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China Housing and Land Development, Inc. Message Board

hdoe1000 11 posts  |  Last Activity: Mar 10, 2015 4:54 PM Member since: Jan 2, 2008
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  • Of what I know, Bovepa trading closes 5 min before 17h local time. But the Yahoo 1 day Bovespa chart (GFSA3.SA) shows a recovery of the share price - with real volume - from 1.81 to 1.85 in the last 5 minutes to 17h. How real is that? - That would mean 1.19 US$ with the closing exchage rate of R$ 3.10/US$ - much more than usual.

  • Floaters:
    Management sees a big shakeout in the floater market with possibly up to 100 old rigs getting scrapped in the next two years. The cold stacked will not return. The size of the floater fleet could fall back to the 2010 level. With oil prices and spending recovering, there is likely a severe shortage of floaters developing after 2016 with day rates recovering to the old heights. On that basis of thinking, management will certainly not accept contracts near current day rates after 2016.

    Cobalt: delivery realistically postponed way into 2016. Delivery and financing only when having a good contract at a day rate significantly higher than the current day rate.

    Debt buyback
    50M face value bought back so far this year at a huge discount, providing significant earnings contribution. It's intended to buy back all the convertibles.

    Jackups:
    There is reasonable market demand from jackups in the 100k to 140k/d bracket in Asia. The Aquamarine will have some idle time and move to a new customer. Its excellent operating history will be a plus in the contract negotiations.

  • Reply to

    Did anyone take a look at the Anchorage Filing?

    by cmeny1977 Feb 18, 2015 10:10 AM
    hdoe1000 hdoe1000 Feb 19, 2015 12:16 PM Flag

    As of Dec 2015, Anchorage holds 27.6M shares + $3.3M in convertibles.
    The filing says: "Each of the Reporting Persons may be deemed the beneficial owner of approximately 1,381,475 Shares obtainable upon conversion of $3,300,000 of the Note"
    Right now It would be silly to convert at $2.39 /share. Better collect the interest or sell the converts and buy shares for the money.

    Sentiment: Strong Buy

  • Reply to

    OK. Where is the buyback?

    by amendoza Feb 11, 2015 10:37 AM
    hdoe1000 hdoe1000 Feb 11, 2015 12:29 PM Flag

    I guess the company is buying, but buyback rules are certainly imposing limits.

    Right now, bad economic news is hitting the stock market and the currency. Analysts had expected an exchange rate of 2.80 by the end of 2015 and 2.9 by the end of 2016. We are nearly there.

    Once we see some exchange rate stability, we should see increasing foreign money inflows into fixed investments and portfolios, attracted by the high yields and low valuations, which could partly reverse the currency decline. Brazilian Government bonds yield 12.5% currently.

    For the stock market, we probably need a signal from the Central Bank that the tightening cycle has peaked.

  • hdoe1000 hdoe1000 Feb 11, 2015 6:19 AM Flag

    If you value the Alfaville participation at market price and take into account the ongoing reduction of the share count, price to book is probably even less.

    In Brazil, the market mood is extremely low and top tier construction stocks trade around 0.7 to 0.8 book. If I look at those stocks, they seem to form a bottom.

    Gafisa is on the right way, operationally, but hasn't achieved top tier profitability yet. The company is even somewhat less leveraged than the average top tier company – quite conservatively managed currently. I'd say that in the market context, 0.5 adjusted book would be appropriate right now. That means a stock price around R$ 4.5 to R$5.

    Sentiment: Strong Buy

  • hdoe1000 by hdoe1000 Feb 3, 2015 9:17 AM Flag

    From the board meeting, Feb 2, 2015-02-03

    - 30M shares, held in treasury, are canceled. Outstanding shares now 378M

    - 10.8 M shares are still held in treasury (I guess from the 2nd buyback program)

    - launch of a new one year repurchase program of
    " up to the limit of 27,000,000 common shares, which represent 10% of 378,066,162 common shares of the Company outstanding in the market, minus the 10,806,616 shares currently held in treasury by the Company. " (ehm: 27M = 10% of 368M? - strange math!)

    Anyway, that could bring the share count down to 340M - down from 430M not so long ago - avery good development.

    Sentiment: Strong Buy

  • hdoe1000 hdoe1000 Feb 3, 2015 8:20 AM Flag

    @happy
    I see.

    Besides, I have doubts regarding the IHS data and think that the Rigzone data are more accurate and verifiable.

    For example, IHS says that the contracted utilization rate of UDW ships ( 7500 ft) is currently around 60%. Even at the cyclical top (Jan 2013), the IHS chart only shows an utilization rate below 80% for UDW ships, although UDW ships were in short supply then and all available ships were under contract.

    Rigzone currently shows a utilization rate of 84% for UDW ships and you can verify that ship by ship.

    According to Rigzone, regarding UDW ships (class5 and class6):
    -Under construction (or ordered): 52 (including the Brazilian)
    -Finished (working or available): 99

    Among the finished
    -Currently under contract: 83 (drilling+en route+inspection+workover)
    -"Ready stacked": 16

    Among the ready staked: 12 class5 and 4 class6
    Regarding the 4 class6 mentioned, two have received short term contracts recently (Venturer and Skyros). The two remaining without contract: Pacific Meltem (under "mobilisation", according to PACD) and the Deep Sea Metro 1 (contract just ended).

    Sentiment: Strong Buy

  • hdoe1000 hdoe1000 Feb 2, 2015 2:52 PM Flag

    @happy

    "87 drillships coming of the shipyards"
    I wonder where you have that number from.

    Orig recently showed a graph from ODS Petrodata, made in Q2 2014, counting 83 floaters to be delivered between 2015 and 2020. That chart is somewhat dated.

    The number includes around 5 class 6 semisubs and 15 lower class semisubs build for very specific harsh environment locations. They are not competing with class 6 ships.

    The number also includes around 23 Brazilian "class 6 phantom units", supposed to be build in Brazil in yards that do not have any experience with modern floaters. Two of the yards are in construction stage and have not build any ship yet and one or two others are currently insolvent. Sete, which is the intermediate paying the yards, is near insolvency too. The yards have acknowledged that they are not even able to build the hulls and are thinking to subcontract this to Japan or China... They also have big problems with local content rules. Apparently, some of the actors are involved in the bribery scandal - which will cause further delays.

    In fact, broadly 25 class 6 ships will be delivered in 2015 and 2016 (from Korean yards) with some 13 having no or only short term contracts.

    By the end of 2015, the total size of the drilling floater fleet will be nearly the same as one year earlier because of the announced scrapings. We will probably get more scrapping news this year.

    Orig recently extended the contract of the Poseidon from mid 2016 to mid 2017 at 513k/d + oil price adjustment. The oil price at contract time was $48/b.

    Sentiment: Strong Buy

  • Reply to

    PE = 1

    by hdoe1000 Jan 7, 2015 2:38 PM
    hdoe1000 hdoe1000 Jan 8, 2015 7:47 AM Flag

    I have to correct what I've said about Nobu Su's VTG shares.

    Apparently, last September, an appeals court has reversed a bankruptcy court decision to accept the shares as collateral in Su's bankruptcy cases. But I have no follow up information. Was that decision appealed? What is with the shares already sold?

    The decision will certainly further complicate the bankruptcy cases. Fortunately, they are independent from VTG's claims. Su is paying fortunes to his lawyers. I wonder how long he can do that.

    Sentiment: Strong Buy

  • Reply to

    PE = 1

    by hdoe1000 Jan 7, 2015 2:38 PM
    hdoe1000 hdoe1000 Jan 7, 2015 6:05 PM Flag

    @happy

    Objectively, the situation in 2008-2009 looked much worse: The world was expected to be in a long recession, reducing oil demand. Financial institutions were bankrupt or stressed, not able to advance credit to the oil sector.

    As to the Nobu Su stake. Most of that is pledged and he will probably never get it back. By last September, creditors had sold some 10% of that stake.

    Unfortunately, Management's communication talent is sub par, as is its talent to create shareholder value. Using 10% of cash flow for share buybacks would not wreck the company but create a lot of shareholder value.

    I could imagine that the delivery of the Cobalt will be delayed by 6 months to the middle of 2016 if day rates remain poor by the middle of this year, although, to my knowledge, there are only five class 6 ships needing a contract in the first half: 3 from Pacific Drilling, one from Seadrill and one from Maersk. Seven class 6 ships need a contract in the second half.

    Regarding Opec: when oil fell to $80 in November, Saudi's Al Naimi promised his fellow Opec partners that the price would recover "soon". In their understanding, that means 3 to 6 months. Refusing the role as a swing producer is costing his country big money. Exporting 9.2 Mb/day (crude+ LPG) at $100/barrel is obviously better than exporting 10.2Mb/d at $50-$60/barrel. I think that Al Naimi will increasingly feel the heat from his own government. Unless prices recover sooner, he has to reach some kind of agreement with other producers about a production cut at the next meeting, at latest - with the others making symbolic cuts an the Saudis factually playing swing producer again.
    His behavior strangely resembles that of Oil minister Yamani in 1986. Yamani suddenly decided that the Saudis will no longer play swing producer and will go for market share. Oil price halved and a few months later Yamani was fired.

    Sentiment: Strong Buy

  • hdoe1000 by hdoe1000 Jan 7, 2015 2:38 PM Flag

    The valuation is getting completely absurd.

    2015 will be the cyclical low for drilling-floaters needing a new contract. Fortunately VTG isn't affected.

    VTG's EPS in 2015 should be in the order of $.30, assuming a ship operating ratio of 92%. Contrary to 2014, deferred items will add to earnings and compensate the non cash financial costs. An upside to that estimate is possible. Thus we are approaching a PE ratio of 1. Market value is just 40% of 2015 cash flow from operations.

    Even if Platinum and Cobalt would work in 2016 at day rates of 230k (total operating cost level), VTG's 2016 cash flow from operations would remain positive at around $80M. That scenario implies that all older floaters in the world will not get an operating cost covering contract and offshore E&P more or less collapses - a case that has never happened. Even during the slump of 2008/2009, with oil prices falling to below $40/barrel, average day rates of UDW floaters (mostly class 5 then) didn't fall below $400k/d.

    At current crude prices, US shale production will not grow in 2015 but will start to crash in the 2nd half of 2015 (field decline rates 40%/year). US shale oil needs +$80/barrel crude to survive medium term.

    So, even without an Opec cut, the "glut" will disappear and crude prices recover to or above $80/barrel by 2016.

    Under the assumption of crude at $100/barrel, US shale production growth was expected to flatten and peak around 2018 or 2019 (EIA). After 2016, global oil demand-supply is likely to get tight again (even with full Opec and US shale production) while - between 2017 and 2019 -, the supply of new class 6 floaters will fall to a trickle – a golden period for DW and UDW drillers.

    Sentiment: Strong Buy

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