In valuing FLX between $16.70 and $18.70 per share Deliotte has assumed the following in relation to coal prices in $USD
Export thermal coal
FY10 $73.0 FY11 $75.0 FY12 $75.0 FY13 $72.0 Long term $70.0
Semi Soft Coking Coal
FY10 $84.0 FY11 $85.0 FY12 $85.0 FY13 $81.0 Long term $80.0
PCI coal
FY10 $97.0 FY11 $97.0 FY12 $95.0 FY13 $92.0 Long term $90.0
Whilst they have assumed a +/- $USD5 allowance for the long term price, it think that their long term price targets for coal are very, very low.
Whilst additional global production is expected to come online, do you actually think that the long term price of thermal coal (which will be FLX's major contributor to profit) will be under $USD100 in 5 years time?
I think that the Yanzhou offer materially undervalues FLX's long term price and I will be voting NO at when the takeover proposal is put to shareholders.
FLX Price at posting:
$17.19 Sentiment: Buy Disclosure: Held
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