ILU - Iluka Resources

Out Too Soon said:

Sure did "double dip", well spotted. Recovering today, hope it continues, $3.20ish is definitely abandon ship territory
Good luck to those holding, I've still got a sell in at $3.99 but that seems kinda silly at present

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$3.20 is buy buy buy territory...i mean what else would u be doing at that level and why would u be buying at much above that :dunno: the ILU chart clearly shows classic ranging quality's...its pretty much screaming the buy and sell levels.

So_Cynical said:

$3.20 is buy buy buy territory...i mean what else would u be doing at that level and why would u be buying at much above that :dunno: the ILU chart clearly shows classic ranging quality's...its pretty much screaming the buy and sell levels.

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Agreed, but at the same time i think we are going through a period of bearish price action within that range. $3.20 would be a reasonable time to buy, so would anything below it (baring any critical news).

3.15 looks like a medium term resistance line, could make a position based on a stop loss at just below this.

I don't think market sentiment can last for too much longer, too many good days, some profits need to be taken up. As i type this the DJIA is down about 0.4%, so maybe Wednesday/Thursday is the day we see if I'm right or not.

So_Cynical said:

$3.20 is buy buy buy territory...i mean what else would u be doing at that level and why would u be buying at much above that :dunno: the ILU chart clearly shows classic ranging quality's...its pretty much screaming the buy and sell levels.

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Brought back into Iluka today at the open $3.32 didn't think it would see $3.20 so jumped in early time will tell all of course...this is my second time buying ILU and still hold a small free carry position at $2.95

One day these guys will start paying divis again and by the time that comes around i plan on having a substantial free carry position....my plan is to exit original capital at about the $3.80 level, in a few months time.

So_Cynical said:

Brought back into Iluka today at the open $3.32 didn't think it would see $3.20 so jumped in early time will tell all of course...this is my second time buying ILU and still hold a small free carry position at $2.95

One day these guys will start paying divis again and by the time that comes around i plan on having a substantial free carry position....my plan is to exit original capital at about the $3.80 level, in a few months time.

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I decided to jump early, and so less than 1 month later im out at $3.71 Net profit of around 11% just too easy ILU has to be one of the best in and out high volume stocks in the ASX100

As per my plan i have left my profit in with a very small amount of capital for a long term hold, my average buy in price has gone up slightly and my shares held have increased by about 30% with about 90% of those shares free carry.

Iluka's share price has been on the up again lately and today traded above and closed at $5.50 for the first time in almost 3 years...its starting to look like the glory days of buying ILU at under $3.50 are well and truly over. :dunno:

Iluka released a presentation a few weeks ago and were very up beat in last weeks quarterly report...anyone interested can read on.

http://www.iluka.com/_uploads/docum...M Eastern Western Operations (July 2010).pdf
http://www.iluka.com/Default.aspx?page=130&did=613

I haven't posted a chart in this thread for a while and i figure a near 3 year high is a good enough excuse plus gives me a chance to show off my 2 near perfect bottom buys and my 2 way too early sells...still a good example of my buy low and leave profit in strategy to achieve capital growth and a high % return dividend stream.

Of course assuming/anticipating ILU will start paying dividends again in the near future.
~

ILU traded above $6 today for the first time since probably March 07....very close to a 4 year high close today...what an amazing turn around, bring on the return to dividends.

So_Cynical said:

ILU traded above $6 today for the first time since probably March 07....very close to a 4 year high close today...what an amazing turn around, bring on the return to dividends.

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Iluka trading above $7.50 today :casanova: almost a 5 year high, its been an outstanding run since late July with the SP now up by around 150% since the July low, and still no dividend announcement.

anyone thinking $9.00 and beyond?

could get very interesting from here or has it made its run?

matty77 said:

anyone thinking $9.00 and beyond?

could get very interesting from here or has it made its run?

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The SP is looking unrealistic IMO...if we look at the dividend history over the last decade ILU has never paid more than 22 cents for a total calendar/financial year, so a yield at today price of around 2.6%

Is the market pricing in a substantially higher dividend? perhaps a special dividend or return of capital? :dunno: the market is pricing in something good....perhaps if/when the goodies fail to materialise the price mite tank back to a more sustainable $5 something. :dunno: anyway i hope the SP holds up until Feb so i can exit with a CGT discount....ready for a re-entry under $6

Iluka released there 2010 Full Year Results today. :1luvu:

So_Cynical said:

Is the market pricing in a substantially higher dividend? perhaps a special dividend or return of capital? :dunno: the market is pricing in something good....perhaps if/when the goodies fail to materialise the price mite tank back to a more sustainable $5 something. :dunno: anyway i hope the SP holds up until Feb so i can exit with a CGT discount....ready for a re-entry under $6

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Well i was right about the market pricing in something good ILU has been hitting all time highs since December and today the SP hit yet another all time high of $10.81 on the back of today's 2010 Full Year Results.

Its fair to say the results were somewhat spectacular. YOY highlights.

• Mineral Sands Revenue up 51%
• Mineral Sands EBITDA up 230%
• Group EBITDA up 205%
• Mining Area C royalty (BHP) up 51%
• Net debt down 18%
• Dividend reinstated 8 CPS

http://www.iluka.com/Default.aspx?page=130&did=713

The write up in the Australian reckons that the Zircon price could double again in 2011

http://www.theaustralian.com.au/bus...ounces-forecasts/story-e6frg9df-1226012128222
~

I'm just so happy i gave such a high priority to buying ILU shares when i did, ILU was a must have, core portfolio stock for me....i would imagine that ILU would be the only ASX100 stock hitting all time highs today, or pretty much this year.
~

ILU hit yet another all time high today $10.99 almost breaking thru $11 and that got me thinking that a index inclusion mite soon be on the cards...a look at the % holdings of the index tracking fund STW confirmed my thinking.

http://www.spdrs.com.au/etf/fund/fund_holdings_STW.html

ILU is currently holding 45th position which is above other stocks already included in the ASX50 like

• CPU #48
• CFX #49
• LEI #52
• SHL #53
• CWN #55
• BLD #57

I know ASX50 inclusion is not only based on market cap, but surely a re-rating is just a matter of time.

I sold out today at the open $12.25 all my shares, both parcels for profits of 312% and 265% while im absolutely stoked with the profit and the fact that i get the CGT discount on both parcels...im also very conscious that selling was never part of my overall plan and ILU has the potential to go higher and pay handsome divis down the road.

Also very aware that the ILU SP would fall very quickly on any big negatives coming outa the BRIC Country's...also figured that i could pull higher div yields else where and it was probably better to open another new "open" position rather to just hope i could hold on to the profits.

Anyway Good luck to the holders.

-------------------------

PS: closing out this trade really kicked my stats along and gave a
big boost to my expectancy (up over 33%)

So_Cynical said:

I sold out today at the open $12.25 all my shares, both parcels for profits of 312% and 265% while im absolutely stoked with the profit and the fact that i get the CGT discount on both parcels...im also very conscious that selling was never part of my overall plan and ILU has the potential to go higher and pay handsome divis down the road.

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So_Cynical, an impressive win .
Makes me wish I had started in the stock market earlier, so I could have ridden the boom in the resource stocks .

Been going allright this year hasn't it. I was looking at this a decade ago and just saw the current price......multi bagger!

How much higher is Iluka going to go!?

I have just read their '2011 AGM Chairman and Managing Director's Addresses' which was released on 30th May. I took out all the good points and bad points and summarised them like this:

Good:

-Expect significantly improved financial results over 2011 and 2012, and beyond.

-The company’s cash flow generation is much stronger. This has enabled debt to be
reduced. Our net debt has reduced from $312 million at the 31 December 2010 to $247 million at the end of April.

-Expect significantly improved financial performance from this year forward, including much stronger cash flows and, with this, the opportunity for strong returns to shareholders.

-As demand has recovered, Iluka has increased zircon prices on five separate occasions from 1 April 2010. The weighted average received price over this period to the end of the June quarter of 2011 has doubled, to an average received price in this quarter of close to US$1,600/tonne.

-For high grade titanium supply, the main avenue we have is the reactivation of idled synthetic rutile kilns.

-Other sources of ilmenite include the Tutunup South mine in Western Australia, which is
expected to come into production next month and be a major part of the feed source for
SR kiln 2, and the potential reactivation of mining at Eneabba in the Mid West to provide
not only ilmenite, but zircon and rutile over a period of a few years.

-We will spend more on exploration activities – particularly greenfield exploration.
From a recent average of $20 million annual exploration, the expenditure planned for this year will be closer to $25 million and move towards $30 million per annum.

-Another is in development of a new product, acid soluble SR, which – as distinct
from our current synthetic rutile products which are used in the chloride pigment process – may be able to be utilised in the sulphate pigment process, which comprises some 45 per cent of the pigment market.

-We have a solid in-country presence in the world’s largest zircon market – China

Bad:

-With the pricing momentum being achieved, it is probable that new raw material projects will be induced. However, as we see it, for both high grade titanium and for zircon, there is not a well defined pipeline of projects, let alone committed, funded or commenced new mines, which will materially impact supply over the medium term.



Prior to 2010, Iluka seemed to be a mess, with very erratic profits and no real direction. Now, things appear to be getting much better and the directors are committed to expanding their company and profits. They have made a big turn around.

I'm waiting for their 2011 annual report to come out and, if profits are still increasing and everything seems to be still on track, I will invest in them.

Does anyone else think that Iluka has a bright future?

Dash.

Dash8 said:

-As demand has recovered, Iluka has increased zircon prices on five separate occasions from 1 April 2010. The weighted average received price over this period to the end of the June quarter of 2011 has doubled, to an average received price in this quarter of close to US$1,600/tonne.

With the pricing momentum being achieved, it is probable that new raw material projects will be induced. However, as we see it, for both high grade titanium and for zircon, there is not a well defined pipeline of projects, let alone committed, funded or commenced new mines, which will materially impact supply over the medium term.

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Gunson Resources, being a zircon focussed exploration company, compare themselves with Iluka in any reports they put out. They mention that zircon supply will not meet demand in future because there are few new producers coming on. Senegal (MDS) and Kenya (BSE) in Africa to name some. They mention zircon is China's third most imported material and ...

Current zircon supply squeeze to become acute from 2012

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Dash8 said:

How much higher is Iluka going to go!?

Does anyone else think that Iluka has a bright future?

Dash.

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So ILU has HY NPAT of $146m... so full year is around $300m? $350m?

And their market cap is... WTF $6.7B That's like a PE ~20.

Can someone explain why they deserve such high earning multiple?

The chart is looking like it's going to roll over...

skc said:

So ILU has HY NPAT of $146m... so full year is around $300m? $350m?

And their market cap is... WTF $6.7B That's like a PE ~20.

Can someone explain why they deserve such high earning multiple?

The chart is looking like it's going to roll over...

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On fundamentals:

The final products Iluka's raw materials create include the finer things in life - ceramics/porcelain kitchen and bathroom fitouts, tiles, cooking/dinnerware.

The way I see it China and India are well and truly into the infrastructure/housing growth stage, where the raw materials required are steel and energy, hence iron ore and coal going nuts. It's only after you've built the house that you look to deck it out. That's when Iluka is going to have the money really rolling home. Although China's domestic consumption is increasing I don't think we've even begun to see the boom it's going to experience once the overall population gets some serious disposable income.

Long term hold IMO, although do agree that growth of price has bubbled a bit too much and expect to see it calm down for a bit, and drop sharply if the market actually acknowledges that growth hasn't yet returned to what seems to be priced in.

Zedd said:

On fundamentals:

The final products Iluka's raw materials create include the finer things in life - ceramics/porcelain kitchen and bathroom fitouts, tiles, cooking/dinnerware.

The way I see it China and India are well and truly into the infrastructure/housing growth stage, where the raw materials required are steel and energy, hence iron ore and coal going nuts. It's only after you've built the house that you look to deck it out. That's when Iluka is going to have the money really rolling home. Although China's domestic consumption is increasing I don't think we've even begun to see the boom it's going to experience once the overall population gets some serious disposable income.

Long term hold IMO, although do agree that growth of price has bubbled a bit too much and expect to see it calm down for a bit, and drop sharply if the market actually acknowledges that growth hasn't yet returned to what seems to be priced in.

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Thanks. While I agree the industry seems to be going OK, the valuation of ILU is completely out of whack on the surface. It's like back in 1999 saying internet is the next big thing so I better buy {insert your favourite .com memory} at PE of 120...

I've just bought some ILU based on their full year report out last week for the SMSF (pension phase account). Looking to grab the 55c dividend before the ex-div date of 5 March. ILU looks like an all round good buy at the moment with Zircon and Rutile prices looking sustainable in the medium term and with limited new supply (compared to say iron ore). The fully franked dividend is the deal clincher for me. Which leads me to my question...

I've seen the Thompson Reuters analyst forecasts of eps for 2012 of 282.8 and 340.5 for 2013 and for dividends of 153cps for 2012 and 186cps for 2013. Aegis is providing consensus forecasts of 259.6 eps for 2012 and 365.3 eps for 2013). At current prices this works out to a forecast PE of 6 for 2012 falling to 5 for 2013.

While the company said in its recent report that it is targeting a dividend payout rate of 40% of free cash flow it came with some caveats. Those dividend forecasts seem very high to me. I see that they were last updated 25 Jan. I wonder if they will come down with the next consensus update?

I guess the main risk over the medium term is the market price of zircon and rutile. Does anyone have any opinions on the price outlook and also on the earnings and dividend outlook for this company?

For me, for the medium term, at the current price ILU is looking good. Good potential for capital gain, good potential for substantial dividend yield. Even if the dividend is held at 75c fully franked for the next year or two that still represents 6.5% yield (with franking credits). I'd hope for better than that, but I've jumped in and going to give this one a go.