Insightful Insights

Do Energy Action (EAX), Central Petroleum (CTP), Perseus (PRU), Iluka Resources (ILU), AGL (AGK), Matrix (MCE), Reward Minerals (RWD), FKP Property (FKP), Rio Tinto (RIO), Telecom NZ (TEL), Hills Holdings (HIL), Aurora (AUT), DWS (DWS) Cash Converters (CCV) or NAB (NAB) achieve the coveted A1 grade? Watch this edition of Sky Business’ Your Money Your Call 15 November 2012 program now to find out, and also learn Tim’s insights on Exchange Traded Funds. Watch here.

by Roger Montgomery Posted in Companies, Insightful Insights, Investing Education, TV Appearances.

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Earlier this week The International Energy Agency released its World Energy Outlook. While total US oil and gas production is expected to increase 35 per cent from 17 million barrels of oil equivalent per day (mboe/d) in 2010 to 23 mboe/d in 2020, the transformation is explained by the expected 6 mboe/d surge in unconventional oil and gas production over this decade. Together with the widening of the Panama Canal by 2014, which will allow LNG Supertankers to travel to Asia from the Gulf of Mexico, the US could potentially turn into a cheap exporter of gas, in competition with Australia.
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by David Buckland Posted in Energy / Resources, Insightful Insights, Value.able.

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The contractual nature of the resource service sector was highlighted with Emeco’s latest earnings downgrade. Their Australian fleet utilisation has declined from 91% in the 6 months to June 2012 to the current 66%. A combination of weaker demand, contract revisions, and contract non-remewals was to blame. Commentary particularly reflected lost contracts from the iron ore and coal industries. Expectations for the Company’s revenue line has been cut by 20% to around $550m for each of Fiscal 2013 and 2014, while net earnings have been reduced by around one-third to $51m and $58m, respectively. At the current share price of $0.51, some brokers are calling Emeco a buy as it is now selling on a prospective PE of 6X and a one-third discount to its net tangible asset backing of $0.76 per share.

Nevertheless, we remain cautious on the outlook for the resource service companies generally and believe investors should be wary of Emeco’s forecast $443m net indebtedness.

by David Buckland Posted in Companies, Energy / Resources, Insightful Insights.

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Roger provides his latest insights into the current state of the Australian share market (and a lack of value therein), the impact of changes in the mining industry on the Australian dollar and future foreign investment, and the outlook in the United States and its “Fiscal Cliff” with Ross Greenwood on Radio 2GB.  Listen here.

This program was broadcast 13 November 2012.

by Roger Montgomery Posted in Energy / Resources, Insightful Insights, Radio.

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AMA, MXI, AHE and ARP share prices are all booming on the back of surging demand in an under supplied car market, causing a shortage of capacity which is driving up margins for the sector’s operators.

You can read one of our recent post on the subject here.

Naturally we have been drawn to the operators in the sector on the back of this capacity shortage. The ability to charge higher prices in a capacity-constrained environment is great if they are enduring, but I must ask, is the entire sector in a little bubble? A bubble in profitability and short-term market growth?
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by Roger Montgomery Posted in Companies, Insightful Insights, Manufacturing.

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In this Australian article published 10 November 2012 Roger discusses why listening to share market cliches is likely to result in poor portfolio returns.  Read here.

by Roger Montgomery Posted in In the Press, Insightful Insights, Investing Education.

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World Steel Production, according to Macquarie Equities, has been cut by 4 per cent to an average 1.7 billion tonnes per annum over the 2013-2015 period.

China’s steel production accounts for an average 760 million tonnes or 47%, approximately 50 million tonnes more than their forecast average demand.

Global mining capital expenditure is expected to peak in 2012 at $142b and decline by around 10% per annum to $115b by 2014.

Earnings downgrades are being experienced by major excavator companies like the Japanese listed Komatsu, where mining equipment makes up 30% of its US$22b revenue line.

by David Buckland Posted in Energy / Resources, Insightful Insights.

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By Russell Muldoon & Roger Montgomery

We like to keep an eye on monthly new car sales statistics produced by the Federal Chamber of Automotive Industries. For a number of businesses we are interested in, including Carsales and ARB Corporation, they are both beneficiaries of a high level of new vehicle turnover.

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by Roger Montgomery Posted in Insightful Insights, Investing Education, Manufacturing.

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In the wake of the RBA’s decision to leave interest rates unchanged it’s interesting to see some of the commentary on the attractiveness of fixed interest versus ‘riskier’ investments, including property and shares. RBA governor Glenn Stevens is reported to favour investors moving into these asset classes away from low-yielding term deposits.

We have recently been doing some interesting analysis to better understand the long-term value proposition currently offered by the Australian equity markets. We will share the results of the analysis here when completed, but the emerging view – for those with a long-term perspective – is that governor Stevens has a valid point.

by Tim Kelley Posted in Insightful Insights, Investing Education.

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Do Imdex (IMD), Sundance Resources (SDL), Woodside (WPL), Axiom Mining (AVQ), Seven West Media (SWM), Silverlake Resources (SLR), Mesoblast (MSB), Titan Energy (TTE) , Metcash (MTS), Emeco (EHL) or Magellan (MFG) achieve the coveted A1 grade? Watch this edition of Sky Business’ Your Money Your Call 6 November 2012 program now to find out, and also discover how David approaches investing in small cap mining stocks.  Watch here.

by Roger Montgomery Posted in Companies, Insightful Insights, Market Valuation, TV Appearances.

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