Well againLynas fell much more than US indexes and more than ASX 200, 2.21%.History has shown that Aggressive Growthstocks always drop more in a correction or recession.Lynas with low cash on hand .No dividend.Erratic earningslow EPS is firmly in the aggressive growth class.The other problem is earnings.AL has told us for the last 2 Qs and AR CC that Lynas can make money with NdPr at USD 37 ~ 38.(JMO but I think this is at full production so number at lower production price is higher but I will use USD37)this is RMB 271,So yes Lynas will be profitable H1 but by how much unless prices rise significantly.If prices stabilize at an average of 330RMB, todays price 317RMBthat is 60 RMB of profit.Times .21 = AUD 12 .6/ KGtimes current production rate of 6KT / yr= 75M in profit/ 695M sharesthat is 11Cents a share.Now ifthe world is doing well that will support a price of AUD 3.25.But if as I think that profit is based on 7.2 KT of ND and PR products and prices don’t average330 RMBthan that profit drops quickly to 5 cents and price will be below AUD 1.50. All depends on where you think the world is going.Lynas is going to do great.The future looks great for LYC.To focus on Lynas and not the world you will miss a great opportunity to sell and buy back more shares.I said this at AUD3.15 and $2 80 I still think the opportunity is there.
US autosales are in for Sept.YOY Car sales are down 19.7% truck sales are down 7.3%combined 11.1%.This is the biggest drop for trucks since I have been watching auto sales.The only drop in CY 2019 for trucks was _.5% in January,They are up over 4% YOY YTD, this is major for US auto industry if it does not reverse.China and EU are down more.The market.For bargain hunters there are still plenty of 2019 around at very high discounts. For people that want latest and greatest the 2020 are in showrooms.Something for everybody,but less buyers.2017 was much better than 2018 so this is a long term trend.https://www.marklines.com/en/statistics/flash_sales/salesfig_usa_2019#sep
US and China economies are still growing, but much slower.EU is shrinking.
Is this thebeginning of the correction or recession that I have been talking about for 18months?Way too early to tell.It is not showing robust growth.
If the WW economy goes into a correction or recession If REO prices go soft because of lack of demand then the world change’s dramatically for Lynas To look at old floors and old trends just does not apply.Subtracting out the one time JARE gain they only made AUD 36M in 2019, with NEXT mostly implimented, down from 53M 2018. Dividing by 695M shares that’s 5 cents a share.With a PE of 30 that is a share price of AUD 1.50.If the World slows we are unlikely to see 5 cents for a year or two.In a major correction or recession we are unlikely to see a PE of 30for any aggressive growth stock.
Rember thisstock was between AUD 1.55 and $1.850 from Dec 4th till March 25 takeover.Then rumors of a TW affecting REO.Both have gone away. What is supporting this stock from returning to those levels?Your floors are very real but do the conditions that caused those floors still exist?
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