What will lead to them trading at a PE of 3 aka $80m profit in FY12?
FY11 shows - ...announced an underlying net profit after tax (excluding non-recurring items) of $2.1 million for the 12 months to 30 June 2011. As a result of a total pre-tax impairment charge of $48.5 million including a write-down in the carrying value of some mining assets and resources, the Company reported a net loss after tax for the year of $32.2 million.
How will they increase from $2.1m underlying net profit to $80m this year? Are their costs falling or are the resources rising or is there something else?
You're right about the big discount to net assets.
PE 3 would require 11c EPS. Goldman Sachs in their recent research report expects 1.2c EPS in 2012 and 3.2c EPS in 2013.
I like the 5 year strategy of KZL and I hope they will decrease the cost of production as they increase production. But in the short term I fail to see the extremely cheap PE 3.
KZL Price at posting:
32.5¢ Sentiment: Buy Disclosure: Held
