That is very interesting McCoy, the hardest part of this investment for me was the exposure to iron ore, I have a positive view in Lithium and Manganese but there is so much iron ore coming on line it is hard to see the prices and margins remaining anywhere near current levels. The processing side however with players like Fortescue does not bother me, MIN gets paid per tonne processed, not on price.
MIN - Mineral Resources
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That is very interesting McCoy, the hardest part of this investment for me was the exposure to iron ore, I have a positive view in Lithium and Manganese but there is so much iron ore coming on line it is hard to see the prices and margins remaining anywhere near current levels. The processing side however with players like Fortescue does not bother me, MIN gets paid per tonne processed, not on price.
FY 2011 was a year to consolidate for MIN, they should really take off from here, expect to see growing dividends from here.
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Result for MIN out today. Pretty good - NPAT coming in at $150m.
skc
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Good result yes. EPS ~89.7c to a share price of $11.73 is a PE of 13. Not expensive considering the potential growth rate, but the current market isn't in the mood for giving out PE 20x to mining services near a potential top of the cycle.
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Min is one of those rare businesses where you can forget PE and the cycle and just sit back and collect larger dividends every year IMO.
I think you make an excellent point. The current yield is 5.26% franked up and that dividend will be increasing significantly according to the forecasts (which seem reasonable). The return on average equity was 27% for the last year which is quite good.
If the price falls more, I will have to buy more based on dividends alone! Meanwhile, I think the result is quite good and the current share price is undervaluing the company. I read an Austock report on MIN about a month ago and their DCF valuation was above $17 from memory.
To those out there selling: What were you thinking?
skc
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Min is one of those rare businesses where you can forget PE and the cycle and just sit back and collect larger dividends every year IMO.
CPU is a wonderful business and has grown its dividend year after year. In 2000 the annual dividend was 1c, this year it is 28c. So a compound annual growth rate of >35%. But the total return for those who bought in 2000 is negative.
Why? Because in 2000 CPU was trading at a PE multiple of 100.
So don't forget the PE. E is where your dividends come from, P is how much you are paying for them. Pay a high PE for a great company and you will get average returns.
Granted MIN isn't CPU and is probably trading at a fair price as I said. In a bull market you will get PE 20x for MIN. The challenge with buying MIN at PE 13x now is whether you will see the bull market valuation before MIN runs out of growth momentum. If I hold I probably wouldn't sell, however.
BTW, take a look at IDL. Same industry, good growth, single digit PE. Higher chance of better returns over the next 12 months imo.
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See this as an opportunity - MIN is a good business (good yield, good growth) and now it is being offered to you at an even better price. Personally, my target is $10.50. I already hold but I would like to hold even more if the price is right.
Of course, I have no idea if it will drop even lower, I'm not predicting the bottom.
All I'm saying is that the price will eventually recover so if you sell now, you just crystalise your losses (or take a smaller profit as the case may be).
I have no plans to sell, I'd love to buy more but I've used the last of my doe to get back onto FWD the other day.
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MIN has broken above $12 today. Results out next month for the HY which will be interesting to see how the growth story is going...thus far the only guidance is that 'target' profit is to exceed FY11..
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Another strong day for MIN, interesting that it wasn't dragged down by the news from the mining giants as MIN also has some iron ore interests.
Looking forward to the results next week
Looking forward to the results next week
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Was keen to get out of MIN late last week after the massive run up which left it looking a little expensive IMO..however I wanted to wait until the result was out to see if management could deliver me a reason to stay.
Out today after reading the report gives me a hint that growth going forward is not justifying the share price increasing much further.
Out today after reading the report gives me a hint that growth going forward is not justifying the share price increasing much further.
Min has had a horror run over the last 3 months
Seems to be picking up?