Yes I am a bit surpised at how quickly (perhaps too quickly) the PRC share price has risen the last couple of days.
There was a report out a day or so ago that was positive about PRC. It was a UBS Investment Research report. Here are a few excerpts from it.
Upgraded to Buy �� PRC has underperformed against the sector In the past three months PRC has materially underperformed the Australian coal sector. While we expect some of this is due to the rockfall in mid-February, since then near-term performance has continued to be lower. This has resulted in PRC now trading at a larger discount to its peer multiples than two months ago.
�� Catalysts We expect the PRC price will be influenced by the direction of coal price forecasts and other commodity stocks (although, as we have seen, may not trade directly in line with its Australian peers). Also, as first hydro mining gets closer, we expect the market will progressively reduce the discount to valuation and to peer multiples. �� Price target raised to $1.00 We have lifted our 12-month price target to $1.00. Our price target continues to be based on comparative Australian sector multiples (average 3E and 4E PE being the first full year of production) – see Table 2 inside, and implies a 30% discount to our one-year forward DCF valuation. This is a larger discount than the current market average, which we believe is warranted for the single mine risk, and risk of further delays. �� Valuation: Our DCF valuation is $1.42 (prev $1.35), and we use an average WACC over the life of the project of 11.7%.
Obviously the current indications in the market that there are signs of "economic recovery" underway has led to the view that steel making will increase and therefore benefits flow through to PRC
PRC Price at posting:
80.5¢ Sentiment: Hold Disclosure: Held
