Início
No seguimento de um artigo escrito no seeking alpha por Paulo Santos, decidimos fazer um breve análise á AYSI.
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Alloy Steel International Earnings For FY2014 And Implications From Q4 FY2014
Dec. 21, 2014 2:30 PM ET
Summary
Alloy Steel International reported earnings for FY2014.
I go over these, as well as calculate a pro-forma Q4 FY2014 to draw further conclusions.
Overall, Alloy Steel International remains deeply undervalued but there are other observations we can draw as well.
I decided to write this article because Alloy Steel International (OTCPK:AYSI) really makes it hard for an investor to keep himself informed on how the company is going.
For reasons ranging from low valuation to how AYSI has evolved in the past (mostly growing earnings, revenues and book value), AYSI is an interesting equity for those willing to consider investing in OTC stocks. And indeed, since my previous article on it, the stock has performed well in spite of a general weakness in the mining sector into which AYSI sells its products.
A FRAQUEZA DO SECTOR PODE SER VISTA AQUI:
Today, AYSI reported its FY2014 earnings. To find these, you have to go Otcmarkets.com - which is kind of weird since AYSI actually put out a press release stating as much. So why not take the chance and include the earnings within the press release?
Anyway, upon checking otcmarkets.com, I could locate the FY2014 annual report filing. This report tells us how AYSI did over FY2014. What it doesn't tell us is how Q4 FY2014 went. I'm going to reproduce the FY2014 balance sheet and FY2014 P&L here for easiness of access.
VER ARTIGO ORIGINAL NO LINK
I was more interested, however, on how Q4 FY2014 went. This is so because Q3 FY2014 had seen a severe slowdown - revenues were down 33% to $6.2 million in the quarter, and net cash was somewhat pressured by increases in accounts receivable and inventories.
SEGUNDO O ANALISTA OCORREU UMA QUEBRA NO VOLUME DE NEGOCIO NO Q3 EM 33% RELATIVAMENTE AO Q ANTERIOR, E O FLUXO DE CAIXA FOI AFECTADO NEGATIVAMENTE DEVIDO AO AUMENTO DAS CONTAS A RECEBER E INVENTÁRIOS.
Since we didn't have an earnings report to tell us how Q4 FY2014 did, I decided to deduce it from FY2014 and Q3 FY2014 (9M). This is how things looked.
VER ARTIGO ORIGINAL LINK
From the FY2014 report and this Q4 FY20914 exercise, we can draw several observations including:
AYSI recovered strongly from the poor showing in Q3 FY2014. Revenues grew around 18% from the same quarter last year, allowing FY2014 to come in just 3.3% below FY2013 even though at the 9-month mark AYSI was showing revenues down 10.1% year-on-year. This is also a result of AYSI's business being somewhat lumpy due to the company being small, but it also highlights how a possible mining slowdown fear might have been somewhat overstated;
Likewise, earnings (NYSEARCA:EPS) showed a strong rebound. AYSI posted EPS of more than 2 times what it had made in Q4 FY2014 ($0.044 per share, taking into account FY2013 and Q3 FY2013 9M), leading the FY2014 earnings to nearly match FY2013, at $0.26 versus $0.28;
At $0.26 EPS, AYSI trades at just 5.2 times FY2014 earnings including cash (using $1.35 for the share price), or 3.5 times ex-cash - still an extremely low valuation;
On the balance sheet side, cash recovered substantially from $5.9 million during Q3 2014 to $7.7 million at year-end. This was helped by significantly reduced accounts payable, though inventories remain high;
Inventories remaining high might explain why accounts payable also decreased very substantially. On the other hand, like high accounts payable in Q3 FY2014 might have been a sign of a good Q4 FY2014 coming, here I'm left wondering if low accounts payable in Q4 FY2014 might be a sign of a bad Q1 2015 coming.
MUITO IMPORTANTE O FACTO DE A AUMENTO DAS CONTAS A PAGAR TER AUMENTADO EM Q3 E SER UM INDICADOR BOM PARA Q4, E ESSA DIMINUIÇÃO EM Q4 SER UM INDICADOR DE UM FRACO Q1 EM 2015 POIS EXISTE UMA DIMINUIÇÃO NA ACTIVIDADE DA EMPRESA.
Conclusion
AYSI remains an extremely undervalued equity in spite of the stock performing well since I and others first highlighted it. This undervaluation was helped by a very strong Q4 FY2014, which might also have served to put away some fears brought about by the extreme slowdown in Q3 FY2014.
The possible mining slowdown continues to be a threat, made more real by the recent plunges in iron ore pricing as well as the ongoing coal troubles. AYSI seems better positioned than most to surpass these difficulties, however one cannot discount the damage that the negative sentiment towards the sector can have on the share price.
Finally, there's a possibly worrisome sign in the deep drop in accounts payable. This is either good - motivated by a desire to bring excess inventories down, which would help cash on hand grow even more; or bad - as a sign that demand for Q1 FY2015 isn't that good so the company is not getting ahead of it and buying from suppliers to meet the demand. We do know that a substantial increase in accounts payable in Q3 FY2014 was a positive sign for Q4 FY2014, so we cannot discount that the exact opposite is happening here now - especially in light of the very strong Q4 FY2014.
ÃYSI's business is lumpy just as expected from such a small company. Over the long term the company has performed excellently, but on a quarter-to-quarter basis we can always have strong swings in sales and EPS - and those swings can have a substantial impact on share price as we saw. This is even more so when there's a general fear that the slowdown in mining and mining capex might hit suppliers like AYSI very hard.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
VER POSTS SEGUINTES
VER AQUI
Alloy Steel International Earnings For FY2014 And Implications From Q4 FY2014
Dec. 21, 2014 2:30 PM ET
Summary
Alloy Steel International reported earnings for FY2014.
I go over these, as well as calculate a pro-forma Q4 FY2014 to draw further conclusions.
Overall, Alloy Steel International remains deeply undervalued but there are other observations we can draw as well.
I decided to write this article because Alloy Steel International (OTCPK:AYSI) really makes it hard for an investor to keep himself informed on how the company is going.
For reasons ranging from low valuation to how AYSI has evolved in the past (mostly growing earnings, revenues and book value), AYSI is an interesting equity for those willing to consider investing in OTC stocks. And indeed, since my previous article on it, the stock has performed well in spite of a general weakness in the mining sector into which AYSI sells its products.
A FRAQUEZA DO SECTOR PODE SER VISTA AQUI:
Today, AYSI reported its FY2014 earnings. To find these, you have to go Otcmarkets.com - which is kind of weird since AYSI actually put out a press release stating as much. So why not take the chance and include the earnings within the press release?
Anyway, upon checking otcmarkets.com, I could locate the FY2014 annual report filing. This report tells us how AYSI did over FY2014. What it doesn't tell us is how Q4 FY2014 went. I'm going to reproduce the FY2014 balance sheet and FY2014 P&L here for easiness of access.
VER ARTIGO ORIGINAL NO LINK
I was more interested, however, on how Q4 FY2014 went. This is so because Q3 FY2014 had seen a severe slowdown - revenues were down 33% to $6.2 million in the quarter, and net cash was somewhat pressured by increases in accounts receivable and inventories.
SEGUNDO O ANALISTA OCORREU UMA QUEBRA NO VOLUME DE NEGOCIO NO Q3 EM 33% RELATIVAMENTE AO Q ANTERIOR, E O FLUXO DE CAIXA FOI AFECTADO NEGATIVAMENTE DEVIDO AO AUMENTO DAS CONTAS A RECEBER E INVENTÁRIOS.
Since we didn't have an earnings report to tell us how Q4 FY2014 did, I decided to deduce it from FY2014 and Q3 FY2014 (9M). This is how things looked.
VER ARTIGO ORIGINAL LINK
From the FY2014 report and this Q4 FY20914 exercise, we can draw several observations including:
AYSI recovered strongly from the poor showing in Q3 FY2014. Revenues grew around 18% from the same quarter last year, allowing FY2014 to come in just 3.3% below FY2013 even though at the 9-month mark AYSI was showing revenues down 10.1% year-on-year. This is also a result of AYSI's business being somewhat lumpy due to the company being small, but it also highlights how a possible mining slowdown fear might have been somewhat overstated;
Likewise, earnings (NYSEARCA:EPS) showed a strong rebound. AYSI posted EPS of more than 2 times what it had made in Q4 FY2014 ($0.044 per share, taking into account FY2013 and Q3 FY2013 9M), leading the FY2014 earnings to nearly match FY2013, at $0.26 versus $0.28;
At $0.26 EPS, AYSI trades at just 5.2 times FY2014 earnings including cash (using $1.35 for the share price), or 3.5 times ex-cash - still an extremely low valuation;
On the balance sheet side, cash recovered substantially from $5.9 million during Q3 2014 to $7.7 million at year-end. This was helped by significantly reduced accounts payable, though inventories remain high;
Inventories remaining high might explain why accounts payable also decreased very substantially. On the other hand, like high accounts payable in Q3 FY2014 might have been a sign of a good Q4 FY2014 coming, here I'm left wondering if low accounts payable in Q4 FY2014 might be a sign of a bad Q1 2015 coming.
MUITO IMPORTANTE O FACTO DE A AUMENTO DAS CONTAS A PAGAR TER AUMENTADO EM Q3 E SER UM INDICADOR BOM PARA Q4, E ESSA DIMINUIÇÃO EM Q4 SER UM INDICADOR DE UM FRACO Q1 EM 2015 POIS EXISTE UMA DIMINUIÇÃO NA ACTIVIDADE DA EMPRESA.
Conclusion
AYSI remains an extremely undervalued equity in spite of the stock performing well since I and others first highlighted it. This undervaluation was helped by a very strong Q4 FY2014, which might also have served to put away some fears brought about by the extreme slowdown in Q3 FY2014.
The possible mining slowdown continues to be a threat, made more real by the recent plunges in iron ore pricing as well as the ongoing coal troubles. AYSI seems better positioned than most to surpass these difficulties, however one cannot discount the damage that the negative sentiment towards the sector can have on the share price.
Finally, there's a possibly worrisome sign in the deep drop in accounts payable. This is either good - motivated by a desire to bring excess inventories down, which would help cash on hand grow even more; or bad - as a sign that demand for Q1 FY2015 isn't that good so the company is not getting ahead of it and buying from suppliers to meet the demand. We do know that a substantial increase in accounts payable in Q3 FY2014 was a positive sign for Q4 FY2014, so we cannot discount that the exact opposite is happening here now - especially in light of the very strong Q4 FY2014.
ÃYSI's business is lumpy just as expected from such a small company. Over the long term the company has performed excellently, but on a quarter-to-quarter basis we can always have strong swings in sales and EPS - and those swings can have a substantial impact on share price as we saw. This is even more so when there's a general fear that the slowdown in mining and mining capex might hit suppliers like AYSI very hard.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
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Última edição por Manuel Marques em Ter Dez 23, 2014 2:59 pm, editado 1 vez(es)
