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Kumba

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Not applicable
Anyone know why OST is indicating a SELL on KIO ??
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18 REPLIES 18
THRESHOLD
Super Contributor
Well - from a trading perspective - it is due a pullback!. From an investment perspective - ASK YOURSELF A FEW QUESTIONS: Where to from here? Will iron ore rise? - Most "experts" say not. Will the ZAR weaken appreciably? It seems very resilient! Do they have huge a huge growth profile? No! Are they diversifying? No! Are they in control of, and reducing, their input cost? Absolutely not! Can they increase their throughput? NO! (Thanks to TRANSNET) 70% GP - perhaps that is as good as it gets? On the macro side - interest rates are rising, markets are jittery, world growth is faltering, doubt over the China story (65% os KIO's output.) South African specific risks are manifest.
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THRESHOLD
Super Contributor
And another very imporatant point: Look at ARCELORMITTAL and HIGHVELD - and ask yourself - are these ore/coal... costs sustainable: Remember the old saw:: "The cure for high prices is high prices"
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buyme
Contributor
2 analyst's on cnbc said to them its a definate buy. 3mt growth for this year and another 7mt planned.current pe i think was 9 and a forward pe of 7,with a good dy. to them the acl story will have no effect on kio and said it would just be the cherry on the cake.
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THRESHOLD
Super Contributor
That is a different ACL story! - to do with their right to cheap ore - and of course that benefits KIO if ACL pays market prices. As regards the analysts on CNBC - so what. Others say sell. The point of this discussion is to present a series of justifications for Standard Bank's "SELL" recommendation. At no point, in the above, have I presented my personal view on this stock. You cannot make an informed decision on an investment without assessing both sides of the argument.
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THRESHOLD
Super Contributor
That growth is in the same commodity and after railage problems and potential drop in current production, is not much. If you want growth - look at ANGLO. KIO (per SBK) is on a forward PE of 9. ANGLO is on 6,5. ANGLO is diversified and has operations outside SA. So how is KIO cheap. Or rather look at BHP for that matter.
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SimonPB
Valued Contributor
it not SB saying sell .. it is concensus .. and not many anyways ..
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striker
Super Contributor
- Threshold - It's hard to find fault with a coy. that has consistantly produced those kind of results. Crystal ball gazing is prone to find fault with any share.In fact I would suggest that AGL has greater downside.The here and now on KIO shows an exce
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THRESHOLD
Super Contributor
STRIKER - You are missing my point - I am not really trying to present my view - I am presenting the opposing view since the original query display incredulity at the possibility of a "SELL" recommendation as evidenced by his appending "??"" to his question.
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buyme
Contributor
Simon is right, it is only a few.it is not std bank saying it...its the analysts.std bank technical view has a price target of R551. we all differ in our views,which is what makes the market
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THRESHOLD
Super Contributor
CASTRO's query referred to OST - and so it makes sense that the response shuould be consistent - noo? So more correctly, OST not STANDARD BANK! But again - this is about a counterpoint and not MY view! Good grief guys - its like talking to a wall!
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Not applicable
no offence boet, but your original response to the question is pretty clearly your own view though - in support of the sell recommendation
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THRESHOLD
Super Contributor
Not at all! Castro asks how there can be a "SELL" ?? (2X QUESTION MARKS Indicating his incredulity!) I set out to show the case for a sell. Had he asked how there could be a buy recommendation - I would have presented that case as best I could. Clearly you guys have never been on the debating team.
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THRESHOLD
Super Contributor
Actually - I would have a weak "HOLD" on this thing.
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THRESHOLD
Super Contributor
BUT here's the real question - were you swayed by my "SELL" argument? (Because I fear I could not produce as compelling a "BUY" argument. LoL - that gives away my bias. I did say a WEAK "hold" after all.)
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Not applicable
well, your sell argument (and it is "your!" sell argument - make no mistake) did get me thinking, since I sit on the other side of the fence on this one. I am a holder of KIO, and will buy more on the dip. And it got me thinking that a hold is probably a better call than a buy rating - because we would be heavily stretched to get another 40% growth out of this company. But to sell now and incur the tax hit, means that I would anticipate a better than even chance of a 30% pullback from here, which would justify the sell rating. At a 9 times PE, divs of 7%, production volumes increasing, I think the current price is pretty sustainable, so I will see your weak hold - and raise you one strong hold!
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THRESHOLD
Super Contributor
TAX SHMAX! Wait until you take a punt on half a million of something juicy at a few Rand. Hold on for a couple of years and the thing runs to R20 or R30 and getting out will cost you a cheque for 10bar. So you hang in there and it reverses and everyone is saying "You were greedy - you should have sold at Rxx" Eventually your entire investment world is defined by the TAX implications. It happens to everyone that sticks around on the market for long enough. Provided they buy quality. And that is why I am sitting in mostly ARM rather than KIO - it has more growth potential. I probablly won't have to make the "SELL" decision for a longer time. (In answer to your query about running 2 portfolio's the other day - sometimes it just isn't worth it!)
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richardw
Super Contributor
Gimme that problem. I want to pay 10 bar tax for an investment.
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kwagga
Super Contributor
Analysts are just a sofisticated (and well paid) layer of market noise. If I had to choose a resource share KIO would be it. Even a very modest 15% growth per year on this share will a market beater for the 12 months.
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