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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (38702)8/5/2010 3:36:46 PM
From: Spekulatius  Read Replies (2) of 78748
 
SEMX.PK @ 24$ emerging from bankruptcy play

40M shares out, 986M$ in book value (~25$/share), ~500M$ in debt. Last quarter's earnings about 9M$ (0.2$/share) net, 54M$ EBITDA.

Some will remember Semgroup, who went belly up in 2008 because the owner did speculate in crude futures. todays business is less exiting, thew own pipelines for crude and gas, gathering systems, terminals etc. with mostly fee based revenues.

The re-orged in late 2009 with an estimated equity value per share of 25$. Earnings are not great yet but it seems like the financial results are getting better for a variety of reasons

1) Some customer who left during bankruptcy are coming back
2) New pipeline and terminal assets coming online
3) Cost related to bankruptcy are mostly gone
4) Interest cost (Currently ~10%) will be reduced

From my point of few, these look like very nice hard assets that are trading at a discount to other comparable assets. many of these assets (if not most) could easily be folded into an MLP which would unlock value. I also assume that post-bankruptcy asset values are conservative (management has not incentive to create a tall bar for themselves). the company as actually underleveraged with a 2:1 Equity/Debt ratio (most pipeline companies run at about 1:1 and achieve BBB rating). The PE is still a little high but i think this could change very rapidly if earnings improve further.

Any thought? I bought a starter today, but I think it'll fish for more. SEMX.PK is trading in the pink sheets but at a healthy volume (around 500k shares).
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