A1M: General Comments, page-472

Ash....got that report for you;

AIC Mines Limited
Sleeping in the Swag(man) on the way to Jericho
Despite the weather affected quarter, A1M still managed to exceed our cost
(-3% vs OMLe) and cash expectations (+A$2m vs OMLe). With FY24
guidance upgraded (+6% on production) we see A1M finishing the year
strongly in the June Q (OMLe: 3.1kt Cu, +$2m FCF). The Company remains
fundamentally cheap (0.5x P/NAV, 3.3x EV/EBITDA) and given current
commodity tailwinds, we see A1M well positioned for investors seeking
leveraged copper exposure (e.g. at A$7.5/Ib, A1M’s EBITDA/FCF improves
54%/107% in FY25). Furthermore, the recent Swagman discovery (~Sep 23)
illustrates potential upside risk to our base case Eloise/Jericho estimates
with permitting and capital benefits given the proximity to the existing
Eloise UG infrastructure. We increase our Target Price to A$0.85/sh and
retain our Speculative Buy Recommendation with 107% TSR.
Solid result and on track to exceed FY24 guidance
▪ Slightly lower production of 3.1kt (-3% vs OMLe) was more than offset by
better costs (-3% vs OMLe – gold sold skews this). The cash balance came
in higher than expected (~A$26m vs OMLe: A$24m) on this better cost
performance, higher realised pricing (+6%) and a positive working capital
adjustment (+$2.9m). Importantly, A1M are on track to exceed guidance
(~12.5kt Cu at A$5.00/Ib AISC) by ~0.8Kt Cu (+6%) with 3.0-3.2kt Cu
expected in the June Quarter.
▪ Simultaneously, the Company also released an updated MROR on Eloise
with a 13% increase to resources and 10% increase to Reserves. This net
of mining depletion, and there is no change to pricing assumptions.
Swagman benefits
In Sep 23, A1M discovered a new copper shoot, named Swagman, at the
Jericho North Prospect which is located between the Eloise Copper mine and
the Jericho deposit (see Figure 5). Recent mine planning and project evaluation
work has highlighted the potential positive impact that this mineralisation could
have on the development of Jericho given its proximity to Eloise UG
infrastructure. As such, the Company is currently drilling this prospect as part
of a broader program which will also test the strike and plunge extensions of
known high-grade shoots at Jericho. While Swagman does not form part of our
base case estimates, it does highlight the upside potential with both permitting
and capital benefits (in our view), should the deposit grow further.
Earnings and valuation changes
We incorporate the result, align our 4Q outlook with new guidance as well as
the timing for concentrate shipments. Our FY24 earnings increase by 47% from
a low base and our TP increases 6%. We retain our Spec. Buy Rec.
Source: OML, Iress, AIC Mines Limited
Source: FactSet
Source: OML, Iress, AIC Mines Limited
Last Price
A$0.41
Target Price
A$0.85 (Previously A$0.80)
Recommendation
Speculative Buy
Risk
Higher
ASX Code A1M
52 Week Range ($) 0.26 - 0.43
Market Cap ($m) 189.5
Shares Outstanding (m) 462.2
Av Daily Turnover ($m) 0.8
3 Month Total Return (%) 51.9
12 Month Total Return (%) 6.5
Benchmark 12 Month Return (%) 3.8
NTA FY24E (¢ per share) 37.0
Net Cash FY24E ($m) 20.3
Copper
Relative Price Performance
65
70
75
80
85
90
95
100
105
110
115
Apr-23 Jul-23 Oct-23 Jan-24 Apr-24
A1M S&P/ASX 200
FY24E FY25E
NPAT (C) ($m) 8.7 33.4
NPAT (OM) ($m) 14.1 22.2
EPS (C) (c) 3.0 5.0
EPS (OM) (c) 3.1 4.8
Consensus Earnings
Paul Kaner
Senior Research Analyst
(07) 3214 5514
[email protected]
Tim Elder
Research Associate
(07) 3214 5565
[email protected]
Year-end June ($) FY22A FY23A FY24E FY25E FY26E
Revenue ($m) 106.5 111.7 179.1 189.4 246.5
EBITDA ($m) 37.6 24.3 58.1 67.3 93.6
EBIT ($m) 27.2 (5.2) 21.1 31.9 55.2
Reported NPAT ($m) 24.4 (5.8) 13.9 22.2 39.0
Reported EPS (c) 7.9 (1.5) 3.0 4.8 8.4
Normalised NPAT ($m) 26.8 (4.8) 14.1 22.2 39.0
Normalised EPS (c) 8.7 (1.3) 3.1 4.8 8.4
EPS Growth (%) - - - 57.4 75.5
Dividend (c) - - - - -
Net Yield (%) - - - - -
EV/EBITDA (X) 2.6 5.3 2.9 2.5 1.7
Normalised P/E (x) 4.7 - 13.4 8.5 4.9
Normalised ROE (%) 54.7 - 8.7 12.1 17.8
AIC Mines Limited
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Ord Minnett Research
Figure 1: Model summary
Source: Company reports, OMLe
All AUD unless noted Year End June 30
Key Details Ratio Metrics FY23 FY24E FY25E FY26E
Target Price $/sh Earnings - Adjusted $/sh ($0.01) $0.03 $0.05 $0.08
Recommendation P/E Multiple x -32.6x 13.4x 8.5x 4.9x
Risk Assessment CFPS (CFO) $/sh $0.05 $0.13 $0.15 $0.18
Share Price $/sh FCFPS (CFO-capex-expl.) $/sh ($0.08) ($0.00) $0.00 $0.03
2023E Dividend $/sh P/CF Multiple x 8.3x 3.2x 2.7x 2.3x
NAV $/sh FCF Yield % (19.4% ) (0.5% ) 0.8% 6.9%
Implied Total Return % Dividends Per Share $/sh $0.00 $0.00 $0.00 $0.00
P/NAV x Dividend Yield % 0.0% 0.0% 0.0% 0.0%
No Shares m Gearing (ND: ND+E) % (25.0% ) (19.3% ) (17.4% ) (21.3% )
Market Cap M $ Return on Equity (ROE) % (3.1% ) 8.3% 11.3% 16.2%
Enterprise Value M $ Return on Capital (ROIC) % (2.5% ) 6.4% 7.8% 12.6%
Prices & Exchange Rates FY23 FY24E FY25E FY26E LT - 2027E P&L Statement FY23 FY24E FY25E FY26E
Copper Price US$/Ib 3.8 3.9 4.3 4.4 4.5 Revenue M $ $112 $179 $189 $246
Gold Price US$/oz 1831 2070 2233 2100 2000 Operating Costs M $ ($87) ($121) ($122) ($153)
Exchange rate AUD:USD 0.68 0.66 0.69 0.71 0.72 EBITDA M $ $24 $58 $67 $94
Production, Sales, Costs & Guidance FY23 FY24E FY25E FY26E FY27E D&A M $ $30 $37 $35 $38
Eloise Kt Cu 10.6 13.3 13.6 17.5 20.9 EBIT M $ ($5) $21 $32 $55
Total Copper Production Kt Cu 10.6 13.3 13.6 17.5 20.9 Other Income/Expenses M $ ($1) ($0) ($0) $1
Guidance Kt Cu ~13.2-13.4 EBT M $ ($6) $21 $32 $56
Total Copper Sold Kt Cu 10.0 13.2 13.1 16.8 20.1 Taxes M $ ($1) $7 $10 $17
Total C1 Cash Cost A$/Ib 3.7 3.2 3.2 3.1 3.2 Net Income - Adjusted M $ ($5) $14 $22 $39
Total All-in Sustaining Cash Cost A$/Ib 5.6 4.9 4.3 4.2 4.1 Adjustments M $ $1 $0 $0 $0
Guidance A$/Ib ~5.0 Net Income - Reported M $ ($6) $14 $22 $39
Capex Breakdown FY23 FY24E FY25E FY26E FY27E Weighted average diluted shares M 384 462 462 462
Sustaining Capex M $ 38.5 40.1 24.4 27.2 22.4 Cash Flow Statement FY23 FY24E FY25E FY26E
Expansionary Capex M $ 19.8 13.2 40.0 40.0 8.0 Cash Flows from Operating Activities
Exploration M $ 1.3 7.2 3.5 3.5 3.5 Net Income M $ ($5) $14 $22 $39
Total M $ 59.7 60.4 67.9 70.7 33.9 D&A M $ $30 $37 $35 $38
Attributable Reserves & Resources Taxes Paid M $ ($1) $7 $10 $17
Cu (kt) EV ($/kt) Non Recurring/Other M $ ($1) $3 $0 $0
Proven/Probable Reserve (P&P) 36 $4.6 Operating Cash Flow M $ $22 $61 $67 $94
Measured/Indicated Resource (M&I) 66 $2.5 Changes in Working Capital M $ $1 ($1) $2 ($10)
Inferred Resource 49 $3.3 Net Operating Cash flow M $ $23 $60 $69 $84
Total Resource 115 $1.4 Cash Flows From Investing Activities
Group All-In Sustaining Costs, Production and NAV Breakdown Capital Expenditure M $ ($58) ($53) ($64) ($67)
Other M $ $7 ($14) ($4) ($4)
Net Investing Cash Flow M $ ($51) ($67) ($68) ($71)
Cash Flows From Financing Activities
Equity Issues (net of costs) M $ $29 $0 $0 $0
Net Borrowings M $ $0 $0 $30 ($20)
Dividends Paid & Other M $ $2 $5 $0 $0
Net Financing Cash Flow M $ $31 $5 $30 ($20)
Increase (Decrease) in Cash M $ $3 ($3) $31 ($7)
Cash at End of Year M $ $31 $28 $59 $52
Operating Free Cash Flow M $ ($36) $6 $5 $17
Net Asset Value (Attrib) DR (%) ($m) A$/Sh NAV (%) Free Cash Flow M $ ($28) ($8) $1 $13
Operating Value Balance Sheet FY23 FY24E FY25E FY26E
Eloise 11% $260 $0.56 100% Cash & Equivalents M $ $31 $28 $59 $52
Total $260 $0.56 100% Other Current Assets M $ $19 $24 $24 $24
Listed investments $1 $0.00 PP&E & Mining Interests M $ $97 $117 $146 $175
Exploration (assets) $70 $0.15 Other Long Term Assets M $ $48 $52 $55 $58
Cash $26 $0.06 Total Assets M $ $195 $221 $284 $309
Corporate G&A ($10) ($0.02) Current Liabilities M $ $18 $21 $21 $21
Debt $0 $0.00 Long Term Debt M $ $2 $5 $35 $15
Other $0 $0.00 Other Long Term Liabilities M $ $21 $24 $31 $33
Total Net Asset Value $347 $0.75 Total Liabilities M $ $40 $50 $87 $68
P/NAV 0.55x Shareholder Equity M $ $154 $171 $197 $240
Total Liabilities & Shareholder Equity M $ $195 $221 $284 $309
107%
0.5x
462
$190
$164
$0.75
0.85
Spec. Buy
Higher
$0.41
$0.00
3.0
3.5
4.0
4.5
5.0
5.5
0
5
10
15
20
25 FY24E FY25E FY26E FY27E AISC A$/Ib Cu Production (kt Cu)
Production AISC
100
%
NAV
Eloise
AIC Mines Limited
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Ord Minnett Research
Result reconciliation
▪ The 3Q24 result was solid, especially considering the rainfall during the
quarter.
- Slightly lower production of 3.1kt (-3% vs OMLe) was more than
offset by better costs (-3% vs OMLe – gold sold skews this).
- Rainfall impacted their ability to transport concentrate, so sales
were lower (2.67kt Cu vs OMLe: 3.03kt Cu) which leaves A$6.1m
awaiting shipment which should see positive unwind in the next
quarter.
- Importantly, cash balance came in higher than expected
(~A$26m vs OMLe: A$24m) on the better cost performance,
higher realised pricing (+6%) and a positive working capital
adjustment (+$2.9m).
▪ Importantly, A1M are on track to exceed guidance (~12.5kt Cu at A$5.00/Ib
AISC) by ~0.8Kt Cu (+6%) with 3-3.2kt Cu expected in the June Quarter.
▪ Simultaneously, the Company also released their updated MROR on Eloise
with a 13% increase to resources and 10% increase to Reserves. This net of
mining depletion, and there is no change to pricing assumptions – so this is
largely organic improvement and potentially a precursor of continual
replenishment in years to come.
Figure 2: Result summary of the quarter vs our previous period estimates
Source: Company reports, OMLe
Key takeaways:
▪ Production: 3.1kt was broadly in line with our expectations as slightly higher
grades (2.17% vs. 2.1% OMLe) offset lower throughput (150kt; -6% to OMLe).
- Throughput was affected by rainfall and the failure of the Mill 3
feed-end trunnion bearing inner race in March 2024, which lead
to a 10-day outage where Mill 1 was the only primary grinding
mill.
▪ Copper sales: 2.7kt were less than we expected (-12% to OMLe) as rainfall
constrained transport of concentrates.
- Realised prices of A$6.15/lb were ahead of our numbers (+6% to
OMLe).
Actual OMLe Actual
Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Mar-24
Eloise Kt Cu 2.57 2.48 2.89 3.40 3.76 3.16 3.07 -3%
Total Kt Cu 2.57 2.48 2.89 3.40 3.76 3.16 3.16 0 %
Copper sales Kt Cu 2.53 2.47 2.65 3.36 3.71 3.03 2.67 -12%
Achieved Copper Price A$/Ib Cu 5.88 6.09 5.39 5.95 5.48 5.82 6.15 6 %
All-in Sustaining Cost*
Eloise A$/Ib Cu 5.54 5.76 5.63 4.95 4.83 5.34 5.18 -3%
Total A$/Ib Cu 5.54 5.76 5.63 4.95 4.83 5.34 5.18 -3%
Capex breakdown
Capital expenditure (sustaining + growth) A$m 15.0 10.5 13.4 11.0 12.2 13.9 14.6 5 %
Exploration + corporate A$m 2.7 2.9 0.9 2.4 2.9 1.8 2.6 46%
Balance sheet
Cash A$m 1 9 3 8 3 1 2 9 2 7 2 4 2 6 6 %
Debt A$m 0 0 0 0 0 0 0 n.a.
Net Debt (Cash) A$m -19 -38 -31 -29 -27 -24 -26 6 %
Production & Sales Unit
Beat / Miss
(%)
AIC Mines Limited
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Ord Minnett Research
▪ AISC: A$5.2/lb (-3% to OMLe) were slightly less than we expected with higher
gold production of 1.5koz (vs. 1.3koz OMLe).
▪ Capital expenditure: $15m (incl. $1.9m on Jericho) were slightly more than
we expected (+5% to OMLe) due to higher sustaining capex.
▪ Cash: $26m (+6% to OMLe) was ahead of our numbers due to a positive
$2.9m working capital movement.
▪ Outlook: A1M is expected to produce 3.0-3.2kt Cu and 1.5koz Au in the June
quarter 2024, which would see the business exceed guidance (~12.5kt Cu at
A$5.00/Ib AISC) by ~0.8kt Cu (+6%).
- This is broadly in line with our expectations, albeit forecast gold
production is slightly higher (1.5koz vs. 1.3koz OMLe).
▪ Mineral resources at Eloise have grown to 155kt of contained copper
(+17.55kt or +11% vs. previous) following the 2023 drilling program net of
mining depletion.
- Mineral reserves have grown similarly to 2.4Mt at 2.4% for
58.1kt Cu, which represents an increase of 9% to contained
copper.
▪ Key increases included infill drilling at the following:
• Upper Zone at Emerson and Elrose Levuka
North/South which added 188kt
• Lower Zone at Lens 6 and the Deeps which
added 820kt.
Figure 3: FY24 guidance summary
Source: Company reports, OMLe, *excludes Jericho / mill expansion capex
Figure 4: Growth in Eloise Ore Reserves
Source: Company reports.
Previous New
Copper Production kt Cu 12.5 ~13.2-13.4 6% 13.5 2%
Gold Production koz Au 5.0 ~6.7 0% 6.5 3%
Gold production Koz Au 5.0 5.0 0% 6.5 31%
AISC A$/lb Cu 5.0 5.0 0% 5.0 0%
Sustaining capital A$m 40 40 0% 40.8 3%
Growth capital* A$m 6 6 0% 12.8 133%
Change
(%) Eloise Guidance Unit
FY24 Guidance OMLe Difference
(%)
AIC Mines Limited
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Ord Minnett Research
Figure 5: Swagman located between Eloise and Jericho
Source: Company reports.
Earnings and valuation impact
▪ We incorporate the 3Q result, roll forward our model and amend our 4Q
estimates to align with new guidance as well as the timing for concentrate
shipments. Our FY24 earnings increase 47% (low base) with the higher
realised pricing and lower costs results. Our TP increases 6% to $0.85/sh and
we retain our Speculative Buy recommendation on clear valuation appeal.
Figure 6: Our changes
Source: Company reports, OMLe
FY23 FY24E FY25E FY26E
Actual Current Previous Change Current Previous Change Current Previous Change
Underlying Net Profit A$m -4.8 14.1 9.6 47% 22.2 23.7 (6%) 39.0 39.8 (2%)
Underlying EPS ¢ -1.3 3.1 2.1 47% 4.8 5.1 (6%) 8.4 8.6 (2%)
CFPS ¢ 4.9 12.9 11.6 11% 15.0 15.4 (3%) 18.1 18.3 (1%)
Copper Production kt Cu 11 13.3 13.6 (2%) 13.6 13.6 0% 17.5 17.5 0%
AISC A$/lb Cu 6 4.9 5.1 (3%) 4.3 4.3 0% 4.2 4.2 0%
NAV A$/share 0.75 0.74 1%
12 Month TP: A$/share 0.85 0.80 6%
AIC Mines Limited
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Ord Minnett Research
Catalysts, comps and relative performance
Catalysts
▪ Jericho mine development: This has the potential to substantially increase
copper production at Eloise, and A1M is taking steps to develop the Jericho
deposit (e.g. revised mining study completed 3Q24, contractor tendering
underway, permitting in progress).
▪ Eloise processing plant expansion: A1M are considering options to expand
its mill from 750ktpa to 1.1Mtpa to support higher processing rates.
▪ Ongoing exploration results: The Eloise region is minerally endowed,
providing potential upside via reserve and resource growth and / or
replacement. Accordingly, any news flow regarding evaluation of additional
resources found along strike (i.e., the West Corridor, East Corridor or via step
out drilling in the Far West Corridor) is likely to be well received as it provides
for increased ore source optionality and reduces the reliance upon the Eloise
Deeps.
Comps
Figure 7: A1M comps across our coverage list
Source: Company reports, OMLe.
Relative performance (6-months)
Figure 8: A1M relative performance vs ASX peers (Cu producers / developers)
Source: Company reports, OMLe
Market
Cap ($m)
Recommendation Risk Price
($/sh)
Target
price ($/sh)
Implied
TSR (%) P/NAV (x) EV/EBITDA
(x) FY24e
P/E (x)
FY24e
P/CF (x)
FY24e
FCF yield
(%) FY24e
AIC Mines A1M PK 190 Spec. Buy Higher 0.41 0.85 107% 0.5 3.3 13.4 3.2 -0.5%
Sandfire Resource SFR PK 4139 Accumulate Medium 9.06 9.20 3% 1.4 8.9 1565.5 7.2 4.3%
Aurelia Metals AMI PK 304 Spec. Buy Higher 0.18 0.25 39% 0.7 1.7 18.2 2.7 4.7%
Aeris Resources AIS PK 246 Hold Higher 0.26 0.13 -49% 0.8 2.2 329.4 4.7 -46.7%
Average 0.9 4.0 481.6 4.5 -9.5%
Company Ticker Analyst
OML Estimates OML Valuation
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Jan-24 Feb-24 Mar-24 Apr-24 Relative performance FYTD
AMI
SFR
Copper
A1M
29M
AIS
A1M
29M
SFR
AIS
AMI
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% Market Cap (A$b)
FY24 YTD perfromance (%)
AIC Mines Limited
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Ord Minnett Research
Valuation and risks
Valuation
Our A$0.85/share target price is based on a 50:50 blended DACF and NAV valuation.
Our target multiples of 7x DACF and 1x NAV are in line with other emerging
producers and commensurate with mine life, margin and overall risk profile. Our
target price and 107% TSR supports our Speculative Buy rating.
▪ NAV: Sum-of-the-parts (SOTP) NAV incorporates life-of-mine DCFs on Eloise,
discounted at a ~11% WACC. Additional SOTP items include: exploration
value, cash and bullion and corporate G&A. We utilise a 1x P/NAV multiple, in
line with historical trading of emerging producers, and apply no risk weighting
to any of the projects.
▪ DACF: Debt-adjusted cash flow multiple of 7x in line with our ASX emerging
peers coverage when considering production, mine life and reserve growth
potential.
Risks
▪ Copper price and currency: The most significant risk to our forecasts
remains the copper price. Our estimates assume a long-term copper price of
~US$4.20/Ib, and USD: AUD exchange rate of 72c.
▪ Seismicity associated with Eloise Deeps: Given the depth of current
underground mining and the use of sub-level caving, seismicity is expected
and, in our view, currently well managed. However, large fault slippages in the
proximal amphibolite could lead to significant production downtime in the
seismically vulnerable deeps section of the mine. The company is improving
their knowledge base of this risk through the recent hire of structural
Geologists which could help better understand stress movements and improve
risk mitigation. Notably this is not a risk unique to Eloise, with many Australian
underground operations managing seismic risks as standard business
practice.
▪ Resource/reserve delivery: Inferred material in the underground mine plan
to form part of the reserve. We believe this conversion is likely and have
incorporated a portion of this material in our base case. Our confidence in this
materials inclusion is based upon the fact it is contiguous to the existing
reserve, of similar grade and would require minimal additional capex to exploit.
▪ COVID-19, labour and supply pressures: Any further pressures and/or
COVID-19-related disruptions (i.e. productivity) could see downside risk to our
estimates. Similarly, supply-chain related pressures may also drive downside
if critical parts are unable to be sourced in a time-efficient manner.
AIC Mines Limited
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Ord Minnett Research
A1M key charts
Figure 9: We expect production and earnings to improve into FY24
Source: Company reports, OMLe
Figure 10: A1M FY23E cost curve positioning (LHS) and OML current NAV assumptions (RHS)
Source: Company reports, OMLe, CRU, Trafigura
Figure 11: OML cash-flow outlook
Source: Company reports, OMLe
0
5
10
15
20
25
30
0.0
1.0
2.0
3.0
4.0
5.0
6.0
FY22 FY23 FY24E FY25E FY26E FY27E Production (Koz AU) A$/lb Cu
Production outlook
Net Cash Cost AISC Production (CuEq.)
-20
0
20
40
60
80
100
120
140
FY22 FY23 FY24E FY25E FY26E FY27E A$M
Earnings outlook
NPAT (at spot) NPAT EBITDA (at spot) EBITDA
-150
-100
-50
0
50
100
150
FY21 FY22 FY23 FY24E FY25E FY26E A$m
Cash flow
Operating cash flow Investing cash flow Financing cash flow
-40
-30
-20
-10
0
10
20
30
FY21 FY22 FY23 FY24E FY25E FY26E A$m
Free-cash-flow
FCF (at spot) FCF
Eloise
100%
Net Asset Value (NAV)
Eloise
A1M FY23E
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0 AISC US$/lb Cu
2022 Global Copper Mine Cost Curve
Average
AIC Mines Limited
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Ord Minnett Research
AIC Mines Limited
PROFIT & LOSS (A$m) 2022A 2023A 2024E 2025E 2026E
Revenue 106.5 111.7 179.1 189.4 246.5
Operating costs 68.9 87.4 121.0 122.1 152.9
Operating EBITDA 37.6 24.3 58.1 67.3 93.6
D&A 10.4 29.6 37.0 35.4 38.4
EBIT 27.2 (5.2) 21.1 31.9 55.2
Net interest (0.2) (0.5) (0.3) (0.2) 0.5
Pre-tax profit 27.0 (5.8) 20.8 31.7 55.7
Net tax (expense) / benefit 0.2 (0.9) 6.7 9.5 16.7
Significant items/Adj. 2.4 1.0 0.2 - -
Normalised NPAT 26.8 (4.8) 14.1 22.2 39.0
Reported NPAT 24.4 (5.8) 13.9 22.2 39.0
Normalised dil. EPS (cps) 8.7 (1.3) 3.1 4.8 8.4
Reported EPS (cps) 7.9 (1.5) 3.0 4.8 8.4
Effective tax rate (%) 0.7 16.0 32.2 30.0 30.0
DPS (cps) - - - - -
DPS (cps) - - - - -
Dividend yield (%) - - - - -
Payout ratio (%) - - - - -
Diluted # of shares (m) 310.3 383.6 462.2 462.2 462.2
CASH FLOW (A$m) 2022A 2023A 2024E 2025E 2026E
Net Interest (paid)/received (0.1) (0.1) 0.2 (0.2) 0.5
Income tax paid - - - (2.5) (15.1)
Other operating items (3.3) (1.5) 2.8 - -
Operating Cash Flow 32.8 22.9 59.5 69.4 83.7
Other investing items (11.5) 8.7 (7.6) - -
Investing Cash Flow (40.1) (50.9) (67.5) (67.9) (70.7)
Inc/(Dec) in borrowings - - - 30.0 (20.0)
Dividends paid - - - - -
Other financing items (9.0) 2.3 4.8 - -
Financing Cash Flow 31.0 30.9 4.8 30.0 (20.0)
Net Inc/(Dec) in Cash 23.8 2.8 (3.2) 31.5 (7.0)
BALANCE SHEET (A$m) 2022A 2023A 2024E 2025E 2026E
Cash 28.1 30.9 27.7 59.2 52.2
Receivables 1.1 1.0 2.6 2.6 2.6
Inventory 5.0 10.8 9.5 9.5 9.5
Other current assets 17.1 6.9 11.5 11.5 11.5
PP & E 26.1 40.8 45.5 45.5 45.5
Investments 38.5 97.2 117.3 146.3 175.1
Financial Assets 6.8 - 1.4 4.2 7.0
Intangibles - - - - -
Other non-current assets - 4.8 4.5 4.5 4.5
Total Assets 123.7 194.7 220.6 283.9 308.5
Short term debt - 0.8 2.6 2.6 2.6
Payables 17.4 14.8 15.4 15.4 15.4
Other current liabilities - 0.1 0.1 0.1 0.1
Long term debt - 1.6 4.8 34.8 14.8
Other non-current liabilities - 0.1 0.1 0.1 0.1
Total Liabilities 33.5 40.4 49.5 86.6 68.2
Total Equity 90.2 154.3 171.1 197.3 240.3
Net debt (cash) (28.1) (28.5) (20.3) (21.8) (34.8)
Speculative Buy
DIVISIONS 2022A 2023A 2024E 2025E 2026E
KEY METRICS (%) 2022A 2023A 2024E 2025E 2026E
Revenue growth - 4.9 60.3 5.7 30.1
EBITDA growth - (35.2) 138.6 15.9 39.1
EBIT growth - - - 51.5 73.0
Normalised EPS growth - - - 57.4 75.5
EBITDA margin 35.3 21.8 32.4 35.5 38.0
OCF /EBITDA 96.2 100.2 97.3 107.0 105.0
EBIT margin 25.5 - 11.8 16.8 22.4
Return on assets 21.8 - 6.5 7.9 12.5
Return on equity 54.7 - 8.7 12.1 17.8
VALUATION RATIOS (x) 2022A 2023A 2024E 2025E 2026E
Reported P/E 5.2 - 13.6 8.5 4.9
Normalised P/E 4.7 - 13.4 8.5 4.9
Price To Free Cash Flow 57.7 - - 127.2 14.6
Price To NTA 1.4 1.0 1.1 1.0 0.8
EV / EBITDA 2.6 5.3 2.9 2.5 1.7
EV / EBIT 3.6 - 8.0 5.3 2.8
LEVERAGE 2022A 2023A 2024E 2025E 2026E
ND / (ND + Equity) (%) (45.3) (22.6) (13.5) (12.4) (16.9)
Net Debt / EBITDA (%) (74.7) (116.9) (35.0) (32.4) (37.2)
EBIT Interest Cover (x) 171.1 - 80.6 199.4 -
EBITDA Interest Cover (x) 236.4 45.3 222.4 420.7 -
SUBSTANTIAL HOLDERS m %
FMR Investments Pty Ltd 26.0 5.6%
Josef El-Raghy 10.7 2.3%
El Raghy Kriewaldt Pty. Ltd. 8.3 1.8%
VALUATION
Cost of Equity (%) 12.9
Cost of debt (after tax) (%) 7.0
WACC (%) 11.3
Equity NPV ($m) 347.2
Equity NPV Per Share ($) 0.75
Multiples valuation method P/DACF
Multiples 7.0
Multiples valuation 0.74
Multiples valuation method P/NAV
Multiples 1.0
Multiples valuation 0.96
Target Price ($) 0.85
Valuation disc. / (prem.) to share price (%) 107.