I agree with much of this, except:- Once the SP hits $1.50+ I...

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hfrench

291 Posts.

135

27/08/21

17:38

Post #: 55635081
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Originally posted by hilly_sandman: ↑

Whether it be playing the arbitrage game out of US operations into China, or just steady operation out of Curragh, 2H21 is looking quiet rosey for CRN at the moment... It is the right time to be buying the cycle IMO, SP hasn't moved, but commodity prices have lifted substantially.

Since CRN reported HY results the coal price is up a further USD$20/t, which is a future USD$20/t of additional margin.

Average realised price in the HY report was USD$100/t and cost to produce USD$64/t - next quarter the realised price will jump to around USD$130-150/t and the quarter after that to USD$160-220/t... In my opinion people are forgetting that miners reap the rewards through cyclical swings in commodity prices. Have a look at FY18 and FY19 Revenue, EBITDA and Profit, short of major production or safety issues at CRN mines, they will enjoy the benefits of the uplift in price, they paid 22c (15c + 7c) in calendar year 2019 before stalling dividend payout in low coal price environment.

Personally the trade I am aiming for is, 100% return through SP appreciation ($1.6SP, bought in 82c) and 40c of dividends over 2yr period, buy price is 82c but will average up in coming weeks I think.

Net debt is only USD$236M, there is clear headroom, CRN will not be held back through debt amortisation. Meaning cash will be returned to holders or used on other ways, rather than being consumed in the big A that most miners have in their ebitdA numbers!

The risk is China. But on the flip side of that, is governments around the world printing money and that money finally making its way into the steelmaking industry through infrastructure and projects, could be a nice 2-5yr boom in prices. Any stable price above USD$200/t and CRN are making +USD$100/t in margin.

Time will tell, I'm a happy holder.

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I agree with much of this, except:
- Once the SP hits $1.50+ I wouldn't wait around for a dividend before selling
- I wouldn't buy at more than $0.80, not enough margin of safety.

This is a 2/10 company (or a 3/10 business being run by 1/10 management).
You want to buy it at a 1/10 price and exit at a 3/10 price - given the poor quality of the underlying business and worse quality of the management, it's not worth being greedy when it comes to taking a profit.

CRN Price at posting: $1.02 Sentiment: Hold Disclosure: Held
5 Upvote

1 Great analysis

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