Paterson Ord Minnett (POM) analyst Hayden Bairstow expects Minara, which also has the benefit of large tax losses to write off going forward, to generate forecast free cash flow for the next three financial years (FYs) ended 30 June including the current one of about A$122 million, A$187 million and A$137 million and net profit of A$153 million, A$191 million and A$142 million respectively.
These forecasts didn’t include the one-off A$93 million, but, importantly, Bairstow pointed out that they were contingent on Minara being able to sustain consistent annual production of around 38,000 tonnes of nickel and continued strong nickel and cobalt prices.
Shares in Minara jumped five percent today to finish at A$2.52, representing a market capitalisation of about A$1.15 billion. POM has a share price target for Minara of A$3.50. “We believe that yield and PE ratios will be key drivers in the short term,” said Bairstow. “Our price target suggests a FY 2004/05 PE of 8.4 times and a yield of 10.6 percent, hardly demanding multiples.”
MRE Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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