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I think the market is missing what a phenomenal money making operation BEN is becoming .
It has been on a phenomenal run but the share price is way behind the increase in the price of MetCoal, the rise in the value of the dollar, and the developments at the Company. Fair value is at least double the current price IMO.
AJ - agreed, and I do, but on fundamentals and potential I believe there's a lot more to come.
AJ - here's my thinking. Short term we'll be producing and shipping (rail) 40k tons per month (1st hwm only, running double shifts). With met coal price at ath I reckon we're clearing $250 profit per ton. With all infrastructure now in place and operational, good resource, strong market, no debt, good jurisdiction, great management, prospect of 1st dividend this year, p/e should be at sector ave at very least = 12. Put all that together gives sp of £3.05. On top there's resource upgrade coming soon to include the 2 contiguous properties added since IPO. Then add 2nd hwm and ramp up of production to 70k tons by late summer. I hope explains my optimism... GLA investors.
Unfortunately the met coal price yesterday was an error, it remains at $440 per mt. Still a fantastic price for us.
Thread looks like one person talking to himself lol
Sharelad - have you got anything actually useful to say about the company?
AJ - agree again, but that's a good thing if you're invested for longer term. Firmer base being established at around this level.
I think maybe we are being more than slightly optimistic here. P/E of 12 seems very fanciful when there are large profitable established miners with a P/E of 5 or 6. A recession will soon start the sale price dropping. Another factor is that 57 million other investors disagree, as they are not buying, and who is to say they are wrong? I am heavily in, but maybe my glasses are less tinted.
I too prefer to use a PE of 6.
In full production BEN will do 870KT HiVolB plus 120KT HiVolA that will be mixed together. If we are working on $200 margin that will give $198m EBITDA
X P/E 6 = $1.188bn
÷ 354m shares = $3.36 sp value = £2.69
However to keep a balanced view I should admit that my calculations are based on full production which won't actually happen until August so I stick by my modest hope's for £1.55 by Christmas
Interesting discussion re p/e. I stick to my rationale for why jan22 coal sector average of 12 is actually a modest aim, but have no problem with others being more conservative. (But I suggest when p/e of 6 is hit, hold on for higher!)
BEN stands out from the crowd because of high profitability and no debt to repay, so all profit is available for reinvestment in the company (for further expansion and/or production increases) and distribution to shareholders, which CEO has committed to. If AW is able to deliver 10p / share div this year - a stated aim and seemingly do-able given current economics - that's about a 12.5% return on shares bought today and held. Not sure there are many in our business matching that at the moment.
For what its worth here is my take on current valuation assuming the trains do come in next week:
CURRENT PRODUCTION 480K tonnes
CURRENT MARGIN $250 estimate at $450 selling price
Strong market for coal which I would not expect to change massively in next 3 years. Any longer than this and you would need to use much more conservative margins. Remember BC was mothballed in the past due to lower coal prices.
VERY CONSERVATIVE MULTIPLE 480K X $250 X 3 = $360M / £288M
Bang in line with present market cap.
If you are more bullish you could add a longer term multiple for years 4-12 but using a much lower margin say:
480K x $50 x 9 = $216M / £173M
So a share price range of 80p to £1.28.
If we can double production in Q3 then I would expect the share price to double to c £1.60 - £2.56.
Here’s my maths:
Loads of coal x very high price x huge demand + dividend company = Great future
Top up when you can
Have a lovely weekend everyone