Technicals versus fundamentals25 Sep 2014 09:22
Technicals have pushed this share down to this level doing a 19 for 1 rights issue many people would not be inclined to take up their whole rights and therefore would sell them pushing the share price down to the issue price where the rights have zero value. Post the transaction I estimate the EV will be around EURO 500 million. That is too low for a company producing 9 million tons of coal a year, 2/3rds of it coking in a location where there is a supply shortage. A few possible positives for the company is a pretty sharp decrease in the Czech Koruna and Ukraine's (a fairly large coking coal producer) coal production has been impacted by the conflict there. Coking coal is currently at a third of its peak, if it can recover a small part of that the current valuation will appear absurd.