Firstly I'm of the opinion that earnings will rise sharply in 06/07. CCI Holdings (CHL) is implementing an automation project which will simplify the processing and publishing of analytical results, meaning a reduction in labour charges. Also, the company will be experiencing a sharp rise in tonnages to be tested (15-20% increase over 05/06). Profit should be at least 4cps for 06/07, with a further hefty rise expected in the 07/08FY.
Results for EPS and NPAT cannot be compared with previous years, because the last 2 years before 05/06 included large non cash writedowns, but were NOT OPERATING LOSSES. This company has never had operating losses. past management purchased coal deposits in the ukraine, with the thought of seeking joint venture partners to own and operate the mining side....these plans never yielded fruit, so large book losses have been taken on Lubel and now the Pluton projects. However if both come into production, they will produce profit for the company through the establishment of royalty agreements. Lubel will earn 0.15c/tonne on all production for the first 10 years. the company has a royalty arrangement in place for Pluton but has yet to announce the terms. so while this has been a lazy investment for CHL, with coking coal being hot property, there is reason to expect CCI can still see significant profit come it's way from their royalties in thes two coal deposits.
regards,
Cheerful.
CHL Price at posting:
0.0¢ Sentiment: None Disclosure: Held
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