shorting, page-19

The market will then look to the future and starting speculating about 100mtpa production. Let's do some really basic analysis here of what is a really basic business. Let's assume in fy10 that FMG produces 100mt at an average margin of $50t (conservative). That's EBIT of $5,000,000,000. FMG's pays some corporate tax (30% conservative) and that leaves NPAT around $3,500,000,000. FMG has 2,802,393,400 shares on issue, of which an amazing 70% are owned by just 5 parties and the top 20 shareholders own 92% (great idea to short that register structure). EPS works out $1.24 a share on that scenario and I think the market will pay an absolute minimum of 10x for that earnings stream. That generates a price target of $12.40 per FMG share.

(great idea to short that register structure).(great idea to short that register structure).(great idea to short that register structure).