$12 million EBITDA for the quarter at Renison is pretty huge. i.e. $48 million for the year means MLX is trading on something like a multiple of 4x (or it was like 3x on Friday).
As long as they do not need to CR or borrow for Nifty (still a real risk), MLX is hugely undervalued due to the value of Renison. CR or borrowing would be dilutive (increasing enterprise value) so I think this effectively giving a discount to the good Renison asset. In effect, this means people are attributing a negative value to Nifty.
I expect the SP jump was due to investors believing that the risk of a CR was now much lower. Giving Nifty a closer to nil value.
Of course there's risk, but it seems to me the potential upside is pretty huge. Downside risk is they continue diluting shareholders (arguably this could have infinite downside) or they give up (limited downside, or possibly even upside!)
MLX Price at posting:
26.0¢ Sentiment: Buy Disclosure: Held
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