10% in HNC HPAL for A$386m in new NIC shares, with estimated EBITDA of around $94m AUD p/a for NIC seems like a bit much. Correct me if im wrong, but we are looking at roughly 4 years before we see a return on that investment (thats if margins remain at around 10k).
However in saying that, it appears that it is a necessary step or highly beneficial for us if we are to take on a project like dawn hpal and have a major interest in it. As it will give NIC an insight in an existing hpal project with an tsingshan delivery model and increase NICs knowledge in hpal projects. It is also said that the dawn project will be replicable to HNC.
So I guess all that factored into the cost of the 10% interest makes sense.
What do others think of this?
NIC Price at posting:
$1.09 Sentiment: Buy Disclosure: Held
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