Targets26 Aug 2018 14:05
Well reading that lot was a waste of my time!
It is interesting to note though that MG is estimating a post tax profit of £30m, based on rather negative assumptions.
The average PE ratio for SA companies is 14.63 and the average AIM100 company PE is significantly higher than that.
Using a PE of 14.51, our market cap would give us 39.25p per share.
As we are a growth company, we should attract a much higher PE ratio than the average.
Just consider our potential growth prospects with production growth through Vametco, Brits and Mokopane.
Plus brownfield acquisition, plus electrolyte production, plus VRFBS, plus Eskom, BE, Lemur, Afritin and Sojitz acquisition.
Also, the huge structural vanadium supply deficit. This will be even greater in November when the new Rebar regs kick in.
A PE of 25 would certainly not be unreasonable.
A PE of 25, even with the low post tax profit estimate of £30m would give a market cap of £750m, 68p per share.
However, a more realistic post tax profit target, taking into account the higher production that will be achieved in H2, after the phase 2 completion and higher FeV prices, is £50m (that is even using costs of $30 per kg).
Bear in mind US FeV has already averaged over $80 per kg for the last 13 weeks, plus the 5% Nitrovan premium, which gives $84 per kg, so that is Q3 already sorted!
US Nitrovan currently stands at over $90 per kg.
On those figures...
A PE of 14.51 would give 65p per share.
A PE of 25 would give £1.13 per share.
Much more reasonable targets and that’s just for Vametco.
Cash elephant! :)
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