Another current analysis on PDN - this time by bell...

Another current analysis on PDN - this time by bell potter

Paladin Energy (PDN) Buy, TP$4.70 - Peter Chapman
Undervalued and vulnerable

Significantly undervalued PDN?s share price is back to where it was at the depths of the GFC, despite producing more uranium, having greater resources and the uranium price being over 20% higher. It is a time also when major energy and mining groups are looking for new resources or uranium. PDN is significantly undervalued on the basis of NPV (as reflected by our target price of $4.70) and EV/lb resources of $3.89/lb.

Sector M&A activity ? PDN vulnerable PDN?s very large resource base of 550mlb is priced very cheaply by the market, making the company highly attractive to both investors and industry players alike. Recent takeover offers for Bannerman and Kalahari indicate that M & A activity persists in the industry. In an environment of low equity and asset prices we believe PDN is vulnerable to such activity.

Don?t expect a good FY11 result FY11 was negatively impacted by a slow ramp up of the Kayelekera operation, heavy weather at Langer Heinrich and one off corporate costs for the Aurora acquisition. Consequently, PDN is expected to report a substantial loss for the year FY11, We forecast a loss of US$39m ( NPAT adjusted) before significant items and tax credits which is slightly higher than consensus of US$37m; the result is due 31 August. The outlook for FY12 is for 30% higher production and much improved earnings.

Investment View We continue to rate PDN a Buy believing the company to be highly attractive for investors and particularly vulnerable at the current low share price levels. The company has large uranium resources and is well positioned for growth as one of the world?s few new emerging uranium producers.