swick's business is not floundering

SWK's SP has floundered in the 32-38c range for past 3 months, after reaching 50c in early January 2010. But is current SP a true reflection of the company's situation? The year-end overview on 30/08 notes:


1) Revenue improved in challenging market conditions
2) Continued improvement in rig utilisation throughout FY10
3) Curently at record high number of rigs at work
4) EBITDA margin remains strong and expected to improve
5) Strong order book in Australia with numerous contracts awarded and renewed during FY10
6) North American expansion on target with recent drilling contract award for Newmont Hope Bay and trials under way with Newmont Nevada and Vale Inco, Sudbury
7) Improving market conditions giving rise to positive outlook for FY11

Drilling service rev of $97.8m was significantly higher than previous year FY09 84.1m. Key to company's strength is high utilisation of underground diamond rigs. I think for example SLR use Swick, and I wonder if MCO have chosen SWK? Most pleasing is that in September 2010 rig utilisation is 89% and projected to increase steadily. SWK has exposure to that key commodity namely GOLD.

I originally paid too much when buying for 48c in Feb 2010. I recently doubled-up at 36c on 10th September. I feel SWK is reasonable buying below 40c and intend to hold. The prospects lookgood as SWK is in a key niche and well-managed. My target SP is 50c when mid-yr results released in late Feb.