The Chinese would be looking at an capital/turnover ratio of about 2. That's like a price/sales ratio for a company. BHP's p/s for example is currently 3, so 2 is in a reasonable ball-park.
Iron ore is already back into bull market territory, and if the Chinese are serious about Belt and Roads then $3.7B is barely small change. For China Railway in particular to guarantee supply for the B&R infrastructure - rather than leaving itself at the mercy of the market - makes a huge amount of sense. Just look at how BHP and co have gouged the market in past years, and it's not just sensible, it's essential.
Will B&R actually happen? I don't know. But Xi Jinping is on a massive power trip, and like various power-hungry leaders of the past he won't care about whether conditions are good for everyone at home before he embarks on foreign adventures. IRD certainly looks like an interesting adventure!
IRD Price at posting:
23.5¢ Sentiment: Buy Disclosure: Held
