more on the special divi/buyback scenario... this is GSJBW's take:
Investment View:
• We note earnings multiples are a misleading indicator for OZ Minerals.
The stock should be evaluated using cash flow multiples following the
non-cash (P&L only) effect of the revaluation and thus higher
depreciation of the ZFX asset base following the merger.
• Although OZ Minerals remains armed with a significant war chest of
~A$1.2bn, we believe the company is cognisant of the share price
impact in overpaying for an investment.
• In our view, the company is more likely to return cash back to
shareholders via a special dividend or a share buyback at current levels.
• The next key catalyst for OZ Minerals is the successful delivery on
Prominent Hill on time (4Q FY08) and the revised budget (A$1.08bn),
together with ramping up Avebury successfully.
• No change to our BUY recommendation.
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