pdn down 10% last night, page-17

according to Fosters...

Today’s Top Picks.

Paladin Energy (PDN. ASX; $0.80/sh; Mkt Cap $686m) – Oversold on strategic sale delay. TRADING BUY

•Two weeks ago we highlighted the likelihood of a delay to the strategic initiatives underway to strengthen the balance sheet (debt currently ~US$740m) and view the stock as now oversold in recent days. While the market often punishes a stock for not meeting timetables for key milestones we believe it is better to extend for another 2-3mths into the September Qtr and secure the best outcome for shareholders vs getting a deal for the sake of simply meeting the market’s expectation.

•Various brokers have indicated a sale of up 15-20% stake in Langer Heinrich could realise up ~$200m based on NPV asset valuations or using historical EV/Resource metrics. Such a transaction would reduce net debt to ~$540 and gearing to ~40%, a far more palatable level should the 12-24mths not see any recover in the uranium price.

•We view PDN as oversold and likely to re-rate back above the 90c level leading into July when further clarity could follow on the process underway with the preferred party. Management have stated they are ‘confident’ of a deal being finalised by August. We note the stock was trading at 98c a week ago with the expectation of a delay likely.

•We view PDN as our top TRADING BUY in the resources sector

http://www.fostock.com.au/announcements/paladin-energy-pdn-asx-iron-ore-holdings-ioh-asx