DDH - DDH1 Drilling

[Plata]

Moelis TP 1.89
Bell Potter TP 1.48
Macquarie TP 1.50

[Plata]

Bit of a pull back today huh! Looks like my FOMO induced entry was an absolute balls up, lesson learnt I suppose. Thankfully didn't buy my full parcel in one go. What do we reckon, healthy pullback to start a new uptrend OR heading back down? I'm thinking low 0.70s could be decent buying given the buyback will likely support it from falling much further. An 8% buyback is a lot of ammunition to keep the price up especially with how low the free float is (unless of course the large holders decide to use it to sell down, which may be the real reason for the buyback).

[Plata]

Buyback looks like it has been suspended, black out period I assume? Looks like it is going to take a long time to use up all the buyback firepower at the current pace. Looking forward to some good results 

[Ferg]

I agree - I too am looking forward to some good result.  Yes there will be some daily ebbs and flows with the share price, which we *should* ignore.  If the business is undervalued from a fundamental perspective and there are not too many headwinds, then I see price weakness as a good chance to continue accumulating.  Unless I have missed something major I see this as low risk.

Edit: I see on HC it is thought the buybacks peaked at around 85c per share.  I also see they have 65m shares coming off escrow 30 August.  Maybe someone thinks they are getting ahead of the founders?
https://hotcopper.com.au/threads/ann-release-of-securities-from-voluntary-escrow.6906070/

[lorraina]

https://thewest.com.au/business/mining/ddh1-slides-despite-record-results-c-8054008

[Plata]

The buyback seems to me making up a very large % of daily volume at the moment. For example, yesterday volume was ~1 million, the buyback was ~450k of that. Does it make sense to be this aggressive with the buyback? Are the share price gains being driven by this buyback, ie will reverse when it is over?

[Plata]

This just keeps going and going doesn't it! People piling in for the dividend or overzealous buyback?

[Ferg]

A nice wee lift lately although I try not to ascribe meaning, or point to events, when it comes to daily share price movements.  There are too many ebbs and flows.  There were a number of shares that came out of escrow 30 August so the cynical part of me thought the buyback timing was not a coincidence.....but I'm speculating.  The buyback provides a safety net of sorts; although it only provides comfort while the buyback programme is in place.  But I still believe the fundamentals are there to support the current and a higher share price.  I'm happy to be patient and hold.

[Ferg]

The share buy back programme is still in place.  The total number of shares bought under this programme up to 4 October 2022 is 10.8m.  The buyback commenced late July '22 and per the 1 July announcement they are authorised to buy back 34.28m shares out of issued capital of ~427m shares.  Hopefully other investors here managed to pick up a few at recent low prices although the NZD/AUD cross-rate of ~0.88 is not helpful.

https://nz.finance.yahoo.com/quote/DDH.AX?p=DDH.AX

[Ferg]

A quick update since the last post.
New website for investor updates: https://ddh1.com.au/investors/

• CFO resigned back in November - seems like an amicable departure.
• DDH to add an additional 11 rigs this fiscal year (with 183 on hand at end of last year that is an additional 6% full year capacity before factoring in increased utilisation)
• No problems with employing staff and staff turnover is low
• Share buyback still progressing, just passed half way on the 34m shares able to be bought
• 20m of the 28m shares that came off escrow 31 August were sold 1 September
• Q1 revenues for FY23 are up 16.7% on last year and average revenue per rig up 4.3% YoY, unaudited EBITDA for Q1 up 9.5%
• Demand for battery minerals is driving drilling activity, and also clients are wanting deeper drilling

Happy holder with the recent pullback offering additional accumulation opportunities.

[lorraina]

A Bell Potter 2023 pick:
DDH1 (DDH)
DDH should maintain positive
operating momentum from its Q1 FY23
performance as the company delivers
an expanding rig fleet into buoyant
production drilling demand over the
remainder of FY23. This outlook is
de-risked given DDH has already
contracted or received commitments
for the majority of its FY23 revenues
while customers are reporting longer
order books for drill rigs, more than
double standard order lengths. DDH
should also benefit from higher fleet
utilisation and charge-out rates
driven by ongoing strong demand for
drilling services and industry-wide rig
availability constraints.
Buy, Target Price au$1.44

[lorraina]

WELL POSITIONED TO DELIVER
SUSTAINABLE RESULTS

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02628302-6A1135100?access_token=83ff96335c2d45a094df02a206a39ff4

[Ferg]

Nice update.  Onwards and upwards.

KW put up some TA posts explaining support versus resistance.  I'm no TA but I'm guessing based on eye-balling the graph that somewhere around the $1 mark used to be a support level, and this may prove to be a resistance level. So despite the TP predictions of brokers, we could see some sideways tracking of the SP for some time, until there is an event or another announcement of sorts.

As I said previously, I think DDH will have to prove itself with a few half yearly results before the market re-rates the P/E ratio.

Happy holding.  I'm done buying for now.

[Plata]

Even now the P/E looks pretty reasonable. Feeling pretty safe and sound with this one, seems they can't put a foot wrong so far. I think ignoring market conditions, if the next half is good it will have to go above a buck.

[lorraina]

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02637420-6A1138451?access_token=83ff96335c2d45a094df02a206a39ff4
A good result,strong out look and increased divie.
Could not ask for better.r