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MCR.V - Macro Enterprises


bz1516

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Nothing exciting on the call.

 

Guidance lowered for Q2, "inline with Q1 results".

 

Companies still asking for bids on large projects.

 

Equipment in good shape.

 

Still seems like a cheap and safe company to me.

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Anyone listened to the call, or got a link to a webcast? Would be interesting to hear if there was anything of any significance in there.

FYI the call is now available : http://www.macroindustries.ca/images/documents/webcasts/Macro-Enterprises-Q1-Conference-Call.mp3

 

Thanks igor for the link. As Laxputs said above, there didn't seem to be anything especially exciting on the call. To me it's in a sense a positive that a bank was willing to lend that much to a company of this size. The end result obviously depends on how they'll deploy that loan. MCR begins to look more and more like a waiting game where you have to let time go and wait for the markets to turn better.

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Anyone listened to the call, or got a link to a webcast? Would be interesting to hear if there was anything of any significance in there.

FYI the call is now available : http://www.macroindustries.ca/images/documents/webcasts/Macro-Enterprises-Q1-Conference-Call.mp3

 

Thanks igor for the link. As Laxputs said above, there didn't seem to be anything especially exciting on the call. To me it's in a sense a positive that a bank was willing to lend that much to a company of this size. The end result obviously depends on how they'll deploy that loan. MCR begins to look more and more like a waiting game where you have to let time go and wait for the markets to turn better.

 

The loan is very positive. They've been preparing to scale up for a while now, I can't wait to see things develop.

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Thanks for posting the link 50centdollars. Does anyone have an idea of the likeliness of the project going through?

 

Certainly sounds like it's going through: http://www.ibtimes.com.au/canada-cheers-petronas-led-lng-project-ready-take-british-columbia-1452064

 

I always viewed the LNG exports as a free option. Now that the free option is about to come to fruition, any guesses as to what it's worth? I'm definitely not selling anytime soon, just can't decide if I should be buying more or not. Hard to value something like this...

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  • 2 months later...

Second quarter was way better than expected thanks to a facility project (still ongoing) and a pipeline project (completed). With Petronas seemingly moving forward on their LNG terminal and them already awarding the pipeline construction to TransCanada (who Macro has a MSA with), this seems to be the most likely explanation for Macro's new $135M debt facility. TransCanada expects to start pipeline construction next month so the timelines certainly line up. I'm still in disbelief at how cheap this stock is so I've taken the opportunity to increase my position in the past couple weeks.

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The results were excellent and the company is now net debt free. I like a lot of things about this company.

 

However, I have noticed this pattern recently that bad news is punished severely while good news get a yawn. It got a pop at the open and now look at it. I think that we are in a bear market for stocks, no longer just energy, and it is just a matter of time for large indexes to eventually come down. This will put pressure on every stock.

 

Another case, I do own High Arctic Energy Services and thanks to Myth for pointing it out. This company has a decent net cash position, pays a nice dividend which is easily covered by current earnings, they buy back the stock and these earnings are growing quite fast. Q2 was better than I thought and the outlook is very strong. Yet the stock threads water at around 8 times earnings (and going down with higher earnings) and well below book value.

 

Cardboard

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yeah they are converting receivables into cash. 70m of receivables + cash - 37m of payables and debt and you g et 33m$ in net cash iwthin a year or so? Discount equipment by 60% that is another 22m$. Maybe 10m$ more earnings in next 2 years? That is 65m$. Stock is trading for like 70m$ including the preferred?

 

Seems disaster is fully priced in at this point. This stock reminds me a little bit of Conrad industries in 2012. Except this business is more crappy. It is a bit of a free long term option on Canadian oil and gas at this point.

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  • 4 weeks later...

I just published a blog post on Macro. Even without LNG, this company is right around liquidation value and it's selling for 10-12x earnings that have basically bottomed out. In addition, LNG is a massive catalyst and all signs are pointing to it coming to fruition sooner rather than later. One of their largest clients (TransCanada) is about to start work on a C$5 billion dollar pipeline at the same time that Macro feels the need to raise debt worth 2x its enterprise value. Doubt that's a coincidence.

 

Anyway, here's my post if you're interested: http://traviswiedower.com/2015/09/17/macro-enterprises-below-liquidation-value-and-profitable/

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The Credit Agreement contains usual and customary covenants and conditions, including that Macro on a consolidated basis will meet certain specified financial tests and that, without the lenders' consent, it will not pay distributions to shareholders in excess of $3 million in any fiscal year, including amounts paid in connection with the Company's outstanding normal course issuer bid.

At least large buy-backs will not be realized to increase undervaluation.

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The company stated in no uncertain terms that it was focusing on growing the business, not playing wall street shenanigans. The bid is essentially there to wash off the options grant they do in the fall, thats roughly what they did last year at least.

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  • 3 weeks later...

Don`t know about Seeking Alpha but, this article:

 

http://themalaysianreserve.com/new/story/petronas-may-defer-canada-lng-project

 

I think that pipelines will still get built to alleviate transportation issues in the Montney area. Veresen just announced the start of construction of the Sunrise gas plant:

 

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aVSN-2315710&symbol=VSN&region=C

 

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How should the Western Canada Select / WTI spread influence pipeline production? I would guess the wider the spread the more you can charge for your pipeline, so the more economical it is to build? Obviously you can't build it on a dime though so it's a long term bet.

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Don`t know about Seeking Alpha but, this article:

 

http://themalaysianreserve.com/new/story/petronas-may-defer-canada-lng-project

 

I think that pipelines will still get built to alleviate transportation issues in the Montney area. Veresen just announced the start of construction of the Sunrise gas plant:

 

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aVSN-2315710&symbol=VSN&region=C

 

Cardboard

 

I've heard that MCR is weak due to a dispute with Encana over a very large receivable.

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Don`t know about Seeking Alpha but, this article:

 

http://themalaysianreserve.com/new/story/petronas-may-defer-canada-lng-project

 

I think that pipelines will still get built to alleviate transportation issues in the Montney area. Veresen just announced the start of construction of the Sunrise gas plant:

 

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aVSN-2315710&symbol=VSN&region=C

 

Cardboard

 

I've heard that MCR is weak due to a dispute with Encana over a very large receivable.

 

13mil in holdbacks and 7mil over 90days due at end of year 2014, I don't see a breakdown in the quarterly financials since then but yeah that is a key risk for the company, considering they have a small client base and a few big jobs for each of them.

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Would it really be surprising if the LNG plan does get put on hold and the BC government is the last to know?  I doubt Petronas would tell the gov't anything negative before getting approvals.  Delaying the project certainly seems the most rational thing to do right now.   

 

 

 

 

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  • 4 weeks later...

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