interim results are out, page-10

Fantastic to see posters willing to do the sums and make their own forecasts re future earnings! It takes courage and i always seek posts with logical moderate argument and a conclusion. Clearly the next 6-18months are going to be good for RQL. Exactly how good is the crux. I see arguments to 'buy' and to 'hold'.... but reader's projections on this thread indicate it's too early to sell. Here's why i find making a firm decision re RQL a bit difficult... but not impossible.
1) Macro re commodities. We are surrounded by indecision. Mining CEO's seem to want it both ways. They committ to massive drilling programs but seem to elay making the step into production. Obviously, production entails huge capital, and always crries a degree of risk. Nobody can accurately predict the POG or strength of AUD even 6 months hence... let alone in 12-18months. Everything is uncertain re commodities except oil IMO.
Conclusion.
If forced into a prediction I'm opting for gold to remain strong and get stronger. But it could be $1,800, 2k or 3k. Who knows? I am not so bullish re coal and bearish re IO. These massive open-cut mines are big customers of dewatering business and those that are producing will not decommission dewatering infrastructure.

2) Rainfall. It sounds comical i know... but some mining CEO's want it both ways. They seem to decide to commit capital to capex for mill etc, but live in hope it won't rain, hence avoiding having to spend cash to keep water levels low. Thus, many decisions re RQL are absolute last minute. The result is uncertainty re RQL's medium term. Horrible thought i realise, but a flood across central QLD will benefit RQL enormously. However, floods of 2011 magninitude are fairly rare and one can't bank on it.
Conclusion. RQL likely to win more work but impossible to accurately quantify.

3) Contractors. Whilst RQL are not typical contractors 'stayer's' observation re PE for this sector cannot be ignored. This business is cyclical and to think otherwise is foolhardy. I m reluctant to invest into any contractor with forecast PE FY12 above 9.0. It means i miss some but capital preservation is crictical... at least for me.
Conclusion. Because short term prospects are bright for RQL i anticipate mkt will pay a PE of 10. But doubt it will willingly pay much more.

4) Takeover. I continue to estimate RQL is a 50-60% possibility of TO within next 12 months.
Conclusion. This factor stops me from selling.

Hence at 45-50c my recomendation is 'Hold'. Should one sell above 50c? Damned hard to say. The discussion on this thread shows optimism in RQL is warranted and having minimal debt is a big plus. If/when SP reaches 50c I'll reconsider, based on the facts available. What are other HC readers doing?

PS. relaxan. What is your forecast EPS for 2HFY12? Do you feel RQL will pay a maiden dividend?