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AJL - AJ LUCAS GROUP LIMITED


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  • 2 weeks later...
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AJL Is doing a huge run after being well oversold we will now see it go back to previous highs IMHO

Cheers Pete

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  • 1 month later...

AJL had a great run up but is now back down again to around the mid $1.50's range. I've been long on this for a while and bought some more yesterday with the release of the year end June statement. NPAT up 30%, eps = 20.8c, dps = 8c, implying current p/e is 7.5, net div yld is 5%.

 

Forward outlook looks promising. WIP is up 1st half so revenues for the 2nd half of 2004 will be up on the first. In addition, mgmt expect a "particularly strong" 2005 year as some of the large contracts its bid for in Australia and Asia (in its pipeline and HDD businesses) get settled later this year. However, the really interesting bit is that you don't need to count on this as they have been able to build up the revenue streams in their coal seam gas and consultancy businesses over the past couple of years - revenue streams that are not as lumpy and something the market seems to have completely ignored. In 2003 these revenues were $8m, 6% of total, in 2004 $48m, 40% of total, and in 2005 they expect at least $95m in revenues from these sources alone (or around 80% of this years total revenues!) and further improvement in their margins....

 

Bottom line is that even if they fail to win new contracts in HDD and pipelines, given existing WIP in these areas and the $95m expected in the other business streams next years earnings don't have much downside (if any) and a huge upside. Currently this stock is 60% off its yearly high of around 2.50, is cheap on the fundamentals, and has promising large contracts which could well be announced over the next few months. I reckon it could easily get back to the yearly highs if they are announced, and shouldn't lose any ground if not - IMO its a great relatively low risk spec play and an even better long term hold http://www.ShareScene.com/html/emoticons/cool.gif

 

 

 

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  • 3 weeks later...

Did anyone else in sharescene land got on to this one http://www.ShareScene.com/html/emoticons/icon14.gif

Its now at $1.81 which is around 20% up on the month http://www.ShareScene.com/html/emoticons/laughingsmiley.gif

IMO that could be just the start - we learn whether they've picked up any new large contracts in Nov/Dec. If they succeed I reckon it will be back over $2.50 by christmas.

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Hope you're right... been holding these guys since they were $2.50 last time, on the basis that they know what they're about and seem to be serious players in an expanding niche market. Had hoped to see them winning more in the coal seam gas extraction business and maybe getting a long term stake in the gas sales side of things... still think they're a sound long term investment, if a bit dependent on contract timing.
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In reply to: bananabender on Thursday 23/09/04 09:08am

bananabender, gosh thats a mouthful, good to hear from another AJL holder.

I first bought in at around $2 and have averaged down since. I though the coal seam gas side looked pretty impressive actually - revenue growth was up around 58% from this source in the current year and mgmt still sees very good growth here going forward. Why do you think they've missed out a bit? As far as contract timing goes it looks like AJL are less dependent on this than in the past given the Stuart aquisition and coal seam gas businesses. The bright side of it of course is that if you think its a fundamentally sound company then market over reaction to the inevitable timing issues can provide a good chance to buy in cheaply, as I think it has been through most of this year.

Time will tell http://www.ShareScene.com/html/emoticons/rolleyes.gif

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In reply to: skinny on Friday 24/09/04 12:23am

Just call me bb... I just accept that the market doesn't always think the way I do and that's life - and buying opportunities! AJL just come across as a sensible no b******t bunch with a solid niche and an old fashioned (honest) approach, as well as nice numbers. I too held them down from the two dollar area but I'm still a believer and just put another 10K in the long term drawer. Let's hope we're both a bit ahead of the crowd!

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