If you saw the 60 minutes story last night you will know i am talking about the UNPRECEDENTED boom in demand for steelmaking raw materials, mainly driven by China which is on a fast track to westernization. W.A Iron ore out of the pilbara was highlighted, but the other side of the steel story is coking coal supplied out of QLD.
CCI Holdings (CHL) is a rare beast. it is a small stock, but one which is extremely sensitive to the VOLUMES of export coal supplying global steel demand. Demand for steel has never been stronger. This is a boom that will be with us for some years yet with only a very small percentage of the Chinese population owning cars at this point in time.
Every Australian coal export port is bring on, or is about to bring on extra VOLUME capacity this year and next year, probably bad news for the coal PRICE but great news for coal VOLUME levels.
At present CCI Holdings is underpriced on fundamentals, the company will this week be giving profit guidance which is expected to show the stock only trading at a single digit P/E ratio when many in the strong mining services sector are attracting multiples of 20+
Campbell brothers (CPB) have pitched a t/o bid at 31c (well underpricing this stock). The stock is tightly held and for good reason when you consider the growth potential. With the market being set back on its heels late last week there is an oppy to enter this stock and enjoy the upside to come.
CHL Price at posting:
0.0¢ Sentiment: None Disclosure: Held
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