ZFX - Zinifex Limited

[ozambersand]

Just in case you weren't aware, according to this morning's Sydney Morning Herald, Zinifex is reporting on its third quarter results on Thursday (ie from 31 December to 31 March).

They warned last report that the continuing increase in profits would depend on continued price of zinc - which hasn't happened. Remember their prices aren't hedged so they will fluctuate.

Here is the 12 month price of zinc from Kitco:

As you can see, they will be reporting a return much lower than the previous quarter but probably on par with the previous year's quarter.

They had a couple of outages during the period (which were all reported) but these shouldn't have affected return. The increase in the Australian dollar price also has to be factored in but from memory I don't think it rose till after March so that will impact next quarter.

The fact that Zinifex has been going down while the market goes up probably reflects people offloading stock in anticipation of this result.

The interesting point is whether there will be any announcement about how they will handle the smelter spin-off. If they do make an announcement, I expect the price will rally again after they get the third quarter announcement out of the way.

So, how much the price of Zinifex will go down (or up) will be interesting.

Here's Zinifex's chart from the Commsec site:

(As a newbie, I'm not too sure whether it's OK to just copy in charts like this -let me know if it isn't)

 

[Halba]

I'm just looking at ZFX, and how its SP has been behaving of late(continual consolidation, no upside to share price recently), investors must be forgiven for thinking this share is a dog? . No return in this stock for six months.

 

[Rafa]

dunno about that, couple of nice fat juicy dividends in there (70c fully franked)... of which i have taken and since exited.

 

[misterS]

Might forgive investors for thinking it was "a bit of a dog", if they got in at $16 -$18 and were disappointed.

The interim 70c div had the anticipated wolfden money snipped off it, as well the other expl cost.

The graph still has a good zinc price for the last half, lead did better than anticipated and the price of zinc is rising - not likely to hit $2 again but it might reach $1.80 as the deficit for '07 manifests itself over the next couple of months and I think the final div will be at least another 70c.

It will be interesting to see who takes over the reins from CEO Greig Gailey after the smelter spin-off and whether they propose to use the $2b odd in cash for acquisition, instead paying shareholders a special dividend.

Presumably that will be the first question the board asks whoever they headhunt for the job, and "give it away" may not be seen as the most imaginative and forward-thinking answer for an aspiring new CEO of a company to give with Zfx "poised to commence the next phase in its transformation into a major global mining house" to quote today's ann.

Either scenario is attractive, and the ideal end-game for me is the t/o of Zfx by Teck just after it really transforms into JUST a zinc miner with truckloads of cash.

As for the sp - dunno, been too many swings to count but I still think, up from here.

 

[chops_a_must]

ZFX is a no brainer as a long termer. Cash at nearly $1b, and probably double by the end of the year. As opposed to Reece, I think this will break up and out. If it broke down, the cash position would basically become about a third of the worth of the company... crazy. It is making lower lows and lower highs etc. but it is still within the bounds of the long term trend. It hasn't been falling at 45degrees, the POZ is looking strong. There are so many factors to stop this falling over. Just a bit of convergence with every factor pointing to it rising further.

Punters may have become nervous as to the Umicore deal perhaps? Waiting to see if they're going to get shafted?

I just hope I can get some money together to put into this one before it breaks out, as I feel it will do well, and the cash position makes future development that much easier.

And I don't hold at the moment.

 

[Dutchy3]

I'm with chops ... just waiting for that big confirming white

 

[michael_selway]

ZFX is a no brainer as a long termer. Cash at nearly $1b, and probably double by the end of the year. As opposed to Reece, I think this will break up and out. If it broke down, the cash position would basically become about a third of the worth of the company... crazy. It is making lower lows and lower highs etc. but it is still within the bounds of the long term trend. It hasn't been falling at 45degrees, the POZ is looking strong. There are so many factors to stop this falling over. Just a bit of convergence with every factor pointing to it rising further.

Punters may have become nervous as to the Umicore deal perhaps? Waiting to see if they're going to get shafted?

I just hope I can get some money together to put into this one before it breaks out, as I feel it will do well, and the cash position makes future development that much easier.

And I don't hold at the moment.

I agree, its all about Value!

EPS(c) PE Growth
Year Ending 30-06-07 303.9 5.1 38.2%
Year Ending 30-06-08 238.4 6.4 -21.6%

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 219.9 303.9 238.4 185.1
DPS 80.0 140.0 140.0 89.0

thx

MS

 

[rederob]

reece
I'm still trying to work you out!
When the fundamentals of a stock barely change, and the price of the stock falls disproportionately, the chance of that stock being a good shorting opportunity is negligible.
Indeed, it's time to go long.

Luckily I am not hampered by chop's predicament.
The Nystar proposition is likely to release greater value to shareholders before year's end, so I guess I'm married to it for a good while yet.

 

[Out Too Soon]

I'm just looking at ZFX, and how its SP has been behaving of late(continual consolidation, no upside to share price recently), investors must be forgiven for thinking this share is a dog? . No return in this stock for six months.

Vivid imagination!:

I just wish I was home the day it dipped to very low ~$15.15 or so, I wasn't & missed out on grabbing more. Looks like it might even hit $16 today, I wonder if we'll see $18 or more again this year?

 

[AnalysisParalysis]

I'm first, I'm first!

 

[michael_selway]

I'm first, I'm first!

Is that chart bullish or bearish on ZFX?

thx

MS

 

[AnalysisParalysis]

Here's an 18 month view. I'm bullish. Bullish up day with volume off long term support.

As well, there's the support levels around $15. This bounce makes it a higher trough as well.

 

[Halba]

Break out! ZFX on a new uptrend I think, it will test its highs from here.

Reason: Zinc price has also broken out. Stockpiles have broken below 100,000tonnes. Lots of zinc users are coming back to the market.

As zinc price increases, analysts will have to redo their valuations! I guess it is not a dog after all.

Disclosure: AM in, leveraged warrants.

 

[drmb]

Ain't that purty now? C'mon pretty pozzy, pozzy, c'mon up up up!
(Kitcometals at 9pm aest)
Zinc April 24,06:29
Bid/Ask 1.7199 - 1.7244
Change +0.0249 +1.47%
Low/High 1.6949 - 1.7312

 

[reece55]

reece
I'm still trying to work you out!
When the fundamentals of a stock barely change, and the price of the stock falls disproportionately, the chance of that stock being a good shorting opportunity is negligible.

Indeed, it's time to go long.

Luckily I am not hampered by chop's predicament.
The Nystar proposition is likely to release greater value to shareholders before year's end, so I guess I'm married to it for a good while yet.

Just to clarify, what I was saying was why would you be interested in ZFX until it showed some promising signs...... And I said BELOW $15.00 I would be tempted to short on a technical basis, not on a fundamental basis. To be perfectly honest, I don't think I would have had the strength to do it even if it did break $15.00 because of the sheer strength and volatility of the share! Long term there is just no doubt ZFX is a no brainer - the divestment of the smelters will most likely give them a war chest of cash to play with, along with their existing cash. My point was when there are so many opportunities in the market elsewhere, there is no use in trading a share that is jogging sideways (or downwards as ZFX has been of late).

Today was most definitely the price action I was looking for...... I see UBS have announced they are sub holders with 6% of the stock and today the market for ZFX shares changed. We have significantly high volume, close on the highs and the $15 support barrier has held very strong. In addition the descending highs in place since January 07 has now ended.

So, in summary, whilst on a fundamental basis I agreed with everyone here, I just didn't see price action that I liked. Now that I have that in the picture now, it looks ripe for an entry.

Cheers

 

[rederob]

Thanks reece.
The next cab off the rank should be OXR, but it's already showed the glimmer of life needed to get it over $4 in the medium term.
At a lesser level is MMN, which is performing miserably given the price of silver.
I agree that trading sideways action is a futile pursuit.
However, I found the notion of "shorting" a stock that was not a dog, and only moderately out of favour, a good way to lose money.

Zinc has technically roared back to life, and is now being well underpinned by supply/demand fundamentals. These data do not yet show zinc to be as robust a proposition as it was last year; but positive signs should never be discounted when higher prices get firmly bought-into.

 

[goetzuwe]

Good news: (base metals report)

Zinc is at $3835, up $105; charts are looking increasingly more positive and a test of $3960
looks to be in the cards. We also thought that yesterday's Chinese data was constructive as far
as zinc was concerned. Although March refined zinc exports came in at 33,000 tons, they were
well below February 47,000 tons reading, and could be the start of a downward trajectory in
exports.

 

[dlineinvestor]

For anyone wanting to re-enter ZFX, stick to the basic's of charting and when the golden cross occurs (circle) accompanied with volume ZFX could even breach 17.00 soon.

 

[Sean K]

could even breach 17.00 soon.

dline, you can't just put these type of statements out there without expanding a bit. Ramp otherwise. Just because it's crossed a MA doesn't mean it's going to reach any particular price. So, why 17 bucks? Thanks, kennas

 

[AnalysisParalysis]

I exited today @ 16.50. Too much resistance on M/D. 31% on call option.