Post by
lifeisgood1010 on Mar 02, 2024 10:23am
NCIB only at deep discount to fair value.
When i wrote to Akita IR, i was told that once the 50 million$ LT debt reach, they would consider
initiating a NCIB.
There is a big diference between considering and doing something.
Like all company their capital allocation will depend on many factors.
If the SP is still very low,only then an NCIB will be apropriate.
I will once again repeat myself.Akita's book value at the end of Q3 was $3.98.
This book value will grow in 2024.My low case scenario is for them to make EPS of 30 cents in 2024,my best case is 60 to 65 cents and my base case is 40 to 45 cents.
Akita's rigs are being carried on the balance sheet at 31% of their cost.
Not included in their book value is an income tax asset of $1.91 / shares.
So adding $1.91 + depressed book value at 31% of cost of $3.98 + EPS of 40 cents
in 2024 =$6.29
Even if the stock were to double to $3.16, it would still make sense to buy some share under a NCIB.
If the SP were let say $10+, surely it would not.I am not a dreamer the SP will not be at $10
in 12 months but i firmly believe it will be much higher then $1.58.
How many time have we seen company engaging in "financial engineering" and buy back their shares at multiple of their book value and destroy the value of their shareholders.
I believe Akita's managment are smart people and will act intelligently.
SP low = use a NCIB when lt's debt is at 50 million or less + debt reduction.
SP high = debt reduction, dividend,improving assets base.
So why did they do the paid write up on Stockhouse.It's because like every company, they would like to see the
share reflecting something closer to what they believe the company is worth.
They did say in their emeail reply that they were VERY FRUSTRATED with
the selling price of the shares.
Most company do road show, presentation to analysts,attend to industry conference
to promote their company...
I don't think Akita wants to see their stock price stay low to do an NCIB.
They would much prefer see an appreciation of it and continue to reduce debt an do
more improvement on the fleet.
The NCIB will be a tool in their tool box to be used only if appropriate.
Also let's not forget that prior to the Extreme drilling acquisition, this company was debt free(2017)
Right now,they are drilling for CNQ, Cenovus,Crescent Point,Shell,Kiwetinohk,Occidental Pet....
They have 11 triple pad in Canada and 14 triple in the USA.I am no expert but from what
i read they have a very good fleet of rigs.
In 2017 and 2018 they were paying a 34 cents dividend.
At that time there was only 17,945,661 shares so in today's term that dividend would be 15 cents
If the financial situation continu to improve like i think it will, who knows
if down the road, not today, not this year but eventually they were to reinstate a dividend.They may not start at 15 cents but any dividend would be a + plus.
I feel i have gone full circle on my thoughts on Akita.
Obviously, there are investors that thinks differently because they are sellers of their
shares at what i believe is at basement DEEP DEPP DISCOUNT.
Time will tell if i am right.
If wrong, witch would not be the first time i will come back and admit it even though
we are all anonymous to each others.
But i would bet a good chunk of money that i have this one right.
An once again, sorry for all the spelling mistakes.Being french is not an easy task to
put my minding in writing.
Comment by
pennydredful on Mar 02, 2024 10:55pm
Overall your writing is excellent .