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Most Recent QIS Capital Independent Research
QIS Capital is pleased to present a brief overview and 2-page research report on the following companies. These company selections will change from time to time as new opportunities arise and as previous opportunities change. As the market changes every day, so should the information that investors receive. Investors are encouraged to complete their own due diligence.
Zapata Energy Corporation is actively engaged in the exploration, development and production of natural gas, crude oil and NGLs in Western Canada. The company is conservatively managed for consistent growth through a balance of drilling and acquisition activity. The corporation was founded and commenced trading in 1999.
Zapata is a value play benefiting from the significant improvement in commodity prices. The company is projecting significant production and cash flow growth in 2008 through a more aggressive drilling campaign and the tie-in of behind pipe production. Zapata is presently trading at just over 2 times forecast cash flow and at just half of its estimated net asset value. Zapata gas also become an attractive takeover candidate given its production volumes and steady cash flow. |
KEY INFORMATION
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| Price to 2007 Cash Flow |
3.6 |
| Price to 2008e Cash Flow |
2.1 |
| Net Debt to CF |
2.0 |
| Reserve Life Index |
8 years |
| Basic Shares Outstanding |
17.3 million |
| 3-Month Average Daily Trading Volume |
15,560 shares |
www.zapata.ca
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Sangoma Technologies is engaged in the manufacturing, distribution and support of PCI cards for the telephony and wide area network industry. The company's products are used across the world with applications in various industry segments that primarily include PBX, call center, voice monitoring systems, Internet services, government and military, banking, retail, entertainment, medical, and manufacturing.
Sangoma is presently trading at an attractive price to earnings multiple of about 11 times expected f2008 earnings. The company remains debt free with positive working capital of about $8.3 million or $0.29 per share. Revenues are expected to continue to expand throughout f2008 and f2009, resulting in continued earnings growth. Current annualized earnings already exceed $3.8 million or $0.13 per share resulting in a forward p/e multiple of only 7.7 times net of working capital compared to the average industry p/e that stands at 18.5 times. |
KEY INFORMATION
|
| Price to f2007 Earnings |
18.6 |
| Price to f2008e Earnings |
10.8 |
| Net Debt to Cash Flow |
nil |
| Basic Shares Outstanding |
28.4 million |
| 3-Month Average Daily Trading Volume |
50,496 shares |
www.sangoma.com
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First Metals was incorporated on February 23, 2006 as a junior mining exploration and development company to capitalize on record high metals prices. The company acquired the Fabie Bay, Magusi River and Duprat mining claims from Globex Mining in April 2006 and completed its IPO in August 2006.
For the 3 months ended March 31, 2008, First Metals reported revenue of $7.67 million and earnings of $1.8 million. The quarter’s results include only one month of revenues and related costs of production, but three months of overhead expenses. On a stand-alone basis, the month of March showed a net profit of $2.1 million or $0.05 per share. Current cash flow is being utilized to develop the much larger Magusi deposit which could begin production in 2009. |
KEY INFORMATION
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| Price to 2008e Pre-Tax Earnings |
1.6 |
| LT Debt to 2008e Cash Flow |
0.7 |
| Book Value per Share |
$0.42 |
| Basic Shares Outstanding |
42.7 million |
| 3-Month Average Daily Trading Volume |
209,117 shares |
www.firstmetalsinc.com
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The Buffalo Oil Corporation is engaged in the exploration, development, and production of oil and natural gas in western Canada. The company’s core areas are located in Alberta at Frog Lake, Gilby/Garrington, Jenner and the Peace River Arch. As at March 31, 2007, Buffalo had over 170 identified drilling locations on these lands. The company recently entered into a major merger agreement with Choice Resources Corp. (CZE:TSX-V).
On a post-acquisition basis, management forecasts annualized cash flow of approximately $27 million. With a targeted exit rate of 5,000 boepd, Buffalo could increase annualized cash flow to over $33 million or $0.50 - $0.55 per post-acquisition share. Based on today’s closing price of $1.41, Buffalo is trading at less than three times 2007 exit cash flow. In addition, the company estimates its Net Asset Value (NAV) at $2.45 per share after the Choice merger. |
KEY INFORMATION
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| Price to 2006 Cash Flow |
3.2 |
| Price to 2007e Cash Flow |
2.9 |
| Net Debt to CF (post-acq.) |
1.8 |
| Reserve Life Index (post-acq.) |
10 years |
| Basic Shares Outstanding (pre-acq.) |
22.4 million |
| 3-Month Average Daily Trading Volume |
34,729 shares |
www.buffalo-oil.com
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The independent research section is presented for information purposes only. While this information is believed to be accurate, the correctness of such information in not guaranteed. This information should not be construed as offering investment advice and is not intended to solicit the buying or selling of any stocks mentioned. Investors should complete their own due diligence before making any investment decisions.
Disclaimer: These companies were independently selected by QIS Capital on the basis of fundamental or other investment criteria. This information should not be regarded as providing investment advice. Investors are encouraged to complete their own due diligence before making any investment decision.
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