Hi Portfolio As a general rule I'm a believer in cycles,...

Hi Portfolio

As a general rule I'm a believer in cycles, particularly in commodities, but I almost never invest in miners or O&G companies as I have zero ability for forecasting commodity / energy prices. I bought MCE at an EV of around $30m based not on what I think of the oil price, but because it seemed cheap to me relative to what I think the business can deliver in cash flow in reasonable market conditions.

I also struggle to put a value on their current diversification efforts, because it's impossible for me to guess what sort of earnings contribution they could generate in future. I think it's a good and necessary thing and the company recognised 3-4 years ago that having the southern hemisphere's largest and most sophisticated composites plant being wholly reliant on one heavily cyclical industry for throughput wasn't sustainable nor an efficient use of the company's PPE.

I probably view this as slightly less speculative than you do as I think MCE can generate sufficient returns through the cycle from its traditional products to make a $30m EV work out ok. Traction from diversification efforts would be upside to my investment case, but I suspect quite a few others see it similarly so would promptly bid the stock up if the diversification efforts started showing signs of meaningful revenue/earnings generation.