ARI

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FnF. Like analysis. If it plays out even close to that then...

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hawkduka

877 Posts.

07/08/14

22:06

Post #: 13786989
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Originally posted by fitnfam ↑

The dividend should be around 40% of whatever ARI report as has been their practice.

I believe most investors have underestimated the resilience of existing operations thanks to divestments and the active fine tuning of operations to demand.
ARI have been rather ruthless and cut anything losing money or not contributing to the pot.
Ignoring the $200m or so sale proceeds,which will likely kiss some debt goodbye,it's time to consider the EBITDA drag now gone of a $50m loss last 6 months tied to these for sale assets and throw in the interest on the $200m i.e. 4% going forward,$8m off expenses to profits.
Along with this there has been a significant drop in employees from June last years 9397 employees to 8440. in December in operational divisions some 957 by my Calcs, with 120 more earmarked to go in the May update to reduce costs by another $14m/yr. July another 30 added to the list.
The refinancing in May of around $750m term debt indicates possibly $250m or so may have been retired this half.There was also a small sum due this June ($30m US)The company report will tell us no doubt.
The acceleration of capital expenditure of an additional $45m announced in May,including paying $5m for land in case of future expansion at Kanloops,is not the action of a company with insecure free cash flow,rather the opposite,driving for growth using what its got and for greater volumes of ore at lower costs.
Such as upping the anti with New tugs,means the barges can get to the boats quicker,less demurrage and faster turn around,with much the same infrastructure.
The subtle mention of another trans shipping unit might take the inner harbour from 45% capacity to 65%,also implies much if the inner harbour is good for 6.5mt-another 3mt possibly.It also implies its full capacity could be around 15mt and ARI's existing facilities all up could handle 22.5mt,if the trans-shipment fleet were there along with enough ore.
The sweating of that infrastructure has started,shown by the slowly dropping FOB cash costs from $49 to $45.90 last QTR.

DYOR + DYODD ARI Might not go any lower

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FnF. Like analysis. If it plays out even close to that then we're looking at a 'management' stock as well as an income stock.

I've had another small nibble today. I've run my numbers based on a 3c div per half for the mid term. Maybe too conservative but I'm happy to be surprised to the upside. 6c pa div for 76c entry is fine for me. Didn't throw the lot in yet though. This could always go lower! Glta

ARI Price at posting: 77.0¢ Sentiment: Hold Disclosure: Held
1 Upvote

0 Great analysis

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FnF. Like analysis. If it plays out even close to that then...

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