Great post. I agree with most of what has been expressed here....

Great post. I agree with most of what has been expressed here. There are many ways to ascertain value - and yes we never do know where we are in the cycle - but almost any way you dice it, this business currently screams value. And it screams all the louder for all the 'soft' reasons just expressed (aligned & prudent management etc).

Wrt the comments about working capital, I sort of agree, to a degree. But you don't have to be an alchemist to see that recent cashflow numbers have been massively 'distorted' by advance customer payments recieved in FY17 - and it's not particularly hard to make the adjustments to account for them.

If LYL's OCF's were massively boosted by advance payments in FY17, then it's only natural that as the work progresses it will be leaving a hole in the current OCF's - which can easily be seen as a running down of 'unearned revenues'. Not hard to make the adjustment.

Wrt to the cycle, I agree we cannot know where we stand or what's coming. That said, we have some idea of where we don't stand. We don't stand, I would suggest, in the midsts of a mining investment boom. The biggest bust in living memory is fresh in our minds. In our minds as investors, and in the minds of mining executives. That, I suspect, can give a sense of what dangers lurk. Where there is caution, there is a self correcting mechanism that prevents the next bust, or at least to softens it - if I could be so bold as to say.

But if we are concerned about the next bust - well guess what, we just had the mother-of-all. We don't need too much imagination to know what the consequences might be. So what happened to LYL - its earnings dipped into the red for barely 12 months (if I remember correctly). And this was mainly because LYL had such a strong balance sheet that management didn't feel the need to cut costs to the bone, and was wise enough to know that to do so would be counter productive in the long run.

And its that strength of balance sheet, which flows from the strength of management, coupled with their owner mentality, that delivers with each passing cycle - as you have suggested.