HELP! Another offer please, page-22

Kepo,

I agree moly cop is the market leader, hence the reason they get the high end multiple. Unfortunately mate, this is how it works at least at the beginning of a process.

The following is an excerpt from an afr article today on Glencore. The 8x comes about because of long term take or pay contracts.

"The standard freight charges across the coal sector run at between $4.50 and $5 a tonne and the two big operators, Aurizon and Pacific National, generate margins of 30 per cent and 25 per cent respectively from their coal contracts. So if we do the maths based on the norm, then the GTrain would throw off revenue of no more than $200 million and generate EBITDA of something orbiting $60 million. If we run an average industry multiple of maybe eight over that we get to $480 million before accounting for the particular strategic value that this business represents for existing operators and other potential investors.

But sources tell us that the RBC-hosted roadshows that opened this week are being presented with a business that generates an EBITDA of nearer $100 million from a revenue of something less that $160 million. If those numbers prove anywhere near sustainable then even our routine multiple would see Glencore settle in its target range."


If they'd can really delivery over 60+% editda margins they would be a cash machine and worth plenty, but alas, they have the small business owner and Arrium disease, i.e. Other people can't see the work I have put into this place and I should get paid for it.