The company I am to investigate is Delta SBD, “One of the leading mining services companies in Austarlia” (2012, Delta SBD Ltd). The company is in business with: Anglo Coal, BHP Billiton, BMA, Boral, Centennial coal, Felix, Guarat NRE, Pacific Resources, Peabody coal and Yanzhou. The company also wants to expand further to Gunnedah coalfield in NSW (Delta SBD Limited, Annual report 30 June 2016). Reading through the company’s annual report and reading up on the company’s history; there are details that one can pick up on that the company wishes one wouldn’t notice. These details consisted of the company’s history in the share market, the company’s investment returns and the company’s growth rate.
Firstly, Delta SBD would not want investors considering their history in the stock exchange as it is material. The reason for this is that Delta SBD was marked at $1.40 a share in 2011 and is now going for 20 cents a share on the ASX. The company clearly is on its way down, although it is gradual and quick investors can profit from micro spikes in the company’s value, passive investors will be losing their money. Delta SBD is hinting at a rise as the company is expanding to Gunnedah coalfields in NSW and it has a turning point near the end of 2015. This is still highly unlikely when the company’s history, in the ASX, is considered. The company has had 4 turning points in its past which has eventually returned to the consistent negative slope. Another piece of material is the company’s returns on their investments.
Secondly, Delta SBD would not want their investors to see the company’s net cash from used from investment activities. On the annual report the company has identified a -$2,292,000 under their net cash from investment activities, in comparison to $9,646,000 in 2015. This means that Delta SBD lost 2 million dollars in 2016 just on investment activities. A company that was sitting at 5 cents a share in 2015 lost $2 million just on investment activities the following year is a reckless company. This is because Delta DSB is in no position to be losing money let alone $2 million. Another issue with Delta DSB losing $2 million on investment activities is that companies usually utilise the money of investors to invest into other companies, so if they do make a bad investment it does not damage the company’s funds. So when Delta SBD loses by such a margin their investors make zero profit, investors will then invest in different companies instead. This is so damaging because it will affect the rate at which the company grows, as they will have minimal funds to utilize as there will be a scarcity of investors.
Thirdly, Delta SBD would not want their investors to look at the rate of their growth over the past couple of years. Over the past 2 years Delta DSB has gone from 10 cents to 20 cents, which is not dramatic at all considering that commonwealth Bank went from $81.30 a share to $86.09 a share in the month of February alone (shareprices.com, 26/3/2017). Delta DSB is not competing with Commonwealth bank but the figures encompass what real growth looks like. This growth rate is not pleasing to both passive and active investors, as profit will be minimal and the company itself is an investment risk. The company does however share its annual report that there is expansion happening over in NSW, but the question is to be asked; is this another one of their investment activities that will cost the company $2 million dollars?
To conclude, Delta SBD “one of the leading mining services companies in Australia” (2012, Delta SBD Ltd) is struggling to stay a-float with their massive drop in the ASX, their terrible investments and their terrible growth rate. It is not recommended for any investors to invest into this company as it is showing signs of future bankruptcy.
A day in uni with Rudolf 