National Automation Services, Inc. (NASV), Partners with Wellington Shields
Expansion through Acquisition. Literally overnight NAS becomes a $46.3 million grossing company in the Oil and Gas Services Sector with 3 acquisitions and 5 locations in the Midwest. The following link shows all current locations http://images.investorshub.advfn.com/images/uploads/2014/8/4/lqhvgNASV_all_JD_locations_8inch.jpg
Also as previously stated by NAS in previous press releases, NAS is in negotiations with several other companies with regards to being acquired. The release mentioned that some big players in the sector have come to the table regarding joining NAS, each with revenues exceeding the current 3 combined acquisitions. NAS could be the next Power House in the Oil and Gas Services Sector.
The word of this gem is just getting out; Seeking Alpha, Wall Street Resources, Stock Market Media Group, -and many others have recently published detailed research reports. Some of the links are listed below.
The key to stable fast growth is to create revenue growth through acquisition and then compound such growth by way of developing synergies among the acquisition portfolio as well as growing each acquisition organically. As a result, growth through acquisition is a quicker, cheaper, and far less risky proposition than the more tedious and expensive methods of expanded marketing and sales efforts. Further, the growth by acquisition strategy offers a myriad of other advantages such as easier financing and instant economies of scale. The competitive advantages too are formidable, ranging from catching one's competition off guard, to instant market penetration even in areas where you may currently be weak, to the elimination of a competitor(s) through its acquisition.
NAS is currently undervalued and is in the process of moving to the AMEX, so that the benefits to the Company and our Shareholders will include a much better alignment of our valuation to our share price, and gives greater exposure and accessibility to the investment community. In particular, over 90% of registered reps at broker-dealers across the country are prohibited from recommending stocks that are currently trading under one dollar ($1.00). With a threshold listing price of three dollars ($3.00), up-listing to the AMEX will enable these reps to recommend NAS shares to their clients, thus creating potentially significant demand for, and consequent upward pressure on the price of the stock.
What is National Automation’s Worth from a Stock Standpoint; a Determination of Value of NASV Based on Market Capitalization and Gross Revenues of Comparable Companies.
With the recent (August 5, 2014) filing of a 14A Proxy Statement with the SEC, we have learned important details about future plans for NASV. In particular, these details help us to hone our previous pricing forecasts to achieve a clearer vision of the current and forward-looking value of NASV common stock. In the 14A, the Company disclosed, among other things, that it will reduce its authorized shares from one billion to 75 million and further will effectuate a 200 to 1 reverse split. These two actions will, in part, facilitate the up-listing of the Company to the NYSE:AMEX listing exchange. How will this affect the valuation of the Company and consequently the price of the Company’s common stock? In a word, “positively.”
The reasoning is simple. If the Company continues to trade on the OTC Markets quotation system, the true earnings potential of the Company is unlikely to be translated into a true market valuation of its Common Stock. This has been discussed before. The OTC Markets quotation system is fraught with manipulation by unscrupulous market makers. Their primary strategy is shorting, which effectively places an unwarranted artificial ceiling on the price of a company’s common stock. We have seen this with NASV. By all accounts, based on the company’s present forward-looking earnings of about $.014 per share, the Company should be trading at an easy $.20 to $.25 per share. But it’s not, it has been trapped in a trading range of about $.03 to $.05 ever since it announced the successful acquisition of JD Field Services.
In sharp contrast to the shenanigans of the “penny world”, listed exchanges are closely regulated and achieve the highest degree of professional trading ethics, which allows the price of a company’s common stock to realize its true pricing potential. Moreover, stocks that are trapped in the penny world cannot be purchased by 99% of registered reps employed by the many brokerage firms across the nation. In general, they are forbidden by their broker-dealer from purchasing stocks under $1.00 per share. As a result, the potential demand for shares that can be generated from a good story such as NASV is suppressed because the great story must be ignored or simply goes unnoticed.
So we know what the value of NASV is as a quoted stock on the OTC Markets. What is a realistic and highly probable value, once moved to the NYSE:AMEX? The most logical pathway to price discover is to compare comparable companies, that is similar participants in the oil and gas field services sector currently trading on a listed exchange. Our research uncovered 6 publicly traded companies with similar business services, who trade currently on the NYSE, NASDAQ or AMEX. These companies would be considered “competitors” of NAS if and when they occupy the same geographical area. The companies were not chosen for Market Cap, PPS, Share Structure or any other reason.
Included Companies are: Dakota Plains Holdings, Inc. (NYSE:DAKP) Williston Basin, ND; Blueknight Energy Partners, LP (NASDAQ:BKEP) located in 23 states; DHT Holdings, Inc. (NYSE:DHT) an International Corporation; Arc Logistics Partners, LP (NYSE:ENSV) Multiple Locations, headquarters in NY City; Enservco (NYSE:ENSV) Eastern USA to Rocky Mountain Region; and Nuverra Environmental Solutions, Inc. (NYSE:NES) Bakken, Marcellus/Utica, Haynesville, Eagle-Ford, Mississippian Lime, Barnett & Permian Basin shales. The services provided include but are not limited to: trans-loading & storage of energy products; terminalling, gathering and processing of oil and gas products; crude oil tanker fleets; water fluid hauling, frac tank rental, well enhancement and maintenance; delivery, collection, treatment, recycle and disposal of Restricted Environmental Products; water treatment, hauling, trucking and storage.
Share structure for these companies ranges from 12.9 million to 79.2 million, with the average being 38.6 million shares outstanding. Market capitalization for the companies ranges from $93.2 million to $532 million. Earnings per share ranges from $-8.88 to $0.33, with half of the companies generating negative earnings and half positive. Trading price ranges from $2.46 per share to $25.12 per share. The table in the following link summarizes relevant data on the 6 companies. Click here.
Due to the lack of applicable Price to Earnings Ratios (based on ½ of our comparable companies having negative earnings and no clear way to estimate what NASV will have for Net Profit in 2015) we have decided to use a multiple of the Market Capitalization divided by Gross Revenue for purposes of determining a comparative share value for NASV. This creates a static number much like a P/E Ratio, but one that can be calculated on a wider range of companies. In addition we can utilize 2013 and 2014 numbers for NASV to determine what size Market Cap we would have if all other variables were equal.
The valuation formula is simple and easy to apply. We divide each comparative company’s Market Capitalization by its Gross Revenues to arrive at a Market Cap Multiplier (“MCM”). We then calculated the Mean MCM, simply by adding each of the companies’ individual multipliers and dividing by 6. This eliminates weighting for company size and gets a simplistic multiplier. In this case that multiplier is 6.7. To determine the potential market capitalization for NAS, simply multiply the Company’s gross revenues by the Mean MCM.
We further refined the Mean MCM by removing the highest and lowest MCM’s of the six companies to eliminate the outlier effect. This worked out to a refined Mean MCM of 3.8. Finally, we calculated the Median MCM. This is simply a Higher Than/Lower Than equation. Since there was an even number, the 2 middle were used and averaged. This multiplier came out to 6.2.
The three multipliers give us a realistic range of possibilities for valuation of NASV once it achieves listing on the NYSE:AMEX. The potential market cap will be now calculated as determined by the companies it owns. First, we know the JD Field Services acquisition is completed, so we will calculate based on the revenue forecast from JD alone.
In 2013 JD had gross income of $19.4 million. Using the multipliers above, the range of Market Cap for NASV would be between $73.7 Million and $129.9 Million. Post reverse split, figuring there will be roughly 4 million issued and outstanding (“OS”) shares left, this translates into a PPS of between $18.42 and $32.47 per share. Although the estimates for 2014 revenues are significantly higher, I think we would all be satisfied with a PPS in this range.
Factoring in the recent Purchase and Sale agreements for Devoe Contracting of Colorado and MonDak Tank of North Dakota, we have a much bigger Price per Share potential. In 2013, Devoe had gross income of $15 million and MonDak Tank had $7.1 million. Combined with JD Field Services, that would bring the total gross income of NAS up to $41.5 million. The Market Capitalization range becomes $157.7 to Million - $278.0 Million, while the Price per Share range grows to between $39.42 and $69.5.
Interestingly, to prove how the move to the NYSE:AMEX allows the Company to reach its true pricing potential or conversely to see what the improvement in today’s pre-split pricing would be, divide the above projected per share prices by the reverse split factor of 200. With JD Field Services revenue alone we would be at $.09 to $.16. Adding Devoe and MonDak revenues we would be at $.19 to $.34.
The above information is from my own Due Diligence and is my own opinion. I am Long in NASV. I did not receive compensation for posting this opinion. This is not a solicitation for investment. This is only an awareness statement of my opinion of a company I feel is undervalued. Please do your own Due Diligence before investing.
SAFE HARBOR AND INFORMATIONAL STATEMENT This document may contain forward-looking information within the meaning of Section 21E of the Security Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statement of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company's financing plans; (ii) trends affecting the company's financial conditions or results of operations; (iii): the company's growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words "may", "would", "will", "expect", "estimate", "anticipate", "believe", "intend", and similar expressions and variations thereof are intend to identify forward-looking statements. Investors are cautioned that any such forward-looking statement are not a guarantee of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the company's registration statement and reports filed with the SEC. The Company claims the safe harbor provided by Section 21E(c) of the Exchange Act for all forward-looking statements.
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