mad market

MCC dropped to $3.23 today, just 10 cents above the net asset value $3.13 per share (30/06/08).

The failure of US$15 billion bailout for big 3 looks going to wipe out more than one trillion US dollar of world share market tonight. Totally unreasonable.

Still working on MCC's hedge book, the only thing I am worried about MCC is its potential hudge loss on currency hedging.

After browsering all the news and reports on MCC, I find it is not so bad.

MCC hedges US$586M at 0.90 from 01/07/08 to 30/06/09, BASED ON A 85% OF SIGNING CONTRACT REVENUE. Then its total selling contract would be valued US$689M for 2009 fiscal year, accounting to AU$766M due to hedge.

There are US$477M left in hedge book from 01/10/08 to 30/06/09, US$109M was covered in September quarter. The September quarter revenue should be 109/0.85=128M US dollars for 1.08M ton of coal, which most coal was sold on Y2008 contract price due to force majeure.

I think MCC is now selling coal at around US$180~200/ton.

MCC sale revenue was $400M last year, and gave us $80M profit after tax. If there is no significant product cut back, the target $150~160M net profit for H1 looks quite reasonable.

Who knows what will happen in US market tonight, as well as 2009 world economy and 2010 coal price.

The only thing I know is, the sun will rise again tomorrow, people will still burn coal and petrol, and the share price of MCC is dirty cheap.

Cheers