DSM Great Buy

[Justo]

Just thought I would share a little bit about DSM. This company is doing great and has just announced that it's net assets per share is around $0.94. Now the intrinsic value is a little lower then that, approximately $0.78 per share (taking into account warrants and options), but this is still a huge discount to what it is trading at (only $0.60 on the TSX Venture). Get out there and get in it! The link to the press release is poested here.

http://www.dachacapital.com/Investors/Press-Releases/Press-Release-Details/2011/Dacha-Reports-Assets-of-C094-Per-Share-With-Inventory-Valued-at-US648-Million-as-of-May-27-20111125447/default.aspx

[Justo]

There is just so much going to with this company right now I’m having a tough time keeping up! So a few more updates.

First off we have the announcement that Dacha will be placing a bid to buy back some of its stock. This is a pretty big deal because it means that the company has (hopefully) realized that the price of its stock is undervalued. They are planning on purchasing just under 7,000,000 shares from the TSX Venture exchange. This is great news as fewer shares mean an increase in share price. However, to me it is very ambiguous what the new price could be should all those shares be repurchased, as we have to take into account the price that it is paying which we do not know. However, we do know that their book value is approximately $0.78 per share (see 2nd post). Assuming that the company does not buy above 0.70 and they buy the maximum amount of shares then the new book value should be higher (currently it is impossible to figure this out as one would need updated financial statements). I’d say that it shouldn’t go much higher than 0.85, but I am speculating here. For simplicities sake I shall stick with my prior calculation that DCHAF’s share price should be valued at around 0.78 (Although the buyback can increase this price).

The second update is that Reuters has re-valued DCHAF’s target share price to $0.99! That is much higher than what I think, but then again right now it’s trading at about $0.65 and I said (in my first post under different circumstances) that it wouldn’t go much higher than $0.60. So those are the updates! Now is still a great time to buy as 1. The current price is still undervalued and 2. The rare-earth metal inventory is going to continue to appreciate meaning that assets, and subsequently book value, are going to increase.

Here are the press releases:

http://www.dachacapital.com/Investors/Press-Releases/Press-Release-Details/2011/Dacha-Strategic-Metals-Inc-Announces-Intention-to-Make-a-Normal-Course-Issuer-Bid1125455/default.aspx

https://research.tdwaterhouse.ca/research/public/Stocks/NewsArticle/ca/SMF?documentKey=1314-L3E7GV0KN-1

[Justo]

Dacha has just announced that it‘s assets per share has increased to approximately $1.32 per share using it’s 73.2 million shares outstanding. We, of course, are aware of the warrants and options outstanding, so the real assets per share is actually approximately $0.95 per share. This is still under what the price of the stock is currently trading at. This is up substantially from the last value of approximately 0.78 per share.
Furthermore, the company has been selling of some of this inventory for a total EPS so far of 0.033 (using diluted total number of shares (not diluted would be 0.046)) per share in just the last 2 weeks. Even if they only did this amount for each quarter their earnings per share would end the year at 0.134 per share. That is huge if the stock is currently only trading approximately 0.77. Personally, think they will be selling of a large amount of their inventory if it appreciating this quickly, which means that this EPS will be much higher than that the simple calculation that I have done here.
Given that I am unaware of what the liabilities of the company currently are I would say that the stock price should probably be valued at about $1.10 given that the asset value per share is high and that the EPS is high. This is also a very conservative estimate, as at this level the stock still only has a P/E ratio of about 8x.
I’ve e-mailed the company for information on what their liabilities currently are, and I will let everyone know as soon as I can. 
http://www.dachacapital.com/Investors/Press-Releases/Press-Release-Details/2011/Dacha-Reports-Assets-of-C132-Per-Share-With-Inventory-Valued-at-US917-Million-as-of-June-10-20111125658/default.aspx

[Justo]

They’ve just reported that their asset value per share has increased to approximately 1.39 (but we know it’s more like 1.01 due to the weighted number of shares outstanding).

Just thought I would let everyone know. Still look at their great EPS though!

http://www.dachametals.com/Investors/Press-Releases/Press-Release-Details/2011/Dacha-Reports-Assets-of-C139-Per-Share-With-Inventory-Valued-at-US974-Million-as-of-June-24-20111125795/default.aspx