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QUOTE (macrae @ Thursday 20/10/05 06:53pm)

As a speculative play, I rode this one up from 22.5c, but sold recently.


My reasons for selling were threefold:


First, I no longer think that a big Orica contract is a realistic possibility in the foreseeable future. If the wider market also begins to recognise this, I'd expect the steam to be taken out of the SP.


Second, with a market cap of $40mill+ ($50-55mill fully diluted), the stock is now looking fully valued as a start-up spec play. The company has not released any earnings forecasts, which suggests that management is expecting further losses this FY and possibly next. Costs will likely rise faster than new revenue over the next 2 years in accordance with expansion plans. For a young company with no runs on the board, very generous remuneration of executive management is also of concern (COO effectively granted $1.2mill in 05, CEO: $717k).


Third, with current cash reserves not sufficient to fund existing products into new markets, I'm expecting a fairly hefty capital raising (= further significant dilution) in the not too distant future.


The China distribution deal will limit any SP falls in the short term, but if significant dilution is announced (and a possible SPP at a substantial discount to the current SP), I see a significant retrace occuring, so I think it safest to wathc from the sidelines.


Long term, however, I still like the look of DDT.

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In reply to: ousia on Wednesday 26/10/05 04:33am

The Orica contract was denied by management and speculative money on this should have left long ago. Nonetheless this kind of deal remains a distict possibility as evidenced by the china announcement and the growing interest in this product.


The company is to receive cash for china deal, and is getting close to breakeven on other operations, with the full effect of some recent anns yet to impact results. Still plenty of cash in bank (4 years at the burn rate of the last quarterly) and oppies to be converted so I can't see any reason for further raising.


No harm in running a company like this at a loss for a couple of years so long as no raisings. Expansion is what holders are looking for - not dividends. This is what they are getting.


Executive remuneration includes a lot of options (COO base salary is $228,000) and management are big holders (and on-market buyers) of shares - this is the way it should be their success is aligned with that of the company.


You would have more credibility as a poster if you were to post your positive comments at the time you bought these shares as opposed to negative ones in hindsight as you clearly haven't done much more than skim through the Annual Report before casting judgement.





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In reply to: dexterbland on Friday 28/10/05 01:04pm

but since you mentioned it - always a possibility...



"Orica Coatings supplies a range of Decorative, Texture, Woodcare, Protective and Powder and Fluoropolymer Coatings to offshore markets including South East Asia and China."

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In reply to: dexterbland on Friday 28/10/05 01:04pm

Probably not a good idea to question my credibility Dex.


You only have to read recent posts from others on this board and HC to see that many punters are still expecting an Orica contract in the short term. When the penny drops for these small players, they will sell.


(I'm not saying that an Orica contract is impossible for DDT, what I am saying is that the two companies are not engaged in active negotiation at the present time).


The fact is, DDT is now trading at around 7 times FY05 revenue (9 times on a fully diluted basis), and is very likely to be incurring losses for a considerable while.


In my judgement, and taking an outlook through to the 06 full year results, DDT is looking fully valued.


And with significant dilution likely in the short term (management need to fund expansion), the risk of significant downside outweighs upside potential over the short-medium term, so I locked in profits last week.


For a loss-making company with 05 operating revenue <$6mill, executive renumeration looks rich to me. Your options excuse cuts no ice under AIFRS.

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In reply to: ousia on Saturday 29/10/05 04:26am

DDT will continue to rise as the significance of their technology becomes apparent to the wider community. An 'Orica' type deal is not what I would be pinning my hopes on. The immense number of potential applications for this technology is what will be the driver for this company. Moving from a start-up, cash-burning entity to a profit-making entity will also begin to attract new investment. Future is huge for DDT, and its current market-cap will be fully justified in a very short period of time.



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  • 3 weeks later...

In reply to: marineboy on Wednesday 30/11/05 12:43pm

Yes, has been a little disappointing, but I guess it wasn't enough to inspire the market. Considering there are up around 1,000,000 cars sold on the Aussie market alone each year 30,000 doesn't look quite so grand. We need one of the bigger manufacturers to take it on then we'll see some action. Anyway, they're winning contracts slowly & datatrace contracts should push things along in due course. It's only a matter of time!

Regards, Zoomer.

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