dunno if u guys saw this in yesterday's the australian...
Neptune Marine (NMS) 22c
FOR a promising entity with its own underwater welding technology, the Perth-based Neptune has suffered more than its quota of setbacks since its January 2004 listing.
After a promising start - the stock hit a $1.50 high in April last year - management upheaval and a steady flow of red ink have made investors justifiably suspicious of the stock.
The next 12 months will determine whether Neptune swims, or sinks to the Davy Jones's Locker of promising companies which simply failed to make a quid.
Neptune yesterday unveiled a $17.3 million equity raising, partly aimed at funding the announced purchases of Allied Diving Services and Territory Diving Services.
These bolt-ons will help augment Neptune's strategy of moving away from one-off jobs to long-term maintenance contracts, especially in the $40 billion offshore oil and gas sector.
The raising is by way of a $1 million placement and a $16.3 million, 2-for-1 renounceable rights issue, both at 20c a share.
In its early days, Neptune focused on its patented technology, which allows ships to be fixed without having to dry dock.
To date, Neptune has been quick to trumpet contract wins both here and abroad, but these have yet to be reflected in the accounts.
Neptune booked a net loss of $2.7 million on revenues of a mere $1.76 million in 2005-06, extending the previous year's loss of $1.5 million.
For the first time, Neptune yesterday forecast current year EBIT of $2.6 million on revenues of $15 million, rising to EBIT of $5.53 million on $35 million of revenues in 2007-08.
This assumes completion of the Allied and Territory Diving Service transactions, with no further acquisitions in 2007-08.
Bear in mind the raising more than triples the number of shares on issue, so there are more hungry mouths.
Neptune's management history makes for salutary reading, with the CEO post changing three times in the last 12 months.
Christian Lange, the current chief, was highly regarded as head of the listed mining equipment provider SDS Corp. Lange left SDS when the 45 per cent shareholder wanted a more active role (SDS was eventually taken over).
At Neptune, Lange took over as CEO from Richard Wolanski, who in turn replaced Andrew Harrison (who went on to list the dental chain Capitol Health).
Clive Langley, who invented Neptune's underwater technology, remains as an executive director and major shareholder.
Criterion last rated Neptune a SPECULATIVE BUY at 74c in June last year - and protected his delicate bottom by noting the investment was likely to be a five-year journey.
We'll maintain this call, with reservations. Early investors who have seen their holdings diluted to a thin gruel are excused from showing even a flicker of interest.
NMS Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
