OSH is undervalued according to most analysts with a valuation "ex-gas" around $1.05.
A take over premium would be more like $2 to allow for the gas assets which are very valuable.
The JV gas project partners are very optimistic they will secure customers to proceed with the pipeline. After that happens customers will be jumping over each other to buy the cheap gas.
According to OSH they are at "advanced" negotiations with a number of parties and Merrill Lynch think they don't need many more customers to secure go ahead. Perhaps only a sigle 50pj/annum contract i.e. the size they lost with AGL.
OSH has also done a liquid stipping project evaluation which would yield about half the value of the assets which according to Merrill Lynch is still a significant prize.
The market price doesn't allow for exploration succes and those fields commercialisation.
So with an upcoming record profit and with oil and gold prices rock solid I can see why AMP are buying.
Is OSH cheap? Yes Does the gas pipeline matter? Yes but current price assumes it won't go ahead and more.
Is it worth buying OSH? Up to you.
OSH Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
