new to this thread, page-25

agree with others here. EHL should be trading on a PE around 15. They met their FY07 forecast (exceeded it by 3-4m from memory) and had been marked down to the 1.40 range before the credit crunch BECAUSE THE MARKET DIDNT THINK THEY WOULD MEET PROSPECTUS earnings. So you would expect it to be trading around the 1.70 mark just based on current earnings.

I know several brokers who are very bullish on the stock - unfortunately a couple of these were similarly bullish when it was above 2.00. Over the longer term I think it could reach 3.00 within 2/3 years -based on fwd earnings estimates that it had earlier targeted - but it should be noted that it declined to firm up these estimates or even give guidance for FY08. This perhaps suggests it sees bumps in the road ahead.

EHL is heavily reliant upon caterpillar for its equipment and with the bigger miners moving to buy their own equipment I understand there have been rumblings that caterpillar may not continue to supply EHL as generously as it has. Another key question is how successful its model is outside australia: it hasn't met its cost of capital in indonesia; it has done better in canada but it is very early days. If it gets it right then the upside in oil sands in north america is substantial but I do wonder about its emphasis in presentations on euro and even african expansion. It 'state of the art' euro site is arguably nowhere near state of the art and I am surprised (and a little concerned) that management has emphasised euro expansion rather than canada where it has a stronger base and a larger market.

However, like RHG (although many seem to disagree, lol) I see the downside as limited and the upside reward such that it appeals. Personally I think its a good buy up to 1.65 and I will be expanding my holdings once RHG gets rerated post the credit crunch.