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WHAT MISSING?

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Super Contributor
Okay - so what's missing? Or perhaps, more correctly: What am I missing? Over 8 million tons ownership at Richards bay - nearly 3x EXXARO. Future of K/fontein mine secured. Moving toward 16 million tons ROM. Lowish cost producer. Huge projects - fully funded. No real debt. Thermal coal holding near record highs. Shipping rate imploding (poor Grindrod) AND no takers? Lack of institutional involvement in a new listing? This company looks very, very, cheap. Trying my patience as I stare at my heap of these drifting slowly to oblivion. I even took anther 10000 of these to intensify the pain.
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13 REPLIES 13
Super Contributor
Not to mention the fact that she has resolved her ESKOM issues. Renegotiated her prices. For the KOMATI mine that is. Her two brownfields expansion projects are placed to supply directly to CAMDEN and ARNOT at a current price structure.
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Super Contributor
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Super Contributor
Coal strike threats = lost revenue and higher costs?
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Super Contributor
Sure but that applies to EXXARO et al. too. AND labour is less of an issue with a coal mine. Especially a strip miner - like her new ops. Also less exposure to costs pressures and a natural hedge since power costs are one of the main causes of inflationary pressure.
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Super Contributor
- It's low liquidity does'nt help much either.
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Not applicable
to be honest, I think that Optimum is sitting at fair value right now. Forecasted HEPS should be around 250-260 odd, if we simply double the last set of interims. So at 10 times forward PE, that would be around the 2600 mark, which is where it is right now. A 10 times forward PE on Exxaro's expected HEPS would put EXX more into the 22000 mark - and EXX pays a dividend, so EXX is looking cheaper than OPT at the moment, IMO?
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And to add, EXX has the track record to boot, whereas OPT still has to prove itself.
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Super Contributor
Which is what I said upfront - New listing - so lacks institutional folllowing. Her cash cost is under $50. So she should be seeing about $80 per ton in gross "cash" profits. Less railage of $18.5 PER TON (after TRANSNET pushed through another 30% hike, making her among the most expensive in the world.) So that leaves about $61.50 x 8000 000 export tons x 6.88 (period zar/usd average) x.72 (after tax) = 2.44 billion. Then we have admin costs ETC. but there shoulod be some fat in the coal supplied to ESKOM (and other inland consumers.) So cash generated by ops should move toward 2+ billion. That potentially leaves us with a coal miner potentially on 2,5 X cash generation. That is CHEAP!
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Super Contributor
Oh yes - and Standard Bank site was predicting earnings closer to R5 a couple of months ago. So I have my doubts. Anyway - certainly worth a shot! You can only lose what you venture.
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Super Contributor
She created +R822 MIL before working capital effects in the first six months of the year. BUT given the price action it looks as if something nasty is coming. Anyway I am trying to do a sell job on myself and convince myself to take more...
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Jip, I have learnt the hard way in recent years that bottom picking resource newcomers is a fruitless excersise. Now I am in the opinion that it is best to sacrifice the first wave up, and catch the momentum train, rather than sit with non-performing stocks in your portfolio - opportunity lost does not outweigh the time cost of money.
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Super Contributor
Looks like the "sales job" I did on myself is paying off.
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Super Contributor
Looks like the "sales job" I did on myself is paying off.
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