Re: ZINIFEX..ZFX
Recommendation Overview
GS JB Were 04-Apr-05 1 Outperform, L/T Buy - -
The broker notes management’s assessment the lost production from technical problems at the Century mine would impact earnings by $14m compares favourably to the broker’s conservative estimate of a $24m impact. As a result, the broker has increased its EPS forecasts in FY05 by 5.4% to 37.2c and in FY06 by 0.2% to 43.2c. Valuation has also increased to $3.02 from $3.00.
UBS 01-Apr-05 1 Upgrade to Buy 2 from Neutral 2 $3.72 22.0%
Target $3.72. The broker suggests the recent share price weakness has been a combination of profit taking and concerns over operational problems at the Century mine. In the broker’s view the price decline has been overdone as the Century impact is likely to be lower than expected, commodity prices suggest guidance is conservative and the buyback can commence on April 8. The broker’s valuation is $3.10.
Macquarie 21-Mar-05 3 Neutral $3.00 -1.6%
Target $3.00. An electrical problem has interrupted production at the Century mine, with the company estimating 20% of quarterly production or 5% of annual production may be lost. As a result the broker has cut its 2005 earnings by 8% or $20m to $237.2m but notes valuation is only reduced by 3c to $2.05, so overall the impact is minor.
CSFB 21-Mar-05 5 Underperform $2.89 -5.2%
Milling operations at Century mine have ceased due to electrical failure resulting in outage of 11-18 days. The share price is, however, driven by the global shortage in zinc concentrates, the broker says.
Deutsche Bank 21-Mar-05 1 Buy $4.00 31.1%
The broker considers any pullback in the share price to be a buying opportunity given the zinc market is strengthening. Target down 2.9% due to problems at Century.
Aspect Huntley 22-Feb-05 3 Hold - -
Normalised NPAT came in slightly below analyst's expectation, with cost pressures starting to impact. Despite this, the analysts upgrades FY05 headline NPAT estimate from $145.2m to $193.0m as a result of increased short term price assumptions and lower than expected depreciation and amortisation charges. Similarly, FY06 NPAT is upgraded from $142.9 to $231.5. After normalising for the anticipated tax benefit, FY05 NPAT has been cut to $131.1m. ZFX is highly leveraged to zinc prices. If Aspect Huntley increases its long term zinc assumption from US$0.55/lb to US$0.60/lb, its ZFX valuation rises from $2.65 to $3.92. Zinc prices are on the improve, driven by China. Stockpiles are sizeable but falling. The bulk of profits are being generated from Century and Rosebery. Mine life is an issue at both operations, the report reminds us.
SB Citigroup 21-Feb-05 1 Buy, High Risk $3.30 8.2%
Earnings surprise was tax driven, the analysts say. Zinc is one of Citigroup’s preferred metals and with the price pushing new highs, the analyst maintain their Buy recommendation and target of $3.30.
Merrill Lynch 21-Feb-05 3 Neutral, High Risk - -
Result higher than guidance due to write backs from tax expenses, the analysts say. Lower depreciation at Century and lower zinc TCRCs see FY05 EPS forecasts rise by 0.11 to 0.36, FY06 by 0.07 to 0.32 and FY07 by 0.09 to 0.22.