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G’day J.L, First looked at bol back in 2007. Always thought there cash flows were strong but gearing was a little on the high side in the earlier years.

What makes bol a better play for investors today is their $67 million equity raising, where the majority was used to retire debt. Even though there’s a little dilution in the business via the raising; a stronger balance sheet has put the group in a better position to take full advantage of the next boom and continue their spread across the energy, resources and industrial sectors.

Debt to Equity has significantly reduced from 96%(30th June 2009) to 46% current, which is much more acceptable for long term holders and the business moving forward. What’s really attractive, is the $180 billion dollars worth of major projects in Australia, over the next 3 or so years as mentioned by management in the slides and if bol can get their finger in some or a very small percentage of those pies and continue their run with major contract wins then bol will be one to hold longer term.

Once the business performance starts to head in the right direction ,then raising new equity later on at much high levels should be the key, that way bol won’t be diluting the business as much and I think management should act quicker this time rather than allowing the sp to drop and then raise new equity at lower levels.

The various covenants i.e. debt service cover ratio, balance sheet gearing and asset leverage will provide significant headroom throughout FY10 according to management.Imo I don’t think their will be an equity raising for quite sometime just as long as they keep the banks happy and they have enough cash to run the business and use retained earnings accordingly.It won't be a fantastic full year of results but i'm buying to hold for the longer term as i see potential in this coy over the next few years.

I’m not to concerned about the outstanding amount of shares on market because they can easily introduce an Appendix 3E type approach i.e. a daily share buyback notice and reduce the outstanding amount with the available cash flow rather than paying out a dividend in the short term. But longer term once performance starts to pick up and the amount of shares has been reduced then dividends should be payed out of free cash flows and not through new debt financing arrangements obtained from bankers which many companies continue to go down this path and not learning from past mistakes.

Couple of other things I like about bol firstly; If you look back about 5 years ago and compare there charts from earlier years to the all ords then this data clearly shows Boom Logistics were outperforming the market when things were on the up and “Yes” this was due to their fast rapid type expansion/growth but this might show the ta’s that boom was a popular stock to buy when things were on the up and not forgetting the McAleese offer which was put on the the table circa 60 cents a while back, which was rejected by management.

The fact that management were buying the shares at much higher levels then current indicates they see value in this coy over the longer term. I suppose one other thing to look out for as bol repositions itself for the next up turn; is if McAleese, sweetens their offer and others start to get interested then in my view, this will only be positives for bol allowing the sp to hold at certain levels and possibly move higher in the short to medium term.

If debt to equity is at current or lower levels over the longer term and stays that way, expenses are reduces and maintained accordingly,Strong cash flows continue and on the up, as well as new potential major contract wins; then i think this will be a very profitable business and one to hold for the longer term.

We still haven’t seen the full potential of this business at full force and with all these major projects in the pipeline over the next 3 years for Australia and the mining sector as a whole u get the feeling bol will join the party to some extent. I just hope the new ceo can restore the lost shareholder value over the years for current and longer term holders and implement strategies to improve the business and its performance as whole thus creating shareholder wealth over the next 5-10years and put bol back on the map.

Bol lately has had some good price action. Support levels around 27cents-30cents and For the ta’s I think if 40 is broken then 55 should be next resistance making 70 a strong possibility. But even though the technical side looks good I tend to stick with the fundamentals of the business.

I think with a n.t.a. backing of circa $0.55 and the potential to win future contracts one would say the price to pay today for bol is relatively cheap considering what’s down the pipeline over the next few years.My focus is on fy11 and beyond.


Cheers…