SGZH...Rames, the one thing that sticks out in your SGZH analysis is the Final 2011 EPS projection of $1.60.
IMO, that's basically projecting 0 growth from Q4 of this year to the end of next year. (FY2010 EPS est = $0.41. Going forward...$0.41 x 4 = $1.64.). It just dosen't make sense because Q4 2010 will only show 2 months or less of a partial re-opening of the Xing An mine with full operation commencing in Q2 of next year. SGZH can now produce coal from the mine year round and brokerage business will be a significant revenue contributor going forward. How is it possible for there to be 0 growth over the next 12 months going forward from Q4 2010?
Also, I noticed in your figures that profit margins have been down quite a bit since the closure of the Xing Am coal mine. Do you think that has something to do with costs pertaining to the overhauling and re-opening of the mine? If so, wouldn't you think profit margins will return to at least the high 30% to the low 40% range? If profit margins were back to where they were before the closer of the Xing An mine (Q4 2009), we'd be looking at approx $0.63 EPS for Q4 2010. (SGZH did say that they will have lower costs in the future).
Considering the above, the 2011 EPS projection of $1.60 seems very VERY low to me. I'm thinking (hoping) SGZH has a blow-out year next year. Time will tell.
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