......despite lower coal prices. He says- "We downgrade our coal price expectations from April 2006. Our previous expectation was for rollover prices. We now expect the premium coking coal benchmarkt to decline 8% to US$115/t and thermal coal to fall 10% to US$47/t.
Prices for hard coking coal substitutes, soft coking coal and pulverised coal injection (PCI) coal appear most vulnerable and we downgrade our forecasts to US$75/t and US$60/t, 21% and 25% falls respectively"
He has subsequently downgraded his intrinsic value to $4.20
I have subsequently done my own calculations based on a 10 year history of earnings growth and a 15% discount rate and surprise, surprise. My calculation is virtually the same - $4.22
I started with - fy05: .241 10 yr growth: 12.6% Discount for the excess period: 15% excess earning period: 5yrs
.232 .235 .224 .216 .22 total: 1.12
continuing value fy09: .495 weighted average cost of capital: 8% discount rate after 5yrs : 50% (.495/.08)*.50 = 3.09
Intrinsic value (3.09+1.12): 4.22 If you are a Warren Buffett fan you might be interested in growth of bookvalue ....19%. Hopefully fundamentals don't lie and share price eventually falls in line with intrinsic value.
There is an annual general meeting on Tuesday, November 15 at the Stock Exchange at 10.30am and the company might be able to come up with something positive that move the price up along and up.
CEY Price at posting:
0.0¢ Sentiment: None Disclosure: Held
