Sunday, February 10, 2013

COF: update

Happy Chinese New Year to all!

COF published its half yearly results on 11 February 2013.  Revenues from Geosciences and International Development increased from previous half, and revenue from Project Management decreased. Margins for Geosciences decreased, margins from International Development increased, and Project Management incurred a loss. Overall, this is quite a commendable result given the difficult conditions in the last half year within the mining and mining services sector. 

I am expecting a much better result this half given the improvements in conditions. In any event, COF's financials are clearly improving since my last posting here:

Cashflow looks very good. After adjusting the operating cashflow to account for movements in trade receivables, trade payables, increase in debt and increase in cash holding, the half year operating cashflow comes to about $17m.  Net debt has decreased to $61m.

Market cap has increased from $82m since last posting to about $100m on 11 February 2013. A conservative estimate of full year cashflow at $25m yields an enterprise value/cashflow ratio of 6.4. My view that a fair value ratio of 10 remains, and hence COF appears to remain good value despite a 25% increase in price.

Disclosure: The author owns shares in COF.

Disclaimer: the content of this post is not to be relied on as financial advice.  It contains my personal opinion only, plus facts that I cannot verify to be accurate.  Do your own research and seek financial advice where appropriate. I have made many mistakes in the past, and will continue to do so in the future.

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