Hello, did you see their recent share buyback? The stock didn't respond that much, only a 1% gain. Also, do you know when their next earnings is? I looked online but there wasn't much information except sites that showed earnings to be "N/A."
This is a very detailed analysis. What bothers me a lot is the history of massive dilution. Why do you think it's not gonna happen again?
There will also be a discussion about Kenmare at the London Value Investing Club at 5th December. Definitely, I want to learn more from people that follow the company.
Just one big concern. The key assets located in the Northern parts of Mozambique. This has been a very unstable region are recently with various insurgencies from both ISIS related and other terrorist groups causing havoc in the bordering Cabo Delgado province. Things look better presently....and the mining assets are a few hundred km's away from the insurgencies.
The Mozambique government is also known for its shady business dealings.
I was surprised that you did not discount this into your analysis. Maybe, for this reason, KMR should trade at a discount, though not nearly as large as the current discount.
Because of the geopolitical risks involved I think the asset would be worth more to a larger more diversified mining company than to minority shareholders. A takeover argument is thus very compelling. However this would again acquire approval from Mozambique government ?
"The model implies KMR will be running at an underlying FCF yield of ~21% (ex-Nataka capex) by FY23, rising to a 30%+ yield by FY25."
Can you help me with this math (using your #s, slightly cheaper today)? Are you basically taking starting EV + cumulative cash build by FY25 and calculating the EV/UFCF yield in FY25 at that point? Because I only see ~100m of FY25 FCF on today's market cap of ~$600m or ~16% fwd FCF yield. Less if discounted back.
Is another way to think of it: Current EV + nakata required capex = $823m. Add up FCF from now until FY25 = ~400-450m so get 50% of EV back in next 4 years? Seems pretty good, but not amazing given prices are well above trough levels (i.e. macro needs to keep being okay). Thoughts?
Once again great work, Conor! Nonetheless I think there is small mistake in the "Recent Results & Trading Update" table. Shouldn't the second column be FY 21 instead of FY 20?
Hello, did you see their recent share buyback? The stock didn't respond that much, only a 1% gain. Also, do you know when their next earnings is? I looked online but there wasn't much information except sites that showed earnings to be "N/A."
This is a very detailed analysis. What bothers me a lot is the history of massive dilution. Why do you think it's not gonna happen again?
There will also be a discussion about Kenmare at the London Value Investing Club at 5th December. Definitely, I want to learn more from people that follow the company.
Great work Conor.
Just one big concern. The key assets located in the Northern parts of Mozambique. This has been a very unstable region are recently with various insurgencies from both ISIS related and other terrorist groups causing havoc in the bordering Cabo Delgado province. Things look better presently....and the mining assets are a few hundred km's away from the insurgencies.
The Mozambique government is also known for its shady business dealings.
I was surprised that you did not discount this into your analysis. Maybe, for this reason, KMR should trade at a discount, though not nearly as large as the current discount.
Because of the geopolitical risks involved I think the asset would be worth more to a larger more diversified mining company than to minority shareholders. A takeover argument is thus very compelling. However this would again acquire approval from Mozambique government ?
"The model implies KMR will be running at an underlying FCF yield of ~21% (ex-Nataka capex) by FY23, rising to a 30%+ yield by FY25."
Can you help me with this math (using your #s, slightly cheaper today)? Are you basically taking starting EV + cumulative cash build by FY25 and calculating the EV/UFCF yield in FY25 at that point? Because I only see ~100m of FY25 FCF on today's market cap of ~$600m or ~16% fwd FCF yield. Less if discounted back.
Is another way to think of it: Current EV + nakata required capex = $823m. Add up FCF from now until FY25 = ~400-450m so get 50% of EV back in next 4 years? Seems pretty good, but not amazing given prices are well above trough levels (i.e. macro needs to keep being okay). Thoughts?
Once again great work, Conor! Nonetheless I think there is small mistake in the "Recent Results & Trading Update" table. Shouldn't the second column be FY 21 instead of FY 20?