letter from kilmister...cheerful
Reading the letter from Kilmister, it is the classic good cop, bad cop routine. Now he is coming over warm and fuzzy concerned about shareholders interests after previously threatening to blow CCi out of the water.
What do you think of his claims that the first half profit was the same as the second half ? The record says 1c eps followed by 1.4c. If the trend continues then 1.8c followed by 2.2c = 4 c eps for this year. he muddies the case by talking about windfall sale of Ukraine asset, but fails to mention alocation of 600k in second half for litigation. Are profits rising steadily or not ?
Then there is the resignation of 3 managers - Zhuravlov in Ukraine, MD of CCI Pope, and Denise Gallager of CCI. However he fails to mention 3 new directors and new management approach which has certainly turned the company around. Is there any evidence that the loss of the 3 managers was harmful, or perhaps a necessary clean sweep of operations as is often the case with new management ?
As far as l can see, the main threats are loss of contracts and capex blowouts. CEO is clearly focused on retaining contracts, and 45% of coal contracts market is an amazing market share considering. Do you have any idea about increased capex which may dent profits ? if they invested in new technology to reduce costs [ good ] then CPB may swoop on low eps to gain control, if shareholders are not forward looking.
CPB is offering cash in 3 days, unconditional, so they are an attractive alternative at present, although it will be a long time before they can gain 50% control.
However Kilmister does have a point that management are yet to prove themselves, and recent litigation was not well handled, so the August figures are going to be pivotal in giving direction for this FY. However coal export volumes are now rising after bottlenecks have been removed and CHL is in the right place at the right time.
Cheerful, if you want to discuss confidentially, please use lzalokar AT aussiemail.com.au LZ
CHL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
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