The Captain thought this was undervalued on 22/11/2004 with COZ...

The Captain thought this was undervalued on 22/11/2004 with COZ at 64 cents and option COZO at 51 cents - now COZ is 39 cents and option 30 cents - "go figure".

Beware those NEOO options - he might send you up - er I mean DOWN the same path.

"I reckon their well short of the mark .. personally ;)"

Subject valuation 71c
Posted 22/11/04 22:06 - 111 reads
Posted by captain_salty
Post #426592 - in reply to msg. #426450 - splitview

FYI ... Patersons say this (I reckon their well short of the mark .. personally ;)
SALTY

Stock: COZ ($0.58)
Current Valuation/Price Target: $0.71 (previously $0.65)

Recommendations: Speculative Buy

Event: First major contract for supply of carbon credits to Origin Energy



Details:

a.. COZ has finalised a contract to supply carbon credits to Origin Energy Ltd.
b.. The contract will involve the supply of NSW Greenhouse Abatement Credits
(NGACs) through to 2012 under the NSW Greenhouse Gas Abatement Scheme.
c.. Fulfilling the contract will require the planting of approximately 6,500
hectares of oil mallees in regional NSW, which will be integrated into broadacre
cereal farms.
d.. Planting and growing of these plantations will be funded through the
establishment of COZ's first retail managed investment scheme which the company
expects will be launched in H2 FY05.
e.. COZ believes this to be the first sale under a Kyoto-compliant carbon sink
arrangement under any emissions trading system in the world.
Impact:
a.. The sale follows on from COZ's successfully achieving accreditation under the
NSW Greenhouse Gas Abatement Scheme on 10 November 2004.
b.. This sale underwrites the entire off-take requirements for COZ's first MIS
scheme, effectively removing the marketing risk for subscribers to the scheme and
thereby greatly increasing the attractiveness of the MIS product to potential
investors.
c.. More broadly, the sale demonstrates that demand does exist for NGACs, and that
the commercial and regulatory imperatives that have driven Origin Energy to the
deal will also similarly impel other NSW energy retailers.
d.. Furthermore, there is a developing move towards additional Australian states
adopting a similar scheme to that adopted in NSW. Any move in this direction
would clearly greatly increase COZ's market, although we note that this is likely
to be by 2006 at the earliest and is by no means certain.
e.. The value of the contract was not disclosed, but we understand the sale to be
partly fixed-price and partly spot-price, meaning that MIS investors will bear
some price risk but will also benefit from any upward movement in the spot price
of NGACs.
f.. COZ now expects to accelerate its MIS activities for the FY05 year, which will
involve, crucially, obtaining the necessary ATO product ruling as well as
finalising the necessary documentation, agreements and marketing arrangements.
g.. We have increased our valuation to $0.71 as a result of the sale which reduces
overall business risk for COZ and improves the prospects and size of near term
FY05 MIS sales.