im just highlighting how undersold and undervalued BND is atm compared to its full valuation. Like said, Dingo West alone at current PCI coking coal prices of circa 240bucks gives a margin of 140bucks/tonne.....lets say in a year or 2 the coking price is 180, thats still a margin of 80/tonne
i.e 80mill in pre tax CASH FLOW (forget depreciation for now, cash flow is most important).....post tax of circa 50% you get 40mill in post tax cash flows, but they obviously will have a whole bunch of tax loss credits to use in the beginning for dingo west??
Anyways say the market looks at dingo west as bringing in 40mill a year on coking price in the next 2 years of 180/t
40mill/550mill issued capital = $0.72 - - give a PE of 10 = 72cents....and this POST 50% tax CASH FLOW
Tax wont be 50% initially from what i gather??
pre tax cash flow is 80mill; 80mill/550mill = 0.145
thats why i said that its worth about $1 using the current issued share capital for dingo west alone which can be put in production at 1mtpa in 2014......the coking coal price today is circa 240....in 2 years say its 30% less at $180
Tax wont be 50%
thus youre looking at dingo west bringing in very good cash flow as long as coking prices remain quite high
Even if in 2014 PCI coke prices are 150, its still a margin of $50/t or 50mill pre tax cash flow
As far as depreciation long term is concerned - u can double it to 30mill - it doesnt reallt affect EPS calculation that much (about 3-4%)
The market as you guys say looks at cash flow pos tax and pre depreciation amtsion and interest......in which case, my previous EPS calculations understate the more important cash flow (which is real money flows rather than accounting lingo)
End of day....if you invest for LONG TERM at 55cents today......hold for 2-3 years.....youll make a very good return IMO
Its undersold and undervalued . 50c is the absolute low unless europe gets decimated....but how much lower can it go?? the upside is now much greater than the downside risk. Put a stop below 50c somewhere snd youll be OK.
BND Price at posting:
56.0¢ Sentiment: LT Buy Disclosure: Held
