Well the way I see it is that they have today $350m cash less $95m convertable notes (US$85m, convertable at $6.44 so lets assume they won't convert) so a net position of $255m cash. There are around 153m shares which gives a net cash position of $1.66 per share.
Add to this they hold 40% of an asset independently valued by the market at $1Bn. This equals $2.61 per share. This asset is currently producing and is cashflow positive from around 3000 Bopd which should be the minimum current flow -therefore none of the cash on hand is being burned by existing production.
So underlying value TODAY is $4.27 and there is no way Sinopec won't be expecting a significant return on their investment(ie upside on that value). Its hard to see why a base price of around $4.00 can't be achieved in the short term with upside to come.
Anyway - the market is a bitch, so who knows what will happen - but I've been buying.
Cheers Zinc
AED Price at posting:
0.0¢ Sentiment: ST Buy Disclosure: Held
