DDH - DDH1 Drilling

[Sideshow Bob]

https://stockhead.com.au/resources/with-declining-resources-and-reserves-australias-biggest-driller-says-explorers-need-to-keep-splashing-the-cash/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+3+March+2023

[Plata]

You've got to admit, no guidance and poor trading in jan/feb is ever so slightly ominous. Everything else looked great, but that has clearly spooked a few into selling. I'm gonna hold on given the low valuation but still, spooky.

[lorraina]

DH1 undervalued, well positioned for mining recovery
Broker MA Moelis has a target price on surface and underground drilling services provider DDH1 (ASX:DDH) of $1.23 (versus the current price of $0.84).

According to the broker, while there have been fewer domestic junior raising and IPOs this year, momentum suggests an improving trend into the remainder of CY23.

Deferral of some exploration programs among majors also suggest that drilling activity had been delayed to Q3.

DDH1's management has previously said that it anticipated increased demand for the remainder of the period, and into the first half of 2024.

MA Moelis believes DDH is well positioned to capitalise on any uptick in sentiment and recovery, as it has leading domestic operational scale and capability.

Another tailwind for the company is that gold has been enjoying strong price momentum in 2023.

"We hold the view macro and capital markets momentum appears to be on an improving trend into the remainder of CY24, which we think will translate to stronger demand and utilisation for DDH," said the note from MA Moelis.

Due to the current soft demand however, the broker says its price target on DDH has decreased to $1.23 (previously $1.35), but has maintained its Buy rating.

"We note DDH continues to trade at a significant, and undeserved, discount of 48% to its mining services peers."

 

[Ferg]

Well that is underwhelming....
https://wcsecure.weblink.com.au/pdf/DDH/02679266.pdf

DDH shareholders to receive A12.4c per share plus 0.71 shares in Perenti (PRN) for each DDH share.  Approximate values is A$1.01.

DDH was to be a cornerstone of my Australian shares.....I don't want PRN given it operates in Africa, has A$840m in debt and does not pay a dividend.  Time will tell if bailing out is the right or wrong call but PRN does not tick my boxes.  Whilst I have done well out of this, I didn't buy this for a quick buck.....I wanted a long term investment.

Oh well....time to find another cornerstone.

[Plata]

Yeah a bit naf, doesn't help PRN sinking like a stone on the news either...Surprising the cornerstone holders and management are keen on it given it was not that long ago these traded above the offer price. Makes me wonder if things are not going so well at the moment. Plus they reckon they can get 22 million in synergies in the first year, on a ~1.1 billion dollar group. Mostly coming from tax losses of Perenti. Jeez, why merge with an overleveraged loss making dog.

[Plata]

Am I crazy or has any mention of the merger been scrubbed from both DDH1 and PRN asx announcement pages?

[Ferg]

Am I crazy or has any mention of the merger been scrubbed from both DDH1 and PRN asx announcement pages?

As much as I wish that were true, I am still seeing it here: https://ddh1.com.au/investors/


I was happily invested in DDH and I could see its prospects for growth and profits. Recent events have soured my opinion of the Directors - I wrote telling them as much. No reply.

My reasons for holding and/or accumulating no longer exist. Further, I am not enamoured with PRN...in particular it's debt levels and African exposure. I sold the last of my DDH shares today.

A quick buck was never my intention. Very disappointing, but I will happily deploy the funds somewhere safer.

[lorraina]

Made no sense to me either.Sold for the same reasons you did.
 

[Ferg]

[insert some pithy comment about lipstick and pigs here]
https://hotcopper.com.au/documentembed?id=uOMxKKzFkiWRTLKhOROKAxjvTDYL4gi5yhPxv%2FN997FiGug%3D

Disclosure: no longer hold

[Plata]

Emotionally it feels like this deal could never get over the line but it seems the market is sure it will. I'm so glad I sold out just before the Perenti DOG released its results, my God what luck. What an absolute heist and the thieves are draining the vault in broad daylight.