Something is afoot at KSC. Inside trading or a bot has gone awry. In a general trawl for stocks I included KSC in a short list, and wrote myself pie-in-the-sky report on it in the wee hours of Monday, 22/07/2014. I thought that if the SP were to retreat, I would consider increasing my holding on the basis, that if I were a marketing manager for KSC's services, the merger with SCC would allow me to pick good commercial targets for a good marketing pitch. When I checked the SP at COB this afternoon, the SP had risen 13
¢, and it rose 5.5¢ on Monday. There has been no announcement. The SP has been trending up for the last three weeks.
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
Column 7 |
| 1 |
22/07/14
|
Tue
|
$1.390
|
$1.540
|
$1.390
|
$1.540
|
43731
|
| 2 |
21/07/14
|
Mon
|
$1.370
|
$1.430
|
$1.370
|
$1.410
|
43731
|
| 3 |
18/07/14
|
Fri
|
$1.310
|
$1.400
|
$1.310
|
$1.355
|
14782
|
| 4 |
17/07/14
|
Thu
|
$1.310
|
$1.350
|
$1.310
|
$1.350
|
32149
|
| 5 |
16/07/14
|
Wed
|
$0.000
|
$0.000
|
$0.000
|
$1.340
|
0
|
| 6 |
15/07/14
|
Tue
|
$1.340
|
$1.340
|
$1.340
|
$1.340
|
4000
|
| 7 |
14/07/14
|
Mon
|
$1.300
|
$1.345
|
$1.300
|
$1.345
|
36901
|
| 8 |
13/07/14
|
Sun
|
$1.320
|
$1.320
|
$1.300
|
$1.300
|
24881
|
| 9 |
11/07/14
|
Fri
|
$1.320
|
$1.320
|
$1.300
|
$1.300
|
24881
|
| 10 |
10/07/14
|
Thu
|
$1.320
|
$1.320
|
$1.300
|
$1.320
|
22403
|
| 11 |
09/07/14
|
Wed
|
$1.300
|
$1.310
|
$1.300
|
$1.310
|
21943
|
| 12 |
08/07/14
|
Tue
|
$1.320
|
$1.320
|
$1.320
|
$1.320
|
7079
|
| 13 |
07/07/14
|
Mon
|
$1.310
|
$1.350
|
$1.310
|
$1.350
|
34363
|
| 14 |
04/07/14
|
Fri
|
$1.270
|
$1.305
|
$1.265
|
$1.305
|
39327
|
| 15 |
03/07/14
|
Thu
|
$1.295
|
$1.295
|
$1.270
|
$1.270
|
15952
|
| 16 |
02/07/14
|
Wed
|
$1.260
|
$1.265
|
$1.260
|
$1.265
|
34557
|
| 17 |
01/07/14
|
Tue
|
$1.250
|
$1.260
|
$1.250
|
$1.260
|
41000
|
| 18 |
30/06/14
|
Mon
|
$1.255
|
$1.255
|
$1.250
|
$1.250
|
21544
|
At the close of day, there were a fair number of buyers, but hardly any sellers. Anyhow, I'll not buy more KSC now, but seeing that I have my pie-in-the-sky report, I paste it below. Sorry if it waffles on – it was not written as an HC post. I hold 40,732 shares that I bought years ago at about $3.00, so I am way behind on this one. I thought that I would give it a year to see what management can make of the opportunities that the merger with SCC offers.
KSC-SCC Synergy Possibilities -- written 22/07/2014
The merger of SCC and KSC makes a great deal of sense. Because of their common ties with the interests of the late Alan Scott, the companies have a long history of cooperation, common shareholders and shared directors, and where their businesses do not overlap both in style and in geography, they are complementary and transferable between geographies. On the last point, for example, SCC's business of servicing the Queensland mining industry by transporting fuel, explosives and chemicals, can dovetail into KSC's fuel transport capability and history, and the combined capability grafted to Regal Transport's presence in northern WA to allow KSC to become a significant service provider to the iron ore and other miners in WA.
KSC has had a long history of working with Caltex, particularly in the area around Mount Gambier (between Adelaide and Melbourne). Caltex has recently been granted the contract to supply diesel fuel to Roy Hill Mine in the Pilbara – a 2-year contract worth circa $200M. Could KSC play a role? Probably not, because Caltex has already set up facilities (fuel storage infrastructure at Roy Hill and four dedicated road trains to transport fuel from Caltex's Port Hedland depot) to handle that, but just as KSC handles smaller volumes in the Mount Gambier area, which Caltex is prepared to subcontract, there may be smaller markets in WA where it would be happy to duplicate the relationship it has had with KSC for many years. I am not saying anything will happen on the Caltex front, but KSC does have an opportunity to make an offer to service areas in Australia as a whole wherein Caltex does not want to invest time and resources. KSC has relationships with other fuel and lubricant companies – its FY2013 mentions:
“New contracts were won with BP Castrol Australia in Perth, MacKay and Port Hedland,
adding to the transport work already undertaken for petroleum and lubricant providers.
Distribution services with Caltex, Fuchs [the world’s largest independent supplier of lubricants] and Shell have continued to grow. Marine bunkering services have also expanded. In all, distribution services in the petroleum and lubrication market segment have increased by more than 20% year on year.”
The combined fuel and lubricant transporting business now includes SCC's Energytrans unit, which carries liquid fuels and other petroleum products. SCC's recently acquired Hawkins Road Transport specialised in the distribution of fuel and petroleum products in the north and central Queensland, and it was rebranded as Energytrans.
The same idea mooted above in respect to Caltex could be repeated for explosives and chemicals, where the combined SCC-KSC have a history and a capability. KSC, for instance distributes explosives via Regal Transport in the Pilbara for Dyno Nobel. SCC's Chemtrans unit carries dangerous and hazardous goods including acids, liquids, chemicals and explosives.
SCC, via its Bulktrans unit carries dry bulk goods including coal and alumina for miners on the east coast, so the same style of service could be offered to miners in WA.
In summary, KSC should perform well in the near future – the merger with SCC has the ingredients for profitable synergy of capability and geography.
