A report came out by Renaissance Capital in March 2011. Just over 3 months before Hanlong and while Ken Talbots shares were being sold off. The Report was spoken about but SDL never allowed it to be put on their site for share holders to read.
I have just come across it. Very interesting and 15 pages long. Price at the time take note,$0.49 cents. Target price $0.76 cents. It was priced with NO Tax holiday,SDL have a five year Tax Holiday. Spoke of selling 50% of its interest in the project in return for half its current market capitalisation. Debt/Equity 70:30 interest rate 8% and 10 year to repay.
At 10% real discount rate at AUD$1.29 per share using higher risk adjusted discount rates of 15% & 17.5% for phases 1 & 2.
Company value AUD $0.76 CENTS,tp/nav 10 multiple of 0.59.
If selling 50% in Project on NPV & Assuming 10% real discount rate,value would be $2.7 billion equivalent to AUD 94cents-AUD 71cents.
I have only read a little of it,I will keep reading.
They said a BUY rating and increase our TP to AUD0.76/share from AUD0.40/share. It was based on long term iron ore price of $1.35/dmtu.
Regards Westcott.
SDL Price at posting:
34.0¢ Sentiment: None Disclosure: Held
