Pellet Price, page-43

The strong pellet price increases must be driving substantial PAT & FCF increases in GRR. Also they had A$125m in the bank at 30/9/17 which is a mere 11cps. The current SP = 20cps so the market is only value the operating performance of GRR at 9 cps. I had to have a look.
1. GRR has a 31/12 YE
2. I use the PLATTS futures 62% Fe prices
3. The pellet price at 17/11/17 was A$140 which is a 72% premium to PLATTS (Assuming AUSUSD = 0.78)
4. My FY2017 forecast PAT = A$55m and FCF = A$61m. Applying a FCF multiplier to FCF gives an EV = A$610m.
5. The MC = EV + Cash = 610+125 = A$735m = 64cps
6. Now it is FY2018 where things get really interesting
7. I assume the Pellet premium of 72% applies throughout FY2018 and again use PLATTS.
8. My FY2018 forecast PAT = A$138m and FCF = A$144m. Applying a FCF multiplier to FCF gives an EV = A$1444,
9. My FY2018 YE cash balance = A$186m
10. The MC = EV + Cash = 1444 = 186 = A$1630m = A$1.41

Now the current SP = 20cps so it would seem very reasonable to assume that at some point GRR will be re-rated to a SP reflecting the strong fundamentals of GRR's business. Looking at the chart it looks like this process it currently underway. Where the SP will eventually settle I don't know BUT I would like to think that we will nudge 50cps sometime soon and maybe A$1.00 by FY2018 year end.

Please remember this is my stuff only so please always DYOR