I have expressed my bearish views about the global economy over the next 1-2 years. However, this calculator helps to soothe my fears regarding Lynas.
Even with the post WW2 P/E low of ~6, and RE prices falling to ~$35, the share price would be $1.94 in two years. I really doubt things would get so bad though, and if they did then it wouldn't stay so bad for long. Also, such an issue would crush the AUD and probably lead to a ~30-40% rise in the USD/AUD exchange rate benefiting our local PE and DPS ratios handsomely (SP of 2.7-2.9).
I doubt PE ratios could fall that hard but another consoling factor is that China is against low prices and would adjust their export quotas to ensure it didn't fall that much.
My assumptions are still applicable in an optimistic scenario where the global economy chugs along, somehow avoiding contagious crises and massive defaults. China may want RE prices to rise higher yet. I am speculating too much but they are surely interested in high RE prices as it hurts their competing nations (US and Japan) while helping them.
Basically, whether you think I'm right or crazy, it seems nothing can really hurt our investment, apart from all the apparent manipulation in the short-term :/
LYC Price at posting:
$1.87 Sentiment: Buy Disclosure: Held
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