LZ,Yep big coal volume increases have just begun with all major...

LZ,

Yep big coal volume increases have just begun with all major ports bringing expansions in capacity on line over the course of this FY. I've got some info on port capcity expansios on the cheerful blog if you want to have a squizz.

On the issue of CPB, it was a very big hint made by them to the CCI board in the last offer document when they said they would like to raise their shareholding by whatever means are available. I read this as saying CPB would be willing to provide CCI with capital for growth by way of a share placement. The response from the CCI board was to point out the company is generating enough cash to fund growth and still pay a dividend....in other words we don't need your money. CCI are going to make them do the hard yards to get enough shares to get a board spot it would appear.

The details of the 5 year strategic plan are very limited, but CCI certainly looks to be an exciting LT investment with 15% annual compounding revenue growth foreshadowed for 5 years (which will effectively double revenue over this period).

To get an idea of the sort of earnings growth which could be expected on the back of this revenue growth, we can consider the year just gone where 13.5% growth in revenue cause a 50% growth in EBITDA, 74% growth in EBIT, and a similar 70% growth to NPAT if you calculate the numbers before abnormals.

It would be realistic and conservative to see CCI earnings increasing 50% annually on the back of this sort of revenue growth due to a large amount of the growth being achieved inherently. Inherent growth basically involves higher revenues without much in the way of additional costs.

CCI just reported EPS of 2.05c for 05/06, but if you remove the 1.19M of one off costs, the NPAT would have been 3.66M or 2.75cps. This figure of 2.75cps is the earnings start point of the 5 year strategic plan.

Five years of earnings growth of 50% annually from 2.75cps for FY 06 would be pretty good for the shareprice!!!!! 4.17cps (07), 6.2cps (08), 9.3cps (09), 13.9cps (10) 20.9cps (11).

With that sort of compounding growth by the end of the decade CCI could be forecasting EPS of around 21c for 2010/11. Applying a P/E of 20 gives a target price of $4.17 during FY 2010/11. A lot of water to flow under the bridge before then of course, but some brilliant growth prospects nonethelsess.

Regards,

Cheerful.