Had to revisit this over the weekend as I suspect the US rate cuts enthusiasm will drive Australian stocks and with rising tide floats all boats. SFR may test$10 and I will need conviction to Not Sell when that happens. (My average cost starts with a 4 so that's a lot of gain and its difficult to not bank that)
VERY Rough Mathematics for FY25 (This is no financial model but a back of envelope calc)
Net Cash Generation after capex, interest and tax etc: $400M
That will nearly wipe out all of the net debt as at end of FY24 which was under $400M - Fantastico!
USD 760M = AUD 1.1B EBITDA
Targeted reserve life is 15 years for both assets plus there is plenty of growth pipeline (not just limited to Black Butte) so an EBITDA multiple of 6X is ultra conservative!
At 6X that's a EV of A$6.5Billion - With zero net debt that's pretty much all equity.
Current MC is 4.1Billion - I think there is plenty of upside left here. So I wont be selling at $10.
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