Original post shows 61 jobs under global HR. Now "Now showing jobs 1 - 10 of 79"
OP - Ed.
Boart Longyear is not updating the market prior to Xmas as this period is the quietest of the year. It's a seasonal business. Right now in the board rooms of the major miners and junior miners they are planning the 2010 drilling programs.
So, why has BLY been treading water?
Broker upgrades aside, you need to look at the following factors and make your own mind up - I am not providing you with Advice. It's my op Ed, that the following factors will drive BLY into 2010.
1. The pressure of orders and excess capacity. - BLY now has 79 Jobs on offer and has filled many since the initial post. The contracts for drilling in 2010 would be in the mail for Jan / Feb quotes and starting programs in 2010. The excess capacity has eased considerably over the past three months.
2. Supplies. Apart from its own drill rigs - BLY supplies materials for other global drillers and stocks for the majors and JNRS in house drilling operations from its manufacturing facilities. It also supplies FULL RIGS. MAJOR DRILLING - recently held a web cast for its 2010 year and is in the market for 5 new RIGS - guess who builds them? - How many drill bits do you think RIO and BHPB go through each year?
3. Supply and demand. From point 2. When commodities drop in value and miners cease all decision and destock as we saw in March 2009. You create a false economy - BLY in particular got smashed to the tune of a 70 - 80% fall in revenue - the greatest impact on this business in its 120 years in operation.
When supply falls and we see demand (as I anticipate explode into 2010 - 2011) - Will see many customers chasing a finite amount of goods. - BLY will be in a position to recoup in price increases much of the losses incurred in 2009.
4. The Debt facts.
When BLY got INVESTMENTWANKERED (ox end dictionary) (that's taking a good company - giving it sh!tloads of debt and floating it off the punters - see also Alco and BNB. That debt has been eliminated by the recapitalisation and SPP. BLY scaled back the SPP to limit the overhang - but you would have to look into it in greater detail - the original Entitlement in the eyes of BLY may not have had full take up - it was lucky the pushed the button on it in an up market. - Lets face it at 0.085C the company was on its knees. BUT, it's had a pulse and after a judicious hit from the packer whacker it got off the canvas. Then, the entitlement created an overhang and the SPP (announced at the same time) created a greater overhang.
BLY effectively has ZERO DEBT. Its cash flows are returning but lack of guidance into 2010 will see its track sideways. The first good news (say mid Feb 2010) will see the share price rocket.
5. S&P ASX 100 - COB last week BLY was knocking on the door of the ASX 100. At the 113th spot. On achieving a 5c gain in share value BLY will pass into the ASX100 - not bad for a 40c stock. That will see index funds buying. - Both Domestic and international managers.
6. Capital Management I would estimate that once BLY is well into recovery and perhaps earlier to save cash - BLY will either conduct an off market buyback at 40ish or look to consolidate capital in a 1 for 2 recapitalisation. Probably item a] as it's a good way to use the free cash flows to reduce the stock overhang and kill off the day traders.
So, that's my considered view - and my view only. It is not an offer to buy securities and appears as an op Ed only.
Sources: TSX ( Major Drilling Q4 results web cast) Boart Longyear.com.au/careers.
Always do your own research.
Jake.
BLY Price at posting:
$3.40 Sentiment: Buy Disclosure: Held
