In a nutshell you are right, holding Lynas is in anticipation of...

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ausheds

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28/08/19

18:10

Post #: 40202494
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Originally posted by DoubleDown! ↑

TU and GA from me. I've lightened my Lynas by about 40% since its highs. I think I've sold for about $2.50 (av buy $0.94) over the last year. I've been bitterly disappointed to do that but I learned not to expect anything positive from Malaysia so sold prior to expected announcements.

I did some analysis about two years ago where I thought that Lynas would be $4 by now. They should be more of course but the hacking away at Lynas each time it tries to grow by Malaysia is just maddening. I read what Amada says, and I hope shes just playing the game when she says shes sticking with Malaysia because as soon as C&L is done in Aus and decisions need to be made on upgrading Kuantan - I want her to relocate lock stock back to WA.

I have CJ on ignore, so my apologies for the angst this will create the rest of you. But I look at the PE of Lynas of 28.2 with a profit of $51m (thats for FY2018) or Yahoo has a trailing twelve month PE of 80 (indicating a profit of $19.2M). Clearly the market expects a better profit than that (how do they calculate the trailing twelve months PE anyway? Do they guess profits? Or was that the half year profit and they expect the last six months to be been breakeven?), and with the shutdown delays and depressed NdPr prices along with everything else its been a tough year. Id still expect a profit somewhere in the $40-50m range - we will find out tomorrow.

But the current shareprice is not related to historical figures. Except perhaps with a foundation of tangible assets, its all about future profits. The first two months of this FY have been at LynasNEXT recoveries and NdPr prices have been okay. Perhaps for FY20 we can hope for sales of $400m+, I'll be optimistic and plug in $450m as revenue, costs should be in the $300-350m range. All done and said I'd expect a profit of $100m.

With a PE for an established miner, not looking to grow and with a PE of 15 our SP should stick around $2.30
With a PE for a growth miner, looking to take the EV sector on headfirst and see a NdPr price rise to $50-70 (currently $35-40) then 30 is pretty fair and our SP should move to $5.

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In a nutshell you are right, holding Lynas is in anticipation of NdPr prices moving into a range of sustainable economic value $50-70kg.

UBS call $55kg FY21 where a PE15 would give you your $5 SP.

IMO they are very conservative COGS, other analysts are generally more buoyant.

Q is how long will China sell NdPr, and the NdFeB directly correlated, for "cabbage", or LT unsustainable, prices?

Still waiting on those H2 quotas............

LYC Price at posting: $2.32 Sentiment: Buy Disclosure: Held
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