Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Should be 600 and above minimun when compared to peers....
I think the next few days will see it zoom to 500 at least.
Good thing we have good old Nader/Dolphin to wake em up Americans about evil MON ! Eh?
plashadpobedy, dotn forget to let us know when you have your newsletter out with picks and predictions.I might even sell a couple MOS shares to pay for it! lol
ADY.AX, is anyone still loading up here, or waiting for the dust to settle? Given the volume as of late I would guess the distressed seller is about to be done, but what do I know...
This is the most confused I ve been in a long time. Bearn Sterns goes belly up, USD looks increasingly as a banana country currency and the response is hard assets and commodity related stocks go all down strongly....
Donald Coxe will be back from holiday tomorrow with a new CC. Hope he wil shed some light. Eagerly awaiting the call. He will for sure get more sophisticated than the crap that is now red on the mainstream media.
BTW, stupid fact, anyone noticed the whole commodity complex turned south as he anounced he was taking on holiday? , lets see
if it gets reversed tomorrow...
DBA: I have a bunch at 30.75. Also lots of other ETC or ETFs for ag futures around same levels similar to buying DBA at 30.75.
My question: is it much of the activity we saw today on the AGs just related to chicken-out global scare on the BSC fall out? In other words, did we witnessed Plain Old BS ???
I think thats the case and lots of those Ag futures ETFs like DBA are on fire sale.
Not just a mention on HotCopper. The trading halt release specifically mentions a pending placement. See at asx.com.au
Aussie potash juniors: Yes, they showed great resilience. I added a new contender in that space...STB.AX at 19 cents..see announcement:
http://aspect.comsec.com.au/asxdata/20080228/pdf/00817202.pdf
RWD.ax + 29.91%
RWD.AX: just hit 1 buck, now 1.01 X 1.02. I think we are glad to be witnessing a new monster bull run as those U or PM Jrs previously had ....
just hold on to your shares for a wild wild ride !!!!
lbas: Thanks! Had not seen that. I dont even have a position in PGG Wrightson as of yet. They are a real little neat firm. One to have in a broad Ag diversified portfolio IMHO
MAK.ax: Broke the 2 bucks to 2.05 X 2.09 and market depth looking like it might have legs to go. What a monster!!!
PGW.NZ: I know them, but they are NOT a pure seed play. They have farms, land, provide financial services to farmers, do sell fertilizers, seeds, etc.... Involved in Australia, New Zealand and Uruguay. Nice company indeed and not very expensive.
LOL. where do you think it might be retracing back? I refuse to sell any for the time being...
MAK.ax just hit 2 bucks!!! Weeeee
Seeds... the way to invest in # 4 is through their seeds division, VILMORIN ( ticker: RIN.PA) in France. I also like a lot #5, KWS AG (Germany), ticker KWS.DE. Both are high priced low floaters and lowly valued compared to peers ( specially the leaders like MON and SYT ). They will either get revalued or bought out...
Herbicides: NUF.AX looks a nice play in that space...
http://www.nufarm.com/About
RWD.AX has a much larger spread and much lower volume as compared to MAK.AX. Probably eons far away they can produce anything...but who cares ;)
littlefish,agree anything can go on short term.... my investment thesis is Very LT anyway....2-3 years at least ...within that time frame I think Ags will outperform about everything...and any of these juniors IF successful, might prove to be THE investment of a lifetime!
RWD.AX: Weeeee!!! Now 36% up. Glad I added a few more just before it took off!!! And MAK up 13% as well!! .
Now there´s 2 scenarios for these Energizer bunnies:
1) Do they temporarily cool off?
2) Does this spill over the Canadian Jrs as well??? ( i.e. the Canucks Go Crazzzy!!)
Any thoughts?
Yes...then look at 10 year charts on U or metal stocks....
and check the moves back in 2002-2003....
I dont think we are witnessing anything extraordinary ( stock like) IF there´s going to be a brutal crash on the grains/food situation....as it seems its gonna be ( I take credit on Donal Coxe for that)
littlefish, would you be selling Denison Mines or other U or BMs back in 2002-2003???
Same think applies now IMHO. Selling Potash jrs. will make you look like a fool in 2-4 years...
MAK.AX: Fantastic move!!! Maybe its best to just sit tight and let them run .Agree we might be in the early stages of similar moves previously witnessed with metals or uranium juniors. Just that this time the list is really short: is it just MAK.AX,RWD.AX,KCL.V,RAY.V,ALM.V and API.TO? Any other potash jrs.?
For a sulfur Aussie play I was suggested MLI.AX. Havent really checked though
More Ag ETNs can be found here: http://www.etfsecurities.com/en/welcome.asp
I am heavily invested on some of these (specially the grains)
MAK.AX: I own that stock on IB as well. Very quick 50% gain in a few days. Also own RWD.AX, another Aussie potash junior that hasnt been mentioned here. Not sure about their merits though.No time for much DD. Since buying up all junior potash I can is part of my current Ag focus I bought them on yellowcake´s mention on hotcopper.com.au forum. He thinks RWD and MAK will be the best performers on ASX for 2008. Yellowcake is absolutetly focused on Ag and started the Grains discussion thread amongst others on hotcopper.
Just found about this board. Great job!
Yara, I own a bunch. If it was valued as POT.TO, it would be trading around NOK 600. Do you agree?
IB: It sucks, it always gives me wrong % changes on HOC.TO and AXC.TO and the jerks cant give me an answer (this has been going on for months)
UMN.TO what´s with the Niger spin-off shares? When are we about to get them? anyone?
Bob, so what are your gold favorites here? TIA
Grat news indeed for the metal heads.
SLT look like a really nice direct play in India IMHO
It´s not a junior, so slightly off topic
Sterlite Industries (India) Ltd.
By Bill Mann
* NYSE: SLT
* Home Country: India
* www.sterlite-industries.com
* Country of Incorporation: India
* Market Cap: $10.7 billion
* Dividend Yield: 0.7%
* ADR Ratio: 1:1
* Buy-Below Price: $15.8
* Company Risk Rating: High
Highlights:
Sterlite is one of India's largest companies, and it controls a hefty share of the country's copper, zinc, and aluminum markets.
These metals are used in cables, wiring, and a countless number of other items, and developing economies will continue to demand them.
Sterlite isn't a play on the global commodities boom. It's a play on global infrastructure -- India, specifically. Here, we've got a low-cost producer with a valuation that doesn't seem to fit its still-startling growth prospects.
Country Risk: LowCurrency Risk: MediumPolitical Risk: MediumEconomy Correlation: Medium
7.5
Metals aren't going out of style, whether you're talking about the copper in your power cables or the aluminum foil that's wrapped around last night's leftovers. This month, I've got a company that profits from the metals demand while enjoying exposure to a rapidly-emerging economy. If that doesn't sound intriguing enough, would you believe that this low-cost producer is available at an enterprise value of 4.2 times EBITDA, less than half that of its main competitors? Yeah, I'm impressed, too.
The Business
Sterlite Industries (India) Ltd. (NYSE: SLT), an Indian metals and mining company, has enjoyed one heck of a great run. Propelled by the metals boom, this gargantuan business has remained off limits to most investors until recently: In June, it held a massive $1.8 billion secondary offering on the New York Stock Exchange, bringing some 130 million shares to the U.S. market. Previously, investors could only buy the stock in India (which is closed to foreigners) or buy shares of its U.K.-listed parent company, Vedanta Resources. The founding Agarwal family is Sterlite's biggest shareholder, with a 53.6% stake in Vedanta Resources.
I said "gargantuan" when describing this business, and I meant it. Sterlite controls a mammoth share of India's copper, zinc, and aluminum markets, specifically:
* 42% of the country's copper market
* 64% of Hindustan Zinc Ltd. (HZL), India's only inte-grated zinc producer, which controls 61% of the domestic zinc market
* 51% of Bharat Aluminium Co. Ltd. (BALCO), which has a 25% share of India's aluminum market
Furthermore, Sterlite has exercised its right to acquire the 30% of HZL and the 49% of BALCO it doesn't own, both from the Indian government. (The government has proposed that the remaining 6% of HZL be distributed to HZL employees.) The government has disputed the exercise of both options by suing the company in Indian courts. We'll keep you posted on how it turns out.
Sterlite is also entering the power generation business, which holds enormous promise given chronic undersupply in India and improvements to the regulatory framework of the business. The company is investing $1.9 billion to develop its first phase generation facility, a 2,400-megawatt thermal coal-powered plant. This is a huge investment, but Sterlite has loads of experience managing power facilities that serve its mining and smelting operations, and it has been selling excess power into the grid for several years.
The Financials
Net sales increased by 96% from fiscal 2006 to fiscal 2007 to $5.6 billion. This resulted primarily from rising metal prices and increased sales from expanded smelting capacity. Cost of goods sold dropped from 76% of revenues to approximately 60% in two years, helping net margins skyrocket to 19.7%.
Following its offering in the United States, Sterlite has about $1.8 billion in cash, versus about $300 million in debt. Not included in these calculations, though, is the $1.9 billion it has committed to spend on its new power generation facility, as well as the potential for almost $2 billion to acquire the remainder of HZL should it be allowed to do so.
Sterlite generated $936 million in operating cash flow in 2007 and had capital expenditures of $588 million. Although zinc only accounted for 36% of revenues, it accounted for 67% of earnings. Obviously, satisfactory resolution of the ownership structure of HZL would be huge for shareholders.
Sixty-three percent of Sterlite's copper business, 50% of its zinc business, and 28% of its aluminum business went to export in fiscal 2007. These numbers have increased significantly from those of previous years. In total, 53% of revenues came from the export market in fiscal 2007.
The Valuation
Base metal prices have risen consistently for more than five years. Global zinc inventories, for example, have dropped by more than 90% in the last three years, down to 66,000 tons. At 4.2 times EBITDA, Sterlite's stock is priced as if commodity costs will go against it and the operating leverage it has generated from increased production will reverse. Still, prices do spike -- zinc shot up to roughly $2.10 per pound in December and has since settled in the $1.55 range. India's growth rates have exceeded 9% for years and are projected to grow by 7% to 9% per year through 2011. The company can sell everything it produces, and due to import tariffs, it can sell for higher prices in India than for export. These tariffs are being reduced and currently sit between 2% and 5%. What's clear to me is that the company partly chose to list in the United States (and Japan) rather than simply running such a large secondary in India because management believed the American market would value its shares closer to that of its competitors. I'd be happy if it did just that.
The Risks
We already know that Sterlite is dependent upon commodity pricing, but it also has a high fixed-cost business. In addition, lower commodity prices could have a dramatic impact on the company's profitability, and substantial risks are tied to its strong dependence on demand from India and the Far East. Of course, zinc, copper, and aluminum can be sold anywhere. Zinc pricing will remain the biggest tipoff to how well Sterlite is doing -- if it stays high (it should), this company will make money hand over fist. It should also be noted, though, that the power plant initiative is an awfully big bet for the company.
Global zinc demand has surged while supplies have remained static, resulting in enormous price increases. Activity like Xstrata's high-multiple purchase of Falconbridge show just how desperate mining companies are to add to their zinc reserves. Into this environment saunters Sterlite, dropping a massive secondary offering on the U.S. market. It's a cheap stock, and the size of the offering has kept shares from leaping higher. They won't stay down forever.
Columbia: Make that ColOmbia instead !!! Common mistake by English speakers. Buenas noches, Bob
Hank: DNO. You said: "Stay away from DNO.ol.. hank"
Can you elaborate on your thoughts on that one? I´m really interested.
I sold out of my huge DNO position early this year for a 4-bagger profit around NOK 11-12. At that time they were producing 10k b/day.
Right now (July figures) production is up +70%, stock price down 25% and Iraq finally is looking to pass the new oil law next month..
that makes DNO a decent takeover play right now IMHO.
Small oil firms in Iraq becoming buyout targets
Simon Webb, Reuters
Published: Tuesday, August 21, 2007
DUBAI -- When Iraq approves a new oil law, the smaller firms that took the risk to start up early despite insecurity and the lack of a legal framework will become buyout targets and are already being sized up by larger competitors.
The most attractive targets are those in the semi-autonomous Kurdish region, where relative stability and a government hungry for development has allowed foreign companies a foothold.
"It was a high risk strategy for some of these small companies to get involved in Iraq," said one London-based energy analyst at a private investment bank.
"But that's what they do -- go where nobody else will go and get the head start. If the legal issues are sorted out, they will look quite attractive."
The Kurdish Regional Government (KRG) signed five production sharing agreements (PSAs) from 2004-2006, which it claims will not violate the new federal law.
Iraq's Oil Minister Hussain al-Shahristani said on Tuesday the new law will stipulate a review of all oil and gas deals struck by the Kurdistan government. Shahristani said he expected parliament to pass the oil law next month.
Larger companies were already circling the operators in the Kurdish region with a view to acquisition once the legal issues are ironed out, industry sources said.
"There are rumours that some of the majors are already working deals to back into existing licenses and it seems likely that some will see acquisition as a potential route in," said one industry executive.
Initially, mid-sized firms were more likely to get involved in buyouts and new contracts in the Kurdish region than majors.
The majors would be more cautious as they have their eyes on potentially much bigger prize of Iraq's largest oilfields in the south.
Corporate security policies ban majors from sending personnel into Iraq, including the Kurdish region. Until security improves, they can't do more than sign deals.
With big oil potentially sidelined for years due to security, a similar pattern could emerge in the south as in the Kurdish region with smaller companies moving in first and becoming buyout targets later.
Norway's DNO, the first foreign oil company to drill in post-war Iraq, holds one of the PSAs in the Kurdish region and is already producing from the Tawke field.
DNO has for months been seen as a potential takeover target. In January, its leading shareholder said the company faced possible unsolicited takeover attempts.
"There's been a lot of talk about DNO as a possible acquisition target," said Alex Munton, analyst at global consultancy Wood Mackenzie. "The assets that they have in Iraq look extremely valuable."
Another PSA holder and potential target is WesternZagros, a unit of Canada's Western Oil Sands Inc.
U.S. Marathon Oil Corp is buying Western Oil Sands, but the Iraqi unit is not part of the deal and is being spun off to Western shareholders.
Western said last week that the oilfields covered in its deal with the KRG could yield a billion barrels of oil over their lifetimes.
Addax Petroleum, together with Turkish partner Genel Enerji, is developing the Taq Taq field in the Kurdish region, which it says could produce 200,000 barrels per day.
Addax, which also has operations in West Africa, was more likely to be a future buyer than a seller, industry sources said.
Turkey's Petoil holds two PSAs as part of joint ventures. The KRG has also signed memorandums of understanding with Heritage Oil and Sterling Energy. Sterling said last week it was hoping to sign a deal with the KRG.
The pace should pick up quickly in the Kurdish region once the federal legislation comes into effect, Munton said.
"The legal framework being in place could really kick start quite a lot of activity," he said. The KRG has finalised several other PSAs and has said it wants agreements for all of its exploration blocks by the end of the year.
The region has high exploration potential, Munton said. Iraq holds the world's third-largest oil reserves, but the Kurdish region is relatively unexplored.
"It's very much a frontier region," he said. "There's very little geological data available."
Agree, its bargain hunting time. I loaded the boat on LBE.v at 2.40 today.
Is there any other stock out there selling at 1 X projected cash flow for 2008 and going to the TSX main board soon? If so, I would like to hear about it!
ETFs: Does anyone know of any ETF that covers junior base metal miners being talked here?
I have to correct myself... Questrade my announce 9.95 but once Exchange fees are incorporated, the price gets to be similar to that of IB or else.
And then..Questrade service just plain SUCKS!
So I wont recommend it to no one
IOX.OL INTEROIL EXPLORATION & PRODUCTION ASA (INTEROIL)
ENTERS INTO LETTER OF INTENT (LOI) TO ACQUIRE OTG
ENERGY
http://www.newsweb.no/index.jsp?messageId=156379
IOX.OL = USD 182 Mkt cap
What do you get for that price?
+ 10k/bpd exit 2007 rate production and about 13M barrels reserves
if that weren´t cheap enough.... just check out their already financed/paid for exciting African acreage .. http://www.interoil.no/
I believe everyone should own some IOX at least. So we can celebrate a 10 bagger in 3 years.
comments wellcome
cheers
Coxe: link? TIA
Pretty good list. I would add MMT.V and AFR.L, increase IOX.OL and short CLL.TO
Questrade in Canada has a flat rare 9.95 for all trades. I just opened an account with them and saving a lot from the IB fees. Say 50k NI.TO at 80 cents will cost you CAD 200. With questrade, 9.95. That´s some saving. Now, I´m in Europe and unsure if US citizens can opne an account with a Canuck broker? not sure