RE: Offer23 Jun 2026 22:04
You can really see you are an FD, all about the EBITDA :-)
I'm with you on the core point. For 29-year Pulawy and 40-year HyProMag assets, NPV truncates the long tail and gives near-zero weight to cash flows that will in reality still be there in 2050, so capitalising steady-state EBITDA is a fair cross-check and arguably the better lens for ultra-long-life infrastructure. Your chain also ties: 5x £169m plus circa $436m debt is circa $1.5bn EV, which at 7x needs around $220m EBITDA, and your bottom-up gets there. Crediting MKA with only 60% of post-financed MKAR is the right move too, since it captures the equity dilution a look-through NPV glosses over.
Two challenges though.
First, the method swings from NPV being too hard on the far future to ignoring the near future entirely. That $225m is fully-ramped steady state, and it does not exist yet: Songwe first production 2029, Pulawy 2030, HyProMag USA commissioning H2 2027. Capitalising it at 7x against today's market cap applies zero discount for four to six years of execution, financing and ramp risk, and zero for the equity still to be raised. That is the mirror image of the NPV criticism. Fair value today is the present value of that future EV, discounted and dilution-adjusted, which is roughly the gap the market is pricing.
Second, the load-bearing input is the $300-350m MKAR EBITDA, which you flag yourself as a guess. Against the integrated projections that implies 85% plus margins. Possible for a high-value separated basket, but it is the bull end. Nearer $200-280m looks more central, and that alone can flip the test. I'd also haircut the UK/Germany $25m to MKA's 79% Maginito interest.
Net, I don't think we actually disagree. Your £2.50 is the steady-state, no-time-discount number; a discounted NPV view lands nearer £2. The 25% gap between them is more or less exactly the renewal and long-tail value you're arguing NPV misses, so the two bracket fair value rather than compete.
Both are still 'if it gets financed, built and ramped' destinations, which is why we're sat at 43.5p. As the projects de-risk toward production the right target should migrate up from the NPV figure toward yours.
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