Lms Capital Share Price (LMS)

Last year's Q4 update was on 31st Jan so hopefully we will get an update tmrw. On one hand the Truss-aster currency boost in Q3 will reverse plus we know Oil Prices are about 10% lower in Q4. On a positive, though, the backlog of maintenance should be nearing completion so 2023 should see workovers and boosts to production - all positive. Also continued interest payments will flow in, and as for real estate we are arguably now seeing market lows so we may get some interesting updates in how the LMS cash pile is going to be utilised? Having powder dry is a great opportunity to pick up some bargains.

Friday's 3Q update doesn't give much detail but there's an increase in NAV to 60.5p mainly due to the sterling crisis 30/09/22 (and reverts LMS to its 31/12/21 valuation).

However stripping out cash you are looking at paying 33p - 22.8p = 10.2p/share. Put another way, net assets ex cash are at a discount to NAV of 74.4% (10.2/(60.5p-37.7p))

But this is for assets where Dacian alone is worth over 11.7p/share, and is generating £1.2m in interest from $9.1m of loan notes (leaving aside that LMS also owns 32% of Dacian) and the interest equals about 5% of LMS' current market cap.... so pays the bills plus the dividends (roughly).

In other words strip that out too and you're getting 1.2p a share plus £20m worth of London property and US VC funds worth 60.5p - 34.5p = 26p a share for free. (102% discount to NAV)

Plus Dacian should grow its profitability through workovers and maintenance. Today the oil price is $96 and gas prices are lower but will certainly rebound as colder weather arrives. Romania do have a windfall tax but even so we should see growing profitability from Dacian.

You don't buy this share for excitement and it feels like it plods along. But if you're patient and are interested in value and overlooked opportunities this is a good wealth preservation share .... its assets underpin its value here and it's incredibly cheap. I'm happy to hold.

3rd quarter update should be out this week. It’ll be good to see some progress on Dacian oil, and the consolidation they spoke of. What’s actually quite impressive is how LMS has quietly steered a course through a pretty challenging couple of years without any real loss of NAV. It remains stubbornly on a huge discount to NAV

https://www.ii.co.uk/news/half-year-report-rnsLSE20210803070008_4065605

We should be seeing a H1 update in the coming week. It should be the case that we'll see a decent jump in NAV on the back of strong oil and gas prices in Romania. When you compare to other plays on European energy this share hasn't risen one iota, despite the attractive economics of the deal they struck. I expect we'll see a rise in the dvidend too.

GLA

NAV grows from 59p to 60.8p
Trading spread 30-34p. So buying at 34p is a 44.5% discount. Since this holds over £20m cash you're buying £47m of income producing assets for £7m. The Dacian oil alone provides a 14% return (about £0.8m per annum).