ILUKA boss David Robb deserves an award from corporate regulators for taking continuous disclosure obligations seriously with his warning that demand for mineral sands had slumped in response to global economic activity hitting the proverbial brick wall.
But he is not going to get one, certainly not from investors in the stock ahead of Monday's share price carnage that was triggered by his warning.
Robb's warning sparked a 24 per cent, or $1.1 billion, plunge in Iluka's (ILU) value, with analysts left no choice but to madly slash this year's profit expectations by more than 50 per cent and next year's by as much as 40 per cent.
At least investors in the stock now know where they stand.
Lesser companies might have delayed passing on the bad news to at least their June-half or June-year profit reports, in the hope a magical recovery in Europe, and a return to strong growth in the US and China, was on the cards.
That seems to be the approach from the coal and oil producers.
Despite the severe slump in their commodity prices, they haven't felt the need to warn that things have become tougher.
Yes, they are not having the same demand issues that Iluka has with mineral sands that are sold into a fragmented market in which there is no "dimmer" switch for slowing demand.
As Robb put it, it is either full-steam ahead or full stop with mineral sands.
But if anything, the price impact on coal and oil producers is more severe because Iluka's mineral sands prices are actually holding up, due mainly to Robb's artful protection of margins by lowering production in line with demand.
So while there are going to be some delayed "shocks" on the profit front from the coal and oil stocks, Iluka investors have already swallowed their medicine.
And on a more encouraging note, there were signs yesterday that Monday's monster sell-off in Iluka was overdone, seriously overdone according to some.
First, there was a flood of big-name broker reports yesterday on Monday's warning, and with a couple of exceptions, they all worked through the shock and horror of it to arrive at conclusions that enabled them to set target prices for Iluka that were north of its $8.88-a-share Monday close.
On the high side, there was Citi ($18 a share) and Goldman Sachs ($16.30). Morgan Stanley was one of the exceptions, with a reset price target of $8.80 a share.
The more bullish held sway to a degree by the close of trade yesterday, with Iluka shares recovering 37c to $9.25.
Time will tell who is right. What is known is that while profit expectations for Iluka have been slashed on Monday's warning, it is still expected to do nicely in historical terms.
Revised profit expectations for this year vary wildly, from $250 million to $580m. Wild variation also applies for next year, but the range is higher, from $650m to $1bn, and at its slimmed down price, Iluka is a $3.8bn company, making it one to watch, based on the market's rejigged profit expectations for next year.
Given the state of the global economy, some faith is required to accept next year's expectations. But as Robb argued strongly on Monday, it is important to differentiate between short-term and long-term issues.
He made his point by quoting a couple of key things about the "floor space"of the world, the growth of which is predicted to drive long-growth in demand for both zircon and titanium dioxide.
A recent McKinsey report highlighted that by 2025, the world will need to construct floor space equivalent to 85 per cent of all today's urban, commercial and residential buildings.
"You look at a situation where over the next 10 to 15 years, in aggregate, the world has to replace or add (a combination of the two) its entire floor space," Robb said.
It is mind-boggling stuff, particularly if the current malaise derails planned production growth of commodities of any description.
ILU Price at posting:
$9.33 Sentiment: LT Buy Disclosure: Held
(20min delay)