News for the Snoozers - Part 2

Wednesday, 12th November 2014 09:11 - by Moosh

Beximco Pharma (TIDM: BXP)

Beximco Pharma has recently released third quarter results (Q3 2014)¹ and it has continued to show a gradual growth in net profit with earnings per share (eps) of 3.14 Taka (Q1 to Q3 2014) which is 6.8% growth in earnings compared to 2013. The company still remains undervalued at 18.5p (mid-price close as of 7 November 2014)². The net asset value of the company also increased to 55.85 Taka per share (46p/share, exchange rate on 8 November 2014).

Empyrean Energy (TIDM: EME)

Empyrean Energy is still keeping us in the dark regarding the indicative offers it has received, but the world still turns in the meantime and there remains information available to the rest of us on how operations at Sugarloaf are going via a recent Q3 release from Marathon Oil (NYSE: MRO), some of which may be relevant to EME.³ MRO has continued to build on the initial success with the Austin Chalk (AC) wells and brought another 8 AC wells online in Q3, with another 16 AC wells at various stages of development. Extra wells have also been brought into production targeting the Eagle Ford shale too during Q3. Given the recent decline in Western Texas Intermediate (WTI) crude oil price, any increase in production will help to mitigate any commodity-driven reduction in revenue that could arise.

Lombard Risk Management (TIDM: LRM)

LRM is a new company on my radar but on a PE ratio basis, it is undervalued on latest full year eps (2.07p).⁴ The current year has seen a number of company developments and it has been stated that the benefits of these will likely impact the second half financials, so we would be looking towards the full year results to be released next year.^5-8 The broker forecast for LRM has earnings as 1.75p per share, which may be reduced from the previous year but it would still suggest that fair value, for a PE ratio 10, begins ~17.5p.⁴ Fundamentally, the current price of 13.375p (mid-price as of 7 November 2014) suggests there is still room for price appreciation.

Orosur Mining (TIDM: OMI)

OMI is in the gold sector so has felt the force of the recent downtrend in gold price over the last few years. However, it interests me since the previous full year results showed a profit, alongside revenue which was vastly above the current market capitalisation.⁹ At 10.375p, the PE ratio is ~2.35 – suggesting it’s thoroughly undervalued. The overriding factor here is obviously the price of gold and if there is any sign of a change in trend for gold over the next year then OMI will be the first gold company on my radar again, especially with <100 million shares in issue and the fact that OMI has been cash positive suggests a low chance of more shares being issued. If there is a move up here then I will be inclined to build up a free carry of shares on the short term swings just in case the company begins to issue a cash dividend in the future.¹⁰ If the gold price does begin to march up again next year then I may have more confidence in the broker forecast currently available at 8p+ (eps for full year to March 2015), but for now, I won’t take too much notice of it and monitor both company activities and gold price.¹¹

Columbia Laboratories (NASDAQ: CBRX)

Of the companies mentioned today, this is the only one of which I am not a current holder since my brokers can only cope with some US shares, of which this isn’t one! I first mentioned it in my ‘Price Tag’ blog post from 2013 and have been watching it from afar ever since CBRX swallowed Molecular Profiles (MP), a company based in the UK having spun out from the Pharmaceutical Sciences department of the University of Nottingham.¹² The buyout of MP by CBRX was obvious from the fundamentals of MP, which had shown steady growth in profit over a 5 year period, suggesting that its management knows their business and understands how to work it over a longer term. Obviously it will take the incorporation of MP into CBRX a few years to settle but the last year has seen MP roll out a new development platform as well as forming new alliances for the future so it will be interesting to see how many more of these arise, and what kind of impact they may have on the service revenues generated by MP over a longer term.^13-15 The base had been established by MP pre-takeover, so now I assume they will grab this opportunity with their exposure in the US, via CBRX.¹⁶ Earnings for CBRX may be difficult to forecast since while the product revenue may be generally obvious, the service revenue generated by MP will be dependent on when projects start and finish and whether they are recurring or not. I don’t see this as a problem though since if I was able to invest in CBRX, I would probably just build up a free carry of shares by trading any short term swings and focus on the longer term future of the company as a whole.

Greka Drilling (TIDM: GDL)

For a while now GDL has been sitting on a rig supply contract to Essar Energy to drill 100 wells, the value of which is ~$65 million.¹⁷ The execution of this contract was due to begin in the second half of 2014, and this has indeed happened from October 2014 and is due to run for 12 months.¹⁸ The price has yet to respond following the initiation of this contract but GDL is on my radar just in case it one day decides to begin to move up, especially if news flow gathers momentum throughout the contract period as rigs are continually used and moved.

Petroneft Resources (TIDM: PTR)

Since completing the farmout of Licence 61 with Oil India Ltd, which resulted in PTR becoming debt-free, progress is now being made with recent success with their Tungolskoye 5 well flowing initially at 100 barrels of oil per day, and with another well – the Arbukovskoye 106 – which was drilling ahead and it should be close to providing us with an update soon.^19-21 I am looking forward to the progress that PTR and Oil India will be making in the Licence 61 area over the next year and continue to hold as they hopefully prove it up.

Servision (TIDM: SEV)

As hinted at in the recent interims, SEV has provided an update of a new distribution agreement for their products in Indonesia and will further advise us regarding a balance of a payment from Beijing SIVI Technology Co. Ltd.²²

References

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.

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News for the Snoozers - Part 2

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