Australian (ASX) Stock Market Forum

Zinc the metal for 2006

Jump to new
Fab said:
What do you think these 2 companies will do on monday ? It is looking pretty grim to me looking at the big drop in commodity price overnight . Vommodities are currrently becoming very volatille
Click to expand...

FAB did u buy high?

otherwise dont need to worry

thx

MS
 
rederob said:
Thanks MS
I like its PE.
(I don't look at published pes for companies like KZL. I forecast it likely earnings based on trend continuity.)
Click to expand...

So do I.
Well explained.
Thank god there is somebody out there who shares this view. Most of the people i speak to say they think KZL is "expensive".
You must look at the future growth in earnings. Id be very happy to pay 15x earnings for a company with 30%pa earnings growth.


michael_selway said:
FAB did u buy high?

otherwise dont need to worry

thx

MS
Click to expand...

"High" is a relative term. When i first bought KZL at $2.45, some people suggested it was "expensive", after all, 2 months earlier it was $1.50. Now some people are telling me, nice one, u got KZL so cheap. I was like, I did? actually NO i didnt, i simply paid the market price on the day which was the all time high at the time of purchase and in the next few days it dipped to $2.20.
I suspect in 6 months time, $5, $6 or $7 will seem "cheap" for this company.
 
nizar said:
You must look at the future growth in earnings. Id be very happy to pay 15x earnings for a company with 30%pa earnings growth.
Click to expand...

I do look at earnings growth, forward Terminal PE of 10

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 16.8 69.9 67.6 43.0
DPS 0.0 7.5 13.3 7.5

EPS(c) PE Growth
Year Ending 30-06-07 69.9 10.1 316.3%
Year Ending 30-06-08 67.6 10.5 -3.3%

thx

MS
 
michael_selway said:
I do look at earnings growth, forward Terminal PE of 10

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 16.8 69.9 67.6 43.0
DPS 0.0 7.5 13.3 7.5

EPS(c) PE Growth
Year Ending 30-06-07 69.9 10.1 316.3%
Year Ending 30-06-08 67.6 10.5 -3.3%

thx

MS
Click to expand...
MS
I believe you are relying on Comsec forecasts.
If that is the case, then you need to remember that they are based on their model forecast future prices for the metals mined.
Comsec has seldom been close to the money in forecasting metal prices in the past 4 years and if you took the time to research their success rate, you would do what I do and ignore their numbers totally.

toothfairy
Why would I pay more for something I already have plenty of? In my case it's not a matter of science as to how much I pay, it's a question of the price representing what I deem as value.
 

Attachments

  • CAIF2N2T.gif
    CAIF2N2T.gif
    3.5 KB · Views: 235
rederob said:
toothfairy
Why would I pay more for something I already have plenty of? In my case it's not a matter of science as to how much I pay, it's a question of the price representing what I deem as value.
Click to expand...

Hi rederob,
sorry, I didn't know that you already had a lot of it, in that case probably not necessary to chase. Just hypothetically if it drops to $5.70 and then goes back up convincingly, would you buy it at say $6.20? For me, I do set targets & limits and whatever, but when it comes to the last minute crunch, I could change my mine.
I think you have more in depth knowledge in these topics then many of us on this forum, would you please give me some advise on my posting in the ZFX forum dated 15-November-06. That is in regards to confusing / contradicting reports on zinc prices. Nobody seems to have replied yet. Regards
 
toothfairy said:
Hi rederob,
sorry, I didn't know that you already had a lot of it, in that case probably not necessary to chase. Just hypothetically if it drops to $5.70 and then goes back up convincingly, would you buy it at say $6.20? For me, I do set targets & limits and whatever, but when it comes to the last minute crunch, I could change my mine.
I think you have more in depth knowledge in these topics then many of us on this forum, would you please give me some advise on my posting in the ZFX forum dated 15-November-06. That is in regards to confusing / contradicting reports on zinc prices. Nobody seems to have replied yet. Regards
Click to expand...
toothfairy
I have not read the other post of yours, but that might not be a problem.
First, in relation to KZL, in October it broke over $5.80 which was the upper band of its long term trend channel (at least the channel I use for investing).
When KZL hit $7 it was a disaster (albeit short term) waiting to happen. Buying into KZL above $6 does not, in my view, represent value, and leaves one open to $2 potential downside risk.
On zinc prices, we are presently having a technical correction - expect a few more, and much worse in months to come.
Will zinc prices rise or fall?
Tomorrow, I have no idea.
Next month I reckon zinc will have tacked on at least 10% from present levels.
I have very little doubt that on the basis of normal market behaviour zinc prices will comfortably exceed $5000/tonne in early 2007.
At the moment I anticipate LME inventory drawdowns will fall to about 2000 tonnes/week, which is only around 500 tonnes off the recent daily drawdowns. But in tight markets this is what we need to come to expect. If I have called it wrong and the drawdowns remain high, then my $5000 figure will become $6000.
As to whether or not ZFX or CBH or PEM or KZL is better than the other really depends on what you want to achieve. I like KZL for the reasons earlier outlined. But when you pick up a fully franked dividend cheque for $3,500 it makes you think twice about investing more in a company not paying dividends over one that delivers in spades.
 
rederob said:
toothfairy
I have not read the other post of yours, but that might not be a problem.
First, in relation to KZL, in October it broke over $5.80 which was the upper band of its long term trend channel (at least the channel I use for investing).
When KZL hit $7 it was a disaster (albeit short term) waiting to happen. Buying into KZL above $6 does not, in my view, represent value, and leaves one open to $2 potential downside risk.
On zinc prices, we are presently having a technical correction - expect a few more, and much worse in months to come.
Will zinc prices rise or fall?
Tomorrow, I have no idea.
Next month I reckon zinc will have tacked on at least 10% from present levels.
I have very little doubt that on the basis of normal market behaviour zinc prices will comfortably exceed $5000/tonne in early 2007.
At the moment I anticipate LME inventory drawdowns will fall to about 2000 tonnes/week, which is only around 500 tonnes off the recent daily drawdowns. But in tight markets this is what we need to come to expect. If I have called it wrong and the drawdowns remain high, then my $5000 figure will become $6000.
As to whether or not ZFX or CBH or PEM or KZL is better than the other really depends on what you want to achieve. I like KZL for the reasons earlier outlined. But when you pick up a fully franked dividend cheque for $3,500 it makes you think twice about investing more in a company not paying dividends over one that delivers in spades.
Click to expand...

KZL will earn $1/share this year if zinc averages us$2/lb this year as i suspect it will. I am more than happy to pay $7 for a company with 30%pa earnings growth. In fact, $10 is still cheap in my view.

I see KZL at $10 in a few months time. It will end FY2007 higher than that because of upside from Admiral Bay drilling due to start in the first quarter of 2007, and as brokers lift their forecasts as the broader market begins to understand whats happening to zinc metal. Their large shareholding in MLM gives exposure to nickel, which is still in very short supply.

They will initiate dividends this year, my call is 10c/share.

KZLs production:

2006: 35kt Zn, 6kt Cu
2007: 50kt Zn, 25kt Cu
2008: 70kt Zn, 40kt Cu
2009: 100kt Zn, 50kt Cu

There is still potential for them to increase their resources and thus production. King Vol can add another 10 years mine life.

This company is a winner.
 
nizar said:
KZL will earn $1/share this year if zinc averages us$2/lb this year as i suspect it will. I am more than happy to pay $7 for a company with 30%pa earnings growth. In fact, $10 is still cheap in my view.
Click to expand...

nizar,

Not trying to put a dampner on yr Zn party, but Zn will have to rocket skywards well over $US5000/tonne for Zn to ave $US2.00/lb for the whole of 06/07.

I am keeping a very close eye on this number (as I have a large ZFX holding), and as of today the ave price for 06/07 stands at $US1.63039/lb.

I have a worksheet which explains all this just a bit undersure of how to upload here for all to see.

regards
john
 
Damuzzdu said:
nizar,

Not trying to put a dampner on yr Zn party, but Zn will have to rocket skywards well over $US5000/tonne for Zn to ave $US2.00/lb for the whole of 06/07.

I am keeping a very close eye on this number (as I have a large ZFX holding), and as of today the ave price for 06/07 stands at $US1.63039/lb.

I have a worksheet which explains all this just a bit undersure of how to upload here for all to see.

regards
john
Click to expand...

No dampner at all bro.
I sold out of KZL a few weeks ago.

Its a great company and very fond, but like i say bottom line is, i only make money when the share price goes up - regardless of fundamentals and zinc price, etc.

If it starts going up and 7.87 (whatever previous high was) is broken, ill be back in no doubt.

This company is a winner.

Thanks for sharing your views though, and for the record, yes i think us$5,000/tonne is only the beginning, but thats just my opinion.
 
nizar said:
No dampner at all bro.
I sold out of KZL a few weeks ago.

Its a great company and very fond, but like i say bottom line is, i only make money when the share price goes up - regardless of fundamentals and zinc price, etc.

If it starts going up and 7.87 (whatever previous high was) is broken, ill be back in no doubt.

This company is a winner.

Thanks for sharing your views though, and for the record, yes i think us$5,000/tonne is only the beginning, but thats just my opinion.
Click to expand...

Hi Nizar

Did you sell KZL because you thought it wasnt worth the market price at the time?

thx

MS
 
damuzzdu
Given the zinc price has already breached $2 and fallen back a touch, if it is well over $2 by Xmas (which I think is likely), then a rate of increase less than the past 5 months will allow it to average $2 for the financial year.
I think that is well within in the realms of possibility.
 
michael_selway said:
Hi Nizar

Did you sell KZL because you thought it wasnt worth the market price at the time?

thx

MS
Click to expand...

No, i sold because im in this game to make profit.
Is the company prospects good? YES
But i only make money when the share price goes up.
The main reason i sold was because I thought it was due for a breather after a sharp run (i bought 4 weeks earlier for 5.95) and i feared a general correction after US elections.
 
Based on the following Macquarie report received today. Zinc stocks should still outperform the market for some time :)

Resources Sector: Are Base metal prices losing steam?

For the past two weeks, there has been selling across-the-board in base metals, as concerns about slowing demand have emerged, and as the physical copper market has continued to ease. However, the key issue is whether the slowdown will be enough to tip each metal into surplus. Copper appears to have moved into small surplus while aluminium and nickel may see some inventory increases in the short-term, leaving them vulnerable to further downside. However, zinc stands out as having the most bullish fundamentals over the next few months and thus MRE expect zinc prices to outperform.

With sentiment turning more bearish, global resource stocks have been hit hard, particularly the Australian listed miners. Therefore with the potential for metal prices to weaken further (particularly copper), Macquarie Research Equities (MRE) analysts are not adverse to investors reducing positions in the short-term.

Stronger for longer. Undoubtedly, the China phenomenon continues apace as the influences of urbanisation and industrialisation remain supportive of unrivalled economic growth. More specifically, robust (albeit moderating) metals intensive fixed asset investment growth continues to place great
pressure on the broader commodities complex and ensures the duration of the current cycle is likely to be supported for an extended period.
 
wrong thread but can anyone remember the thread about platinum being at its lowest levels since time began-sounds familiar
 

Similar threads

M
SDV - SciDev Limited
75 76 77
Replies
2K
Views
194K
Dona Ferentes
Dona Ferentes
Top