FYI | Aug 01 2011
Daily update on share prices and consensus price targets.
By Rudi Filapek-Vandyck
Once upon a time stockbroker RBS used to actively cover Geodynamics ((GDY)), "potentially Australia's largest geothermal energy producer". But since the last update, as seen by our eyes, dates from October 11th last year, it's probably a fair assumption the stockbroker has quietly removed the troubled green energy developer from its coverage portfolio. As reported previously by FNArena, Geodynamics is regarded "toxic" and the latest market update proved just why.
The company's fourth quarter cash flow report revealed the company has now experienced $58m free cash outflow in FY11. Taken from a different perspective, FY11 is the ninth consecutive year in which GDY has experienced negative free cash flow. Let's take an even different perspective: at $58m in the red, FY11 is the company's worst annual result since listing a decade ago. Let's add another perspective: cash balances at 30 June 2011 have fallen to $29m.
What this means is that either Geodynamics will be shopping around pretty soon, trying to find a corporate partner/predator who's keen, or the company is already preparing to return to its shareholders for more cash, or it will simply run out of money at some stage.
Analysts at Morningstar, who contrary to their colleagues at RBS, continue to keep an eye open for further developments at Geodynamics, talk about "ongoing destruction of shareholder value". They don't see any prospect for revenues (let alone profits) in the "foreseeable future".
In case there are still shareholders out there who've remained loyal all this time: better be prepared for more dilution, and thus a weaker share price.
All this also makes one wonder why exactly some commentators put so much supposed "wisdom" into share market movements and action. Geodynamics' share price went up by a massive 200% on the announcement of a carbon tax by the Federal Government in Canberra. Beneficiary? This company will be lucky to stick around long enough.
Had RBS still continued updating its views on Geodynamics the company would have likely popped up on the Icarus Signal, either as trading above target (very likely given the 200% rally) or in the Bottom 50 as a troubled stock trading well below intrinsic value. It all depends on how silly (or not) RBS would have dared to be.
Another stock that has had its share of financial troubles (and struggles with corporate survival) is Hastie Group ((HST)). Post the company's near-dead experience, most stockbrokers have gone "neutral", preferring to await further developments, if they're still paying attention at all. Analysts at Morningstar still are, and they seem to be becoming increasingly positive on the developing turnaround story.
Morningstar believes the two largest shareholders in Hastie, Lazard Australia Private Equity, of Chandler Macleod ((MCG)) rescue fame, and Thorney, the Pratt family’s investment vehicle, are ready to guide Hastie to better fortunes ahead, including selling off non-performing assets. Contrary to GDY, Hastie Group actually is in Icarus' Bottom 50, as are Intrepid Mines ((IAU)), Watpac ((WTP)), PaperlinX ((PPX)), Photon Group ((PGA)) and 45 others.
The group of stocks trading below but close to target had been decimated to 10 by Friday, but expect many more names to join after today's relief rally. The list of stocks trading above target had reduced to 25, but more names will be added after close of trading today.
Investors should consider the information and data are provided for research purposes only.
Stocks <3% Below Consensus
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Stocks Above Consensus
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Top 50 Stocks Furthest from Consensus
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To see the full Icarus Signal, please go to this link
Technical limitations
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