Share Price/Charts, page-53

I do not know if I should laugh or cry. A Q report and these are the only two comments. Neither even mention the Q report. I have also looked at the other threads and did not see anything there. So I will try to start something. First this report shows me wrong on several things. I would have preferred to be wrong because the company did better than I expected but unfortunately it was worse.

First thing I expected a bang up full production Q. I even totally agreed with AUS when he said this would happen. This was the second worse Q of FY 2019. Q2 was worse if you take a quick look 80M of sales vs 88M Q4. AL told us several times during the Q2 meeting to adjust for December by multiplying by 3/2 if I do that Q2 comes up to 120M making this the worse Q of the year. Very disappointing when you were expecting the Best.

One bright spot which AL pointed to was cash which did rise from 67M to 90 M a very nice gain. Of 23 M Looking a little more closely sales were 87 Million collections were 106 a gain of 19M. So cash went up less than 4 M after this is considered. Collections will go up and down each Q but long term they will always average to sales figures so this can not continue.

AL talked allot about how they are now in control. They chose to limit production because they did not want more product in inventory. This sounds great. What this said is their preferred customers would not take any more at a price that they could make a profit on. That the spot market would not take any product at a price they could make a profit at. If you can make a profit you make product. This also brings into question the reserves for key customers they talked so much about. Setting product aside when you can sell all you can make shows customers that you truly care. Setting aside product when you are limiting production is a nice jester but not all that important.

I have been saying that with everything stable Lynas could break even at volume adjusted Nd, Pr, NdPr price of 240RMB ~ 250 RMB The average price this Q was about 270. It had a few dips below 260 but most of the Q price was above 260. With my estimates they should have been able to move product all Q with a small profit . As I said when I made this estimate there were too many variables to be sure. This Q report actually added more variables when I was hoping it would clarify a few. With this input I now feel the break even point is 255RMB ~ 270RMB Though my confidence level in this price is lower than before.

AL mentioned how bad auto sales in China is hurting the NdPr market. As I have pointed out pure ice vehicles are still the biggest user of PMs. I agree China is the worse at about 15% ~ 18 % decline YOY. But the ROW has been down about 3% to 5% every month YOY. 2018 was down a little YOY from2017. This is a trend and it will turn. Is it is not going to turn rapidly. So demand decline caused by Autos will last allot longer than I think AL thinks but that is JMO. I think at least one possibly 3 years.

I warned people to protect some profits on june 2^nd price was AUD3.15 Post #: 38870840

Again on july 26^th Post #: 39718296 price 2.66.

My prediction is that Nd Pr will drift lower to maybe the 270 RMB level. That Lynas after this report will drift down to $2.00 ~ 2.25 with it. When the AR comes out the earnings will be less than last year AUD 53M which with current shares 668M will be about 7 cents a share. Performance going down YOY along with the EPS of 7 cents will drop this stock quickly to the old lows of $1.50 to 1.70. At that point I may jump in big time as a buyer. Think about it, I may be wrong. But if you think I am please give data or opinion to say why. Data may get me to raise my buy price.

Just to be clear I still see a SP of way over $10 for Lynas in the future. It is what is going to happen in the next year that I am paying attention to.

I have been assuming that contract delay caused a 90 day lag between market price and sales numbers. AL made a very quick comment that June’s price spike would show up in July. I am not ready to change my 90 days but I will go back and reexamine with this in mind.

Before I wrote this I listened twice to Q4. Went back and listened to Q3 and 2. As wellas H1. Doing this gave much more insight to trends that are important. Sometimes what the story has changed from is far more important than what the story is.