and a 89-102MTpa capacity upgrade for Newcastle and you can see why the next 12 months will be good for the bottom line.
CHL are about to enjoy INHERENT growth, no new contracts requiring set-up costs, just high profit margin on the incremental tonnage growth under the umbrella of existing contracts......the large shareholders are digging in to see this growth come to fruition, rather than handing this profit growth on a plate to CPB.
Some of the smaller shareholders may be tempted by the t/o offer, but anyone close to the industry knows the best two years of profit growth for CHL are right in front of it now, the best thing for all CHL shareholders is to sit on their shares for the strong upside to come.
As far as the abnormals on the update goes, the settlement with Barclay mowlem was for a cash payment to CCI. the company has had a longstanding claim of about $600,000 against Barclay Mowlem, so i would have imagined the settlement would have been for an amount in this region. The sale of pluton for a cash payment and future royalty on any production from the coal deposit is a good one for the company as it now takes this project out of the hands on CHL and allows them to focus on the core business operations while giving a cash injection in the ST.
The loss taken on the closure of the Indonesian engineering joint venture business, is as I understand it isjust a book loss, and once again allows the business to concentrate on core operations do do with coal testing, than develop this business which was not synergistic with the rest of the group.
You may have noted the name change to CCI Engineering (the Australian engineering business) to flud tech....This business was earmarked by the board for sale for similar reasons to closing the indonesian engineering arm. CCI Engineering is now very profitable, and has good potential to fetch 3-5M from sale which would provide the company with funds for a special dividend or capital return. another reason to hold on to this little gem rather than selling out with a ST view.
Cheers mate :-)
CHL Price at posting:
0.0¢ Sentiment: None Disclosure: Held
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