LTR is an excellent company and one day will be on a par with PLS. However the current weak SC6 price is reducing its FCF which directly affects its valuation and hence the share price. Hence I have had a look at what LTR's valuation is at various SC6 prices.
Assumptions:
1. LTR produces a SC6.0 product.
2. All sales are sold into spot market under the umbrella of offtake agreements.
3. Production = 613kt pa SC6.0
4. AISC = A$936/dmt
5. Valuation methodology: Free Cashflow (FCF) multiplier = 10 times
6. Valuation = (FCF x 10)/Number of Shares.
Valuations:
1. SC6 = US$1000. Valuation = A$0.74
2. SC6 = US$1500. Valuation = A$2.04
3. SC6 = US$2000. Valuation = A$3.34
4. SC6 = US$2500. Valuation = A$4.64
5. SC6 = US$3000. Valuation = A$5.94
The powerful feature of LTR is its high production volume. A small increase in the SC6 price produces a substantial rise in FCF and hence its valuation. This makes it a very attractive investment in a rising SC6 price environment. Unfortunately the opposite effect occurs in a declining price environment which we are currently experiencing.
Hence the reason I am currently short LTR. As soon as the SC6 price starts to twitch upwards I shall turn and face in the opposite direction.
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Last
90.5¢ |
Change
-0.020(2.16%) |
Mkt cap ! $2.194B |
Open | High | Low | Value | Volume |
91.0¢ | 93.5¢ | 89.0¢ | $26.09M | 28.68M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
7 | 472933 | 90.0¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
90.5¢ | 446423 | 6 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
2 | 5786 | 0.900 |
4 | 110000 | 0.895 |
34 | 321661 | 0.890 |
8 | 180544 | 0.885 |
17 | 389749 | 0.880 |
Price($) | Vol. | No. |
---|---|---|
0.905 | 22997 | 2 |
0.910 | 105000 | 5 |
0.915 | 95187 | 4 |
0.920 | 25500 | 1 |
0.925 | 44911 | 4 |
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