latest ml report - p.o. $0.52

Hi holders, am watching Paladin atm from the sidelines out of interest; have previously traded in and out with some success.

Just now, Merrill has released another underperform recommendation titled "Reducing PO, LHM minority
interest sale needed near term"


"We reduce FY14E NPAT by
81% to US$9M due to lower realised pricing (60-70% of sales now assumed at
spot), partly offset by cut to D&A resultin
g from KM asset write-down to nil. FY14
NPV lower by -12% to A$0.80/sh and PO reduced to A$0.52/sh (was $0.65/sh)."


Apart from the elephant in the room (spot price) the key factors remain; Paladin has high financial gearing compared to peers and has operating costs above peers.

"We regard a sale of 15-20% in LHM as necessary to underpin
short to medium term operations while the uranium price remains at depressed
levels. However, we have concern over PDN’s ability to achieve reasonable value
for the asset, as we consider near term risks to continued low uranium pricing as
significant."

Z-score analysis highlights risk to PDN

"We have analysed our covered companies using the modified Altman Z-score, a
formula which may be used to predict the probability that a firm will go into
bankruptcy within two years (see Chart 1 inside note). PDN screens last across
our covered companies with a score of -1.21, followed by YAL (+0.28) and GBG
(+0.71), companies we currently consider to be in "unhealthy" financial positions. "

The report is fairly lengthy, but none of it paints a particularly rosy picture. I'm also not allowed to post the full report due to copyright issues sadly.

Nice bounce today - but am now worried about the companies future BIG time and cannot bring myself to invest here.

Cheers
-Cali