I still believe that it is speculation, and opportunism that is driving the share price.
No new contracts have been announced. The contracts in hand will contribute towards an improving performance, but nothing anywhere near as what has already been factored into the share price.
With ~510m shares now on issue (following last week's conversions), UEC is now capitalised @$173m. If you add debt to this (ie: ~$45m at the mid-year mark), you get to an Enterprise Value (EV) of $217m.
On FY03 EBITDA of $17m, that makes for ~13x multiple. Even if you factor for the Company's own revised EBITDA range of $18-22m, that still takes you above 10x multiple.
Anything in this range must be considered expensive, particularly as the resulting p/e* (forecast), based on net profit, takes you well above 20 (even on the basis of an FY04 outlook).
Analysts such as IWL were suggesting 2 weeks ago (when UEC was nearer 27c) that UEC was fast approaching replacement value, and that back then the stock had moved from a 30% discount to net tangible assets, to a 30% premium to net tangible assets. As at tonight's close, that figure is now running much closer to 50%.
Most industry analysts of substance have factored for a much lower sustained share price than the one currently being featured.
My own view is that UEC is over-valued quite significantly although I would concede that my earlier 18c projection is unlikely to be revisited any time soon.
Quite possibly, therefore, some re-rating of the stock has been factored for, but consider this: 1) anyone building a stake in UEC for the purposes of launching a bid must, at a minimum, bid at the highest price offered for any of that stake in the 4 months immediately preceding the bid (ie: anyone buying at or above 30c and proceeding with a bid, must then bid at or above that same 30c mark); 2) no bid will be successful in the absence of bringing ALN on board (for ALN, any price above 18 -22c is likely to be considered fair, reasonable, or better than breakeven); 3) any re-rating by someone with deep pockets is more likely trying to build a stake for purposes of spoiling any reuslting bid, or squeezing out an even higher price (ie: a Rivkin initiative, for instance); 4) as we have seen elsewhere, however, either low bids are being made for distressed telco assets, or no bids at all are being put up for consideration (ie: the danger with a squeeze play is that the targeted predator may not engage the squeeze, or may acquire ALN's stake, whilst being content with minorities being locked in); 5) at an MC of $173m, the share price only needs to rise to 39c in order to breach the $200m limit (something which is then likely to lock out all but a few major telcos from a prospective bidding war); 6) @MC=$200m, the actual acquisition price will exceed $300m, with assumed debt commitments of $45m, prospective debt commitments of $35m+, additional working capital requirements of $5-15m, and transaction and success fees of $10-15m; and 7) to pay back such an acqusition price, one would need substantial net profits today (not in 2-3 years time), substantial cost savings today (not tomorrow), and valuable surplus assets which are capable of being turned around, and divested for a strong return, or closed for minimal outlay.
To, therefore, answer your question Blokes, I would argue that someone is stoking the share price either to smoke out a predator, to greenmail a predator, or to position themselves for an eventual break-up of the Company.
That said, no-one has yet filed a 5% substantial shareholding notice as this would be the first trigger that I would be looking for.
I do not believe, however, that any serious bidder for UEC is preparing to bid at these sorts of prices as they only need to secure ALN's stake in order to: 1) move to a 19.9% threshold position /blocking stake; or 2) acquire all of ALN's position (with a complementary offer to all minority shareholders) in order to secure 66% control, and more likely anything up to 80%+ control on a full bid for the Company.
Apart from this, I have no other plausible explanation of the continuing rise in the share price, and especially of the sharp rise from 3.30pm last Friday through to tonight - unless, of course, someone has leaked some information, or if UEC is itself being just a tad mischievious (ie: all of these new issue announcements, CEO selling, but still holding a 93% equity stake even though most of that stake will never reach threshold value, Chairman buying through salary sacrifice and /or various UEC Share Plans not available to ordinary shareholders, etc).
